\u201cTo some extent, we\u2019ve been had,\u201d said the chairman of the state Land Use Commission, commenting on the painfully slow progress by landowners to move forward with a development proposed in the area of Puako, on the Kohala Coast of the Big Island.<\/p>\n
\tThe development, he noted, had been approved in record time because LUC members had been led to believe that the developer had the financial backing to pay for the project. But \u201cto date, nothing has happened. The developer needs to show some good faith.\u201d<\/p>\n
\tThose comments were made in 1995 by then LUC chairman Allen Hoe, expressing his frustration with Nansay Hawai`i, which had proposed the development of some 2,000 housing units on 3,000 acres of land mauka of the Mauna Lani resort.<\/p>\n
\tMore than 13 years later, LUC members appear to be even more exasperated than Hoe was with Bridge `Aina Le`a, the developer that has succeeded Nansay. Despite their approval in 2005 of a time extension (to 2010) for completion of 384 \u201caffordable\u201d housing units, commissioners had been growing skeptical that the development was on track \u2013 or even had been launched. Last fall, the commission voted to ask Bridge `Aina Le`a to show cause why the LUC should not order the 1,060 acres in the Urban land use district, where the core of the development is planned, to revert to Agricultural, its status before the LUC gave its blessing to the concept of a resort and golf-course community back in 1987.<\/p>\n
\tBut when the commission held a hearing on the show-cause order in January, the developer sought instead to change the terms of the development agreement. When Bridge attorney Eric Maehara was asked to present his case, he focused the commission\u2019s attention on Bridge\u2019s request to be relieved of the need to build all affordable housing units on the project site.<\/p>\n
\tAs an alternative, Maehara proposed that the affordable housing provision be amended to require no more than 100 units on site, to be completed by the end of 2012, and to fulfill any other affordable housing requirement that Hawai`i County might impose.<\/p>\n
\tCommissioners were not happy. Lisa Judge, of Maui, originally made the show-cause motion in September, and she stood by it. \u201cUnfortunately, here we are today and no affordable homes are on that development. Not even a glimmer of them coming anytime soon. No building permits, no infrastructure\u2026.<\/p>\n
\t\u201cI look back at that Decision and Order granted January 1989, and amended decision granted July 1991, when the project was sold to Nansay. Many many promises were made to the community, to West Hawai`i, to the Big Island. In those documents, the petitioner agreed to a 60-percent affordable housing condition. In 2005, the Land Use Commission granted relief, to provide only 20 percent, since they said they were going to do it right then. Twenty years have gone by and nothing\u2019s happened\u2026 This commission needs to know if, how, and when the promises will be kept.\u201d<\/p>\n
Changing Conditions<\/i><\/b><\/p>\n
That\u2019s not what Bridge representatives were prepared to give. Instead, the CEO of Bridge `Aina Le`a, Hoolae Paoa, told the commissioners about the alternative arrangements that Bridge was now pursuing. \u201cWe intend to solve the affordable housing requirements, and have been in discussions with the County of Maui to build transitional housing in Kaloko,\u201d he testified under direct examination by Maehara. (After Paoa\u2019s second reference to Maui, he was corrected by a deputy attorney general.)<\/p>\n
\tThe previous administration of Mayor Harry Kim had rejected a letter of intent that Bridge had proposed, Paoa said. But, he added, \u201cthe new administration has renewed negotiations. As of today, we\u2019re substantially complete on an agreement that will deliver this year 24 transitional housing [units]\u2026 and also allows us to develop 72 units on that site. This will require an amendment to the housing condition.\u201d<\/p>\n
\t\u201cTransitional housing is so important,\u201d Paoa continued. \u201cWe are prepared to spend money now to do the transitional housing. We also recognize the need for rental units. And that will require an amendment to the conditions\u201d of the LUC decision and order.<\/p>\n
\tAs recently as November, the county administration, under then Mayor Harry Kim, had been at loggerheads with Bridge. First, Bridge had proposed reconfiguring the development by submitting a project district application to the county. When notified that this would require preparation of an environmental impact statement, Bridge submitted a non-significant zoning change application that would allow all 384 affordable housing units to be shifted to one location. Bridge argued that the relocated units would allow for construction efficiencies and would enable the company to meet the LUC deadline for affordable housing, but Yuen denied the application, noting that the proposed site was in a floodway. In November, the county Planning Board of Appeals upheld Yuen\u2019s decision. (For details, see the December edition of Environment Hawai`i<\/i>.)<\/p>\n
