The fight over resort development at Honokohau and Kealakehe, on the Kona Coast of the Big Island, has taken an interesting turn.
On August 23, the Hawai`i County Council gave approval to the first reading of Bill 309 amending Hawai`i County’s general plan, including changes that would seem to block most of the project that Atlanta-based Jacoby Development, Inc., is planning to build on more than 500 acres of state and Hawaiian home lands in the area.
The bill, initiated by Hawai`i County planning director Chris Yuen, would redesignate the development area from Open to Urban Expansion. This would allow expanded harbor facilities and some urbanization along the largely barren stretch of rocky coast, but would seem to prohibit the heart and soul of the planned development – more than 2,500 hotel and time-share units.
The project, known as Kona Kai Ola, was first proposed by JDI in 2004 in response to a request for proposals for a mixed-use development from the state. If all had gone as JDI and the state had hoped, the County Council would already ble on its way toward redesignating the area to Urban Expansion and Resort. In addition to the hotel and time-share units, the proposed project is expected to include an 800-slip marina, a marine science center, retail shops, a fish market, shoreline and cultural parks, and more, on 530 acres of land owned by the Department of Hawaiian Home Lands and the Department of Land and Natural Resources at Honokohau and Kealakehe.
But all has not gone as planned.
Resort and Urban Expansion designation is critical for Kona Kai Ola, JDI representatives said earlier this year. But opposition, led by Yuen, to any resort development at Honokohau seems to have slowed that train for now, much to the relief of some members of the Kona community who are in the midst of creating the very first Kona Community Development Plan.
Throughout the community planning process, “over 1,500 Kona residents have made it crystal clear that the Kona community wants no more development between the coastline and Queen Ka`ahumanu Highway (which is exactly where Kona Kai Ola is planned),” wrote Charles Flaherty, president of Citizens for Equitable and Responsible Government in a July letter to Peter Young, chair of the state Board of Land and Natural Resources. Recent letters to the editor from other Kona area residents published in West Hawai`i Today contain much the same sentiment.
Because the General Plan amendments proposed by Bill 309 need to go through two more council votes before final approval, it’s too early to say that Kona Kai Ola, as proposed, is dead. But with the County Council already straying from the Kona Kai Ola development script, the window in which JDI has to obtain all of its necessary approvals and entitlements is shrinking fast.
Perhaps recognizing this, before the August 23 vote, JDI representatives had already begun debating whether Resort designation and zoning are necessary for Kona Kai Ola to move forward.
Last February, Yuen had proposed amending the General Plan to change the area around Honokohau harbor from Open designation to Urban Expansion, which would allow the DLNR to expand the existing harbor and have associated commercial and golf development.
“So he recognizes this is an urban area,” a JDI representative said at a recent Land Board briefing. And in an email to Environment Hawai`i August 16, JDI representative David Tarnas added, “We believe that, under certain circumstances, hotel and time-share units would be appropriate within an Urban Expansion area.”
But according to a letter Yuen sent to the council the same day, to authorize zoning of the proposed project, the General Plan would have to be amended to list the area as a “major resort,” and the county’s land use map redrawn to show a “Resort Node.”
“If the project were scaled down to a maximum of 1,500 visitor units, it would still need a General Plan amendment for an ‘intermediate resort’ designation … and a ‘resort area’ designation on the LUPAG map,” Yuen wrote, referring to the land use pattern allocation guide.
Divergent Visions
Up until February 2005, the county General Plan allowed for resort development at Honokohau. But anyone even remotely interested in developing that land knew that the county had long planned to remove the resort designation there. In December 2001, in the process of updating the 1989 General Plan, Yuen proposed deleting the Resort and Urban Expansion designations from portions of the land at Honokohau, and designating the DLNR land as Open and the DHHL land as Urban Expansion. Resort use had been deemed by the county to no longer be appropriate for the area.
Even so, the DLNR proposed enlarging the Resort and Urban Expansion areas on its lands. On June 13, 2003, Land Board chair and DLNR director Peter Young wrote Dixie Kaetsu, managing director of Hawai`i County, regarding the DLNR’s proposed amendments.
