On May 8, the Land Use Commission met on Maui to receive an update on a project that first received LUC approval more than three decades ago. Initially, more than 1,700 homes were proposed for what was called Puʻukoliʻi Village, although that was pared back to 940 for the more makai portion, with still more units planned for the more makai so-called Puʻukoliʻi Triangle area. The original LUC Decision & Order (D&O) called for some 340 units in the Triangle area, but now that number is uncertain, given the landowner’s changed plans.
No vertical construction has gone up in all that time. Members of the commission placed the blame for the lack of progress not on the Kaʻanapali Land Management Corporation (KLMC), which, as successor to Amfac, has owned the land since the project was first approved, but on the state Commission on Water Resource Management.
Two years ago, after numerous public hearings, CWRM designated West Maui as a water management area for both surface and groundwater. The determination means that the commission found that water sources were stressed. Existing users would need to apply for water use permits to continue their uses, while permits for new uses are to be considered after applications from existing users have been issued.
The Puʻukoliʻi project would draw water from the Honokōwai aquifer, where, at the time of designation, existing and authorized planned uses totaled 10.181 million gallons a day. The aquifer’s sustainable yield is only 6 million gallons a day, and that number could decrease if cumulative rainfall in the area continues to fall below the long-term average.
The legal framework for such decisions is set forth in the state Water Code, Chapter 174 of Hawaiʻi Revised Statutes, and in the commission’s implementing rules. Deviating from the procedures set forth in law and rules would almost certainly be challenged in court.
But comments from the commissioners at the May 8 meeting betrayed an almost astonishing lack of understanding of the legal issues associated with designated water management areas.
Chair Dan Giovanni: “Seems like we’re prepared to move forward with this valuable project … but it’s all hung up with this water issue. My sense is that they [the Water Commission] have made a generalized priority to prioritize all the existing applications, existing water users, before they would consider something new at all. That seems to be to be pretty myopic in the grand scheme of things.”
Commissioner Brian Lee wanted to know why the LUC had to defer to the Water Commission. “We need to consider, if CWRM is going to be the obstacle, why are we deferring to them without any examination?” he asked.
Katia Balassiano, the land use development administrator of the state Office of Planning and Sustainable Development, as well as Alison Kato, the deputy attorney general representing the OPSD, described how a team of agency heads convened by the governor meet every Friday to discuss ways to move forward with housing and other needs of the Lahaina area following the devastating wildfires of last August.
On learning of the Friday morning meetings, commissioners wanted to make sure that the participants were aware of the Puʻukoliʻi project. “I would really encourage this Friday morning meeting to consider opportunities to make an exception to get a little more priority for consideration of the water application for a new project such as this, because it just seems so important for a community in this part of the island,” Giovanni said, addressing his comments to Balassiano and Kato. He and other commissioners also charged the OPSD with seeking comments from CWRM as to why this project was not being given the consideration that they felt was its due.
“We can raise that again with them, but we don’t make CWRM’s decisions for them,” Kato replied.
“Everything’s pointing to them,” Giovanni added. “They’re what’s holding this up. Is that a fair representation? That’s the plug in the wall, right there.”
Still, after listening to representatives of KLMC describe a long process of planning for almost all its undeveloped properties in the Kaʻanapali area that began around 2009 and is still unfinished, commissioner Lee Ohigashi of Maui, in one of his last hearings before leaving the LUC at the end of this month, criticized the company for its apparent lack of urgency.
“I’m hoping that the parties are understanding the sense of urgency in that area and that thirteen years to do a development agreement and put into a plan is kind of unacceptable,” he said, referring to a “desperate need” for housing in the area. “I’m not happy with the fact that we don’t have a sense of urgency on the part of the petitioner in this matter.”
When the LUC received the original petition for redistricting the Kaʻanapali land for the mauka area and the triangle, the state housing agency was a co-petitioner. After the D&O was amended in 2009, the Hawaiʻi Housing Finance and Development Corporation (HHFDC) was left out of all discussions concerning affordable housing.
