{"id":13627,"date":"2021-06-03T07:52:27","date_gmt":"2021-06-03T07:52:27","guid":{"rendered":"https:\/\/www.environment-hawaii.org\/?p=13627"},"modified":"2021-06-03T18:18:51","modified_gmt":"2021-06-03T18:18:51","slug":"hokua-place-witnesses-grilled-on-housing-water-wetlands","status":"publish","type":"post","link":"https:\/\/environment-hawaii.org\/?p=13627","title":{"rendered":"HoKua Place Witnesses Grilled On Housing, Water, Wetlands"},"content":{"rendered":"\n

HoKua Files Motion To Withdraw Petition<\/em><\/h4>\n\n\n\n

On May 27, just as Environment Hawai\u2018i <\/em>was preparing to go to press, William Yuen, attorney for HGKJV, LLC, filed a motion with the Land Use Commission asking that the company be allowed to withdraw the boundary amendment petition. That petition was to allow the development of 769 housing units, both single- and multi-family, on about 96 acres of land outside of Kapa\u2018a, Kaua\u2018i.<\/sub><\/p>\n\n\n\n

The LUC\u2019s hearings on the petition were the subject of a long article in our May issue. And, as readers see here, they are also written up in this issue of the newsletter as well.<\/sub><\/p>\n\n\n\n

We print the article reporting on the May hearings without reference to the withdrawal. The April and May reports together provide, we believe, insight into why HGKJV management decided the best course of action, at this point, was to ask the commission to allow it to pull the petition.<\/sub><\/p>\n\n\n\n

The commission has not set a date to hear arguments on the motion.<\/sub><\/p>\n\n\n\n

\n\n\n\n

\u201cPut it this way: You\u2019re not just passing on a developer, you\u2019re rendering a decision that has an impact on the value of the land, okay? Keep in mind the value of the land as you go through this.\u2026 I want you to think that if you add value to this land, going forward, it may not be the same developer, it may be a better developer. And the county can get in there, do things. At the end of the day, you know, maybe it gets sold. Or they get a partner, or something like that.\u201d<\/p>\n\n\n\n

With those words, Paul Richard \u201cRicky\u201d Cassiday, testifying as a housing market consultant, concluded his appearance before the Land Use Commission as it considered the petition of HG Kaua\u02bbi Joint Venture, LLC (HGKJV), to approve a plan to put more than 700 housing units on about 96 acres of land outside of Kapa\u02bba, Kaua\u02bbi.<\/p>\n\n\n\n

Cassiday\u2019s words provoked an immediate reaction from commissioner Dawn Chang. In his unguarded, voluble, pontificating way, Cassiday had blessed the very behavior that has troubled the commission for decades: that their approvals of boundary amendment petitions were at times nothing more than a step in the speculator\u2019s effort to jack up the resale price of raw land.<\/p>\n\n\n\n

\u201cYou said that\u2019s what\u2019s before us, that this petition added value. And you\u2019re absolutely<\/em> correct. That\u2019s exactly<\/em> what this petition does. It adds value to this property, with no guarantees that it will be done the way that it\u2019s presented to us. Eighty-three million dollars in infrastructure costs, affordable housing \u2013 there is no guarantee. But he could then sell the land at an extremely valuable increase, because of the new zoning. And then somebody else is going to come in and say \u2013\u201c<\/p>\n\n\n\n

Chang stopped herself mid-sentence. \u201cAnd I\u2019m going to apologize. I\u2019m making much more of a comment than a question.\u201d<\/p>\n\n\n\n

Additional testimony from other consultants and representatives failed to allay the commissioners\u2019 concerns about the project\u2019s feasibility.<\/p>\n\n\n\n

Housing<\/strong><\/p>\n\n\n\n

Cassiday told the commission that he was approached to work on the project some eight years ago by former classmate Peter Young. At the time, Young, a one-time chair of the Board of Land and Natural Resources, was preparing the environmental impact statement for what was called Kapa\u02bba Highlands. (The draft EIS overseen by Young was deemed insufficient by the LUC in 2015; following that, the landowner retained Ron Agor, a Kaua\u02bbi architect and one-time BLNR member, to take over the job.)<\/p>\n\n\n\n

