Proposal for Hamakua Development Steers Clear of Environmental Review

posted in: April 1992 | 0

On December 10, 1991, the Hawai’i County Council gave its final approval to eleven separate bills that, taken together, clear the way for unprecedented changes in the landscape and social character of the Hamakua Coast, especially along the eastern rim of the Waipi’o Valley. The anticipated development there, covering more than 3,000 acres, includes: three golfcourses and a golf practice facility (for a total of some 67 playing holes covering about 660 acres), a 200-unit hotel, a 100-unit “retreat resort”, 175 condominium units; 1,225 single-family residences (including some on newly created “agricultural” lots); and a new major highway linking Kukuihaele town with Waimea.

The council’s approvals entailed changes to the county General Plan, zoning changes, and state land use boundary amendments. In addition, they were accompanied by permits issued by the county Planning Department (for development within the Special Management Area along the coast and for golf courses on agricultural-zoned land).

It is not unreasonable to imagine that development on such a scale as this would pull at least one of the several triggers contained in the state environmental impact statement law, Chapter 343 of Hawai’i Revised Statutes, and in the county’s own law. Nonetheless, despite a high level of public interest in the fate of the lands at issue – all of which had been cultivated in sugar cane for decades – and the fact that the county has routinely required that the environmental impact statement process be undertaken for projects of far more modest proportions, no EIS was required for this project.

At no time was the public put on notice through the mechanisms anticipated in state law that this development was in the works. At no time were the extensive, detailed documents describing the planned development announced as being available for public review. At no time was the developer required to address concerns that the public might have regarding the means by which significant impacts – including many acknowledged by the developer – could be mitigated or avoided.

The land at issue is in one of several areas where Hamakua Sugar Company intends to sell off most of its holdings as part of a plan to pay off its creditors. No other area – in Laupahoehoe, Paauilo, and Honokaa- involves as many acres or as high an expected sale price as the Kukuihaele properties. The 3,800 acres that Hamakua Sugar wants to sell in the Kukuihaele area, for example, were at one point under contract for $95 million (roughly $25,000 per acre). This is equal to almost two thirds of Hamakua Sugar’s total indebtedness.

The first agreement of sale fell apart on the eve of the New Year. No new agreement has been announced. Still, Hamakua Sugar’s owner, Francis Morgan, is counting on selling the Kukuihaele lands for roughly the same price and for the same purpose. Should that occur, the ability of the public to comment in a structured, formal manner on the development plan will be foreclosed, while the Legislature’s clear intent in establishing Chapter 343 will be frustrated.

An EIS that Wasn’t

In fact, a document bearing a striking resemblance to a draft environmental impact statement was prepared for Hamakua Sugar by Belt Collins & Associates. Bearing the title “Kukuihaele Land Use Plan: A technical report assessing the impacts of proposed land uses,” and the date of April 1995, this document contains most of the information required of environmental impact statements. But because it was never made subject to the public notification and comment requirements imposed on environmental impact statements and environmental assessments, it falls short of meeting the definition of an environmental impact statement.

The report’s Introduction summarizes what Belt Collins takes to be “some of the more significant impacts.” They include increased rate and volume of runoff as a result of the development; impacts on native fauna in stream drainages and Lalakea Reservoir; erosion during construction; possible damage to nearshore water quality resulting from the use of fertilizers and pesticides; an aggravated shortage of labor, resulting in the need to import labor from off-island; increased demand for housing; possibility of insufficient water to meet the needs of diversified agriculture, increased electrical demand; growth in school enrollments; increased volume of solid waste generated, more traffic on the Hawai’i Belt Road and greater congestion on the Honoka’a-Kukuihaele Road; loss of archaeological features; and a “change in overall visual character of the area; possible impacts on Waipio Valley.”

Mitigating measures are identified for each impact. However, the sufficiency of those measures has not been subjected to the test of public review. Moreover, at no point is there a commitment, by Hamakua Sugar or its successors in ownership of the affected lands, to implement the identified mitigation measures.

