{"id":10303,"date":"2018-04-02T18:55:08","date_gmt":"2018-04-02T18:55:08","guid":{"rendered":"http:\/\/www.environment-hawaii.org\/?p=10303"},"modified":"2019-04-05T20:32:39","modified_gmt":"2019-04-05T20:32:39","slug":"homeowners-association-is-sued-by-kau-developer-with-big-plans","status":"publish","type":"post","link":"https:\/\/environment-hawaii.org\/?p=10303","title":{"rendered":"Homeowners\u2019 Association Is Sued By Ka\u2018u Developer with Big Plans"},"content":{"rendered":"
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The development proposed for Discovery Harbour in the 1960s included retail and office space, as well as two high- rise hotel towers.<\/figcaption><\/figure>\n

A half-century-old plan to build a lavish resort in Ka\u2018u is at the heart of litigation that\u2019s been brought by the current owner of the land where two high-rise hotel towers were once proposed to be built, along with restaurants, bars, offices, condominiums, and other visitor lodgings.<\/p>\n

The land in question consists of two parcels \u2014 one just over 11 acres, the other about 18 acres \u2014 separated by a roadway in the Discovery Harbour subdivision, near the community of Waiohinu.<\/p>\n

The owner is South Point Investment Group, LLC (SPIG), which in 2009 purchased the two parcels as well as the golf course that lies at the center of Discovery Harbour.<\/p>\n

Perhaps surprisingly, the litigation pits the landowner not against Hawai\u2018i County or another governmental entity whose zoning or land use regulations might pose a bar to development. Rather, the defendant is the Discovery Harbour Community Asso- ciation (DHCA). Its claim that the 29 acres that SPIG wants to develop are subject to association regulations \u2014 and have been since the early 1970s \u2014 is a central factor in not one but two lawsuits brought by SPIG in 3rd Circuit Court.<\/p>\n

The first complaint, filed in May 2016, is well along the path to trial. The community association has filed a counter-claim against SPIG in that case. The dispute revolves around the association\u2019s claim that its covenants, conditions, and restrictions apply to SPIG-owned lots.<\/p>\n<\/div>\n

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The second complaint was filed on February 28 of this year, alleging that the claims of the association had damaged SPIG as the county was developing the Ka\u2018u Community Development Plan. While some Discovery Harbour residents had supported the new plans of SPIG to build a restaurant, \u201chotel lodge,\u201d \u201chotel villas,\u201d a retail center, timeshare units, and condominiums, among other things, on the two large lots, the association spoke against the plan. The committee advising the county on the CDP then fashioned its recommendations to accord with the limitations that the association said applied to the area. When the plan was adopted in October by the Hawai\u2018i County Council, the planning map identified the SPIG commercial lots as suitable for \u201clow density urban\u201d zoning. (The second lawsuit had not been served on the DHCA by press time.)<\/p>\n

A Divided Community<\/strong><\/em><\/p>\n

Discovery Harbour began life in the 1960s as the second phase of several proposed by a California developer, with the phases to be developed in increments of \u201cfrom 300 to 500 acres\u201d each.<\/p>\n

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In 1969, the developer sought approval from the Hawai\u2018i County Planning Commission of a special permit for what it described as a $40 million project on the two parcels. A special permit was required since the land was in the state Agricultural District. (It still is.)<\/p>\n

A sales brochure submitted to the county at that time identified the first phase as the Mark Twain Estates, a 700-lot subdivision on 370 acres. Discovery Harbour would be built just west and south of the first phase. It was to consist of 540 acres divided into about 800 house lots, 200 acres set aside for a \u201cchampionship\u201d golf course, and 18 acres for a \u201cMark Twain Hotel.\u201d<\/p>\n

\u201cMany tour experts predict that the \u2018Mark Twain Hotel\u2019 will be among the most popular in the islands due to its wonderful climate, its excellent recreational facilities and geographic location \u2014 half way between Kona and Hilo,\u201d the sales brochure states. Eventually a \u201cdude ranch\u201d would be built: \u201cThere are many miles of excellent riding trails for the horse enthusiasts,\u201d the publicity states. Also, \u201cLocated approximately 3 miles from the bottom portion of Mark Twain Estates is the Ka\u2018alu\u2018alu Bay small boat harbor. In recent years this harbor has been little used. However, the developers have been informed that the harbor will be rehabilitated if there is sufficient demand for its use.\u201d (Ka\u2018alu\u2018alu Bay was identified in 1992 as a \u201crefuge harbor\u201d by the Army Corps of Engineers. It was in use at the turn of the 20th century but has not undergone any improvements to speak of since then.)<\/p>\n

The application itself sought village-commercial use \u201cto permit the construction of a small hotel-motel type operation with a restaurant, bar, and office space.\u201d \u201cThere are only a limited number of hotel rooms in the District of Ka\u2018u,\u201d the application stated. \u201cYet the drive from Hilo to Kona or vice-versa is long and arduous. A stopover at the subject property would be welcome. Further, the golf course will encourage people to stay overnight.\u201d<\/p>\n

Yet when the Planning Commission heard from the developer at its May meeting that year, the architect for the project, Shigenori Iyama, described much more ambitious plans.<\/p>\n

The first phase of development, he said, would involve construction of a golf course clubhouse, a restaurant, two seven-story buildings with 200 hotel units, plus restaurants, stores, and shops. A second phase of commercial development would include<\/p>\n

