Some 68 acres of land in the West Hawaiʻi district of North Kona have become the battleground between two dueling visions for the future of the site.
One of them sees the area, first zoned for housing forty years ago, as appropriate for the development of more than four hundred multi-family units that, few would dispute, are direly needed.
The other views the flood-prone land as littered with historic sites that call out for preservation, where further development would exacerbate already frustrating traffic issues, and which, in any case, is unlikely to make a meaningful dent in the urgent demand for affordable housing.
The land was acquired in late 2015 by current owner Kona Three, LLC, and was to be the final part of the Kona Vistas development. Following approvals by the state Land Use Commission and the Hawaiʻi County Council in the early 1980s, 215 single-family houses went up in the area around Lako Street. The affordable housing condition attached to those approvals was not fulfilled, putting the burden to perform on that condition now on Kona Three.
While the LUC redistricting order remains in effect, not so the county zoning ordinance. The original ordinance was approved in 1984 and renewed eight times, most recently in 2003. At that time, the deadline for completion of all work was 2012. The members of Kona Three have acknowledged they purchased the land, for $600,000, fully aware that the county entitlements had lapsed.
In 2021, Kona Three published an environmental assessment and, in 2022, sought to breathe new life into the “stale entitlements.”
The proposal received pushback from the county Public Access, Open Space, and Natural Resources Preservation Commission (PONC), which, in its 2022 report to the mayor, recommended preserving the area as “Connecting the Holualoa Royal Complex.” It was ranked eighth of eight sites recommended for acquisition by the county.
The report describes the area as linking “the Walua Trail and the ancient Kealakowaʻa Heiau of the Sadie Seymour Botanical Gardens with the Kealakowaʻa trail, providing recreational and cultural access mauka to makai. U.S. Geological Survey identified an ancient trail running the entire length of the property, mauka to makai, in 1927. The trail was mapped again in 1936 by U.S. Department of Commerce, National Oceanic and Atmospheric Administration. These historical trails are intended to be protected for the benefit of the public. … There are two major drainages on the properties, thus limiting the use of the land for development, as only a small portion is not prone to flooding.” (The developer has taken strong exception to the claims of historic trails and says the flooding concerns are exaggerated.)
In December of that same year, the Leeward Planning Commission held a hearing on the proposal, which had been forwarded to the commission with a favorable recommendation by the county Planning Department. The chaotic meeting ended without a decision on the proposal itself, but the commission did ask the county Cultural Resources Commission to look into the matter.
The CRC appointed a group to investigate claims of cultural and historic sites, and, on hearing the group’s report, determined that the proposed housing development “will likely have a substantial impact on historic assets.” The preference of the CRC, the commission wrote in a letter to the Leeward Planning Commission, is that the property be preserved “in perpetuity.” In the event that is not feasible, it recommended conditioning approvals on further documentation of “lineal descendant and kamaʻaina knowledge of the natural and cultural resources of the project area, inclusive of trails,” and that the developer amend plans to allow for more open space areas that protect natural, historic, and cultural features. (Exactly what the CRC meant by “feasible” became the subject of council member concerns when the council took up the matter in July.)
Even after receiving the report from the CRC, the Leeward Planning Commission was unable to vote on Kona Three’s request for an ordinance that would give it 10 years to complete the development.
In a letter to the council in May, commission chair Barbara DeFranco described her commission’s history of involvement with the application:
The Planning Department accepted the application from Kona Three for the time extension in June 2022, DeFranco wrote, and the deputy planning director forwarded it to the commission with his recommendation on December 1, 2022. (DeFranco does not state why the deputy director, Jeff Darrow, made the recommendation rather than Planning Director Zendo Kern, who would usually be doing this. Kern had been walled off from considering the application, Darrow has said, because of his prior involvement with the applicant when Kern was a private planning consultant.)
DeFranco went on to say that the commission heard the application on December 15, 2022, but voted to defer action until the CRC had reviewed it. In July 2023, the CRC provided its recommendation to the Planning Commission. Thereafter, she wrote, “the applicant spent eight months assembling additional information in response to the CRC’s recommendation and the application was scheduled for a hearing” before the commission on March 21, 2024. “However, this meeting was cancelled … due to a lack of quorum.”
On March 18, DeFranco wrote, “the applicant requested the commission transmit the application to the County Council with an unfavorable recommendation. Based on this request, and in accordance with … the Zoning Code, the commission has failed to act on this application within the time period prescribed in the Zoning Code.”
