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Council panel mulls sale of Maui Lani lots

Bulk sale of 51 lots won in legal settlement could boost affordable housing fund

Using county land in the former The Fairways at Maui Lani project for affordable housing is being considered by members of the Maui County Council’s Budget and Finance Committee.

On Tuesday, the committee deferred action on a resolution to sell 51 lots in Maui Lani as a “bulk sale” for $9.8 million in a public auction. The lots were part of The Fairways at Maui Lani project and were obtained as part of a settlement with a developer a decade ago.

The legal dispute stemmed from the developer using dirt to fill in the property and increase the heights of homes that eventually towered over neighboring Palama Drive homes. The county acquired the lots in August 2011 for nearly $11.8 million in a settlement with developer VP & PK LLC. The developer’s construction plans faced public challenges and legal issues over fill and grade heights.

The recommendation to sell the lots in a bulk sale came from a task force put together by Mayor Alan Arakawa late last year to determine the fate of the properties. Budget and Finance Committee Chairman Riki Hokama chaired the task force.

Hokama said the council would determine what to do with the lots, including prices and other matters.

The task force mulled over many scenarios, including affordable housing and selling the lots piecemeal, but the best way for the county to recoup its money was through the bulk sale, he said.

If the lots were sold in bulk, the money would go into the county’s affordable housing fund, with the council directing the money to a specific project, Hokama added.

Selling each of the lots individually may not be as advantageous because some lots are more desirable than others, and the county may get stuck with less-desirable lots, he said.

Department of Finance Deputy Director Mark Walker told the committee that it could cost $13 million more to build homes on the lots.

Walker said the county also would need to find ways to put up an additional 10 affordable homes, if it were to develop on the Maui Lani properties, to fulfill the county’s own affordable housing requirements. He noted that there are covenants, codes and restrictions that could make it hard to build affordable homes.

In addition to the $11.7 million spent for the properties in the settlement (which included some Sand Hills area lots that the county is not selling), the county has spent around $252,000 for homeowners association fees and upkeep, Walker said.

But Council Member Elle Cochran said that even if the county were to receive the $9.8 million, “we don’t come close” to recouping much of the cost. She suggested that affordable homes could be put on the land, even if it is near golf courses and multimillion-dollar homes, because residents in other income levels could be treated to the views.

Council Member Alika Atay said challenges to affordable housing include obtaining land and infrastructure, but the county has both at the former Maui Lani site.

“It’s kind of like we’re playing Trumps. I give away my Trump card. I don’t want to give up the land. I don’t want to give up the infrastructure,” he said.

He said that the county would not get another 51 lots elsewhere for $9 million.

Council Member Stacy Crivello asked for a comparison of how much it would cost for the county to develop on the lots versus taking the money from the suggested land sale and creating affordable housing elsewhere.

Council Chairman Mike White said that he was concerned that if the county built affordable homes in the area, someone could come and flip the property for a profit in the future.

Cochran said that she too is concerned about the flipping of the property, but she said that perhaps the land could be put in a land trust to keep it affordable.

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

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