<\/b>\u201cThe Waikoloa Highlands project you see today is unusual.\u201d<\/p>\n
In this way did Steve Lim, attorney for the developer, prove himself master of the understatement.<\/p>\n
Lim made the comment to the Land Use Commission at its meeting of September 6, when he was attempting to sell commissioners on the idea that his client, Waikoloa Highlands, Inc., should be given one more year to show that it was serious about moving forward on the project.<\/p>\n
The commission had gathered in Kona to consider a show-cause order issued to the developer \u2013 an order, that is, that the developer give the commission good reason as to why the land proposed for development should not lose the entitlement bestowed on it by the LUC 10 years ago. That entitlement, needed to allow the company to develop 398 house lots on some 761 acres of land, shifted the designated land use category from Agricultural to Rural. Performance \u2013 defined by the LUC as installation of \u201cbackbone infrastructure\u201d needed to allow the sale of the house lots \u2013 was to have occurred within 10 years of the redistricting. Nothing has been done on the land in that time.<\/p>\n
It was only after the LUC had voted to approve the show-cause order at a status hearing in May that Lim came on board as the attorney for Waikoloa Highlands. \u201cAbout June or so \u2013 June of this year \u2013 after my client missed the status conference in May, I was contacted by Mr. [Joel] LaPinta and together we discussed\u201d approaches to the LUC\u2019s order, Lim told the commissioners. LaPinta, a planning consultant in Hilo, has been designated as the project manager.<\/p>\n
\u201cUntil that time,\u201d Lim said, \u201cI don\u2019t think my clients understood what they were facing. We\u2019ve done our best to educate them.\u201d<\/p>\n
\u201cThis was a project delayed by fraud [and] mismanagement, allegedly,\u201d Lim said, referring to the company\u2019s reliance upon a former director, Stefan Martirosian, to carry out the project. \u201cNow the owners do understand the Land Use Commission entitlement process in Hawai`i much better.\u201d<\/p>\n
What Lim was seeking on September 6 was a one-year continuance of the order to show cause, effectively giving Waikoloa Heights an opportunity to seek an amendment to the 2013 zoning ordinance (which expired in March), attempt to resurrect past agreements with service providers and contractors whose last contact on the project dates back nine or more years, and figure out how to satisfy other conditions imposed by the LUC\u2019s 2008 decision.<\/p>\n
Lim handed to the LUC\u2019s deputy attorney general a draft stipulation he was going to propose to the two other parties to the LUC proceeding: Hawai`i County and the state Office of Planning. Neither party had had a chance to review the stipulation; Lim acknowledged that the owner, in Moscow, had given Lim his approval to offer the draft stipulation barely 10 minutes before the meeting began.<\/p>\n
Accompanying Lim at the meeting was, in addition to LaPinta, Natalia Batichtcheva, who was identified as a director of the company. No one at the table, however, could make a statement binding the company to any agreement, a fact that troubled several of the commissioners.<\/p>\n
Commissioner Gary Okuda asked Lim for \u201cthe names of the specific individuals who are considered the decision-makers with respect to this project. \u2026 You did reference that you had to seek the approval of decision-makers outside of Hawai`i. Nothing wrong with that. The law makes no distinction, but just for the record, we should know the specific names of specific people considered by you as decision-makers.\u201d<\/p>\n
In addition to Batichtcheva, who seems to be merely the face of the company in the United States, with no decision-making authority of her own, Lim named as shareholders of the company Ovashafyan Ayaks and Vitaly Grigoriants.<\/p>\n
Okuda continued with a line of questioning about ownership of the company, noting that Lim had stated that the present petitioner, Waikoloa Highlands, \u201cis an entity separate from the original petitioner, Waikoloa Mauka, LLC.\u201d<\/p>\n
Lim agreed: \u201ca separate company.\u201d<\/p>\n
Okuda: Did these companies at any time have identical shareholders?\u201d<\/p>\n
Waikoloa Mauka, the original petitioner, \u201cwas an LLC,\u201d Lim answered, \u201cso they had membership interests. For the relevant time the commission is looking at this, they had the same control group, with the exception of Martirosian.\u201d<\/p>\n
\u201cSo the group controlling Waikoloa Mauka is the same group that now controls Waikoloa Highlands?\u201d Okuda asked.<\/p>\n
\u201cEssentially, yes,\u201d Lim responded. He went on to blame the problems with the project on Martirosian\u2019s \u201cbad acts\u201d \u2013 or, at least, allegations of bad acts, taking pains to point out that nothing had yet been proven in a court of law in any country.<\/p>\n
Commissioner Dawn Chang also had questions about the company\u2019s ownership. \u201cThe gentleman \u2013 Martirosian \u2013 the gentleman in jail, he has no position in the company at all?\u201d (Martirosian has been held in a Moscow jail since last fall, appealing an order to have him extradited to Armenia, to face charges of fraud brought by Grigoriants.)<\/p>\n
\u201cNone at all,\u201d Lim stated. \u201cHe was a director, running the company, but because of his fraudulent and criminal acts that were alleged, he was taken into prison.\u201d<\/p>\n
At that point, LUC chairman Jonathan Scheuer noted that one of the exhibits that Lim himself had submitted showed that Martirosian still held a 20 percent ownership interest in the Waikoloa Highlands.<\/p>\n
