Panel approves RFP plan for Maui Lani lots

Budget committee recommends sale of land with affordable housing restrictions

WAILUKU -- A Maui County Council committee is recommending that the county sell 55 residential lots it acquired in a legal settlement six years ago for development as affordable housing.

The Budget and Finance Committee on Tuesday sent a resolution to the full council, urging Mayor Alan Arakawa to issue a request for proposals to sell the lots at The Fairways at Maui Lani in Kahului at a "discounted price" of $8 million with affordable housing restrictions.

A selling price of $9.8 million by public auction initially was proposed for the lots acquired in August 2011 for $11.8 million as part of a settlement with developer VP & PK LLC in a dispute over fill and grade heights for homes more than a decade ago, county officials have said.

The $8 million price tag for the lots comes with development restrictions, such as selling single-family homes to those with very low and low income (25 house-lot packages for $290,450) and with below-moderate income (25 house-lot packages for $372,050), based on federal Housing and Urban Development income criteria.

Four lots are designated for roadway development and one for drainage.

Other conditions call for work on the homes to begin two years after the sale and for the developer to post a construction bond.

Committee members voted 7-0 in support of the resolution with members Kelly King and Elle Cochran excused. The resolution now heads to the full council for a final decision.

Maui County Communications Director Rod Antone was noncommittal on the resolution, saying that if the resolution is passed by the full council, the administration "will definitely take a look" at it.

The committee's action Tuesday concludes many discussions by council members on what to do with the property. Arakawa put together a task force in late 2016 to consider options for the properties; members included Hokama as chairman and representatives from the departments of Public Works and Housing and Human Concerns.

The task force recommended that the parcels be sold for $9.8 million because the option presented the least market risk to the county and would be a quick way for the county to recoup some of the sale price. The recommendation was taken up by the budget committee, which in June sent the matter to the council's Housing Human Services and Transportation Committee to explore affordable housing options.

Budget Chairman Hokama said Tuesday that he listened to the housing committee and his fellow members to assemble the RFP option. He assured council members that they still will have a say on the fate of the resolution.

The specific provisions in the resolution, such as the sale prices of the homes, were inserted so developers and potential buyers, which could be nonprofit housing organizations, would "know what we require" and would "make up their mind . . . if they can or cannot do it."

Just holding the lots is costing the county money. In response to a question by Council Member Yuki Lei Sugimura, Maui County's Real Property Manager Guy Hironaka said that last year holding costs incurred by the county for the property were $230,000 and that the amount grows by about $40,000 each year. He said the total includes includes monthly maintenance fees of $3,200.

The Fairways lots have been the subject of lawsuits and court hearings that go back to the first administration of Arakawa in the early 2000s. The dispute centers on the development and final grade heights of homes.

In 2005, Arakawa decided to exempt two Maui Lani developments from the county building height ordinance at the time, which would have limited the developer's ability to fill in the land before building. In overruling one of his directors, he agreed to allow The Fairways and New Sand Hills projects to proceed under grade height provisions in place in 1991, when the project received its initial permits.

Those rules allowed the developers to use as much as 30 feet of fill before building the homes, which blocked views of existing older homes on Palama Drive and raised questions about drainage and flooding from the altered landscape. Homeowners also complained about the dust and vibrations from compacting the fill.

The neighbors of the development sued the county over the approval of the permits for the project and in 2008 a 2nd Circuit judge invalidated Arakawa's decision.

In 2011, the County Council passed an ordinance specifically for the developments that basically reinstated the older building height provisions. That allowed the developments to proceed as originally planned.

The developers and contractors also faced a lawsuit from neighbors of the developments near Palama Drive over land preparation and the thousands of tons of dirt trucked in to turn a gulch into a hill. In 2009, a jury awarded eight owners of six homes on Palama Drive $232,700 in damages. However, eight owners of five other houses were not awarded damages and later were ordered to pay legal costs for the defendants.

* Melissa Tanji can be reached at mtanji@mauinews.com.