“Kona land designated as wilderness.” So read the headline over an article in the May 17, 2003, Honolulu Star-Bulletin. The article, by reporter Rod Thompson, described how Governor Linda Lingle had signed a bill “creating a 22,000-acre wilderness area in South Kona” during a speech to the Kona-Kohala Chamber of Commerce.
The bill puts into the park land ranging from Honomalino in the north to Manuka in the south. State lands account for about two-thirds of the area. Private holdings in the ahupua’a of Kapu’a, owned by companies allied with Ko ‘Olina developer Jeff Stone, account for the rest.
But will the measure really accomplish what Lingle and others say it will? If the private holdings are not acquired by the state by December 31, 2006, the park designation and accompanying protections are repealed in their entirety – not just for private land, but for state land as well. And the bill vests the likelihood of acquiring the private lands almost entirely in the hands of the owners.
Three Decades in the Making
The idea of a wilderness park in the historically rich South Kona area goes back more than 30 years, when it was proposed by the Association of Hawaiian Civic Clubs. Two decades ago, the Division of State Parks was given $50,000 to study the proposed park’s feasibility, but, according to a report to the 2002 Legislature by State Parks, a final report was never made. By 2001, interest had been renewed and that year the Legislature adopted a resolution calling for State Parks and other divisions of the Department of Land and Natural Resources to “renew the plan to create a state park and nature reserve with minimum improvements.” In doing so, they were to work with Pa’a Pono Miloli’i, an organization made up of residents and others with ties to that South Kona coastal village that has been aggressive in protecting the area’s undeveloped character. (Among other significant actions, Pa’a Pono Miloli’i was instrumental in curbing the Hawaiian Riviera Resort development proposed by Charles Chidiac more than a decade ago.)
When the DLNR presented its proposal to the 2002 Legislature, the park included state land only. Apart from the inland Manuka holdings, the park followed the coast from Honomalino in the north to the boundary with the district of Ka’u in the south. Yet the report stopped short of recommending the land be set aside as a park: “DLNR has determined that the area possesses significant resource values worthy of protection as a State Park. However, because of the numerous issues, constraints, and opportunities that have been identified, further evaluation is needed. Therefore, DLNR has not made any determinations about whether a wilderness park or a nature reserve should be established.”
Initially, House Bill 1509 in the 2003 Legislature reflected the boundaries proposed in the DLNR report. About 14,600 acres of state land would have been included. The bill “authorized and encouraged” the DLNR to contract out park management to an interested non-profit organization, “such as Pa’a Pono Miloli’i,” and it included a paragraph authorizing revenues, in an unspecified amount, to be spent in developing the park.
By the time the bill emerged from the House Finance Committee, chaired by Dwight Takamine, all references to Pa’a Pono Miloli’i had been erased and some 8,000 acres of private land in Kapu’a had been included in the park designation, with the proviso that they were to be acquired by the state in a “value-for-value” exchange.
Takamine was asked about the changes made while the bill was on his watch. He referred questions to Rep. Robert Herkes, saying that he, Takamine, knew little about it – that it was Herkes’ bill. The only public testimony that his committee received on the bill when it was heard on February 27 was from Gilbert Kahele, one of the leaders of Pa’a Pono, who supported the measure but did not propose any changes to it.
The bill moved to the Senate, where it was further refined. On it went to a House-Senate conference committee. The version that emerged was approved by both chambers and signed by the governor at the Kona meeting.
Key provisions include:
o Placement (by legislative fiat, rather than vote of the Land Use Commission) of all designated lands into the state Conservation District. There was no provision that the Land Use Commission be notified of this change in district; LUC boundary maps, which are to be the last word in determining what district a given parcel falls into, still show the land in Agriculture;
o The requirement that the state obtain the private lands through a value-for-value exchange of other state lands, but with the added provision that “the costs associated with any appraisal, including that of the public land, shall be borne by the owner of the private land” or by private funds, grants, or contributions;
o A repeal date of December 31, 2006, if the state has not acquired the private lands by that time;
o If the measure is repealed, all lands designated for inclusion in the park revert to their previous land use classification (Agriculture, in the case of almost all private lots).