Going, Going…

In January 1990, Hamakua Sugar defaulted on a mortgage payment of more than $3 million due its major creditor, the Western Farm Credit Bank. According to a document called the “Problem Statement,” prepared by the Office of State Planning, as a result of the default, the bank and other lenders “entered into a forbearance agreement, which required that a portion of Hamakua Sugar lands would have to be sold to repay the loans. … [They] agreed to a plan proposed by Hamakua Sugar Company to auction off approximately 5,000 acres of plantation land.”

The company hired a Boston firm to prepare a lavish auction catalog, showcasing land that Hamakua Sugar deemed to be unnecessary to its core sugar plantation. Most of the parcels were to be sold at auction in June of that year, however, the land around Kukuihaele was to be sold at auction in August. (Asking price was $17 million for the parcel makai of the state road and $30 million for the mauka parcel. The plantation manager’s house in Kukuihaele was on the block for $2.5 million.)

The first 1990 auction fell far short of expectations. While the catalog valued the total area of land up for sale (lying between Honoka’a and Papa’aloa) at more than $15 million, the June auction generated just $1.3 million on 12 parcels – substantially less than the $1.9 million that had been sought for the acreage sold. According to the “Problem Statement,” “bids were rejected on seven properties worth a total asking price of $3 million.”

(Several reasons have been put forward to explain the poor results of the June 1990 auction. One is that the agricultural zoning on most of the parcels precluded development of the sort that would be needed to allow investors a reasonable return on their investment, if they were to pay the prices sought by Hamakua Sugar. The decision of Hamakua Sugar not to allow brokers their customary cut on any deal has been cited as another major reason for the auction’s failure.)

On July 1, 1990, Hamakua Sugar failed to pay Western Farm Credit Bank the $35 million needed to avoid default. At that time, the bank took title to approximately 8,000 acres of Hamakua Sugar land – primarily in the Laupahoehoe and Kukuihaele areas.

The Hamakua Regional Plan

Within the month, Governor John Waihe’e announced that the August 16 auction had been called off and that he had formed “a steering committee to guide the development of a master plan for the Hamakua Coast, including permanent protection of the Waipi’o Rim. “Committee members included delegates from the Western Farm Credit Bank, the Office of State Planning, the International Longshoremen and Warehousemen’s Union (which represents most of the state’s plantation workers), the Governor’s Agricultural Coordinating Committee, the Department of Agriculture and the Department of Land and Natural Resources. Also sitting on it were Francis Morgan and County Council Member Takashi Domingo, who represents the Hamakua area, who is chairman of the council’s planning committee and who until recently worked for Hamakua Sugar Company. Serving as the committee’s chairman was Duane Kanuha, then head of the county Planning Department. (He left the county’s service within the year to work for Hamakua Sugar Company as head of its land management division.)

The committee worked against a tight deadline: the Western Farm Credit Bank had set a deadline of December 31, 1990, for resolution of the default on its loan. One of the first actions undertaken by the committee was an opinion survey of Big Island residents, which yielded three primary considerations for any development. As described by the committee, they are as follows:

“The preservation of the Waipi’o Rim is an unqualified precondition to consideration for development;

“While there is need for development, special places in Hamakua need to be preserved. In addition to the Waipi’o Valley Kukuihaele was noted as having several plantation related homes as well as a long history of support to HSC; and

“The development of small-scale resorts or related golf courses had to result in minimal impacts to the community. These impacts could include traffic, construction and architecture out of character with the rural ambience of the area.”

By November, the committee had completed its task and had issued its report, “The Hamakua Regional Plan.” It had identified some 9,500 acres of land owned in fee by Hamakua Sugar Company or Kualoa Ranch (the O’ahu-based ranch that, like the sugar company, is owned entirely by the Morgan family) that would need to be sold. It also characterized the type of development for the area that would simultaneously achieve the financial rescue of Hamakua Sugar while avoiding unwanted impacts of growth in areas that all parties agreed should retain their rural character.

Bound into the same volume as the report was a resolution by the County Council endorsing “the land use concepts” (as they were presented to the council’s Planning Committee on October in, 1990) developed by the Steering Committee. The council resolution’s next clause, however, resolved further “that all development proposals affected [sic] by this plan shall still be subject to the same standards of review relative to land use procedural requirements, community participation and infrastructural impacts and obligations thereto.”