Diane Praywell, attorney for KLMC, told the commission that KLMC was “still in discussions, and we need to work out with HHFDC the terms of … a new or modified version of the current development agreement.”
Ohigashi asked Stan Fujimoto, representing HHFDC, about those negotiations. “When was the last time you were in touch” with KLMC, he asked.
“Not until recently,” Fujimoto replied.
“What does recently mean,” Ohigashi asked.
“Oh, 2024,” Fujimoto answered. “Just discussions in response to this inquiry,” referring to the LUC request for a status report.
Prior to that time, Ohigashi asked, “was there any other negotiation being conducted?”
Fujimoto: “No.”
Ohigashi: So there’s been 13 years of non-negotiation in this matter.”
“Right.”
Still, Chad Fukunaga, vice president of KLMC, pushed back against the suggestion that the company had been dragging its feet. In response to a question by commissioner Nancy Carr Smith, Fukunaga said the company had been working on this for some 17 years.
“It was a top priority even before the fire,” he said, referring to the devastating fires on Maui last August. He then launched into a description of the discussions leading up to designation of West Maui as a surface and groundwater management area. “That process in itself puts pause into whether you need to move forward with design and development, particularly the water system,” he said. “We’re at the mercy of CWRM’s decision.”
Yet the designation process, by Fukunaga’s own admission, didn’t start until a good 10 years after the Land Use Commission’s consent to the amendment of the original redistricting decision, which reduced the affordable housing requirement in the mauka area.
Fukunaga also clarified that his company wouldn’t actually be the party eventually applying for a water permit. “To clarify, Hawaiʻi Water Service has an established water service area equivalent to most of our lands,” he said. “So our request for water service would go through that company.” HWS had applied for an existing use permit, he went on to say, “and that is the permit they’re trying to process now.”
Among other things, KLMC also attributed delays to Maui County’s development of a new community plan for West Maui, finally adopted in 2022. Land use designations in the plan “are not entirely consistent with the [Kaʻanapali 2020] Master Plan,” Praywell stated in the most recent annual report to the LUC. “[A]dditional efforts will take place to continue with revised planning and with permitting and other regulatory approvals.”
At the May 8 meeting, Jeff Rebugio of KLMC elaborated. The Triangle area “has been reconstituted into the Kaʻanapali 2020 project,” he said. Following the county’s adoption of a new community plan, “the final plan was inconsistent with the 2020 land plan, leaving out a significant portion of the urban area – mainly, the entire south end, which we approximate to be about 200 acres… Because of this discrepancy with the West Maui Community Plan, Kaʻanapali is regrouping to identify a revised land plan. We may need a community plan amendment.”
But Maui County Planning Director Kate Blystone disputed that characterization. KLMC had stated that they were disappointed in the outcome of that process, she noted. “But that’s not in relation to the area under discussion today,” she said. The Triangle area was designated “small town center” in the plan, a designation that “is not meant to regulate uses so much as to regulate the form and character of the place.” It allows for “lower profile buildings, all the amenities a community would need. Residential, commercial … all are appropriate for this designation.”
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Financial Disclosures
All members of the Land Use Commission must file financial disclosure statements with the state Ethics Commission. State law requires that such interests include sources of income above a minimum level, real estate and other ownership interests, and indebtedness, among other things. The statement should also disclose the financial interests of the commissioner’s spouse and dependent children.
Nancy Carr Smith, who began serving on the LUC last year as a member representing the island of Hawaiʻi, has filed two financial disclosure statements. In her first statement, for 2023, she identifies one source of income for herself: Aloha Kohala Realty, with the amount earned ranging between $100,000 and $150,000. She also identifies a source of income for her husband, Riley Smith. His employer is identified as Lanihau Properties, with the income ranging between $150,000 and $250,000.
Since 2022, Riley Smith, a member of the state Board of Land and Natural Resources, has also been required to file a financial disclosure statement. At no time has he identified an income source for his wife.
In Carr Smith’s most recent filing (made April 17, 2024), there is no mention of Riley Smith’s income.
— Patricia Tummons
Carl Christensen
If water is a limiting factor, and the aquifer is already over-committed, which existing users would the LUC dry up?