“The majority of these DLNR lands are designated ‘Open’ under the existing and proposed GP [General Plan]. By letter to the Honorable Bobby Jean Leithead-Todd [a former councilmember] dated May 31, 2002, DLNR’s Boating Division … requested certain amendments that would allow the development of the lands surrounding the Honokohau Small Boat Harbor. Since that time, DLNR’s Land Division has taken over management of these lands and has been considering various development alternatives. DLNR has also had several discussions with various entities interested in developing all of a portion of these lands,” Young wrote, noting that in April 2003, the Land Board authorized the DLNR to issue a request for proposals to select a developer for a master-planned mixed-use project at Honokokau.
Young reaffirmed the boating division’s request for changes in land use designation, saying they would “allow the development of the mixed-use project contemplated in the Board’s approval.” The boating division had requested relocating or reconfiguring the two existing Resort Node designations on state lands. In his letter, Young suggested they be combined and relocated closer to the harbor. He also asked that the area designated Open be changed to Urban Expansion.
“First of all, Urban Expansion designation is appropriate for the area immediately surrounding the harbor to allow marina-support and marina-related commercial and industrial uses. Second, the area near Queen Ka`ahumanu Highway has excellent development potential … due to its proximity to both the highway and the harbor. And third, an urban expansion designation of DLNR’s lands would be consistent with the designation of the adjacent DHHL and Queen Lili`uokalani Trust lands,” he wrote.
Despite Young’s plea, the Hawai`i County Council approved an updated General Plan in February 2005 that conformed to the Planning Department’s vision of the area. The new plan no longer included a resort designation for the DHHL parcel and deleted urban expansion and resort designations on the DLNR parcel as well.
Development Potential
By the time the County Council made the 2005 amendments to the General Plan, the Department of Hawaiian Home Lands and the Department of Land and Natural Resources were already working on proposals for the area that diverged from the land uses anticipated in the county document.
Some time before the DLNR began its efforts to develop the area, the Department of Hawaiian Home Lands issued a request for proposals to develop, operate and manage a commercial or commercial/industrial mixed-use project on roughly 200 acres of vacant land at Kealakehe, just mauka of and adjacent to DLNR’s 350 acres at Honokohau. (Under a Memorandum of Agreement with the county, the DHHL may dictate its desired zoning to the county.)
By early 2003, the DHHL had chosen its developer and in early 2004, the DHHL signed a 65-year lease for the land with Kona Marina Development Group, LLC, a limited partnership with local contractor Menehune Development Co., Inc., and JDI.
According a March 2004 DHHL newsletter, Kona Marina’s project “may include a golf course, industrial development, resort, retail and commercial development.” The report also states that the lease for this project will generate at least $6.5 million in revenue over the next ten years, and a minimum of $64 million over the lease term.
About the same time Kona Marina was ironing out its plans for the DHHL parcel, company representatives “indicated to DLNR that its preferred scenario would be to develop a larger master-planned project that would include both the subject property [DLNR] and the DHHL parcel,” an idea that DHHL was open to, according to an April 25, 2003 report by Keith Chun, planning and development manager for the DLNR’s Land Division.
On April 25, Chun asked that the Board of Land and Natural Resources do three things: 1) find that the public interest demands that a lease for 350 acres at Kealakehe be disposed of through negotiation and approve issuing a master lease for a mixed-use development project; 2) authorize the chairperson to issue a request for proposals for the selection of the lessee, establish selection criteria, accept applications, and select the lessee, subject to board approval; and 3) find that the public interest will best be served by the disposition of a land license by negotiation for the excavation of a harbor basin adjacent to the existing Honokohau harbor.
Chun proposed that the lease be for a master-planned mixed-use development project with resort, commercial, industrial, recreational, and/or marina components, with a term of 65 years.
“The subject property has development potential,” Chun wrote in his submittal to the board. “However, the majority of the property is vacant and underutilized, largely due to the current zoning of the property, the lack of infrastructure, and the state’s lack of available funds to construct the necessary infrastructure and/or develop the property on its own. Staff believes that a master-planned development … would substantially increase the value of the lands and the return to the state on these lands, especially if the state can secure a private developer that would undertake the various predevelopment duties (e.g. EIS, land use entitlements, etc.).”
