Halting the controversial Kihei shopping centers that have come under scrutiny by the state Land Use Commission could also jeopardize 250 affordable housing units promised to Maui County five years ago.
The two separate projects share the same 88-acre lot along Piilani Highway that's subject to conditions the commission imposed in 1995 when granting a land reclassification from agricultural to urban.
At the time of the change, former landowner Kaonoulu Ranch had proposed a light industrial subdivision for the site, mauka of the Kaonoulu Street-Piilani Highway intersection.
One of the 1995 conditions states that the developer "shall develop the property in substantial compliance with the representations made to the Land Use Commission. Failure to so develop the property may result in reversion of the property to its former classification or change to a more appropriate classification."
Kaonoulu sold the property in 2005 to Maui Industrial Partners, which in turn sold three-fourths of the property in 2010 to Piilani Promenade North LLC and Piilani Promenade South LLC. (Both Piilani entities are controlled by California developer Eclipse Development Group.) The remaining parcel was retained for 250 off-site affordable housing units for the planned luxury golf community Wailea 670 - now known as Honua'ula.
Since the change in ownership, neither the developers of the planned retail centers nor the affordable housing project have formally petitioned the Land Use Commission to proceed with their new projects.
A challenge from community groups Maui Tomorrow Foundation and South Maui Citizens for Responsible Growth and Kihei resident Daniel Kanahele prompted the Land Use Commission to revisit the site's approvals.
While the proposed Maui Outlets and Piilani Promenade shopping centers have been the main focus of opposition, the entire property faces the possibility of being reverted back to the agricultural district.
Honua'ula contends that penalizing the workforce housing project because of the shopping centers' development activities would be "draconian and completely unreasonable."
To that end, Honua'ula is asking the Land Use Commission to separate its affordable housing project from the challenge facing the retail centers. A hearing has yet to be set for Honua'ula's so-called motion to bifurcate.
Honua'ula's attorneys argue that considering the projects separately will "help to clarify that the fate of the Honua'ula parcel and the Piilani parcels will be determined by the actions of Honua'ula and Piilani, respectively."
In its motion, landowner Honua'ula Partners says there are no immediate plans to build the affordable housing project.
"No construction is presently occurring on the Honua'ula parcel, and no construction activities are planned in the near future. No county building, grading or other permits that may be necessary for construction of the desired affordable housing units have been obtained," the motion states. "No firm estimates or time frames for when the construction . . . will commence have been established. In this regard, Honua'ula stands in stark contrast to Piilani which has already begun the process of obtaining permits to initiate construction of its project."
Honua'ula promises to file by July 31 a motion with the LUC "to clarify that the Honua'ula parcel may be used as the site for the desired affordable housing units."
"Given the absence of present construction activities on the Honua'ula parcel, and Honua'ula's commitment to file the motion to amend and to refrain from initiating construction of the affordable housing units on the site unless and until the commission grants the motion to amend, it would be grossly unjust and inefficient to subject Honua'ula to the show cause hearing and the possibility of reversion of the Honua'ula parcel to the agricultural district," the motion said.
That order to show cause hearing - which will require the landowner to prove it has not violated conditions on the property - is set for Nov. 1 and 2.
The landowners need to "show cause" as to why the land should not be reverted back to agriculture, Land Use Commission Chairman Ron Heller said at a commission meeting earlier this month.
The lack of a construction timetable for the affordable housing contrasts with the dialogue the developers had in 2007 when seeking zoning approvals from the Maui County Council for the $1.2 billion Honua'ula project, which is expected to include up to 1,150 housing units and an 18-hole golf course on 670 acres above Wailea Resort.
When the County Council approved the change in zoning in 2007 for the project site in Wailea, council members imposed a requirement that 250 affordable housing units be built first.
Council members wanted assurances that the units could be built immediately, according to archived meeting minutes.
"The affordable component that's going to - or was proposed to be built outside of (Wailea 670) was done for the purpose of immediacy," Council Member Mike Victorino said during an Oct. 18, 2007, meeting of the council's Land Use Committee. "In other words, it can be done right away, we don't have to wait three or four years, and it was available land that could be developed because the infrastructure was there."
Now, Honua'ula says in its LUC motion that "it is not clear when construction activities will commence . . . and no construction activities are planned in the near future."
Charlie Jencks, owner representative for Honua'ula, was traveling out of the country Sunday and could not be reached for comment.
Units at Honua'ula cannot go up for sale until the affordable housing component is built.
The Maui Planning Commission in July approved the final environmental impact statement for the luxury golf community. At that time, when asked about a construction timeline for the Wailea site, Jencks said "delivery of product within three years is essential."
* Nanea Kalani can be reached at nkalani@mauinews.com.
