2 Decades and Counting: Golf ‘Villages’ At Puako Are Still a Work in Progress

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In the two decades since development was first proposed for some 3,000 acres inland of Puako Bay on the western Kohala coast of the Big Island, plans have changed frequently – and radically.

Initial plans, put forward in the late 1980s by then-owner Signal Puako (held by the Signal Oil Company), called for development of the “Puako Residential Golf Community – six “villages” with a total of 2,658 housing units (both large-lot single family dwellings and apartments), built around as many as six 18-hole golf courses. An environmental assessment prepared for the project described it as a “complete support community that would provide housing at affordable prices for employees of the various resorts that are being proposed on the Kona coast.”

Hardly was the ink dry on the Land Use Commission approval of the plan, in 1989, when Signal Puako sold a 90 percent interest in the land to a Japanese company, Nansay Hawai`i in May 1990. Within a year, Nansay was back before the LUC, seeking an amendment to the LUC decision, which had redistricted a core area of 1,060 acres into the Urban district from the Agriculture district. Nansay sought to revise “the proposed project from a support community with onsite affordable housing to an upscale residential community providing affordable housing offsite.”

The LUC obliged, but still required Nansay to provide at least 1,000 housing units (off-site or on) that met the definition of “affordable” to families earning up to 140 percent of the county’s median wage.

By the mid-1990s, the real-estate bubble that had dramatically inflated land values in Hawai`i was collapsing. Nansay Hawai`i, which had purchased the land for $42 million, was having difficulty paying its creditors. In August 1996, the Hawai`i County Real Property Tax Office announced it would foreclose on the Puako property to recover taxes owed. Nansay was also falling behind in payments to its chief mortgage holder, Mitsui Bank of Japan.

Nansay sought to attract investors by amending certain conditions of the county’s rezoning ordinance. The County Council cooperated, but in the end, Nansay lost the property. Mitsui sold the non-performing mortgage to a company called Kennedy-Wilson, which took ownership through foreclosure. In 1999, the land was sold to the current owner, Bridge Capital, and companies closely affiliated with it. At the time of the sale, Bridge was based in the U.S. Virgin Islands. It has since relocated to Saipan, in the Commonwealth of the Northern Mariana Islands.

Under New Management

Once more, it was back to the drawing board. By late 1999, Bridge Puako was proposing several significant changes to the approvals granted by the county and Land Use Commission. In the face of community opposition, it withdrew its requests to the county for a reduced buffer requirement, reduced the land to be dedicated for school use, and elimination of the provision for public play on the golf courses.

But Bridge Puako did not give up on the request to have time-share units included in the development. While it initially sought the required County Council resolution allowing time-shares with no cap on the number, it eventually informed the county it would limit the number of time-shares to 750. In May 2000, the council adopted the resolution.

Over the next few years, Bridge Puako (now known as Bridge `Aina Le`a) sought to attract investors to participate in developing the property. In 2005, at the time that Bridge was asking the LUC for relief from some of the affordable housing requirements, it disclosed that Cole Capital/Westwood Development Group was its “development partner.” The agreement with Westwood, said Westwood president Michael Bowen, was contingent on the LUC lowering the 60 percent affordable housing requirement to “coincide with the 20 percent County of Hawai`i standard.”

“If this condition is amended, Westwood is prepared to begin development of this project immediately in conjunction with Petitioners,” Bowen told the LUC.

The LUC went along with the proposal, agreeing to reduce the affordable housing component to 20 percent (385 units) within the development itself and requiring certificates of occupancy for those dwellings to be obtained by November 17, 2010.

In addition, the LUC ordered Bridge `Aina Le`a to submit a signed joint venture agreement and mass grading contract by November 17, 2006. It denied Bridge `Aina Le`a’s request to amend a community benefit package that was part of the original approval, and it emphasized that if any time-share units were to be included in the project, specific LUC approval would be required.

In December 2006, Bridge `Aina Le`a broke ground – ceremonially, at least – on the project. Bowen, the Westwood executive, said agreements were in place to move forward. He was reported as having told West Hawai`i Today that construction equipment had been mobilized, but that engineering studies would take up to a year to complete.

Yet Another Plan

By July 2007, Cole Capital/Westwood was out of the picture, and a new company, DW `Aina Le`a, announced it had entered into a joint venture with Bridge `Aina Le`a. In a press release, John Baldwin, CEO of Bridge `Aina Le`a, described DW `Aina Le`a’s principals, Steve Dunnington and Robert Wessels, as having “resort and construction experience [and] industry contacts.” The press release went on to state that the Villages of `Aina Le`a would have a “shopping center, affordable homes, shared-ownership resort condominiums, a hotel, a luxury lodge, townhouses, single-family homes and estate homes, all with ocean views and surrounding a golf course.”

Several of the amenities listed in the press release would require petitioning the LUC for additional amendments to conditions of the redistricting approval. Also, county approval would be required if the project were to include a hotel and, possibly, a luxury lodge.

In the fall of 2007, Sidney Fuke, a planning consultant for Bridge `Aina Le`a, submitted to the county Planning Department a project district application for the company’s land at Puako. Under county law, owners of more than 50 acres can apply for a project district, which allows greater flexibility in developing larger properties. Within project districts a wide range of uses may be allowed, including hotels and commercial areas. The Hawai`i County Code requires preparation either of a county environmental report or, if circumstances require, compliance with the state’s environmental disclosure law, Chapter 343.

County Planning Director Chris Yuen returned the application to Fuke, along with the $5,000 check covering the required application fee. Because of two recent events, Yuen wrote in the accompanying letter, “we have re-evaluated our practice in reviewing applications to see whether the proposed project(s) would require compliance with Chapter 343, Hawai`i Revised Statutes, particularly when a land use application for private development will require improvements within the state or county road right-of-way. For your information, one of the events was a recent memo from the state Department of Transportation which stated that they would not process applications from a private landowner for improvements within the state right-of-way unless the landowner could show that there had been compliance with Chapter 343 when the permits for the land use were granted. The other event was the state Supreme Court’s recent opinion on the Superferry case.” (In that decision, the court found that use of state facilities by the private Superferry required compliance with Chapter 343.) Yuen also pointed out that, should Bridge `Aina Le`a’s plans call for construction of a wastewater facility on site, that, too, would require preparation of an environmental assessment or EIS.

On December 8, 2007, the state Environmental Notice announced the availability of an EIS preparation notice for the Villages of `Aina Le`a. According to that document, improvements would include infrastructure, give golf courses and a golf academy, a 40-unit lodge, up to 2,406 housing units in a mix of multi-family and single-family dwellings, 863 rural-agricultural lots, and commercial uses.” The master plan would address all 3,000 acres of the Bridge `Aina Le`a land at Puako, the document stated, although the Project District would only cover the 1,060 acres included in the Urban district. “The balance of the property, or 1,940 acres, would be developed in accordance with its existing … zoning,” according to the EIS preparation notice.

The notice was prepared by Constance Kiriu of Makani Resources. Deadline for comment was January 7, 2008. According to Kiriu, additional studies are being done in preparation for the draft EIS. She said it probably would not be published until May, at the earliest.

— Patricia Tummons

Volume 18, Number 9 March 2008

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