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County to clean up 51 lots acquired in legal settlement

Administration and council ponder future of parcels in Kahului

By Melissa Tanji 6 min read

WAILUKU -- Maui County Public Works crews were scheduled Thursday to begin cleanup of 51 lots in Kahului that the county acquired in a legal settlement eight years ago and that neighbors say is bordered by broken-down walls and leftover construction material from former developers.

County Managing Director Sandy Baz relayed the news of the cleanup Thursday morning at the Maui County Council's Economic Development and Budget Committee.

Baz was giving a presentation regarding the history of the 51-county owned lots at the Fairways at Maui Lani, which have been vacant for more than eight years. The lots have cost the county around $400,000 in carrying costs, which include taxes, maintenance fees and association fees.

No legislative action was scheduled nor taken on the parcels on Thursday.

For years the county administration and the council have wrestled with what to do with the lots, which were acquired in a legal settlement with developer VP & PK LLC in a dispute over fill and grade heights for homes. Deputy Corporation Counsel David Galazin said at the meeting Thursday that the county acquired the property in an $11.7 million settlement with developers after a potential buyer for the lots pulled out due to the ongoing legal issues with the county over grade heights.

A county law that took effect in 1991 limited residential building heights to 30 feet from the natural or finished grade--whichever is lower. But then-Mayor Alan Arakawa made an "administrative decision" to allow the two subdivisions, Fairways and New Sand Hills, to proceed under the prior law that measured building heights from the finished grade. Arakawa had said that Maui Lani development obtained Phase II project district approval in 1990 when the old law was in effect. In the 14-acre Fairways subdivision in Kahului, thousands of tons of dirt were trucked in to fill a gully, raising elevations so older houses along Palama Drive were backed against a mound of dirt towering above rooftops. This spawned other lawsuits involving residents, contractors and the county.

In late 2016, Arakawa in his second term put together a task force, which included current Council Member and then-Council Budget Chairman Riki Hokama, along with public works and housing officials who recommended a public auction of the lots for $9.8 million. Reasons included the least market risk to the county and a quick way for the county to recoup some of the cost.

But in 2017, the council instead decided to sell 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.

That failed as there was "no response or responsible bidders."

Baz said outside of the meeting that he wanted to have Mayor Michael Victorino's administration, which came on in January, to finally handle the long-standing issue of what to do with the lots.

On Tuesday the county held a community meeting moderated by the Department of Management at the Velma McWayne Santos Community Center in Wailuku to receive public input on the future of the lots. Options floated included partnering with a developer to build homes or selling the lots and reinvesting the proceeds in acquiring land well-suited to a multifamily project.

According to Council Member Tasha Kama, who attended the meeting along with members Alice Lee and Yuki Lei Sugimura, attendees were concerned about drainage issues along neighboring Palama Drive, along with loss of views and the type of soils used to increase the height of the Fairways properties.

Kama said options that garnered the most support were restoring the Fairways lots to original grade and possibly developing the site for housing or a park.

Since the Tuesday meeting, Baz and council members have separately toured the area and visited residents along Palama Drive. Residents have pointed out the issues with inadequate drainage, a longstanding problem even before the new lots, along with the broken vinyl fencing and walls from the county-owned property and unkempt maintenance of the drainage swales.

Baz said Thursday that funding had been appropriated for the Palama Drive drainage issues in the past, but access through private property was an issue, so the project was not completed.

Longtime Palama Drive resident Annette Heu, who was vocal against the new development years ago, explained during a meeting recess Thursday that neighbors have long put out requests for service to the county and nothing has been done about the unmaintained county property.

Council members questioned the administration about the holdup.

"Now the administration is going to react to it?" Council Member Mike Molina asked.

He wondered out loud if the property was not maintained because the county was going to sell it.

"Why has it taken so long to address?" Molina asked.

Baz said the prior administration started to discuss what to do with the lots around 2015 and 2016.

"I don't know what the availability of funding or efforts were to maintain the property when (the county) acquired it through the settlement," he added.

Council Member Lee said she was glad that the administration is taking steps to address the issues, but wondered about the overall disposition of the lots.

"This is going to be a huge challenge because, boy, how do you use the property, when many, many people don't want anything on it. Is there an answer? I'm sure there is," Lee added.

She said that "mistakes happen" and that "these types of issue occur," resulting in the settlement the county is dealing with.

Hokama said he has a different perspective and that "this is not a mistake."

"It was just a bad decision that didn't take into account corporation counsel advice," he said of Arakawa's decision on the grading heights. "The code was specific regarding natural grade."

In 2011, the council later adopted an ordinance that backed Arakawa's decision.

Hokama added that the county should have maintained its newly acquired property "from day one," and should have known issues surrounding it that are affecting neighbors. "No excuses, 'we don't know.' . . . Go and find out, that's your guys' job."

Baz said the decisions on what to do at the lots are now in the council's hands but the administration will provide information and figures in the future.

This includes soil analysis, as there are concerns over old Paia mill dirt trucked over to the site to create the fill. Baz said the county will also analyze the retaining wall separating the county property from Palama Drive residents. Area residents claim the wall was not built appropriately.

Committee Chairwoman Keani Rawlins-Fernandez said there will be other meetings to discuss the disposition of the lots. She also hopes to have a resolution at the next meeting on the matter that would apply $250,000 from the affordable housing fund to the county lots.

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

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