According to Cassiday, the pent-up demand for housing on Kaua\u02bbi stood at 1,432 households. But, as the Kauai Planning Department\u2019s Chris Donohoe noted, a study commissioned in 2019 by the Hawai\u02bbi Housing Finance and Development Corporation found that the demand for affordable housing alone on Kaua\u02bbi was 4,281. <\/p>\n\n\n\n

Was Cassiday aware of this?<\/p>\n\n\n\n

\u201cI glanced at it,\u201d he said, going on to cast shade on the firm that conducted the study, SMS. \u201cI glanced at the things that I know really well. And I know what I know really well. I\u2019m pretty unique. SMS is what I used to call when I worked in Washington somewhat of a contract researcher. They\u2019ll go all over the place. We called them beltway bandits when I was in D.C. They have grown a pretty good practice on skimming gross numbers, census numbers. \u2026 Yeah, I looked at it\u2026 The problem they have is they do surveys. You get called or you get something in the mail. The low end of the market doesn\u2019t speak English or doesn\u2019t have time to work on it. So a lot of the survey part isn\u2019t very good.\u201d<\/p>\n\n\n\n

\u201cFour thousand two hundred eighty-one differs from your testimony that only 1,432 units are needed,\u201d Donohoe said.<\/p>\n\n\n\n

\u201cAnd I\u2019m happy it does,\u201d Cassiday said. He went on to explain that his work differs from SMS\u2019s in that he works with builders. \u201cThese guys,” he said, referring to SMS, \u201cyou know, sit in an office downtown.\u201d<\/p>\n\n\n\n

The environmental impact statement had pegged the prices for the 231 \u201caffordable\u201d housing units to be included in the HoKua Place development at between $175,000 and $275,000. Cassiday\u2019s study, however, put the projected cost at between $225,000 and $480,000 for units deemed affordable to one- to two-person households earning between 80 and 120 percent of the area median income.<\/p>\n\n\n\n

Bianca Isaki, representing the intervenor Liko Martin, noted that Cassiday\u2019s study assumed that 88 percent of the future buyers would be full-time Kaua\u02bbi residents, while 12 percent would be investors or non-fulltime residents.<\/p>\n\n\n\n

\u201cThat was my assumption, given my expertise,\u201d Cassiday replied.<\/p>\n\n\n\n

But, Isaki pointed out, a study led by Eugene Tian, the chief economist of the state Department of Business, Economic Development, and Tourism found that statewide, the percentage of out-of-state home buyers is 20 percent, while on the neighbor islands, it is twice that.<\/p>\n\n\n\n

\u201cEugene is a good economist,\u201d Cassiday acknowledged, \u201cbut I find the data set needs to be interpreted by somebody who understands the facets of it. One of the things is the addresses on the data set. Say you own a property and you have an address that\u2019s local. You\u2019ll count that as a local unit. But what if your next-door neighbor asks you to send his tax bill to your address. That skews the data. It wouldn\u2019t be my data.\u201d<\/p>\n\n\n\n

Dan Giovanni, the commissioner from Kaua\u02bbi, asked Cassiday about the impact of the pandemic on housing.<\/p>\n\n\n\n

\u201cThe pandemic hit, and everything ground to a halt,\u201d Cassiday said. \u201cAnd then after, around the third quarter, but before that, you saw people seeping into the island to buy homes. That seepage turned into a wave and now it\u2019s engulfing the island. It\u2019s gone from the high end to the lower priced segments.\u201d<\/p>\n\n\n\n

Giovanni asked how the pandemic has affected the low-income families that are striving for their first home.<\/p>\n\n\n\n

Cassiday: \u201cThis is just me looking around Kaua\u02bbi. A lot of people are out of work. The Harley-Davidson store ran out of bikes \u2018cause people were buying bikes for their kids. The other thing, surfing. The thing of the stimulus money, that was a big deal. The other thing that happened on Kaua\u02bbi that was pretty cool, people sharing resources, the barter economy. The giving economy. To my mind, those families \u2013 second, third, fourth generation \u2014 they did what they did in every disaster. They all banded together. The stimulus money coming from the outside helped them survive. Guys who didn\u2019t have that either had to belong to an affinity group that would support them\u2026. Ones who didn\u2019t have that grouping, they left the islands.\u201d<\/p>\n\n\n\n

\u201cWould you describe overall it as a form of survival during a tough time?\u201d Giovanni asked.<\/p>\n\n\n\n