\tYet even as Bridge was appealing Yuen\u2019s decision, its attorneys had approached attorneys for the county in an effort to work out a separate deal. On November 13, Maehara wrote LUC chairman Duane Kanuha, asking that the hearing on the show-cause order be delayed a month, from December to January. Bridge \u201chas been in negotiations with the County of Hawai`i with regard to \u2026 participation in a county sponsored transitional and affordable rental housing project at Kaloko, Hawai`i\u2026 [A]s you are no doubt aware, a new county administration will be inaugurated on December 1, 2008.\u201d Postponing the hearing, Maehara continued, would \u201cgive the new county of Hawai`i administration a reasonable opportunity to review this matter and respond to the proposals of the Petitioner with regard to the Kaloko housing project.\u201d<\/p>\n
\tWithin days of the swearing-in of Mayor Billy Kenoi, Bridge and the county had apparently struck a tentative deal. Bridge, Maehara said, \u201chas an agreement in principle with the County of Hawai`i to irrevocably deposit $6 million into an account from which it will periodically draw down payments for the development of the transitional housing.\u201d<\/p>\n
\tPaoa said Bridge would build 24 transitional units and 72 rentals near Kaloko, but Julie Mecklenburg, deputy corporation counsel for the county\u2019s Office of Housing and Community Development, indicated that no deal for 72 rentals was in the works.<\/p>\n
\t\u201cWe received a proposal from Bridge `Aina Le`a on December 17,\u201d she said in testimony to the LUC. A draft memorandum of understanding was agreed upon on December 26, but it \u201cis still under negotiation,\u201d she added.<\/p>\n
\t\u201cWe have agreed in principle on the construction of 24 transitional units,\u201d she said, but as to the 72 affordable rental units, there has been \u201cno real commitment made in that respect.\u201d The Kaloko project \u201conly has water commitments for 32 affordable rental units, so the other 40 cannot be constructed there.\u201d For the additional affordable housing credits they\u2019ll have to earn for this project, \u201cthey\u2019d have to come up with another proposal for us under a different agreement,\u201d Mecklenburg said.<\/p>\n
Altered Plans<\/i><\/b><\/p>\n
Deputy Attorney General Bryan Yee, representing the state Office of Planning, asked whether Bridge would be managing the affordable units \u2013 \u201chaven\u2019t decided,\u201d Paoa replied \u2013 or would be receiving rents \u2013 \u201cIt could be that, but we haven\u2019t formulated a plan,\u201d Paoa said.<\/p>\n
\tHow many affordable units would then be built at the Bridge `Aina Le`a site, Yee asked. \u201cIt depends on what we can work out, offsite, work out with the county, and also with the approval of the LUC\u2026 We\u2019re going to build more than 385 units. There will be room for more.\u201d<\/p>\n
\tYee: \u201cSo you don\u2019t know the number of affordable units to be built, but it will be equal to 385?\u201d<\/p>\n
\tPaoa: \u201cPossibly more.\u201d<\/p>\n
\tUnder further questioning, Paoa told Yee that the Memorandum of Understanding with the county \u201chas nothing to do with `Aina Le`a\u2026. The MOU is for Kaloko.\u201d Bridge and the county were close to an agreement on how much affordable-housing contribution Bridge would have to put up as a result of construction at the Puako property, Paoa said, although he could not say how many units would be required.<\/p>\n
\tYee then asked about financing, noting that in 2007, Paoa had said that Bridge `Aina Le`a was looking to partner with another joint venture.<\/p>\n
\tPaoa replied that he had an agreement \u201cthat brings in an affordable housing developer who would demonstrate his financial capabilities. We don\u2019t have a final deal, but we\u2019re close.\u201d<\/p>\n
\tYee inquired as to the relationship between Bridge `Aina Le`a and Bridge Capital, which Paoa identified in 2007 as the company providing capital for the project.<\/p>\n
\t\u201cIt\u2019s a sister company,\u201d Paoa said.<\/p>\n
\t\u201cYou share a parent company?\u201d<\/p>\n
\t\u201cUnder terms of the joint venture, it would,\u201d Paoa replied. \u201cSo Bridge `Aina Le`a can draw down on the financial resources of Bridge Capital, the parent company.\u201d<\/p>\n
\t\u201cLet me try this one more time,\u201d Yee said. \u201cBridge Capital is the parent company of Bridge `Aina Le`a?\u201d<\/p>\n
\t\u201cFor financial reporting purposes,\u201d Paoa said, \u201cbut it is a separate company. All Bridge `Aina Le`a has right now is debt. It has to draw down on something that has financial \u2013 Bridge Capital has cash to fund Bridge `Aina Le`a\u2026 They\u2019ve agreed to give money, but with conditions. But they are committed to spend money to build the [affordable] units. It will be Bridge Capital that will put $6 million in escrow\u2026 I\u2019m also an officer of Bridge Capital.\u201d<\/p>\n
