ML&P suing over project

KAPALUA - Maui Land & Pineapple Co. is suing the county Department of Housing and Human Concerns to enforce a 2004 affordable housing agreement. The county says ML&P's Project District 1 at Kapalua now is governed by the 2006 ordinance that mandates 50 percent affordable housing in new residential developments.

Ryan Churchill, ML&P senior vice president for community development, says the company voluntarily agreed to provide 40 percent affordables for its Central Resort Project at a time when the county had no ordinance on work force housing.

The Central Resort mixed-use project, which is scheduled to break ground late next year, includes 196 residences; so the difference between 40 percent and 50 percent is 20 units.

The suit was filed Friday in U.S. District Court in Honolulu. As of Monday afternoon, the county had not been served, and spokeswoman Mahina Martin said it therefore had no comment.

The suit includes a photocopy of a letter sent Dec. 6, 2006, to Alice Lee, then the director of the housing department, asking her to confirm that Lahaina Project District 1 was covered under two exemptions in the housing bill, which had passed the County Council just three days earlier.

On Dec. 12, Lee and Alan Arakawa, then the mayor, signed the letter. ML&P was reassured that its 2004 affordable housing agreement was valid.

The work force housing bill had been controversial, with Mayor Charmaine Tavares, then on the council, pushing for an 80 percent requirement. Other members had suggested proportions as low as 40 percent. Gov. Linda Lingle, who had been on the council when Maui's very first work force housing bill (later repealed) was passed, advised against it; and Arakawa vetoed it. The council overrode him.

The work force housing bill would not affect ML&P's proposed Pulelehua new town, which will be more than 50 percent affordable, but its implications for the company go beyond the 20 units at the Central Resort. Project District 1 covers about 214 acres, and the zoning allows for a 500-room hotel and 800 residences.

"We're not planning to do that," Churchill said Monday.

According to the complaint, the 2006 work force housing ordinance allowed for two exceptions, and ML&P qualified under both:

* It had an "executed affordable housing agreement with the county, currently in effect and approved."

* It was subject to a zoning condition that required either affordable or residential housing.

A project district is its own zone, granted by the county to allow flexibility in meeting a list of declared goals to attain "quality development." Project District 1 was enacted in 1989.

In October 2006, at the height of the furor over the housing bill, ML&P applied for special management area permits to develop 40 acres of Project District 1 into residential-commercial mixed use, a large-lot subdivision of 15 lots and administrative buildings.

According to the narrative in the complaint, in March 2007, as part of the SMA review, the housing department sent a letter to the Planning Department alerting the staff planner that the ML&P-county agreement was "being sent to the County Council for their review and comments, under what was previously Chapter 2.94" of the code, which had by that time been repealed.

In April, the housing department sent a letter to the planning director saying it had determined that the project was subject to the new work force housing law.

ML&P asked for an explanation, and in reply received a "short letter."

Meanwhile, a special management area permit hearing at the Maui Planning Commission, first scheduled for April, was delayed to allow ML&P and the housing department to "resolve" the requirement for affordables.

The commission in June approved the SMA permit, imposing a condition for a voluntary 40 percent contribution, unless there were a determination that 50 percent was applicable.

ML&P says it tried in November and again in February to get the housing department to answer its analysis of the history of the agreement.

The lawsuit says the actions by the Department of Housing and Human Concerns violate the company's contract and due-process rights.

It asks the court to declare that the 2006 work force housing law does not apply to Project District 1 and to issue an injunction requiring the county to perform its part of the bargain under the contract.

It also claims that since ML&P relied on county assurances, it has vested rights and incurred obligations, including a 38-unit affordable housing project at Honokeana and transfer of land at Hale Noho to the county for 20 more units.

* Harry Eagar can be reached at heagar@mauinews.com.