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more hotel units and 60 condominium units, all with underground parking. All totaled, there would be 950 hotel rooms, with most of them in two 20-story \u201ctwin towers.\u201d<\/p>\n

Architectural drawings of what the area would look like once it was all built out show multiple high-rise, mid-rise, and low-rise buildings and even a helipad.<\/p>\n

Commissioners expressed concerns over the adequacy of water supplies and also over \u201cincremental development.\u201d<\/p>\n

The application came at a time when the Planning Department was said to be on a \u201ccrash program\u201d to include Ka\u2018u in the county\u2019s General Plan. For that reason, the department asked the commission to defer action on the application. Separately, a Planning Department analysis of the application concluded there was \u201cno basis for this amt commercial this time.\u201d It is not clear that this was ever transmitted to the Planning Commission.<\/p>\n

Permit or No?<\/strong><\/em><\/p>\n

Work on the golf course was completed in the early 1970s, but the two lots where the developer had wanted to build hotels and other amenities remain vacant to this day. And that\u2019s not all that\u2019s vacant. Of the more than 800 house lots that were established in the Discovery Harbour subdivision, only about 25 percent have houses built on them.<\/p>\n

The golf course fell into disuse in the 1990s. In 2009, however, Gary McMickle, an investor from the Fort Worth area, and several others formed the South Point Investment Group and purchased it as well as the two large lots where the hotels had once been proposed. (Separately, McMickle has purchased several hundred acres south of the subdivision.)<\/p>\n

In 2012, SPIG argued before the Hawai\u2018i County Board of Appeals that the permit sought back in 1969 was valid, despite the planning director\u2019s determination that it was never approved. The county\u2019s \u201cfailure to act on the application means that it should be deemed approved,\u201d wrote SPIG attorney Randy Vitousek in his petition to the board. \u201cAlternatively, appellants submit that hotel and commercial uses have in fact been approved by the county and that these should be considered pre- existing and non-conforming uses on the subject parcels.\u201d<\/p>\n

The appeal was rejected. The BOA determined that the planning director lacked the authority to make any such determination regarding a special permit. (Under the county charter, special permits are to be approved by the Planning Commission.)<\/p>\n

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In a letter to the planning director on Valentine\u2019s day of 2014, Vitousek notified the county that SPIG \u201ccurrently plans to file a complaint in the Circuit Court of the Third Circuit asserting due process viola- tions and inverse condemnation.\u201d<\/p>\n

\u201cIt is SPIG\u2019s position,\u201d he continued, \u201cthat since 1961 both the state and county have been aware of and involved in the plans to develop a commercial district on the subject parcels. Based on this history, SPIG has invested substantial resources in acquiring the parcels, making development plans, and seeking approvals for such plans.\u201d<\/p>\n

The threatened lawsuit did not materialize \u2014 against the county and state, at least. Instead, as the Planning Department began to work on its community development plan for Ka\u2018u, a new spanner was thrown into SPIG\u2019s plans when the community association leadership argued to the group advising the Planning Department that the lots in question were subject to its CCRs.<\/p>\n

\u201cIn 2015, … the DHCA began to aggressively oppose SPIG\u2019s development in Ka\u2018u CDP meetings,\u201d SPIG claims in a brief to the court filed in association with the first lawsuit it filed against the homeowners\u2019 association, in 2016. \u201cAs a result, while the Ka\u2018u CDP steering committee was prepared to propose designating the commercial lots for use as a Retreat Resort area, it abruptly shifted gears. Between October 2015 and December 2015, it changed its recommendation to Low Density Urban.<\/p>\n<\/div>\n

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… The DHCA\u2019s interference in the Ka\u2018u CDP process has delayed development of the commercial lots and repair of the golf course lots, has cost SPIG a favorable land use designation, and has caused it to incur significant other monetary damages.\u201d<\/p>\n

As finally adopted, the land use policy map for SPIG\u2019s parcels designates the lots as \u201clow density urban,\u201d which allows only single-family residential, multiple-family residential, or residential-commercial mixed use development.<\/p>\n

A scheduling hearing is to be held on June 29 by the judge hearing the first lawsuit. If the landowner prevails, then it will still need to obtain changes in the state land use district classification and zoning.<\/p>\n

Prevailing in that first lawsuit would also clear the way for the second one, seeking damages from the homeowners\u2019 association for its statements during the preparation of the Ka\u2018u CDP. Vitousek denied that this amounted to a SLAPP action (a strategic lawsuit against public participation).<\/p>\n

\u201cNo, I don\u2019t think it\u2019s a SLAPP. You\u2019re not privileged to make false testimony,\u201d he said. The litigation is \u201cessentially dealing with the fact that some of the members of the homeowners\u2019 association made representations to the regional plan steering committee as to whether the SPIG properties were subject to the CCRs. It had an impact on the property.\u201d<\/p>\n

If, on the other hand, the homeowners\u2019 association prevails in the earlier litigation, then the second lawsuit is pretty well mooted.<\/p>\n

\u2014 Patricia Tummons<\/strong><\/em><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

A half-century-old plan to build a lavish resort in Ka‘u is at the heart of litigation that’s been brought by the current owner of the land where two high-rise hotel towers were once proposed to be built, along with restaurants, … Continued<\/a><\/p>\n","protected":false},"author":1,"featured_media":10304,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[435],"tags":[],"class_list":["post-10303","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-april-2018"],"_links":{"self":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/10303","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10303"}],"version-history":[{"count":0,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/10303\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/media\/10304"}],"wp:attachment":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10303"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10303"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10303"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}