{"id":12854,"date":"2020-09-01T04:48:20","date_gmt":"2020-09-01T04:48:20","guid":{"rendered":"https:\/\/www.environment-hawaii.org\/?p=12854"},"modified":"2020-09-01T05:42:29","modified_gmt":"2020-09-01T05:42:29","slug":"waikoloa-mauka-project-now-subject-of-fbi-investigation-developer-says","status":"publish","type":"post","link":"https:\/\/environment-hawaii.org\/?p=12854","title":{"rendered":"Waikoloa Mauka Project Now Subject of FBI Investigation, Developer Says"},"content":{"rendered":"\n

Danny Julkowski threw himself on the mercy of the Leeward Planning Commission of Hawai\u2018i County\u00a0last month. And as sympathetic as the commissioners were to his plight, their mercy was more limited.<\/p>\n\n\n\n

Julkowski was asking the commissioners to recommend that the Hawai\u2018i\u00a0County Council approve zoning and boundary redistricting changes so he could develop commercial lots and housing on an oddly shaped 11.7-acre parcel he purchased in 2018 a short distance beyond the Urban District boundary of Waikoloa Village.<\/p>\n\n\n\n

The parcel had once been part of a much larger development that was proposed in the late 1990s as the Waikoloa\u00a0Highlands golf estates. That development received county zoning approvals, but the owners never got much further than the construction of a rustic rail fence and a stone entry gate before state law changed and the type of residential subdivision on Ag land that was envisioned for Waikoloa Highlands was no longer an option.<\/p>\n\n\n\n

That larger parcel was eventually sold to an entity called Waikoloa Mauka, LLC, which was required by the county to submit a redistricting petition to the state Land Use Commission, asking that the land be placed into the Rural land use district, a move that would allow the planned development of nearly 400 houses on some 760 acres to proceed.<\/p>\n\n\n\n

In 2008, the LUC approved the boundary amendment with conditions, including one that required Waikoloa\u00a0Mauka to comply with county regulations concerning affordable housing. In this case, that meant building, underwriting the construction of, or donating land\u00a0to the county or a non-profit entity that\u00a0would build 80 dwellings affordable to families earning less than the county\u2019s median income.<\/p>\n\n\n\n

In 2017, Waikoloa Mauka subdivided off an 11.7-acre parcel on which it claimed the affordable housing units would be built. It is this parcel that Julkowski purchased in 2018 for $1.5 million.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

And in so doing, he unwittingly bought into a scheme that is now the subject of an FBI investigation.<\/p>\n\n\n\n

Broken Promises<\/strong><\/p>\n\n\n\n

Between the time Julkowski\u2019s company,\u00a0Pua Melia, LLC, purchased the property\u00a0and now, the state Land Use Commission revoked the Rural designation owing\u00a0to Waikoloa Mauka and its successor,\u00a0Waikoloa Highlands, Inc., having failed to do much of anything in the 10 years since LUC had approved the boundary amendment petition. With all the acreage in the original petition \u2013 including what was now Julkowski\u2019s parcel \u2013 having reverted to Agriculture, Julkowski could no longer move forward with his plans absent County Council approval.<\/p>\n\n\n\n

That set the stage for Julkowski to ask the Leeward Planning Commission to bless the approvals he needed to develop 32 units in four-plexes and duplexes, five commercial lots, and a larger lot where he was hoping to build a large hardware store.<\/p>\n\n\n\n

\u201cSo, uh, what we have here is an interesting, challenging project,\u201d Julkowski\u2019s planning consultant, Zendo Kern, told the commissioners in their August 20\u00a0WebEx meeting, live-streamed on YouTube.<\/p>\n\n\n\n

The formal advice of the county planning director, Michael Yee, was that\u00a0the Planning Commission forward to the County Council a recommendation against approving the redistricting and zoning requests. The proposal involved \u201cspot zoning,\u201d staff planner Alex Roy said, with no existing infrastructure and no sidewalks to allow future occupants of the residential units to walk to Waikoloa village, among other things.<\/p>\n\n\n\n

\u201cWhat we heard is a presentation from the Planning Department that talked about basic land use components,\u201d Kern said. \u201cWhat we haven\u2019t talked about is how we got here.\u201d<\/p>\n\n\n\n

Kern went on to say that he was approached about a year and a half ago by \u201ca person who at that point in time worked for the county.\u201d This person, not named by Kern, told him that he \u201chad a client who had a 201H application,\u201d referring to the state law that governs construction of affordable housing. To Kern, it seemed like a \u201csimple, easy project.\u201d<\/p>\n\n\n\n

\u201cI said, sure, happy to assist … and then talked with Mr. Julkowski,\u201d he continued.<\/p>\n\n\n\n

The project \u201cseemed to make sense,\u201d but then, on speaking with Planning Department staff, Kern discovered that the \u201cPlanning Department was not supporting the 201H application, as [the Office of\u00a0Housing and Community Development]\u00a0was … Generally, when there\u2019s a conflict,\u00a0it gets complicated.\u201d<\/p>\n\n\n\n