\u201cI might dial it back a little bit,\u201d Cassiday replied. \u201cIt wasn\u2019t like there wasn\u2019t any food. The mortgage didn\u2019t need to be paid. The landlord didn\u2019t need to be paid. The status. It wasn\u2019t life or death survival. It was a mental condition that turned out pretty good at the end of the day. So far, so good. Touch wood.\u201d<\/p>\n\n\n\n

Water<\/strong><\/p>\n\n\n\n

One of the most anticipated witnesses was Tom Nance, who testified about the availability of fresh water resources to serve the development. A well drilled in 2006 near the southwest corner of the proposed development site punched through a nearly impermeable geologic feature that Nance described as an aquiclude into a deeper aquifer. <\/p>\n\n\n\n

This well was drilled \u201ccrooked as a dog\u2019s hind leg,\u201d Nance said, and the state Commission on Water Resource Management ordered it years ago to be sealed and abandoned (something that has not yet been done). Nonetheless, Nance continued, pumping tests showed that there was enough quality water in the aquifer to meet the development\u2019s needs. <\/p>\n\n\n\n

Nance testified that a new well drilled near the old one would have the same characteristics and would be a viable source of potable water to the HoKua Place development.<\/p>\n\n\n\n

Donohoe, the county attorney, questioned Nance on the sufficiency of the proposed well. <\/p>\n\n\n\n

\u201cThere are three issues to consider,\u201d Donohoe said. \u201cSource, storage, and transmission. So with regard to HoKua, an analysis would be needed to see if the current system has enough of these to serve the water needs of the proposed development.\u201d<\/p>\n\n\n\n

Nance demurred. \u201cThat\u2019s not exactly the case, but I\u2019m not prepared to testify to that. I\u2019m testifying on the viability of the onsite well.\u201d<\/p>\n\n\n\n

But, Donohoe continued, \u201cYou said the maximum requirement is 610,000 gallons per day,\u201d a figure that, he added, would translate to 424 gallons per minute.<\/p>\n\n\n\n

Again, Nance ducked. That estimate of demand was made by the project engineer, William Bow, he said, and while it might be sufficient for a private water system serving the development, he was unsure whether it would meet the county demands if the development were to be linked to the county water system.<\/p>\n\n\n\n

Nance also acknowledged to Donohoe that he had not determined if a new well for the project would affect other water systems and water sources, although he said it could. However, he added, \u201cBecause we\u2019re drawing from deep water, the reality is that pumping from this aquifer is not likely to impact surface water, much less other water uses.\u201d<\/p>\n\n\n\n

Donohoe pressed Nance on a number of other issues. Had Nance analyzed how the use of the well might affect other public uses? (No.) Had he consulted with the Commission on Water Resource Management? (Yes, but only to determine the status of the well drilled in 2006.) Was Nance familiar with the Kaua\u02bbi Water Use Development Plan? (No.)<\/p>\n\n\n\n

Was the proposed use of water reasonable and beneficial? (Nance said he believed it would be.)<\/p>\n\n\n\n

Would the use harm any public trust or waters in their natural state? (Nance said he didn\u2019t think so.)<\/p>\n\n\n\n

What about the exercise of Native Hawaiian Rights, would they be affected? (\u201cI don\u2019t believe it will,\u201d Nance said, “but I\u2019m not aware of any downstream traditional practices using water. This is a deep aquifer that discharges to the ocean.\u201d)<\/p>\n\n\n\n

Was Nance aware that a public trust analysis of the proposed water use would need to be conducted at the county level? (No, he said, he was not.)<\/p>\n\n\n\n

Donohoe\u2019s tough questioning reflected the kinds of issues that were raised when the county\u2019s Planning Commission was challenged over its denial of a permit to a water bottler. The case, Kaua\u02bbi Springs v. Planning Commission of Kaua\u02bbi<\/em>, established the rigorous standards applicants for water permits would need to meet. (For background, see \u201cHawai\u02bbi Supreme Court Reaffirms Government Duty to Protect Public Trust,\u201d Environment Hawai\u02bbi, <\/em>April 2014.)<\/p>\n\n\n\n

In response to questioning from Alison Kato, representing the Office of Planning, Nance said he assumed a new well was needed because there was not sufficient water available in the public water system.<\/p>\n\n\n\n

Was the new well sufficient to serve both the residences and facilities on the 96 acres subject to the LUC docket and the 16 or so agricultural lots that make up Phase I of the HoKua Place development? Kato asked.<\/p>\n\n\n\n

