New management on deck at Mala Wharf

Current lessee loses 35-year-long permit for state boatyard, calls new bid process flawed, vague, biased

Lahaina boater John Helly (top) hands friend Rocky Barnett his fishing pole Thursday afternoon aboard their 27-foot powerboat “Del Sol” in the Mala Wharf boatyard. The Maui News / CHRIS SUGIDONO photo

LAHAINA — New management is taking over the state-owned, dryland boat and trailer storage at Mala Wharf where a Lahaina man paid the state a fraction of its generated revenue and operated it for 35 years, according to the state Department of Land and Natural Resources.

Lessee Wilson Keahi has held a revocable permit for the 18,644-square-foot property since Sept. 1, 1981. He originally paid $18 a month to store boats on land near the boat ramp off Ala Moana Street. Keahi now pays nearly $710 a month to the state, which he can cover with rental income from less than two of the typically 20-plus boats in storage.

Next month’s change in management of the Mala Wharf property is part of the department’s statewide effort to address a backlog of properties needing to be reappraised at current market values. The reissuance of the revocable permit in Lahaina is one of the first processed by the department’s Division of Boating and Ocean Recreation.

The division has been working to transfer management of state-owned property from short-term revocable permits to long-term leases.

The state intends to offer leases for sale at public auction, although a public auction is not required to issue the permits.

Lahaina boater Rocky Barnett tends to his Contour trimaran Thursday afternoon alongside 16 other boats in the boatyard at Mala Wharf. The Maui News / CHRIS SUGIDONO photo

In the state’s review of the Mala Wharf property, Keahi declined to pay a land appraisal fee of $3,614, and the state awarded a property management permit to A&K Ventures LLC, the department reported. A&K Ventures takes over March 1. The corporation is operated by West Maui resident Alvin Pelayo.

The company’s permit is for landscaping, maintenance, storage of small boats and trailers and other activities.

Pelayo could not be immediately reached for comment.

Keahi maintains the state’s bid process was flawed, vague and unreasonably biased. He said state officials acted behind his back to “take the land away from me.”

“I want to get an attorney and have my day in court,” Keahi said Thursday. “I want to have them give me a reason. How can you guys do that? How can you just take this away from me?”

A&K Ventures LLC, which is run by West Maui resident Alvin Pelayo, will take over management of the state-owned Mala Wharf boatyard on March 1. Lahaina resident Wilson Keahi has managed the property for 35 years, and he maintains that state boating officials have treated him unfairly in a new process to update lease fees based on current market values. The Maui News / CHRIS SUGIDONO photo

In a Maui News investigative report published in July 2015, DLNR officials said they did not know how Keahi obtained the property or how his initial lease amount was determined. The department said most of the lease amounts for the 30-plus revocable permits throughout the state were not formulated through property appraisals.

Keahi’s initial permit called for “landscaping, maintenance and storage of small boats and trailers.” The rent was bumped up from $18 a month to $643 a month in 1999.

More than 20 boats typically are stored on the property, and boaters say they pay $400 a month. Based on the number of boats and rent amounts, Keahi would rake in at least $8,000 a month.

“It was not for me to make money. I built that to pass it on to my grandson,” Keahi said. “He just had a baby boy, and they’re taking that (boatyard) away from me. He did a lot of work. Poor guy.”

On June 24, a state Revocable Permit Task Force was launched to review and update revocable permit rental amounts and provide justification for them. A month later, the Board of Land and Natural Resources authorized its chairperson to adjust rents for revocable permits and directed the boating division to hire licensed appraisers.

On Aug. 12, the board continued Keahi’s permit to October and called for the new rent to be approximately $40,000 per year. He was required to submit his proposal by Oct. 31.

Keahi’s attorney replied Oct. 27 with an offer to pay $10,200 per year and argued it was unreasonable to request a proposal after receiving a letter from the state only three days earlier.

The state also sent a letter to Pelayo, who offered to pay $42,000 per year, on Oct. 24. The land board voted Dec. 9 to award the permit to A&K Ventures with a base annual rent of $43,360.

Keahi said he matched Pelayo’s offer, but it was denied because it came after the deadline. He said the final appraisal did not come out until December, and if he had been given adequate notice of competing offers and how the bidding process worked he would have protected his investments.

“They never call me or nothing,” Keahi said. “They said it’s a done deal. It’s over.”

Boating division officials did not take into account the roughly $1 million in improvements he has made to the property over the years, Keahi said. He added that he originally raised the land about 9 feet to bring it out of the flood zone, installed pavement, erected a fence and built an office.

“I did it bit by bit because I didn’t have enough money,” he said. “I borrowed a lot of money. To look at it before and now, there’s a big difference. Someone can move in, and they have a business already. They don’t have to do nothing.”

Keahi said state officials told him they would deduct the cost of the improvements he made from his offer. He said he should not have to pay as much as Pelayo.

“He can put any number he wants because he didn’t put anything in there,” Keahi said.