\tYee pressed Paoa on changes that Bridge `Aina Le`a had made to its proposed development that had not been conveyed to the Land Use Commission or the Office of Planning. Originally, the plan called for all affordable units to be built in the petition area, along with the market-rate housing, Yee noted.<\/p>\n
\tPaoa agreed: \u201cI wasn\u2019t here or involved, but I suspect that makes sense.\u201d<\/p>\n
\tYee: \u201cIn 2007, you decided you needed to build the affordable housing units in one particular area… What did you tell the LUC? In 2007, did you tell the LUC that the [county] project district application was needed?\u201d<\/p>\n
\tNo, Paoa replied.<\/p>\n
\tYee inquired about plans for construction of the market-rate housing.<\/p>\n
\t\u201cWe have no plans for market housing,\u201d Paoa said. \u201cThere\u2019s not a market that\u2019s available right now. I don\u2019t have any plans to develop market housing\u2026.\u201d<\/p>\n
\tOther commissioners pressed Paoa on other changes in the plan.<\/p>\n
\tCommissioner Judge noted that the decision and order approving the project had 50 conditions, all of which were to have been met by 2002. \u201cBridge `Aina Le`a has missed all the deadlines set out in those documents \u2013 for affordable housing, drainage, water sources, sewage treatment plants, transportation. All that was supposed to be done by 2002. Yet you say you\u2019re not here to ask for an extension, but all these deadlines are passed. So I\u2019m a bit confused\u2026 and I just heard you say you\u2019ve eliminated one of the golf courses?\u201d<\/p>\n
\tPaoa acknowledged that one of two planned golf courses had been cut from the current development proposal.<\/p>\n
\t\u201cAs these things change, they need to be changed with us as well,\u201d Judge told Paoa. \u201cThis whole project has morphed into something you can\u2019t even tell us what it is now.\u201d<\/p>\n
\tMaehara attempted to mollify the commission, acknowledging that the show-cause order \u201cis probably the most severe remedy the commission has\u2026. We realize the seriousness of this situation\u2026 I think it behooves the petitioner to set forth in detail exactly what is being proposed today for this project and also to express in detail to this commission exactly how we propose to meet the affordable housing condition.\u201d<\/p>\n
\tBut whether that would be sufficient remained an open question at the end of the meeting.<\/p>\n
\tCommissioner Thomas Contrades of Kaua`i was visibly angry. \u201cThis meeting is not to discuss whether or not they can have credits for transitional housing. It\u2019s not to discuss whether they\u2019re going to build affordable housing. It\u2019s to show me why at this very second I should not make a motion to revert this land back to Ag, take away what we gave them. I\u2019m totally insulted by what has gone on so far, by the fact that they haven\u2019t even bothered to tell me why I shouldn\u2019t do that\u2026 You say you\u2019ve done stuff that I\u2019ve never seen as a commissioner. Everybody else needs to show me a piece of paper that shows they have the money. Now we hear they own a bank. How much money? Where? They have partners. They have an international group. I have never seen any of that.<\/p>\n
\t\u201cMy favorite word: obfuscation \u2013 making everything cloudy so you cannot see. I want to see. That is my job, my duty, that\u2019s what I swore to do when I became a commissioner\u2026 This is crazy, this is nonsense, this is insulting\u2026 Don\u2019t think I\u2019m not upset about this.\u201d<\/p>\n
\tAs the meeting drew to a close, commissioner Reuben Wong asked the commission\u2019s deputy attorney general, Russell Suzuki, whether the LUC could order the land to revert to its original classification \u201cunless the petitioner finds a substitute petitioner for this project.\u201d Wong noted that the commission had heard \u201chow great this project is for the community. We can use a world-class golf course. We can even have great jobs for people. But nothing\u2019s happened\u2026 Not that the project is bad, it\u2019s that the one who\u2019s running this project is coming to this commission with empty promises. I\u2019d like the attorney general to advise us if we can order the reversion unless the petitioner finds a substitute petitioner, so we can have things done to help this community.\u201d<\/p>\n
\tThe matter of the show-cause order was continued and is scheduled to be taken up by the LUC at a meeting tentatively set for April.<\/p>\n
— Patricia Tummons<\/p>\n
Volume 19, Number 9 March 2009<\/p>\n","protected":false},"excerpt":{"rendered":"
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