Nance said he assumed it was for both, but was not sure. He hadn\u2019t been involved in any discussions about the ag lots, he said.<\/p>\n\n\n\n

On behalf of the intervenor, Isaki asked Nance if he was aware that wells in the Lihu\u02bbe basin had experienced reduced productivity in recent years. Yes, he was, he replied, although he was not certain that the proposed well site was within the Lihu\u02bbe basin.<\/p>\n\n\n\n

Isaki queried Nance about what Nance described as an aquiclude separating the shallow aquifer from the aquifer that was proposed as a source for the development. Referring to the earlier well drilled on the HGKJV property in 2006, she asked Nance if he was aware that when the Water Commission reviewed the drilling log for that well, staff concluded that no aquiclude was present at that depth.<\/p>\n\n\n\n

\u201cI\u2019m aware of that and I absolutely disagree and we just went through a similar analysis for Moloa\u02bba 1,\u201d a nearby well that is being drilled for the county, Nance said. \u201cIt\u2019s unfortunate that the Water Commission staff just hasn\u2019t had the experience of drilling through the Koloa volcanics. You\u2019ve got layers of poorly permeable lava layers of mud and the realities are you can get small little freshwater bodies on some of these impermeable layers and the assumption that there\u2019s collective permeability vertically through it is absolutely incorrect.\u201d<\/p>\n\n\n\n

Commissioner Gary Okuda established that Nance was not involved in the preparation of the final environmental impact statement and that Nance had, in his own words, only \u201clooked briefly\u201d at some of the sections.<\/p>\n\n\n\n

\u201cIn your review, however brief it was, of the final environmental impact statement, did you see anything \u2026 which you can specifically point out to us, so the record is clear, which included matters that were discussed by the county of Kaua\u02bbi attorney today, the Office of Planning attorney, or the intervenor\u2019s attorney? Can you point to where in the final environmental impact statement those issues were discussed?\u201d Okuda asked.<\/p>\n\n\n\n

\u201cI can\u2019t,\u201d Nance replied.<\/p>\n\n\n\n

Okuda: \u201cCan you recall, to the best of your knowledge, any such discussion of those water or water resource or water impact issues that the three counsels questioned you about? Can you recall any such discussion in the final environmental impact statement?\u201d <\/p>\n\n\n\n

\u201cI think a number of those things that have been raised were not addressed in the EIS,\u201d Nance replied.<\/p>\n\n\n\n

After Nance stated that he had been involved in the preparation of draft and final environmental impact statements, Okuda asked him if he was, in any way, troubled \u201cthat these water issues were not discussed in the final environmental impact statement?\u201d<\/p>\n\n\n\n

\u201cTroubled is a strange word, because I haven\u2019t been involved in that part of the process,\u201d Nance said. \u201cHad I been author of this section, I would\u2019ve written it in a different and far more detailed way.\u201d<\/p>\n\n\n\n

Okuda then asked, \u201cIf we were just to look at the final environmental impact statement, do you believe there is sufficient information \u2026 for us on the Land Use Commission to make a reasoned decision with respect to the impact and effect and availability of water for this project?\u201d<\/p>\n\n\n\n

\u201cI didn\u2019t review the EIS for that purpose,\u201d Nance replied, adding that he wasn\u2019t comfortable answering that question. \u201cI was really just reviewing it to see if they had misrepresented both the existing well drilled and the proposal to drill a new one,\u201d he said.<\/p>\n\n\n\n

As to what he had testified to on this day, Nance said, it only \u201crepresents my opinion of the viability of the new well.\u201d<\/p>\n\n\n\n

\u201cYour opinion is not in the final environmental impact statement,\u201d Okuda said.<\/p>\n\n\n\n

\u201cI think that is correct,\u201d Nance responded.<\/p>\n\n\n\n

Commission chair Jonathan Likeke Scheuer , who has had extensive experience as a consultant on water issues, was the last to question Nance.<\/p>\n\n\n\n

Given that the proposed well site is below the Underground Injection Control line, Scheuer asked Nance if pre-existing nearby injection wells would have to be removed in order for the HoKua well to be useful as a domestic water source.<\/p>\n\n\n\n

No, Nance responded. \u201cIt would be up to us to prove to the Department of Health that existing sources of potential contamination wouldn\u2019t be a problem,\u201d he said.<\/p>\n\n\n\n

