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Kihei developers seek to go back to the future

Latest proposal for Piilani Promenade project area more in line with 1995 plans

The Piilani Promenade project area is shown outlined in red, just south of the Kihei Industrial area and mauka of Piilani Highway. Map art via Google Maps

KAHULUI — Developers of 88 acres in north Kihei formerly slated for construction of two “megamalls” want to hit the reset button, figuratively speaking, returning project plans to “substantial compliance” with what the state Land Use Commission approved in 1995.

Now, developer Piilani Promenade North and South, owned by Texas-based landowner Sarofim Realty Advisors, is proposing to forgo plans for a retail and mixed-use development. The commission unanimously rejected a final environmental impact statement for those plans in July 2017.

Instead, developers aim to develop the area north of the Kihei high school site with Honua’ula Partners “in substantial compliance with the representations made to the commission” in 1995, according to a status report submitted to the commission on July 5 by attorney Randall Sakumoto.

The original development plan called for building a 123-lot commercial and light industrial subdivision.

The developers hired Koa Partners of Dallas to do community outreach in South Maui. Koa Partners Chief Executive Officer Harry Lake said he has held at least six meetings with members of the community. A meeting for the general public will be held later.

Kihei Community Association President Mike Moran testifies before the state Land Use Commission on Wednesday morning at the Maui Arts & Cultural Center. Moran said he appreciated the community outreach effort by developer Piilani Promenade North and South, but he said the island’s most pressing need is for affordable housing, not a light industrial development. The Maui News / BRIAN PERRY photo

Commissioners, intervenors and members of the public applauded the community outreach efforts.

During public testimony Wednesday morning at the Maui Arts & Cultural Center, Kihei Community Association President Mike Moran said: “We hear positive-sounding words that he (Lake) wants to follow the needs expressed by the local community for this land, while following the parameters set in your decisions.”

Moran told commissioners that affordable housing is “far and away the greatest need of South Maui and most of our island.”

He noted that light industrial development isn’t needed. “Adjoining on the north edge we have a true light industrial complex that is already full of vacancies,” he said.

Maui Tomorrow Foundation President Lucienne de Naie reminded commissioners that the project was originally developed during the Kihei-Makena Community Plan update in 1993 and 1994.

“Citizens at that time wanted a project that did not overwhelm the traffic capacity of Piilani Highway,” she said. “This is still an important goal.”

She expressed concern about the truthfulness of developer representations that the revised project based on the original 1995 plans might not need an updated environmental impact statement.

“The impacts of each project are unique,” she said. “Any current project will not be the same as what was proposed in 1995, and any new plan should have an updated environmental review.”

Other public testimony expressed concern about the development’s impacts on drainage and potential flooding and on Native Hawaiian cultural and archaeological resources.

Sakumoto said the developer is sincere about gathering community input through a “true dialogue” for what has been a controversial development.

“I think it has started in earnest,” he said. “We would like to continue that process.”

Sakumoto said the developer wants to develop specific project plans and reach a stipulated agreement with the state Office of Planning, Maui County and intervenors, which include Maui Tomorrow, South Maui Citizens for Responsible Growth and Kihei resident Daniel Kanahele.

The stipulated agreement would go before the commission for approval. It would say that the development’s plan would be in “substantial compliance” with what was approved by the commission in 1995, Sakumoto said.

Because the final plan’s details remain to be determined, Sakumoto said he wasn’t able to estimate the project’s cost or say if an environmental impact statement would be needed.

Among other things, Sakumoto said he would ask the commission to lift a 2013 order banning construction on the project site.

When asked by commissioner Edmund Aczon whether any construction had occurred on the project site, Sakumoto said he understood there had been some grading and a perimeter had been established.

Grading stopped after there were community objections to the project.

Sakumoto’s status report detailed the amount the developer has spent on the project so far, including nearly $2.7 million for materials and construction work. That amount doesn’t include the developer’s costs for plans, professional services and permits, he said.

Also, Piilani developers have deposited more than $22 million with Maui County to fund infrastructure improvements. Those include $4.8 million for a 1 million-gallon water tank, $2.9 million for storm drainage, nearly $2.3 million for East Kaonoulu Street improvements and almost $1.8 million for an access road and swales.

One matter that surfaced numerous times during the commission’s discussion of the Piilani development was whether it had “substantially commenced.”

That phrase apparently stems from a Hawaii Supreme Court ruling that raises the possibility that the Land Use Commission could revert the project land to its original agricultural designation because the developer has not started construction.

In November 2014, the Supreme Court issued a ruling in DW Aina Le’a Development LLC v Bridge Aina Le’a LLC, the state Land Use Commission, the state Office of Planning and the Hawaii County Planning Agency. In that case, the high court ruled, among other things, that the commission may revert property to its original land classification, provided that the property owner “has not substantially commenced use of the property in accordance with its representations.”

The court referred to legislative history to show that state lawmakers were concerned about private speculation on undeveloped land that had obtained state and county land use designations. The court quoted a Senate committee report that said, “Such speculation and untimely development inflates the value of land, increases development costs and frustrates federal, state, county and private coordination of planning efforts, adequate funding, public services and facilities.”

The court quoted testimony from the state Office of Planning that called for legislation preventing land speculation by requiring successful applicants for land-use boundary amendments to “either ‘use it, or lose it.’ ”

Attorneys told commissioners Wednesday they weren’t prepared to discuss the legal issues arising from the Bridge Aina Le’a case.

Kaonoulu Ranch proposed the original development plan for a commercial and light industrial subdivision, called Kaonoulu Light Industrial Park. On Feb. 10, 1995, the commission reclassified the property from agricultural to urban, subject to 20 conditions.

In August 2009, the property was sold to Maui Industrial Partners, and Maui County approved subdividing the property into seven lots. A lot of about 13 acres was later sold to Honua’ula Partners.

And, in September 2010, Maui Industrial Partners sold 74 acres to Piilani Promenade South and North, owned by the Texas-based landowner Sarofim Realty Advisors. In 2011, Eclipse Development, hired by Sarofim, drafted plans for nearly 700,000 square feet of retail space in two major commercial areas separated by paved parking lots.

After seeing dust fences erected, community opposition galvanized against the “megamalls” project, and the development ran up against legal challenges. Project opponents maintained that the development of the retail project violated three conditions of the commission’s 1995 decision and order approving the original project. And, they contended it didn’t fit the Kihei-Makena Community Plan.

Over four days in November 2012, the commission heard testimony and arguments, and it ruled on Feb. 7, 2013, that the “megamall” projects would violate three of the project’s original conditions. More legal maneuvering followed, and the Piilani developers came back with a scaled-back, mixed-use development called Piilani Promenade. Its plans called for 226 multifamily apartments; light industrial space; and retail, office and business/commercial development limited to 530,000 square feet.

But then, after two days of public hearings, the commission voted 6-0 on July 20, 2017, to reject the final environmental impact statement for the mixed-use project. The commissioners wanted to see more study of cumulative project impacts in South Maui and additional work on archaeological issues and traffic and cultural impacts.

And, the commission also wanted an environmental study for the entire 88 acres, those owned by Pi’ilani North and South (Sarofim) and the 13 acres owned by the Honua’ula development, which had proposed building 250 affordable units on the property as part of its workforce housing requirement for its 670-acre, master-planned community south of Maui Meadows.

On May 4, the Maui County Council approved Honua’ula Partners’ request to move its workforce housing to its master-planned development because of delays before the Land Use Commission.

The commission took no action on the Piilani development after receiving its status report.

* Brian Perry can be reached at bperry@mauinews.com.