The Council, Part I
In June, the County Council Committee on Legislative Approvals and Acquisitions took up the Planning Commission’s recommendation against approval of the time extension.
At its first meeting, on June 4, the committee heard testimony from the developer as well as residents of the area opposed to the development. Toward the end of the hearing, committee chair Holeka Goro Inaba described amendments to the proposed ordinance that he had worked on with Kona Three. The amendments removed reference to a “full movement” channelized intersection with the state’s Queen Kaʻahumanu Highway, since, as Inaba explained, the state Department of Transportation and the developer have not yet worked out details on the intersection. Also, language regarding affordable housing requirements was expanded, if not clarified.
The June 10 meeting ended with the committee deferring any decision on the matter to its next meeting, on June 18. At that time, many of the same people who testified in opposition at the previous meeting were present and again testified against it. Competing experts were brought in to discuss whether or not a holua slide crossed the project site. The matter of housing – affordable or otherwise – was thrashed out.
As the meeting concluded, Councilmember Sue Lee Loy, representing the Hilo area of Keaukaha, moved to recommend that the full council approve the ordinance granting another decade to complete the project. Ashley Kierkiewicz, representing Puna, seconded the motion.
On a 4-5 roll call vote, the motion failed. The bill went to the full council without the committee’s recommendation for passage.
The following week, the Kona Community Development Plan Action Committee held its regular monthly meeting. On the agenda was the question of whether that group should submit testimony to the County Council on the Kona Three time extension request.
After hours of discussion, the committee unanimously approved a motion to provide testimony opposed to the request.
It endorsed the recommendations of the Cultural Resources Commission. It went on to state that the application “does not reflect the goals adopted within the Kona CDP Ordinance,” citing two objectives.
The first dealt with traffic congestion. The Kona CDP calls for growth to be concurrent with traffic infrastructure “so as to avoid overloading the arterial system,” the committee noted. However, its letter went on to say that the Kona Three application “conflicts with the Kona CDP’s Concurrency Objective. … New development accessing Queen Kaʻahumanu Highway, especially in that vicinity, may further overload the arterial system and compromise the safety and quality of life for Kona residents.”
Second was concern for environmental resources. The committee “is concerned that the … application does not adequately address the potential impacts of flood corridors that may affect adjacent properties.” Specifically, it reminded the council that the CDP policy relating to environmental protection suggested that floodplains and planned flow ways “may serve as open space amenities, such as linear parks and/or greenbelts between urbanized areas.”
The Council, Part II
On July 10, when the council took up the request, it became clear that several council members were prepared to change their vote. Several councilmembers suggested that opposition was mainly driven by NIMBY concerns. Others raised the prospect of the developers wanting to obtain entitlements only in order to flip it, mentioning at several points that the cost of acquiring the land ($600,000) could be recouped in the sale of just one house.
Again, questions arose over affordable housing requirements. While the LUC required the actual construction of affordable housing units equal to 10 percent of the total (including in the calculation the 215 houses already built in the existing Kona Vistas subdivision), the county’s Chapter 11, satisfied through the production of housing credits rather than brick-and-mortar houses, didn’t necessarily result in any additional homes. A deputy corporation counsel attempted to explain the complicated formulas for satisfying Chapter 11 – but from the puzzled looks on councilmembers’ faces, it wasn’t apparent that she succeeded
Daryn Arai, planning consultant for Kona Three, made a PowerPoint presentation, taking on allegations that the site was subject to flooding, that it conflicted with the Kona CDP, and that a trail used to transport koa logs to the coast was on the property. He also rebuffed the notion that the development would allow short-term rentals, stating that Kona Three would attach conditions in deeds prohibiting this.
After hours of discussion, Councilmember Inaba expressed his unease about the project owing to concerns expressed by the Cultural Resources Commission. Councilmember Jenn Kagiwada amended the bill to require conditions on deeds prohibiting the use of any units as short-term rentals.
Council Chair Heather Kimball said she was not comfortable with the status of the ordinance, that there were “key deficiencies” remaining to be worked out. “I could not support it in its current format,” she said.
On a motion from Councilmember Rebecca Villegas, seconded by Inaba, the council voted unanimously to postpone further consideration of the bill to its August 21 meeting in Kona.