Did Nance know how many potential sources of contamination there were?<\/p>\n\n\n\n

\u201cLittle or none,\u201d Nance said.<\/p>\n\n\n\n

Had Nance done any survey to verify that?<\/p>\n\n\n\n

No, he replied.<\/p>\n\n\n\n

Scheuer questioned Nance about the need to obtain approval from the Water Commission to drill a well as deep as that proposed. <\/p>\n\n\n\n

Nance explained that the Water Commission needed to grant a variance for any wells where the depth is greater than a quarter of the assumed thickness of the basal aquifer. \u201cIf it\u2019s basal groundwater with saline water beneath,\u201d he said, \u201cyou have the potential for upconing. It\u2019s not only a problem for the well but for the aquifer.\u201d<\/p>\n\n\n\n

On Kaua\u02bbi, however, because of the unique geology of the site, Nance said, \u201cwe can put wells far closer to the shoreline than anywhere else in the state. A very large percentage of wells drilled into Koloa volcanics have to drill below what is the basal groundwater assumption\u2026 If we stuck to the one-quarter lens thickness, we\u2019d have no water at all.\u201d<\/p>\n\n\n\n

Return to the Wetlands<\/strong><\/p>\n\n\n\n

Following Cassiday\u2019s testimony, archaeologist Nancy McMahon reported on the survey she made of the area, which for decades had been in sugar cultivation. She insisted that if, as some members of the public had suggested, a heiau was on the site, she would have found it in the days that she walked the area.<\/p>\n\n\n\n

Ron Agor, who prepared the final environmental impact statement, was the last witness put on by William Yuen, attorney for landowner HGKJV. <\/p>\n\n\n\n

One of the more contentious issues raised in previous questioning of the landowner\u2019s witnesses was the presence of about three acres of wetland within the area proposed for redistricting. In the final environmental impact statement, the drainage plan \u2013 prepared in 2011 \u2013 proposed using the area as a detention basin for runoff from the development.<\/p>\n\n\n\n

Since then, a new drainage plan had been prepared by William Bow that avoided directing runoff into the wetland area, at the southwestern corner of the area subject to the Land Use Commission petition.<\/p>\n\n\n\n

Agor was questioned extensively about this change. In his power-point presentation under direct examination from HGKJV attorney Yuen, Agor acknowledged that an unnamed stream ran along the western edge of the petition area and that the \u201cwetland area could be .03 acres.\u201d<\/p>\n\n\n\n

\u201cHoKua Place will not develop the stream bed but wants to include it in the Urban District,\u201d Agor stated in the presentation.<\/p>\n\n\n\n

The draft EIS \u2013 \u201cproduced by my predecessor,\u201d Agor stated \u2013 \u201cspoke about point three acre of wetlands that are on the property but not necessarily within boundaries of the petition area.\u201d<\/p>\n\n\n\n

The final EIS included in an appendix a soils map prepared in 2018 by the USDA office in Lihu\u02bbe that identified just that small area near the southwest corner of the petition area as \u201cmarsh.\u201d<\/p>\n\n\n\n

\u201cKeep in mind that the USDA is the entity that delineates wetlands in the community,\u201d Agor said. \u201cThat map, dated May 5, 2018 \u2013 the 3.8 acres that suddenly appeared \u2013 was not on that map.”<\/p>\n\n\n\n

The map that the Office of Planning included in its list of exhibits in the LUC proceedings showed 3.3 acres of wetland inside the area proposed for redistricting. It was generated by the Hawai\u02bbi Statewide GIS program, based on the U.S. Fish and Wildlife Service\u2019s National Wetlands Inventory.<\/p>\n\n\n\n

Agor cast shade on the FWS map. After seeing the Office of Planning exhibits, \u201cI went onsite [sic] and searched for the Fish and Wildlife map. And the only map I could find was a map developed in 2019 that shows the 3.3 acres.<\/p>\n\n\n\n

\u201cSo I believe, I strongly believe, that Fish and Wildlife acted on developing their own map. Once the wetlands are delineated in the community, the U.S. Fish and Wildlife, whose objective is to protect fish and wildlife, have a tendency to develop their own map and expand the wetlands.\u201d<\/p>\n\n\n\n

\u201cMy feeling is that when we sent out the draft EIS to all of the agencies, including Fish and Wildlife, it was then that Fish and Wildlife decided to address the area and it was then that they developed their own map and labeled a 3.3 acre part of kula lands as wetlands.<\/p>\n\n\n\n

