Maui Land & Pineapple Co. logged net profit of $500,000 in 2018 on the strength of a $5 million benefit from the new federal tax law, despite revenue being half as much as 2017, according to company filings.

Expenses also increased by $2.2 million, driven mostly by a $1.9 million increase in the real estate sector to settle lawsuits filed over The Ritz-Carlton Club and Residences, Kapalua Bay. The costs included legal fees, mediation and settlement costs, according to the Kapalua-based company’s annual report filed last month.

On the revenue side, ML&P reported $11 million in 2018, compared to $24.6 million in 2017. Real estate sales have been the main revenue driver for the company in recent years, and in 2017 ML&P sold the 15-acre Kapalua Golf Academy practice course for $7.6 million, realizing a gain of $6.4 million, most of which was used to pay down a loan.

There were no major real estate sales in 2018.

ML&P, once one of the largest employers on the islands with pineapple fields Upcountry and in West Maui, reported a net income of $500,000, or 3 cents per share, in 2018 compared to $10.9 million, or 57 cents a share, in 2017.

Bringing the year into the black, the company recorded an income tax benefit of $5 million for unused Alternative Minimum Tax credit carry-forwards, which will be refunded under the Tax Cuts and Jobs Act signed into law in December 2017, a news release from the company said. Among the changes cited in the annual report was a decline in the corporate income tax rate from 35 percent to 21 percent.

In the final quarter of 2018, ML&P reported a net profit of $3.7 million, or 19 cents a share, compared to a $900,000 net loss, or 5 cents a share, in 2017. Operating revenues were $1.7 million for the quarter compared to $2.5 million in 2017.

The lawsuits that put a drag on the company in 2018 and were finally resolved in February trace back to the Great Recession. The Residences of Kapalua Bay luxury condos, which was completed in 2009 at the beginning of the recession, was financed by Lehman Brothers, which went bankrupt. ML&P was a partner in the development, which ended up being foreclosed on with the company on the hook for obligations associated with the project.

ML&P was one of the parties in lawsuits filed by some owners of units and timeshares in the project formerly known as The Ritz-Carlton Club and Residences, Kapalua Bay, the annual report said. The lawsuits were filed in 2nd Circuit Court on May 23, 2011, June 7, 2012, and June 19, 2013. The lawsuits alleged deceptive acts, intentional misrepresentation, concealment, and negligent misrepresentation, among other allegations, and sought unspecified damages and other relief.

In September, the defendants reached a settlement with the plaintiffs in the 2011 lawsuit and two of the 10 plaintiffs in the 2012 lawsuit. Under terms of the confidential settlement agreement, ML&P made an undisclosed payment in October to be released from the lawsuit.

In November, the company reached a settlement with the eight remaining plaintiffs in the 2012 lawsuit. In the confidential agreement, the company’s insurance carrier made an undisclosed payment in November to release the company from the lawsuit. In addition, the company’s insurance carrier in December reimbursed ML&P for certain defense costs it incurred in the 2012 lawsuit, the annual report said.

In February with a trial ongoing, ML&P reached a settlement with the plaintiffs in the 2013 lawsuit. ML&P will be making an undisclosed payment to be released from the lawsuit in the confidential settlement. The undisclosed payment was accrued as of Dec. 31, the annual report said.

ML&P also was preliminarily assessed a $230,000 administrative penalty for alleged violations related to the company’s Upcountry wastewater treatment facility, the annual report said. The facility was built in the 1960s for 200 single-family homes developed for workers in the company’s former agricultural operations. The facility is made up of two 1.5-acre wastewater stabilization ponds and surrounding disposal leach fields.

After an inspection in June, the Health Department issued the administrative penalty and ordered the development of a new wastewater treatment plant. The company has requested a hearing to contest the violations and penalties, with the proceeding set for September. The penalty and order are pending the hearing.

Without any major real estate sales in 2018, more than half of the company operating revenues, 56 percent, came from ML&P’s leasing sector, which netted $6.2 million in 2018. The sector includes residential, resort, commercial, agricultural and industrial land and property leases, as well as licensing of the company’s registered trademarks and names and stewardship and conservation efforts.

ML&P owns and leases about 190,000 square feet of commercial, retail and light industrial properties, including restaurants, retail outlets, office buildings, warehouses and Kapalua Resort activities. The company also has 1,900 acres of diversified agriculture leases in West Maui and Upcountry.

The company owns a total of 22,800 acres, with 21,000 acres in West Maui. The rest of the land, is in Haliimaile.

ML&P has a 630-acre parcel of agricultural land and a 33-acre parcel of agricultural land and wastewater treatment facility in Upcountry on the market, the annual report said.

State and county land-use entitlements have been secured for the Kapalua Mauka and Kapalua Central Resort developments, which have projected completion between 2020 and 2039.

Kapalua Mauka is a long-term expansion project upslope of the existing Kapalua Resort. As presently planned, it encompasses 800 acres and includes up to 639 residential units with amenities, including up to 27 additional holes of golf. State and county land-use entitlements have been secured for this project, the annual report said.

Kapalua Central Resort is a commercial town center and residential community in the core of the Kapalua Resort. It is composed of 46 acres and is planned to include up to 61,000 square feet of commercial space and 188 condominium and multifamily residential units.

A longer-term project is the expansion of Haliimaile town. This project is envisioned to be a holistic traditional community with agriculture and sustainability as core design elements. The project includes 290 acres with small-town classification in the Maui Island Plan. Land-use entitlements have not been obtained and “are expected to take several years,” the annual report said.

The company has a $15 million revolving line of credit with First Hawaiian Bank, which matures at the end of the year. The average borrowing was $1.3 million in 2018. As of Dec. 31, the company had $13.8 million on that line of credit.

Shares of company stock traded between $9.23 and $17.55 during 2018.

ML&P currently has 14 full-time employees.

Earlier this month, ML&P announced its annual shareholder meeting will be held on April 24 at the Maui Land & Pineapple Co. Honolulu Office Conference Room.

* Lee Imada can be reached at leeimada@mauinews.com.