The Kaʻanapali Land Management Corporation has been working on its 2020 master plan for more than a decade, and it is still, apparently, a work in progress.
But a project to develop an exclusive agricultural subdivision on some of its mauka lands is a done deal. By 2018, KLMC says in its promotional materials, all but one of the 52 lots, each between four and seven acres, had been sold.
Buyers are not coffee farmers – at least not in any traditional sense of the word. KLMC has described the operation to lot owners this way:
“On your Farm Lot, a ‘Farm Dwelling Site’ of roughly one acre will be set aside for your exclusive use. You may build a main house, cottage, and also a workshop or artist’s studio. … Most of the acreage beyond the Dwelling Sites will be planted in coffee trees. Kaʻanapali Farm Services, Inc., tends the crop and MauiGrown Coffee, Inc., processes and markets it under contracts with the community’s association.”
Vacant lots now sell for seven figures. Current real-estate listings include a 5.18-acre property, consisting of a 3,555-square-foot house with five bedrooms, four baths, heated pool and jacuzzi, and an associated “farm building.” That “farm building,” the listing says, “spans 1,454 square feet” and “accommodates a bedroom, a bathroom, a gym, and even an outdoor shower.”
Of the 52 lots, 41 are owned by people or entities that are out of state, including several in Canada. Sixteen are held by limited liability companies or other businesses.
Taxes on the land are modest. Land that is not the house site is taxed at agricultural rates. A five-acre estate, for example, has 3.6 acres of agricultural-zoned land assessed a value of $1,226, or about $334 an acre. The 1.4 acres surrounding the 3,470-square-foot house, on the other hand, is assessed at $685,300 – roughly half the market value of $1.28 million, according to the Maui County tax records. The house, with pool and other amenities, is assessed at just under $3 million. For 2023, the total taxable value for the property was set at $3,646,000, with property taxes amounting to $27,000.
While most of the lots are allowed two “farm dwellings,” vacation rentals are not generally allowed. A different but nearby five-acre estate, with 4.6 acres of ag land assessed at $1,552 and a half-acre house site, assessed at $415,300, obtained a special use permit in 2015 allowing it to be used as a short-term vacation rental. While the total taxable value of this property is less than that of the nearby five-acre estate — $3,207000 – the property tax bill for 2023 was higher: $38,000. Rental charges at the property, advertised as “Maui Rainbow Villa,” start at $1,675 per night.
Coffee Water
The coffee lots are irrigated with water from the former Pioneer Mill irrigation system. According to the state Commission on Water Resource Management, KLMC “has applied for an existing ground water use permit for Honokowai Tunnel 1, … Honokowai Tunnel 2 … and Puʻukoliʻi well. … The water from these tunnels flows into Honokowai Stream and is then diverted via the Honokowai and Honokohau ditch systems.”
In a filing with the Securities and Exchange Commission, the company reported that last March, it had been served with a notice of violation by CWRM. The violation, KLMC stated, concerned “the metering and monitoring of certain designated areas within the Honokowai aquifer and hydrologic unit, as well as certain waste conditions CWRM allegedly observed on prior investigations of those certain areas.” Environment Hawai‘i asked CWRM for details but received no response by press time.
The company has also applied for two surface water use permits: the Kapaloa tributary of Honokowai Stream via the Honokohau and Honokowai ditch systems, and Honokohau Stream via the Honokohau ditch system.
A portion of the ditch system extends over state-owned land. In 2018, the state Department of Land and Natural Resources’ Division of Land Management proposed that the Board of Land and Natural Resources approve an easement allowing KLMC to continue its use of the state land for its ditch system. That proposal was withdrawn. No further approvals have been sought since then.
The deeds for the coffee lots contain specific language concerning the use of irrigation water by the association of homeowners: “In its withdrawal and use of water under the Individual Water Agreement, the lot owner shall do no act or thing (or omit to do any act or thing) which causes the Association to be deemed a public utility engaged in the sale of water under law and subject to regulation by the state of Hawaiʻi Public Utility Commission and/or the Water Commission of the state of Hawaiʻi.”
Chapter 269, HRS, defines as a public utility “every person who may own, control, operate, or manage as owner, lessee, trustee, receiver, or otherwise … any plant or equipment … directly or indirectly for public use … for the production, conveyance, transmission, delivery, or furnishing of light, power, heat, cold, water, gas, or oil…”
— Patricia Tummons
Leave a Reply