\u201cSo here\u2019s the fun part. Fish and Wildlife \u2013 and I\u2019m okay with them developing their own map; they have a mission to protect fish and wildlife, so that\u2019s okay \u2013 they categorized that 3.3 acres as a certain type of wetland.\u201d<\/p>\n\n\n\n

Agor agreed with the FWS categorization as less than 20 acres, but he took exception to the characterization of the wetland as having standing water. \u201cThere\u2019s no chance of this 3.3 acres having a body of water. The land slopes a minimum of 15 percent in one area but for the most part it\u2019s 30 to 40 percent. So there\u2019s no way water can accumulate in a pond-like situation.\u201d<\/p>\n\n\n\n

He also said the FWS identified the wetland as having characteristics of a coastal wetland, a characterization he disputed. The wetland on the HGKJV property, he said, was instead characterized by silted clay.<\/p>\n\n\n\n

A photograph taken by Agor shows what seems to be an overgrown, unpaved cane haul road, with a steep slope on the right side of the photo. He described the vegetation as Java plum on the slope and hau bush where the slope leveled off on the opposite side of the road. There was no standing water visible in the picture.<\/p>\n\n\n\n

After Agor stated that there never was any intention of building on the site, Yuen asked him if it was appropriate to include the wetland within the petition area.<\/p>\n\n\n\n

\u201cI needed it to be included,\u201d Agor replied. \u201cWhen we start out planning at the county area, if we end up with a density of \u2026 10 units per acre, 3.3 acres converts into 33 units.\u201d And, with the developer\u2019s intention to provide 30 percent of the units to be sold at \u201caffordable\u201d rates, that translates to nine affordable units.<\/p>\n\n\n\n

\u201cI cannot lose 30 units,\u201d Agor said.<\/p>\n\n\n\n

On behalf of the Office of Planning, deputy attorney general Kato pressed Agor about plans to protect the wetland area. Agor pledged that even though he disagreed with the Fish and Wildlife Service\u2019s map, the developer would respect it and work with the service to come up with a protection plan, including fencing to protect water birds from predators, such as feral cats. At the same time, he said, he would still appeal the service\u2019s designation to the state Division of Forestry and Wildlife.<\/p>\n\n\n\n

Toward the conclusion of Agor\u2019s testimony, Lance Collins, representing the intervenor, asked a question that had left previous witnesses stumped: \u201cHow did you folks get the name HoKua Place?\u201d<\/p>\n\n\n\n

\u201cHoKua Place was discussed with Mr. [Greg] Allen and myself. And, really it refers to looking out and seeing the horizon meeting the sky. And, certainly from HoKua, looking out, you can see the horizon of the ocean and its integration with the sky and sometimes you don\u2019t know the distance between the sky and the ocean. Something like that.\u201d<\/p>\n\n\n\n

The Developer Is Recalled<\/strong><\/p>\n\n\n\n

Agor was the last witness to testify for the developer. But before Yuen closed his case, he recalled Jacob Bracken, one of the managing members of HGKJV LLC.<\/p>\n\n\n\n

From his office in Utah, Bracken verified certain documents submitted as exhibits, including an overall cost estimate prepared by Agor and William Bow, the engineer retained by the company.<\/p>\n\n\n\n

For infrastructure (not including offsite improvements that may be needed to accommodate sewage capacity), project costs were pegged at $83,411,400. Vertical construction was estimated at $211,988,800. \u201cSoft costs\u201d \u2013 permitting, financing, fees \u2013 were estimated at $44,310,30. The total came to $340 million. Yuen asked Bracken how he anticipated financing this. <\/p>\n\n\n\n

\u201cWe have secured some significant lines of credit already,\u201d Bracken replied. \u201cWe have approximately $30 million available for the project to get going. We have spent in excess of $10 million to date in acquiring the land and, you know, getting us to this point. In addition to that, we do plan on getting as much traditional financing as we can. As we [sic] are aware, we\u2019re involved in other real estate projects that are currently profitable and are cash-flowing. In fact, you know, we do have the ability from existing operations at sister projects to cover those same cash flows as well. But our goal, our plan, would be to utilize as much traditional financing as possible.\u201d<\/p>\n\n\n\n

The cost projections from Agor anticipated that about $85 million would be required at any one time to keep the project moving forward. How, Yuen asked, would HGKJV meet this need?<\/p>\n\n\n\n

