In June and July 1991, Environment Hawai`i reported on the Hawaiian Riviera Resort, a large, luxury tourist development proposed for the Ka`u District of the Big Island by Charles Chidiac. Here is what has happened in the intervening years.
In the years preceding Land Use Commission action on the proposal of Charles Chidiac’s Palace Development Corporation to build a large resort along the Ka`u coast of the Big Island, Chidiac and his partners, a group of partnerships know collectively as Hawai`i Ka`u `Aina, divided the land they owned into three parcels. Lot 1, owned by Chidiac, was to be the site of the most intensive hotel and commercial development. This lay along the coast just south (makai) of the subdivision known as Hawaiian Ocean Ranchos. Lot 2, which adjoined Lot 1 to the east, and Lot 3, which adjoined Lot 2 to the east and extended to the north of the Belt Highway, became the property of Hawai`i Ka`u `Aina.
In May 1991, the Land Use Commission approved a scaled-down version of the resort. That decision was appealed to Third Circuit Court, which ordered the LUC to re-hear testimony relating to the impact of the resort on Hawaiians’ fishing grounds. That has not occurred yet.
Additionally, under terms of the LUC approval, Palace Development Corp. was to present to the commission details of how the project was to be financed. That, too, has yet to be submitted.
Mounting Debt
In July 1991, Chidiac exercised his option to purchase HKA’s two lots – an action that, he later said in filings with the First Circuit Court, was done under duress. Already by this time, Palace Development Corporation had run up a debt of several tens of millions of dollars with lending institutions allied with Den norske Bank, of Norway. The notes Palace gave to HKA more than doubled the company’s debt. Soon, Palace was in default on its loans to HKA and the bank.
To satisfy the bank, on July 17, 1992, Chidiac conveyed Palace’s ownership of Lot 1 to a company called Notepower Limited. Press reports at the time stated that Notepower, based in the United Kingdom, was affiliated with the bank. In addition, in a letter to the Land Use Commission dated November 6, 1992, Ivan Lui-Kwan of the law firm Carlsmith Ball Wichman Murray Case Mukai & Ichiki said, “All of PDC’s interest in Lot 1 … has been transferred to Notepower Limited. Notepower Limited is a wholly owned subsidiary of Den norske Bank … This law firm represents Notepower Limited.”
On December 7, 1992, the HKA partners sued in First Circuit Court, seeking a foreclosure auction of the property used by Chidiac to secure his debt to them. (Total principal amount of the debt was $37.5 million, while interest owed came to $11.7 million.) Named as defendants were (among others) Notepower Limited, Den norske Bank, and Palace. Soon thereafter, the bank filed a cross-claim against (among others) Notepower Limited – the same entity earlier identified by its lawyer as a “wholly owned subsidiary” of the bank.
Circular Title
In an affidavit dated April 24, 1994, Gunnar Foss, a vice president of the bank, stated that Notepower had assumed the loans of Palace to the bank, but had “failed to make payment” in accordance with the assumption agreement. The total amount owed to the bank by Notepower was $14.7 million in principal and almost $1.5 million in interest, Foss said.
In August 1994, a foreclosure auction was held. HKA submitted the winning “credit bid” of $2 million for Lots 2 and 3, although it later increased the bid to $15 million. Den norske Bank submitted the high “credit bid” of $14 million for Lot 1. (A credit bid is one that involves no cash payment, but rather involves an agreement to pay to the creditors an amount equal to the amount bid.)
On January 31, 1995, the court-appointed foreclosure commissioner, Michael Matsukawa, executed the deed conveying the title to Lot 1 to the party designated by Den norske Bank. And the new owner of the property is: Notepower Limited – the same company, in other worlds, against which the bank had foreclosed.
Registration documents in London disclosed that Notepower is, in fact, a subsidiary of Den norske Bank, and that Gunnar Foss is one of three Notepower directors. The corporate purpose listed is to act as a holding company for U.S. property assets.
Notepower is not registered to do business in Hawai`i. In 1992, Lui-Kwan filed a name reservation for a company to be called Notepower Pacific, Inc., with the Department of Commerce and Consumer Affairs, but that reservation expired with no action taken.