‘Legislatively Appropriate’
One of the most controversial bills to pass the 2003 Legislature was the one providing tax credits of up to $75 million that Stone’s companies can take against costs of development of an aquarium and other facilities at the Ko ‘Olina resort, on O’ahu’s Wai’anae Coast. Unlike her predecessor, Benjamin Cayetano, who vetoed a similar proposal a year earlier, Governor Lingle was quick to approve the tax credits for Stone.
Herkes told Environment Hawai’i that the tax credits set the stage for the South Kona measure, creating “some urgency to get the bill passed,” referring to House Bill 1509. “We had to – it was legislatively appropriate to deal with Jeff Stone on this issue as long as we were dealing with him on Ko ‘Olina. It seemed prudent for us to pass the South Kona wilderness area at the same time that we passed the tax credit for Ko ‘Olina.”
Even with the tax credits, Herkes said, Lingle was concerned that “we were taking from Jeff Stone” in the wilderness bill. “We were able to assure her we had an agreement with Stone on the value-for-value exchange.”
Herkes also defended his management of the bill. Despite little public testimony, he said, “every amendment we made I discussed with Jim Case and Gil Kahele.”
James Case is a Honolulu attorney who, Herkes said, “helped draft the legislation.” Case, Herkes added, had been in discussion with environmental groups on the possible purchase of the private land, with eventual dedication to the state.
In a recent interview, Case said he had been working on the Kapu’a land acquisition issue with the Trust for Public Land, a private group that, like The Nature Conservancy, acquires land that it identifies as having value requiring long-term protection. “The first step,” he said, “is to see if they can reach a reasonable agreement with the private owner on a price.”
The private Kapu’a land will be a challenge to acquire through purchase, said one person familiar with the area. “The property is large, with high-value expectations on the part of the owner,” the source said.
Still, Case seemed hopeful that the deals could be done long before the bill’s repeal deadline. “We’ve got three years to do it, and we’re working on it.”
Give Back?
The 8,000 privately held acres in Kapu’a were part of the land purchased in 1996 for $4.25 million by One Keahole Partners, an entity in which Jeff Stone is a partner, along with Showe Kapu’a LLC and Kapu’a Development Ventures. (Showe Kapua is made up of members of the Showe family, which owns National Housing Corp. of Hawai’i, a company that has worked closely with Stone in several developments. Kapu’a Development has as its principals Ernest Watari and Garrett Kojima, both affiliated with PKH Hawai’i, a tourism consulting firm. Their interest in the land goes back to the 1980s, when the Kapu’a land was the subject of a proposed agricultural and aquaculture development known as the Farms of Kapu’a.)
The 8,000 makai acres were later subdivided and sold to the various companies affiliated with One Keahole Partners. In December 2002, Showe Family Hawai’i acquired a 50 percent interest in the northernmost parcel (about 2,400 acres) from One Keahole (Bureau of Conveyance records indicate Showe Family paid $925,000 for this). A company called South Kona LLC purchased the two middle parcels (totaling 3,500 acres) for $1 million (the manager of South Kona LLC is another Stone company, Pacific Northwest). One Keahole Partners retained the southernmost parcel (1,844 acres).
At the time of the subdivision, the lands were in the Agriculture district. As a result of House Bill 1509, they are now in the Conservation District, where the more limited development potential would result, theoretically, at least, in reduced market value.
If the state were to engage in a value-for-value exchange with Stone and his associates, would it be with the lands valued as Conservation or Agriculture? Or if a private conservation group were to purchase the lands for eventual donation to the state, would they be appraised at the lower Conservation value? The bill’s repeal deadline would seem to give the owners the upper hand in negotiations, since they have little to lose by holding out for a higher valuation. Early versions of the bill would have made negotiations subject to binding arbitration, but that language was dropped in the Senate.
— Patricia Tummons
Volume 14, Number 7 January 2004
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