\u201cWe are not a licensed contractor in Hawai\u02bbi, so we look on relying on or selling lots to either partner with or sell lots to local contractors for the vertical construction,\u201d Bracken said. \u201cThat\u2019s typically how we do much of our development.\u201d<\/p>\n\n\n\n

Collins asked more specific questions concerning the financing. \u201cYou previously represented the petitioner has access to a $5 million revolving loan,\u201d Collins said, which is shared with a \u201csister\u201d company that is undertaking a development in Utah, Sand Hollow Resort.<\/p>\n\n\n\n

That development has access to the same funds, correct? Collins asked.<\/p>\n\n\n\n

\u201cWe have not been using it. We use the Sand Hollow Resort \u2026\u201d<\/p>\n\n\n\n

Collins cut him off. \u201cMy question is: But it has access to that same $5 million, correct?\u201d<\/p>\n\n\n\n

\u201cI guess. Yes, it could. From an entity level no, but yes, I\u2019ll give you that,\u201d Bracken said, adding that HGKJV and the Utah development were both guarantors of the loan.<\/p>\n\n\n\n

Collins then questioned Bracken about the claim that the company had paid $10.6 million for the property.<\/p>\n\n\n\n

\u201cThe commissioner\u2019s deed indicates the property was paid for at $4 million at the foreclosure sale, but you value the property on the balance sheet at $10.6 million,\u201d Collins stated. \u201cCorrect?\u201d<\/p>\n\n\n\n

Bracken agreed.<\/p>\n\n\n\n

\u201cYou had said that $6 million was a second position, a $6 million note, correct?\u201d<\/p>\n\n\n\n

Again, Bracken agreed, adding that the $6 million \u201ccame from a second position note we acquired at the time.\u201d<\/p>\n\n\n\n

The conveyance tax paid on the transaction was $28,000, Collins noted, which would equate to a transaction value of $4 million.<\/p>\n\n\n\n

How was this other note extinguished, how was it characterized to the IRS? Collins asked. Was it a net gain or net loss?<\/p>\n\n\n\n

\u201cI don\u2019t remember what that was at the time. It was contributed as part of equity into HG Kaua\u02bbi Joint Venture, but I don\u2019t remember the tax treatment,\u201d Bracken said.<\/p>\n\n\n\n

\u201cAre you aware of HRS 247-2, which says that the conveyance tax is based on the actual and full consideration\u201d paid for a property, Collins asked, quoting the statute more fully.<\/p>\n\n\n\n

\u201cI understand what you\u2019re saying,\u201d Bracken said. \u201cI would say our transfer value was the auction value. We acquired the note at an earlier time.\u201d <\/p>\n\n\n\n

Collins soldiered on: \u201cSo, if the conveyance tax was paid on $4 million, that means this other $6 million value was not reported.\u201d<\/p>\n\n\n\n

Bracken pleaded forgetfulness. \u201cI don\u2019t know how it was done. Again this was in 2013. But I believe the value for conveyance tax purposes was the auction value it was sold at.\u201d<\/p>\n\n\n\n

Even though the statute says the conveyance tax is to be computed on the total value of the transfer? Collins said.<\/p>\n\n\n\n

\u201cAgain. This is going back in time quite a bit. I would say our transfer value was the auction value. We acquired the second position note at an earlier point in time,\u201d Bracken replied.<\/p>\n\n\n\n

Collins posed his last question: \u201cSo that was in 2013. You testified previously that the value of this property is being valued on the balance sheet as $10 million because of something that happened in 2013, but you\u2019re not able to explain how this other $6 million was reported to any tax authority as actually existing in 2013.\u201d<\/p>\n\n\n\n

Bracken\u2019s memory was no clearer than before. \u201cAll I can say is, we reported it, and we structured the transaction according to our legal and tax advice at the time,\u201d he said. \u201cI can\u2019t tell you the details here, eight years later.\u201d<\/p>\n\n\n\n

Commissioner Dawn Chang asked Bracken if the cost estimates prepared by Agor included traffic improvements that the state might require. \u201cI assume that it does, but I can\u2019t say for sure,\u201d Bracken replied.<\/p>\n\n\n\n

Does it include wetland mitigation, since Agor said he will accept the wetland designations? Chang asked.<\/p>\n\n\n\n

