Is the third time the charm?
The owners of a slice of coastal land in West Hawai`i, the subject of a pending petition before the state Land Use Commission, are hoping so. In January, the final environmental impact statement for their project was accepted by the LUC and now the long hearing on the merits of their land reclassification request can proceed.
The petitioner, O`oma Beachside Village LLC, is asking the commission to place about 181 acres of land now in the Conservation District into the Urban District. That redesignation will clear the way for the owners to proceed with the county approvals needed for their proposed development of between 900 and 1,200 housing units, two commercial village areas, and parks, preserves and buffers. The entire development is proposed to be built not only on the 181 acres proposed for redesignation, but also on the adjoining 83-acre mauka lot that was placed into the Urban District in 1986. Some 38 acres of the makai parcel are not included in the petition for reclassification. This area, which stretches from the coast inland about 1,100 feet, is proposed to remain in open space as a “coastal preserve.”
The developers argue that the project is compatible with the neighboring land uses, which include the Natural Energy Laboratory of Hawai`i to the north and the residential development of around 500 houses that has been approved for the Kohanaiki area to the south. But many issues remain to be resolved, including concerns over noise impacts (much of the area lies under the flight path of planes approaching and departing the Kona airport to the north), effects on groundwater flows to the anchialine ponds of the Kaloko-Honokohau National Historical Park half a mile south, increased traffic, and coastal runoff.
A Long History
The first proposal to develop the O`oma land was floated in the mid-1980s by the Kahala Capital Corp. At that time, the property didn’t quite extend to Queen Ka`ahumanu Highway and stretched further north along the shore. In 1986, Kahala Capital sought LUC redistricting to build a resort, including a hotel, golf course, an ocean science center, and office park. Late that year, the project’s configuration changed when the state traded 83 acres of mauka land fronting the highway for the northernmost 83 acres of land controlled by Kahala Capital (now a part of state land leased to NELHA). To sweeten the trade, the mauka acreage was upzoned to the Urban District, where Kahala Capital planned a golf course, office complex, some housing, and other amenities.
Still, in June 1987, the LUC voted down the project. Among other things, it was concerned that development of the area could throw a wrench into future expansion of the Keahole airport.
In 1991, Kahala Capital came back for a second bite at the apple. The proposal now included a “first class” (as opposed to luxury) hotel of 550 rooms, an 18-hole golf course with clubhouse and an “inn” of 50 to 60 rooms, 130 to 230 condos and 70 to 100 residential lots, a retail center, a “Marine Exploratorium,” a water recreation park, and a conference center, among other things.
This time, the project faltered over uncertainties about the developer’s ability to deliver as promised. The chairman and sole stockholder of Kahala Capital was Norbert A. Schlei, who, during the Kennedy and Johnson administrations, served in the Justice Department as an assistant attorney general. His tenure there was distinguished by his advocacy for civil rights. Among other things, he helped draft the Civil Rights Act of 1964, the Economic Opportunity Act of 1964, and the Voting Rights Act of 1965.
By the mid-1980s, Schlei had become involved in efforts to sell bonds that, according to one theory, were secretly issued in the 1950s by the Japanese government, which, for various and nefarious reasons, was now refusing to redeem them and calling them counterfeit. In 1992, Schlei was indicted by a federal grand jury in Tampa on charges that included conspiracy to sell counterfeit foreign securities, mail fraud, wire fraud, and bank fraud. Schlei turned over management of Kahala Capital to Robert Van Dorpe, and also signed an agreement that relieved Van Dorpe of responsibility for any representations that Schlei may have made to the LUC.
(Schlei was convicted, but most of the felony convictions were later vacated by an appeals court. He died in 2003 in Santa Monica.)
In the LUC’s decision on the O`oma petition in 1993, doubts were expressed about Schlei’s financial ability to carry through on the project, whose cost was estimated as $300 million in 1991 dollars. The petitioner, the LUC found “did not provide specific and definitive information of the manner in which petitioner proposed to finance the development.” The LUC was also skeptical about Van Dorpe’s ability to manage and direct the development. “Mr. Van Dorpe’s testimony about his education and prior work background indicated that he had no experience as a developer of a project of this scope or nature,” the Decision and Order states.
In 1997, Kahala Capital lost control of the property through foreclosure. In 2001, Clifto’s Kona Coast, a Nevada partnership owned mostly by Cliff M. Morris, bought the land and applied to the county for upzoning of the 83-acre Urban parcel. Morris proposed to build 390 houses, a hotel with 250 rooms, and a shopping center on the lot.
The project was approved by the Hawai`i County Council, but Mayor Harry Kim vetoed the rezoning ordinance. In September 2004, the council upheld Kim’s veto, on a 5-4 vote, to the cheers of some 250 people who had crowded the council’s meeting room.
Back at the LUC
At the same time he was pushing for the rezoning, Morris was trying to sell the makai portion of the O`oma parcel. In 2005, state records show, he gave a mortgage to Arnold Volny, a retired California banker, and the partners in Clifto’s Kona Coast changed. Morris remained a member, but he was now joined by Pete LLC (an entity representing Volny’s interests), Moresco Properties LLC (representing the interests of architect Dennis Moresco and Midland Pacific Building Corp., Moresco’s construction company), and two Waikoloa residents, Steve Johnson and Georgeann Johnson.
Within months of the additions, Clifto’s Kona Coast changed its name to North Kona Village, LLC (changed again in 2008 to O`oma Beachside Village, LLC). By 2007, it had developed yet another proposal for both the mauka and makai parcels – this time not involving a resort, but two communities, each with a commercial center, park, and a variety of housing types – single-family, condominium, and “mixed-use” (commercial space with owners living above). A draft environmental impact statement preparation notice was published that summer. In 2008, the draft statement was published. By the end of last year, the final EIS had been prepared and was accepted by the Land Use Commission in January.
But acceptance of an environmental impact statement is only the first step in the long process of winning redistricting from the LUC.
Now the applicant has to file a formal notice of its change of name to O`oma Beachside Villages and needs to submit an amended petition to reflect any changes to the project that may have occurred in the last two years. When the LUC deems that to be complete, the petitioner is notified and a 365-day window opens within which the LUC has to make a decision.
During that period, the LUC holds a contested case, in which, by law, the state Office of Planning and the affected county (Hawai`i County, in this case) are parties. Other parties with an interest in the outcome are given an opportunity to file their notice of intent to intervene in the contested case.
Already, says Dan Davidson, LUC executive officer, the National Park Service has notified the commission of its intention to intervene.
— Patricia Tummons
Volume 19, Number 9 March 2009
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