At that meeting, the Land Board approved of the concept behind Chun’s proposal, but directed the Land Division to first reach out to community members to determine what kinds of uses they wanted – and didn’t want – at Kealakehe.
Community Day
On July 30, 2003, the DLNR held a community meeting at Kealakehe High School. The 120 or so people in attendance were split evenly into eight groups, which discussed what they most wanted and least wanted to see at Kealakehe. Seven of the eight groups supported building a marina for additional boat slips and having open space or a park; five wanted recreational and cultural land uses; four wanted a hotel or resort, and a minority wanted a deep-draft harbor, commercial and educational uses on the land.
Of those land uses not wanted, the top two were industrial and a deep-draft harbor, followed by a golf course, hotel/resort, timeshare/condo, recreational (such as an amusement park or camp ground), residential, and other miscellaneous uses.
In August 2003, Chun reported back to the Land Board, saying that except for the marina, the Land Division felt it would be inappropriate to require or prohibit any specific land use in the RFP. “Staff believes the potential applicants should have the freedom to consider all possible land uses in developing a master plan that makes economic sense,” he wrote.
In January 2004, the DLNR issued its request for proposals for development of the land at Honokohau. Ten months later, the Land Board, over the objections of disqualified applicant Kealakehe Ahupua`a 2020, selected JDI to develop its lands at Kealakehe and authorized its chair to negotiate the terms of a development agreement, lease, and land license with JDI, subject to review and approval by the Land Board.
As the DLNR advanced its development plans, the county pressed forward with updating its general plan. Knowing that the project would be in doubt without the proper county zoning, Young again encouraged the expansion of the resort and urban designations around the Honokohau harbor.
In a November 30 letter to Hawai`i Mayor Harry Kim, Young noted the public’s desire to expand the marina, and the community support for a master-planned, mixed use development, including resort, commercial and recreational uses.”
According to Young’s letter, JDI representatives had also discussed “certain GP amendments” with Kim regarding an expanded harbor, resort and urban uses, and open designation along the shoreline.
A little over a year later, however, the County Council chose to designate the DLNR area as open and the DHHL parcel as urban expansion. Despite the council’s decision, the Land Board, at a September 2005 meeting in Kona, voted to enter into a development agreement with JDI for the project.
Yuen’s Letter
“From 1989 until February 2005, the Hawai`i County General Plan designations for land use on the Kona Kai Ola project site included Urban Expansion Area, Resort, and Open, with an area designated for harbor expansion. It was upon this basis that DHHL and DLNR negotiated their agreements with JDI for a mixed-use development at this project site including commercial and resort components, and an expanded harbor,” JDI senior vice president Scott Condra wrote in a June 27, 2006, letter to Young.
Hoping it could get the council to change its mind, JDI representatives approached councilmember Virginia Isbell, who had opposed the project at the Land Board’s meeting in Kona. Their discussion bore fruit: on July 18, 2006, the County Council Planning Committee held a public hearing on Resolution 383-06, introduced by Isbell, which sought to initiate amendments to the General Plan that supported the proposed project (including the reinsertion of Resort and Urban Expansion designations), and called on the county planning director to conduct a study to determine the feasibility of amending the General Plan.
While the committee passed the resolution, the full council on August 1 voted to “file” the resolution, essentially killing it, based on a letter by planning director Yuen about the project.
“The proposal would create about 2,500 new visitor units. This is a massive project,” Yuen stated in his July 17 letter to the Planning Committee. “Currently, there are about 4,500 visitor units in North Kona, so this would be a major addition to the current inventory.”
Yuen noted that the project would generate a huge amount of additional development, with hotel and timeshare units “given typical staffing levels,” requiring one half to one employee per unit, or 1,250 to 2,500 workers.
Where would these workers come from? Not from Kona, Yuen said. With West Hawai`i resorts being unable to fill more than 1,000 vacant jobs, new workers for Kona Kai Ola would either have to commute over long distances, or the county would need a lot more affordable housing in Kona, he wrote, adding that although JDI has proposed some workforce housing on nearby land, it will do nothing to relieve the existing shortage of housing. He also noted that the project’s work force will require schools, roads, parks, and other public facilities that government will have to provide.
