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13-year-old ‘fast track’ project nears ‘no track’

LUC to consider reverting 116 acres in Waiehu to agriculture

Remember Hale Mua, the affordable housing planned in Waiehu by developer Sterling Kim?

Well, you might as well forget about it, especially after the property has been foreclosed on and the new owner has no development plans.

On June 4, the state Land Use Commission issued an “order to show cause” why it shouldn’t revert 116.2 acres mauka of Kahekili Highway from urban land use back to its former agricultural designation because there’s been no construction on the “fast track” Hale Mua project approved by the Maui County Council in 2005 and the commission in 2007.

In response to the order, new owner Southwest 7 informed the commission that it had acquired the Waiehu land through foreclosure after Kim defaulted on a $10.6 million loan in April 2011.

Southwest 7 “had no intention of acquiring the property for the purpose of development,” wrote attorneys Randall Sakumoto and Kelsey Yamaguchi on behalf of the owner. And, “successor petitioner is not interested in developing the reclassified area and has not commenced development of the reclassified area.”

The Southwest 7 attorneys detailed how the new owner has done nothing to develop the area and was unaware of anything Kim or Hale Mua Properties had done to begin development as had been represented before the commission.

The Maui County Department of Planning and state Office of Planning have no objections to reverting the Waiehu property back to its agricultural land-use designation.

On Wednesday, the commission had set a meeting to hold an “order to show cause” hearing with witness testimony and the receipt of exhibits. But, after attempting to convene a morning meeting at the Maui Arts & Cultural Center, the commission postponed it because of a lack of a quorum. The commission needs five members for a quorum and only Vice Chairwoman Nancy Cabral and commission members Edmund Aczon, Dawn Chang and Gary Okuda were present.

The order to show cause hearing was rescheduled for September on Maui.

Originally, Hale Mua Properties had sought to reclassify 240 acres from agricultural and rural districts to urban, but on Feb. 12, 2007, the commission denied reclassification of 120.9 acres and ultimately ordered the reclassification of the 116 acres from agriculture to urban. That would have allowed for Hale Mua developers to build 238 affordable homes (priced at the time as low as $200,000 and with an average price of $275,000) and 209 market-priced homes. The project had included $15 million to $20 million in off-site improvements, such as the extension of Imi Kala Street with a new bridge crossing the Wailuku River. There also were sites for an elementary school and a park.

The project site was on land formerly used as a macadamia nut farm on the mauka side of Kahekili Highway, above Waiehu Terrace and Waiehu Heights.

The affordable homes were to have been built on 5,000-square-foot lots on the lower part of the property, while the market-priced units were planned for 10,000-square-foot lots at higher elevations with ocean views. Also, because the property could not be reached by the county’s sewer system, the project would have needed its own wastewater treatment plant.

The project was in trouble even as it won approval from the Land Use Commission in 2007.

At that time, Kim reported mounting costs and delays could kill the project. He told commissioners in February 2007 that delays had cost him $1 million, and that was before the subprime mortgage crisis hit, crashing the real estate market and contributing to the Great Recession from December 2007 to June 2009.

Attempts to contact Kim for comment were unsuccessful Wednesday afternoon.

* Brian Perry can be reached at bperry@mauinews.com.