On the Scene
Soon after the Riviera project collapsed, Chidiac left Hawai`i. Lately, however, he has visited the Big Island, where he is once more talking about his plans for the parcel. On May 5, he and several other men, including George Manoha, a resident of Na`alehu who was one of the resort’s community advocates, met with Big Island Mayor Steve Yamashiro.
According to sources in county government, Chidiac is talking now about developing a “Hawaiian cultural center” on the resort property.
Efforts to reach Chidiac were unsuccessful. There is no listing for Palace Development Corp. or for Chidiac in the telephone directory.
Hayward Closes Out Contract with State
Ever since publication of the July and August 1993 editions of Environment Hawai`i, the Department of Business, Economic Development and Tourism’s Office of Space Industry has come under increasing critical scrutiny. Here we recap several developments in this area:
One of the last projects undertaken by the Office of Space Industry was sponsorship in November 1994 of a meeting of something called the Japan-U.S. Cooperation in Space Project. The meeting was held November 10-12 at the Outrigger Kaua`i Beach Hotel.
The project, which refers to itself as JUSCSP in written materials, was put together in 1990 by Thomas B. Hayward, the former admiral who for years held a consultant contract to serve as the state’s space “czar.” Since then, the Office of Space Industry has served (in the rather formal language employed by Hayward) as JUSCSP’s “secretariat.”
In late 1993, after public outcry over Hayward’s pay and his expense account, then-Governor Waihe`e announced that Hayward’s contract would be terminated at the end of the year. In 1994, however, the Office of Space Industry entered into another contract with Hayward, calling for Hayward to organize the 1994 JUSCSP conference and to secure the attendance of six experts listed in the contract. To induce them to attend, each was to receive an honorarium of $1,200. (For more on this, see “[url=/members_archives/archives_more.php?id=1050_0_29_0_C]Audit of Office of Space Industry Blasts Hayward, MCM Planning Contracts[/url]”, in the February 1995 edition of Environment Hawai`i.) Hayward received payment of $8,000 immediately, but under terms of the letter of agreement with the state, he was to provide DBEDT with an accounting of how the funds were spent by December 30. Upon submittal of that final accounting, Hayward was to receive payment of $1,000 for his services.
The reports and invoices were not received at the Office of Space Industry until February 24, 1995. Hayward informed the state he had paid a total of $7,080.76 to the six participants, and had also paid $712.30 to cover the cost of travel from Washington for one Chris Johnson “for staffing the registration and delegate services table.” Included in Hayward’s statement of expenses was a check for $206.94, reimbursing the state the difference between the $8,000 advance and the amount he actually paid out.
In late April, DBEDT processed payment for the balance of $1,000 owed Hayward under terms of the letter of agreement.
Navy Nuclear Fuel to Go to Idaho
In September 1993, we reported that the spent fuel removed from Navy submarines at Pearl Harbor was being kept in Hawai`i as a result of a lawsuit barring further shipments of nuclear waste to the “temporary” Idaho repository used by the Navy for decades.
The U.S. Department of Energy and the Navy have released a final environmental impact statement addressing the problem of what to do with spent nuclear fuel from Navy submarines (among many other problems). A record of decision, which closes the legal requirements under the National Environmental Policy Act, was to have been prepared by June 1, 1995. The preferred alternative for handling of naval spent nuclear fuel from Hawai`i involves shipping it, as before, to the Idaho National Engineering Laboratory in Idaho Falls.
Rancher is Convicted in Re-Trial
In January 1995, Environment Hawai`i reported on the cruel management of cattle on state-owned land near Ma`alea, Maui, under lease to the Perreira Ranch. Annette Perreira Niles was convicted by a jury the previous month of animal cruelty charges. That conviction was later vacated because of technical troubles encountered in preparing a record of the trial for appeal.
Since, then, Perreira-Niles has been retried – and once more, convicted. She was fined $22,000 and sentenced 30 days in jail. Her attorney has said she will appeal.
— Patricia Tummons
Volume 5, Number 12 June 1995
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