A Competing Proposal
Villegas, who has made no secret of her opposition to the Kona Three proposal, introduced in July a resolution that calls for the county to start negotiations to acquire the property using the county’s Public Access Open Space, and Natural Resources Preservation Fund.
Her resolution notes that the site was identified as significant in the 2022 PONC report to the mayor. Acquisition would “fulfill the purpose of preserving historic or culturally important land and sites that promote preservation and perpetuation of our native Hawaiian culture, tradition, and customary practices,” among other things, the resolution says.
The owners have indicated they are unwilling to sell, it goes on to say. The resolution therefore calls on the county director of finance “to enter into negotiations for the acquisition of land and/or a conservation easement for all or a portion of the property.”
The council’s Committee on Legislative Approvals and Acquisitions considered the resolution at its July 23 meeting. Kona Three consultant Daryn Arai testified that his client took no position on the matter.
Councilmember Sue Lee Loy opposed the resolution, stating it “thumbs the scale” – apparently on the council’s consideration of the time extension Kona Three has sought – and is “incredibly premature.” It was tantamount to “strapping the owner over a barrel” and raised an issue of unconstitutional taking, she said.
Lee Loy was joined in opposition by Kirkiewicz and Michelle Galimba, representing Kaʻu. Villegas’s motion to adopt the resolution was approved on a 6-3 vote.
The resolution is scheduled to be heard by the council on August 7.
An Ethics Complaint
At the July 10 council meeting, Councilember Villegas asked that the council go into executive session to discuss what she described as a potential conflict of interest of another councilmember.
Following the executive session, Lee Loy made a statement, acknowledging that she was the subject of Villegas’s concern. She said that she and her husband as well as her mother and daughter had acquired two properties that had been developed by a member of Kona Three. She did not provide a name but said that she went through a real estate agent.
On July 19, Elizabeth Dunn of Kona filed a formal complaint against Lee Loy with the county Board of Ethics. Dunn stated her concerns that Lee Loy “has a longstanding pre-existing ‘quid pro quo’ financial relationship, and therefore a conflict of interest, with two of the three partners of Kona Three, LLC – Robert Williams and Roland Higashi, and potentially Roland Higashi’s wife, Janice, and daughter, Laurie.” Williams was the listing agent for property that Lee Loy’s mother and daughter purchased in the Waiakea Fairways subdivision, she said, and Higashi was the real estate agent involved with the sale of property to Lee Loy and her husband in the Ola Hou subdivision that one of Higashi’s companies developed.
Dunn noted that the sale of the Waiakea lot is listed in county tax records as not having been made on the open market. The lot was purchased for $135,000 in 2018; the market value of the land today is $280,300, according to real property tax records.
“This development was to comply with the county’s Chapter 11 requirement to satisfy the affordability requirement for Roland Higashi’s company that developed luxury lots” in Paukaʻa, a neighborhood north of Hilo, Dunn wrote.
“I’d like to understand how Ms. Lee Loy’s mother and daughter were able to purchase a lot meant for an affordable household, especially since each already has a home and the lot remains vacant. … This sounds very much like preferential treatment.”
Lee Loy was on the County Council’s Committee on Public Works and Parks and Recreation in 2018, when the county accepted the roadway dedication for Waiakea Fairways, Dunn wrote. “Ms. Lee Loy voted to accept the dedication of this roadway for the Waiakea Fairways project. Hilo Two, the developer of Waiakea Fairways, was made up of two LLCs – RJL, LLC (Roland, Janice, and Laurie Higashi) and RS Williams, LLC (Robert Williams, realtor). … It’s strangely coincidental that almost two weeks later, the [Waiakea Fairways] lot was sold to Ms. Lee Loy’s mother and daughter. This sounds very much like preferential treatment….”
As to the Keaʻau property, Dunn noted that it was sold to Lee Loy and her husband, Ian, by Roland Higashi. This lot was “bought for $189,150… Today’s market land value is $287,500, based on the County of Hawaiʻi Real Property Tax Office. I would like to have a better understanding of how this sale came about,” she stated in her complaint, set to be heard by the Board of Ethics on August 14.
(Among the attachments to Dunn’s complaint was a print-out of an article from the March 2023 edition of Environment Hawaiʻi, “Affordable Housing Gets Short Shrift as Developers Devise Work-Arounds.”)
— Patricia Tummons
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