Lim conferred briefly with Batichtcheva. \u201cMs. Batichtcheva says they have something,\u201d he told the commission \u2013 apparently something to indicate that Martirosian is no longer in the picture. Whatever that is, it was not presented to the commission.<\/p>\n
What his client was seeking, Lim said, was also something out of the ordinary, so far as commission proceedings were concerned. Normally, when the commission enters a show-cause order, the developer is not supposed to do any further work on the project while the order is pending.<\/p>\n
In this case, however, the developer wants to move forward with the project, obtaining renewals of county permits and engaging with the Department of Transportation and other agencies to develop plans for the traffic improvements and other projects related to the development, Lim said.<\/p>\n
\u201cEssentially, what we\u2019ve done, at the request of the Office of Planning originally, is try to find a middle ground where OP would be comfortable with no further groundwork at the project, and we would do certain things with respect to entitlement. In the meantime, we would process land use entitlements,\u201d Lim said, describing the terms of a proposed stipulation order.<\/p>\n
With respect to things like the development of the promised traffic circle at the intersection of Paniolo Drive and Waikoloa Road and other improvements, \u201cthose are subdivision issues,\u201d Lim said. \u201cThat\u2019s why we suggest we go there [to the county] first and then come back to the Land Use Commission with a motion to amend\u201d the conditions of the redistricting order the LUC approved a decade ago.<\/p>\n
\u201cGive us about a year, to go to the county and do rezoning. If we don\u2019t finish by that time, we\u2019ll come back, on the order to show cause. If we have no progress, we\u2019ll proceed with the order to show cause.\u201d<\/p>\n
The county deputy corporation counsel representing the Planning Department, Ron Kim, indicated that \u201cgenerally speaking,\u201d the county was agreeable to Lim\u2019s stipulation.<\/p>\n
The Office of Planning was hesitant, however. Its representative at the meeting, deputy attorney general Dawn Apuna, said that the OP didn\u2019t \u201coppose the motion for continuance, but we would like to ask the petitioner that they halt any development as well as entitlements until the order-to-show-cause hearing.\u201d<\/p>\n
Lim then outlined for the commissioners what he called the \u201cparadox\u201d of the \u201corder-to-show-cause box.\u201d \u201cOnce you get into the OSC box, it\u2019s paradoxical,\u201d he said. \u201cBecause here we are, with a new team, wanting to develop the project, and everybody is saying, \u2018don\u2019t develop.\u2019 We\u2019re ready to proceed. We have engineers, we hired an archaeologist. We submitted drainage plans and satisfied the affordable housing requirement. We have an agreement to satisfy the parks requirement \u2013 but we don\u2019t understand the deal on that We may implement the park in another location, but there are things we want to do to proceed with the project. This was a project delayed by fraud and mismanagement, allegedly. Now the owners do understand what the LUC entitlement process is in Hawai`i much better.\u201d<\/p>\n
(The agreement to provide land to the county for a public park involved a parcel of land on the opposite side of Waikoloa Road that is owned by a former associate of Martirosian, Michael Miroyan. After Miroyan and Martirosian fell out, the park agreement does indeed seem to be off the rails.)<\/p>\n
Commissioner Okuda disagreed with Lim on the point of the \u201cOSC paradox.\u201d \u201cI don\u2019t believe there\u2019s a paradox,\u201d he said. Citing language in the Hawai`i Supreme Court\u2019s decision involving the `Aina Le`a case, reported on extensively in past issues of Environment Hawai`i, <\/i>Okuda noted that \u201cvacant land with appropriate state and county Land Use designation is often subject to speculation\u2026. [It] inflates the value of the land, increases development costs, and frustrates federal, state, and county\u201d interests.<\/p>\n
\u201cIn other words,\u201d Okuda continued, \u201cI believe the Supreme Court has stated that one of the legal reasons why the commission must strictly review and enforce these conditions is that in certain cases \u2013 and I\u2019m not prejudging this case, but in certain cases \u2013 allowing developments to basically lie there without compliance to conditions and where these conditions aren\u2019t complied with sometimes for decades really does not give the benefit to the community\u201d that was represented at the time the boundary amendment was approved. \u201cIt contributes to land speculation,\u201d he said, \u201cdriving up prices without concurrent benefit.\u201d<\/p>\n
Commissioner Arnold Wong made a motion to have the LUC hear the order to show cause at an LUC meeting on October 24 and, if needed, the 25th. At that time, he stated, the LUC \u201cwould like the petitioner to give us more information to insure that we know who is running this. \u2026 And, also, if your representations are binding. If this gentleman, Martirosian \u2013 he\u2019s no longer a part of this petition at all? [We need] some kind of representation.\u201d<\/p>\n
Lim indicated he understood the commissioners\u2019 concerns.<\/p>\n
Before the vote, LUC chairman Scheuer explained why he would be voting in favor of the motion. \u201cWhen we move land from ag or conservation into rural, we do so deliberately and thoughtfully with conditions that are put in place not to burden landowners but to make sure that substantial public interests are held up, and one of those conditions is that they proceed timely.\u201d<\/p>\n
The motion passed without dissent.<\/p>\n
<\/i>— Patricia Tummons<\/i><\/b><\/p>\n","protected":false},"excerpt":{"rendered":"
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