(As\u00a0Environment Hawai\u2018i\u00a0<\/em>has reported,\u00a0Julkowski was not the first party to\u00a0purchase the 11.7-acre parcel designated for affordable housing. Shortly after the parcel was subdivided off from the\u00a0larger Waikoloa Mauka parcel, and in\u00a0an arrangement that seems to have been worked out by a former county housing\u00a0office employee, Alan Rudo, a for-profit\u00a0entity called Plumeria at Waikoloa, LLC,\u00a0purchased it for $55,000, despite Hawai\u2018i\u00a0County requirements that the land be donated either to the county or to a qualified non-profit. Plumeria at Waikoloa did not\u00a0develop the affordable housing but instead\u00a0sold it to Julkowski for $1.5 million.)<\/p>\n\n\n\n

The 201H process was dropped and Kern and Julkowski went with a more straightforward application for housing \u2013 which Julkowski said he intends to be affordable \u2013 the hardware store, and several commercial lots that Julkowski was hoping to sell.<\/p>\n\n\n\n

From his home in Minnesota, Julkowski then related the history of his involvement with the project, which he said began in January 2018, when a county employee \u201ccontacted us and asked if we were interested in purchasing property.\u201d<\/p>\n\n\n\n

\u201cI had known this guy from the past because he was trying to get us to do affordable housing,\u201d he said, noting that at one time he had been a general contractor.<\/p>\n\n\n\n

\u201cWe talked back and forth. He came up with a price, and we decided to go with it. Then he wanted a little bit more and I said I don\u2019t have that type of funds. I can work with this.\u201d<\/p>\n\n\n\n

Julkowski had \u201cmultiple meetings at the Housing Department [sic]. I signed documents at your county buildings with lawyers to do the affordable housing.<\/p>\n\n\n\n

\u201cWe invested quite a bit of money. They were telling us that they\u2019re going to help us. If we do the housing, they\u2019ll help through this whole project.<\/p>\n\n\n\n

\u201cThen one day I get a phone call from\u00a0the FBI, saying, \u2018What do you know about\u00a0this project?\u2019 … Before that, I had threatening phone calls towards my family.\u201d \u201cThe main thing is,\u201d Julkowski said, \u201cthe county employees came to us. We sat down with county employees. So I purchased that property based on county employees working with us. All of a sudden they get fired and they disappear. And then I\u2019m standing alone.\u201d<\/p>\n\n\n\n

\u2018Something Really Funky\u2019<\/strong><\/p>\n\n\n\n

Commissioners seemed mystified by the events Julkowski related. Planning deputy director Jeff Darrow filled them in on the problems that led ultimately to the Land Use Commission placing Waikoloa Mauka\u2019s property \u2013 and, with it, Julkowski\u2019s \u2013 back into the Agricultural District.<\/p>\n\n\n\n

\u201cThings happened that are under investigation right now, and we are where we are,\u201d Darrow said. \u201cCurrently, the state land use designation is ag for the property, county zoning is open and rural, and the\u00a0general plan reflects the zoning.<\/p>\n\n\n\n

\u201cThere\u2019s discussion as to the whole\u00a0background of this, but as far as [the Planning Department] goes, Planning looks at it from the planning standpoint.\u201d<\/p>\n\n\n\n

Kern tried again to win over the commissioners. \u201cSomething really funky happened between having that 80 units\u00a0of affordable housing [and the property]\u00a0being sold to my client. Really funky. … It doesn\u2019t look well on the county level. …<\/p>\n\n\n\n

\u201cI actually did speak to the original consultant. He didn\u2019t even know what happened. Something really funky happened in that transfer.\u201d<\/p>\n\n\n\n

Commissioner Max Newberg made a motion to recommend against the rezoning and redistricting requests. \u201cIt\u2019s unfortunate,\u201d he said, \u201ceverything before us today.\u201d Still, he added, \u201cI have a hard time looking at anything that would be anything other than unfavorable.\u201d<\/p>\n\n\n\n

Commissioner Perry Kealoha concurred, saying that he suspected \u201cfraud along the way. But this is not the place to litigate any fraud that may have taken place.\u201d<\/p>\n\n\n\n

In the end, commissioners voted four to two against the rezoning and redistricting requests. Commissioner chair Nancy\u00a0Carr Smith and commissioner Michael\u00a0Vitousek were the two dissents.<\/p>\n\n\n\n

\u2014 Patricia Tummons<\/strong><\/p>\n\n\n\n

For Further Reading<\/em><\/p>\n\n\n\n

Environment Hawai\u2018i\u00a0<\/em>has reported\u00a0extensively on the Waikoloa Mauka\u00a0development, including the irregularities surrounding the proposed satisfaction of the affordable housing requirement. See:<\/p>\n\n\n\n