The ink was hardly dry on the Hamakua Regional Plan when, in January 1991, Francis Morgan announced that he had entered into an agreement with Royal Coast Waipi’o Corporation for the purchase of more than 3,800 acres in the Kukuihaele-Waipi’o Rim area Royal Coast Waipi’o, whose president is the developer Eugene McCain, in turn entered into an agreement with the Japan-based Sokun Hawai’i, Inc., calling for Sokun to purchase the makai portion of the area, consisting of roughly 600 acres. The total sale price was reported to be $95 million.

Da Kine EIS

These, then, were the events that led up to Hamakua Sugar and Western Farm Credit Bank approaching Belt Collins & Associates with the request to prepare the EIS-like document known as the “Kukuihaele Land Use Plan,” used as a basis for decision-making by the council, the Planning Department, and the Planning Commission. On May 15, 1991, Hamakua Sugar Company applied to the county Planning Department for a number of amendments to the land use boundaries and zoning changes. Subsequent to that, county Planning Director Norman Hayashi applied (late July 1991) for the amendments to the county General Plan that would be the necessary first step to go forward with the rezonings and land use changes sought by Hamakua Sugar Company. (In other words, as a matter of procedure, the General Plan amendments must precede action on rezoning and land use district boundary requests.)

County ordinances as well as the state’s Chapter 343 donor require the Planning Department to prepare an environmental assessment or EIS when it initiates changes to the General Plan. Private parties proposing such amendments, however, must accompany their petitions for amendment with an EIS, according to county law. Additionally, the County Code provides that an EIS must be prepared for any zoning change proposed for the construction of hotel or condominium developments as well as for so-called “destination resort communities”.

The approvals needed for the resort development – General Plan amendment, golf course permits for land remaining in the agricultural district, land use boundary changes for several parcels under 15 acres in size for intensive hotel – condominium development, zoning changes needed to allow the developer to apply for building permits – whizzed through the Planning Commission and the County Council with hardly more than token challenge. When questions were raised as to the wisdom of rushing such far-reaching changes through to passage, the integrity of the questioner was usually impugned.

A Voice in the Wilderness

Only one person stood in the way of the Hamakua steamroller: Henry Ross, an elderly gentleman living in North Kohala. Ross has said he was unhappy with the way in which laws intended to provide for public review and comment had been circumvented and so he sued to bring a halt to the process.

The various county agencies and personnel involved were named by Ross as defendants. However, Hamakua Sugar Company was granted standing by the court to intervene as co-defendant and, to judge from court transcripts, the company’s private lawyers (Gary Grimmer and Tim LuiKwan, of the firm of Carlsmith Ball Wichman Murray Case Mukai & Ichiki) presented the bulk of the defense against Ross’s complaint.

Ross’s case was eventually thrown out by Judge Ernest Kubota without the merits being addressed; Ross has filed a new complaint, as has Greenpeace Hawai’i.

Whatever the legal outcome, statements made by Grimmer during the court hearing of December 11, 1991, shed light on the county’s and the company’s regard for the public-review process set forth in Chapter 343. According to Grimmer, even though the threshold for preparation of an EIS under either the county or state framework had not been crossed, the Kukuihaele Land Use Plan nonetheless counted as an EIS Moreover, Grimmer told Kubota, the plan “has been deemed by the county planning director as an Environmental Impact Statement in compliance with the County Environmental Impact Statement requirement. Finally, Grimmer reported that the Planning Commission had specifically asked a county planner “whether the Kukuihaele Land Use Plan is an EIS under the County Code for the purposes of the County Code. And her response was in the affirmative.”

Hawai’i County’s ordinance establishing an EIS system was enacted in 1974, the same year that the state’s EIS statute was added to the books. The county law requires developers to prepare and submit an EIS to the Planning Commission for proposals to construct hotels, condominiums, or any other development requiring a Planned Development permit. Although announcement of a finding of no significant impact or of the preparation of an EIS in the state OEQC Bulletin is not specifically required by the county ordinance, the county Planning Department customarily does publish such notices. No notice appeared, however, for any of the actions proposed by Hamakua Sugar Company.

Volume 2, Number 10 April 1992