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County ponders what to do with Maui Lani parcel

Attempt to sell, turn into affordable housing fails

A Maui County Council committee continues to mull over what to do with 50 residential lots the county acquired in a legal settlement seven years ago, following a failed attempt earlier this year to sell the lots at a discounted price for affordable housing.

In January, the county issued a request for proposals to sell 55 lots in bulk at The Fairways at Maui Lani in Kahului for no less than $8 million, discounted from $11.7 million the county paid for the land in the settlement. As part of the sale, half of the house-lot packages were to be offered to those with very low and low incomes (below $65,120 for family of four) for a purchase price of $290,450 and the other half to below moderate income families ($65,120 to $81,400 for family of four) for $372,050, based on federal Housing and Urban Development income criteria. Out of the 55 lots, four lots are designated for roadway development and one for drainage.

Finance Director Mark Walker told members of the council’s Budget and Finance Committee on Tuesday that the invitation for bids came out in January with bids to be opened in February.

“We had no response to the RFP as it was recommended to us by various housing advocates,” Walker reported. “We’re back after trying what was asked of us. We are back to where we are, with the original consideration.”

In meetings last year, the budget committee considered the original proposal, which called for selling the lots at $9.8 million by public auction, as recommended by a task force put together by Mayor Alan Arakawa in late 2016. Members included budget committee Chairman Riki Hokama and representatives from the departments of Public Works and Housing and Human Concerns. The task force recommended the $9.8 million price tag because it presented the least market risk to the county and would be a quick way for the county to recoup some of the sale price.

The lands were acquired as part of a settlement with developer VP & PK LLC in a dispute over fill and grade heights for homes more than a decade ago during the first Arakawa administration, county officials have said.

Last year, the budget committee also referred the proposal to the Housing, Human Services and Transportation Committee to explore affordable housing options after hearing testimony by affordable housing advocates and at the urging of some council members.

In October, the budget committee recommended selling the lots for $8 million with affordable housing restrictions and other conditions, including requiring work on the homes to begin two years after the sale and the posting of a construction bond by developers.

But since that proposal failed, the committee on Tuesday reconsidered the original proposal to just sell the land. It garnered a majority of members present in a 4 to 2 vote but lacked the necessary fifth vote for passage.

Voting for the resolution were Hokama, Mike White, Stacy Crivello and Yuki Lei Sugimura. Voting against it were Don Guzman and Alika Atay. Excused were Robert Carroll, Elle Cochran and Kelly King.

With the resolution failing, Chairman Hokoma deferred the issue, keeping it in committee. He noted that it would be difficult to make “a major policy decision” with three members absent, and he understood the opposition to the resolution.

But he said action needs to be taken.

“We spent almost $12 million, that is correct, and from the time we did the settlement to now, it is too long a time for this asset to sit and do nothing,” he told the committee members, referring also to the maintenance and holding costs of the property of $336,656.

If the land were sold, at least the county would have money on hand to do affordable housing projects in the near future. That would “take away the lame excuse” of not having money when it is time to construct those projects, Hokama said.

But Atay said he wasn’t ready to decide on the original proposal and still would like the county to keep the property.

He pointed out that the biggest cost to affordable housing is the land, which the county already owns.

“The second biggest cost is cost of infrastructure, . . . We already got it,” he said, referring to the lots. “I’m trying to look for solutions.”

Atay suggested that perhaps Maui Lani’s covenants, codes and restrictions could be altered to allow ohana units and or duplex units on the lots to maximize the land area.

But housing Director William Spence said that traditionally it is difficult to change covenants, codes and restrictions because the action involves other property owners as well.

Guzman called the issue “a black eye in the Arakawa administration” and a “hot potato” that the administration would like to get rid of.

He said the administration has not been eager to think about other solutions for the property. He called on the next mayoral administration to figure out what to do with the property.

White said he understood Atay’s point about not wanting to give up the property, but he noted that the county could fund more than the 50 units that are slated to be built on the site with the proceeds from the sale.

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