DLNR spokeswoman Deborah Ward said boating division officials offered Keahi an opportunity to bid, and he was not willing to offer the appraised rental amount in time for the board’s decision. She said officials informed Keahi they planned to put the property out for a long-term lease this year and told him they would notify him so he could bid on the property.

Revocable permits are issued on a month-to-month basis, so others could make an offer for the property and acquire it upon board approval.

Keahi said state officials have “tried their best to discredit me” for the past four years and accused him of living on the property, but nothing was ever substantiated. He said it “takes a toll,” and “it’s very, very tiresome.”

“They’re very, very arrogant. Everybody call them the Gestapo,” he said. “They’re very, very mean people.”

In light of the change in management, many boaters have already moved out, and others are worried what will happen next.

Only about 16 boats were seen late Thursday afternoon, including vessels owned by Lahaina boaters Rocky Barnett and John Helly. The men returned to the boatyard after fishing and whale watching off the north shore of Molokai.

“Hawaii has a great lack of facilities, and this is a pretty good facility for Maui and Mala,” Barnett said. “It’s been here for years, and we’ve all relied on it for a long time.”

Barnett said he has been renting from Keahi for about 18 years. He stores his 34-foot Contour trimaran and a 27-foot powerboat, which he co-owns with Helly.

Barnett said his experience with Keahi has been positive and that he has “always treated me with kindness and respect and he’s been fair.” Barnett noted the improvements made to the yard in security, electrical and water services.

“This yard is secure despite everything that goes on around it,” he said. “We feel like we’re not going to have expensive equipment removed or stolen so I’ve had pretty good luck.”

Barnett said he also knows Pelayo and thinks he is a “really good guy,” but boaters are still “holding our breath to see what happens.”

Keahi predicted rents would triple under new management and that renters have already sold their boats or moved them on the street. He has friends and family from Molokai who rent from him and use their boats to travel home and return to Lahaina for work, he said.

“They’re poor people trying to make a living,” he said. “I wish I had a place where they could put their boat, but I cannot find a place. They’re so worried about where they’re going.”

Barnett said he believes the $400 a month he pays is “pretty fair and equal value.” He said nobody would be able to stay if rents tripled.

“I would have to move,” he said. “I mean $1,500 a month – to rent a condo or apartment in West Maui that would be a good deal, but to rent a spot for your boat, that’s a bit extravagant.”

Finding another place for his Contour trimaran would be tricky considering its tall mast, which would hit electrical lines on Honoapiilani Highway. Barnett said there are no other places to store large boats in West Maui other than the water.

“This boat should be in marina or mooring, but I have a trailer because we get storms,” he said. “We get Kona storms in the winter. We get hurricanes in the summer and tropical depressions in between. There’s been, like, 62 boats in the last 18 years that I’ve counted that have gone ashore in Kona storms just alone in the winter – wrecked along the beach. It’s a big mess for the community and a big mess for the owners because nobody has anyplace to go.

“This has been my salvation during that time.”

Capt. Terry “Killer” Kellam has rented space with Keahi several times over the past three decades, but moved his boat out about a month ago after getting worried about the change in management. He also supported Keahi.

“He keeps it clean, keeps it secure with a fence around it, keeps it all together and he’s there if you ever need anything,” Kellam said. “He’s always around to help out and give the right direction. I liked him. I thought he was awesome.”

The area is only a couple hundred feet from the Mala boat ramp, which features two ramps, two loading docks, a vessel washdown, restrooms and a shower and offshore moorings.

Helly noted: “This is a great location, can’t beat it.”

“I love the yard and having it close to the ramp is a real plus,” he said. “It would be a shame if anything changed. The status quo is fine, and we’d like to see it continued or improved.”

The boating division is seeking to reach out to existing tenants at the facility and is asking them to email information to dlnr.dobor.pm@hawaii.gov or visit its Mala Tenant Registration Page at dlnr.hawaii.gov/dobor/mala_tenant/.

Land board Chairwoman Suzanne Case said there’s a lack of information about current vessel owners. Requested information includes the vessel owners, business name, documented vessel number and a cellphone number.

“The contact information we collect will greatly improve our outreach to those existing tenants and facilitate the transition so their use of the facility can continue without any interruption,” she said.

Before the property management transitions to A&K Ventures, Keahi is working to remove all improvements he has made. He said he is in the process of acquiring a demolition permit from the county to remove the pavement and structures, but he does not know if he will receive it by the end of the month.

Under his agreement with the state, Keahi is allowed to remove all of his improvements.

Keahi was told the state would work with the new tenant to allow Keahi on the property for the demolition work if he needed more time, Ward said. However, the state would need to see documentation to show his ownership of the improvements before they’re removed.

Keahi said he does not want to lose the property and that some of his family members are buried at the neighboring cemetery. He said he is considering legal action.

“I’m trying to make things right for my grandchild,” he said. “Give me an equal chance. I matched the bid, and they said ‘no good.’ That’s not right.”

* Chris Sugidono can be reached at csugidono@mauinews.com.


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