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KAHULUI- The Fairways at Maui Lani - one of two subdivisions at the center of lawsuits over grading laws and site preparation damages - is being put up for sale.

The asking price is $13.5 million.

The 50-lot subdivision on the Dunes Golf Course was put on the market Tuesday, according to listing agent Tamio Iwado of Prudential Iwado Realty in Kahului.

The 13.5-acre subdivision borders Palama Drive, where up to 30 feet of new fill added to the project site has the still-vacant subdivision towering over the older Kahului homes.

Residents from Palama Drive and other residential areas affected by the new Maui Lani projects have filed lawsuits over the fill allowed in the Fairways and the New Sand Hills subdivision, charging that the county failed to adhere to its own laws restricting the amount of fill allowed in new projects.

During development of the Fairways subdivision, homeowners along Palama Drive also suffered flood damage from runoff from the construction site that was being built up from a gulch that bordered the older homes, turning the subdivision site into a hill.

"This is not right at all," Palama Drive resident Hirum Heu said Thursday.

He said he was unaware that the site was put up for sale, but predicted there may be buyers even if the sale notice warns of pending litigation.

"People that don't know, they're going to eat it up. There's going to be a lot of people jumping at this," he said.

"This is crazy."

Lance Collins, one of the attorneys representing the Palama Drive homeowners, said any buyer would be subject to the legal actions if the homeowners' complaints are not resolved.

"I think it would be ideal that this issue be resolved versus getting passed on to the next developer," he said.

"Essentially you are paying $13 million to enter into a lawsuit. At the present moment it's essentially 30 feet of fill or more. Thirteen million dollars for 30 feet of fill is expensive."

The property is owned by VP&PK LLC, based in Aiea, Oahu.

"I think it's just a business decision of the developer," Iwado said of the decision to market the property.

Iwado said he hasn't had any inquiries on the subdivision.

The listing says the infrastructure for the subdivision including sewer, underground electric, cable, telephone and drainage, will be completed within the next 30 days.

"This is an ideal investment opportunity for a mid-level homebuilding company as you can immediately go in for building permits for your homes, limiting the carry costs to a minimum," the listing says.

The agent listing does say the parcel is "currently pending litigation."

The litigation involves two civil suits filed by homeowners. One complains that Maui County ignored its own laws in allowing the subdivision to proceed with filling in the sites at both the Fairways and at the New Sand Hills project. The other seeks compensation for damages that occurred while construction was under way.

While the 1,200-acre Maui Lani project district was granted Phase 2 project district in 1981, the county changed its grading ordnance in 1991 to restrict what could be built on land that is filled.

Under the 1991 law, when a landowner adds fill to a house site, structures may be no more than 30 feet above natural grade or fill grade - whichever is lower. Under the 1991 law, a developer adding 30 feet of fill could not be allowed to build any structure on a residential site.

When VP&PK LLC initially submitted its subdivision plans, then-Planning Director Mike Foley ruled that the 1991 limits on fill applied. But Mayor Alan Arakawa interceded after consulting with county attorneys and granted the subdivision plans based on the 1981 Phase 2 approvals that provided for changes in the drainage patterns across the project district to use the Maui Lani Golf Course as a drainage basin.

The suit against the county charges that the mayor improperly voided the 1991 limitations on filling the site and seeks a declaratory ruling to order the county to adhere to its grading ordinance. That could prevent the county from issuing building permits on the filled land.

Although VP&PK LLC and New Sand Hills LLC, and their contractors, were dismissed as defendants from the lawsuit seeking to enforce current height limits, Collins said the developers have intervened to participate in hearings on the complaint.

The other homeowners' suit is against the developers and seeks compensation from the developers and contractors for damages alleged to have resulted from the construction work, including damage from flooding, construction dust and vibrations from more than a year of heavy equipment operations. Storm runoff from the Fairways site flooded Palama Drive yards and homes repeatedly after the fill process began in 2006 in the gully that had been diverting runoff from the neighborhood.

Heu's wife, Annette, said she felt "bothered" by the sale.

"This is not Palama's problem, it's Maui's problem," she said, sometimes fighting back tears as she spoke about the injuries inflicted on her neighborhood.

Annette Heu said she hoped that no other neighborhoods would have to go through what she and her neighbors have gone through.

She walked to a neighbor's home to point to dust and dirt coating the walls and garage floor. The home belonged to an elderly man, who had been able to keep it spotless before the fill went in, she said. She also pointed to the large rock wall topped with new white fencing that practically surrounds the home and runs behind nearly all of the homes along Palama Drive - including the Heus'.

"I walk out my door every day and see this," Annette Heu said.

Another neighbor, Lillian Torrecer, suffered flooding in her backyard, garage and washroom in November 2006, after a heavy rain sent muddy construction runoff through her yard. A retaining wall built by the contractor repeatedly failed when rains hit the area.

Torrecer, saying she misses her view of the West Maui Mountains and kiawe trees in her backyard, said she always thought the property behind her home would be sold in individual residential lots instead of as an entire subdivision.

"I assume they'll buy the problems that go with it," she said.

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