\u201cI couldn\u2019t tell you specifics, other than these are the best estimates at this time by professionals that are advising me,\u201d he replied.<\/p>\n\n\n\n

\u201cYour testimony is that it\u2019s premature\u201d to require a performance bond, Change noted. \u201cYou don\u2019t have development plans at this time and it\u2019s too early to tell. Is that what you\u2019re saying?\u201d<\/p>\n\n\n\n

\u201cA bonding agent would want something, \u2026 specific plans for what they would be bonding. Right now, we have guesses, you know, back-of-the napkin guesses of what things are going to look like. We don\u2019t have a specific plan to bond against,\u201d Bracken said.<\/p>\n\n\n\n

\u201cWell, this is a pretty nice napkin that you gave to us,\u201d Chang said. \u201cYou\u2019ve given us vertical construction costs of almost $212 million. What is that based on?\u201d<\/p>\n\n\n\n

Agor and Cassiday got together and put out their best guesses on construction costs, Bracken said.<\/p>\n\n\n\n

\u201cYou\u2019re telling me you don\u2019t have any designs, you just have total number of units.\u201d<\/p>\n\n\n\n

Bracken said it was just on the basis of their \u201cbest guesses\u201d of unit size, average cost, and the like.<\/p>\n\n\n\n

The End Is Nigh \u2013 Not!<\/strong><\/p>\n\n\n\n

Once there were no further questions for Bracken, Yuen rested the petitioner\u2019s case. <\/p>\n\n\n\n

In the usual course of events in LUC proceedings, the commission would now hear the case presented by the county, Scheuer said, going on to suggest that this might not be the course followed in this particular docket. <\/p>\n\n\n\n

At this point, Collins interjected, stating that he wanted to make a motion.  Scheuer called instead on Okuda, who made his own motion to deny the petition. Kauai\u2019s commissioner, Dan Giovanni, provided the second.<\/p>\n\n\n\n

Okuda then supported his motion with a lengthy recap of many of the issues he had raised in his questioning of the witnesses Yuen had put on. Among other things, Okuda cited to the Unite Here! decision of the Hawai\u02bbi Supreme Court, in support of his position that the final environmental impact statement for the development was insufficient.<\/p>\n\n\n\n

He also pointed to the commission\u2019s own statute, HRS Section 205-4(H), which requires the Land Use Commission to approve boundary amendment petitions only \u201cupon the clear preponderance of the evidence that the proposed amendment is reasonable \u2026 and consistent with the policies and criteria\u201d set out in law.<\/p>\n\n\n\n

\u201cIn this case here,\u201d he stated, \u201cI believe even taking a very easy, look-the-other way, and trying to view things somewhat in the light most favorable to the petitioner, the petitioner has simply not met its burden of proof\u2026. I hesitate to give the entire laundry list, because, frankly, I think we\u2019d be here a long time.\u201d<\/p>\n\n\n\n

Most of the other commissioners indicated their support for the motion to deny. Edmund Aczon, representing O\u02bbahu, was the only LUC member who openly disagreed.<\/p>\n\n\n\n

Just as it seemed that the commission would be voting then and there to reject the HoKua Place petition, Bryan Yee, the deputy attorney general advising the Office of Planning, raised procedural concerns. Linda Chow, counsel for the commission itself, suggested that rather than take a vote at once, the parties should be given a chance to argue their positions.<\/p>\n\n\n\n

Heeding that advice, the commission set a deadline of May 27 for the parties to submit their briefs on Okuda\u2019s motion. Collins, for the intervenor, indicated to Environment Hawai\u02bbi <\/em>that he would be submitting a separate motion instead.<\/p>\n\n\n\n

Replies to the briefs are due on June 2. The commission is to hear oral arguments at a meeting tentatively set for June 10.<\/p>\n\n\n\n

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

HoKua Files Motion To Withdraw Petition On May 27, just as Environment Hawai‘i was preparing to go to press, William Yuen, attorney for HGKJV, LLC, filed a motion with the Land Use Commission asking that the company be allowed to withdraw the boundary amendment … Continued<\/a><\/p>\n","protected":false},"author":1,"featured_media":13535,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[484],"tags":[7],"class_list":["post-13627","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-june-2021","tag-patricia-tummons"],"_links":{"self":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/13627","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=13627"}],"version-history":[{"count":0,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/13627\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/media\/13535"}],"wp:attachment":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13627"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13627"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13627"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}