“Kona is already suffering from the side effects of too-rapid growth and development. Traffic is one symptom of the current development boom,” Yuen pointed out. (It’s not uncommon for traffic along Queen Ka`ahumanu Highway into Kona to be backed up several miles past the airport at Keahole, which is itself a few miles outside of the heart of Kona. Kona Kai Ola would be built along the coast between Kona and the airport. )
Most of the current development of leeward Hawai`i has been on sites zoned between the 1970s and 1990s, Yuen said. “Thousands of units can be built within Hualalai Resort, Kuki`o, Keauhou, Kohanaiki, Hokuli`a, and other approved projects. This is enough to fuel construction activity and growth in the visitor and second home market for decades to come… We need more housing for people of ordinary means… This project, however, is different: it will generate further development that somehow will have to be absorbed in a community that is already struggling with excessive growth.”
‘Stretching the Concept’
“[T]here will need to be an amendment to the current General Plan to re-designate the project site as ‘Resort’ and ‘Urban Expansion Area,’” wrote JDI’s Condra in his June 27 letter to DLNR’s Young.
But since the County Council’s August 1 vote, JDI seems to be backing away from that stance.
“A representative from Jacoby Development argued to the council that the project would be accommodated within an ‘urban expansion’ General Plan designation…,” Yuen informed the County Council in an August 16 letter. The letter was responding to questions from council members about whether resort development can occur around Honokohau harbor under an Urban Expansion designation.
“The short answer is no,” he wrote.
The longish answer: Urban Expansion designation allows for “village commercial” (CV) and “project district” (PD) zoning, which allow a hotel “when the design and use conform to the character of the area, as approved by the director.”
“We have a few examples of small hotels in CV zones, like the Hotel Honoka`a Club or Kamuela Inn… But it would be stretching the concept to call such hotels a ‘resort.’ Like many issues in land use, this is a question of scale,” Yuen wrote, adding that the General Plan is clear that resorts with anywhere from 51 to 3,000 visitor units are supposed to be called out as resorts in the plan’s land use maps and specifically designated in the plan’s text.
“To say otherwise completely repudiates the purpose behind having these categories in the General Plan, and repudiates the consistent practice for many years,” Yuen concluded.
Whether this means the JDI will revise the scope of Kona Kai Ola remains to be seen. Although JDI representatives testified on August 23 in favor of Bill 309, they clearly had a different view of what Urban Expansion designation means.
When asked by County Council member Bob Jacobson whether he was aware of Yuen’s view that the amendment proposed by Bill 309 does not allow for resorts, JDI’s Tarnas said that he was.
“Do you agree?” Jacobson asked.
Tarnas replied, “I’m supporting the planning director’s amendment and supporting this project as appropriate.”
Jacobson persisted, “Have you any interpretation whether a resort would be allowed under this designation?”
“I wouldn’t want to say that a resort wouldn’t be allowed here… This project is a mixed uise Urban Expansion project,” Tarnas said.
“Rather than changing General Plan designation to support resorts, you may want to change the lease agreement with the state rather than change the whole General Plan,” Jacobson said.
When Environment Hawai`iasked whether JDI would continue to push for resort zoning, Tarnas replied, “We are not ‘pushing’ for resort zoning. If necessary in the future, we would apply for resort zoning.”
Under the Hawai`i General Plan,
• Resort area designation allows for hotels, condominium hotels, and support services;
• Resort node designation is for major resort areas, or areas that include “a mix of visitor-related uses such as hotels, condominium-hotels (condominiums owned and/or operated as hotels), single family and multiple family residential units, golf courses and other typical resort recreational facility, resort commercial complexes and other support services,”;
• Urban expansion designation allows for commercial, multiple and single family residential, neighborhood commercial, industrial, industrial-commercial and/or open uses “in areas where new settlements may be desirable, but where the specific settlement pattern and mix of uses have not yet been determined,”; and
• Open designation allows for parks and other recreational areas, historic sites, and open shoreline areas.
— Teresa Dawson
Volume 17, Number 3 September 2006
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