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District tax could help fund erosion project

Council committee discusses levy on Kahana Bay owners

WAILUKU — A new county financing tool could be used to pay for a multimillion dollar project to restore the Kahana Bay coastline, which is being severely eroded by sea level rise, frequent storms and seawalls built to protect condominiums.

The Kahana Bay Steering Committee, which represents nine oceanfront condominiums and one kuleana parcel in the area, and the county Planning Department are looking at establishing a Community Facilities District to help fund the beach nourishment project, whose cost is now in the $19 million to $30 million range, according to information presented at a council committee meeting Monday afternoon.

The district would help fund the project through a special tax on property owners within its boundaries.

The county would sell bonds, with backing from the taxes, said Planning Director Michele McLean, who said the department “strongly supports” the financing tool.

In a news release about the meeting, council’s Water and Infrastructure Committee Chairwoman Alice Lee said “CFDs can be a way for residents to work with the county government to fund infrastructure needs in their neighborhoods.”

The districts can significantly lower the upfront cost of public infrastructure needed to support new developments and may allow for the construction of lower cost homes and additional community amenities. It’s a form of public/private partnership, according to information from Columbia Capital Management, which presented information on the topic at a Nov. 18 committee meeting.

All four counties in Hawaii have adopted ordinances enabling the creation of Community Facilities Districts, although only one has been formed in the state, according to county documents. The Kukui Ula Project on Kauai was formed in 2008, and Kauai County sold its first bonds in 2012. The district helped fund road and intersection construction and improvements, as well as expansion of the county’s potable water system.

Twenty states in the nation also have a form of special tax districts to fund public infrastructure.

No action was taken by the committee Monday afternoon, even as property owners and Kahana committee officials sought quick action.

“We cannot afford a delay. The rate of the bay’s erosion has greatly accelerated these last two years. The sense of urgency is quickly transitioning into an active emergency,” said Sandy Szymanski of the Kahana Bay Steering Committee and president of the Kahana Reef Association of Apartment Owners.

“We hope you will support the use of a CFD to help fund the beach replenishment project, as well as support the saving and replenishing of Kahana Bay,” Szymanski said.

Szymanski said that the committee also will seek funding from county, state and federal sources, but that implementation of the special district would be putting their “foot forward” and saying “we mean business.”

She added that with construction costs of around $20 million, private property owners cannot do it alone.

Analysis of historical aerial images indicates that the Kahana Bay shoreline recedes at an average rate of about 1 foot per year, according to the Environmental Impact Statement preparation notice released earlier this year.

Jim Buika, a coastal planner with the Planning Department, confirmed that costs have grown for the project from an estimated $8 million earlier this year to as much as $30 million currently.

Buika said after the meeting that work is ongoing on the project’s environmental impact statement, which should be out sometime in the spring. He said the project could involve the use of groins.

The EIS preparation notice said that the project calls for transporting 50,000 to 100,000 cubic yards of sand from areas offshore, and building structures that would extend from the shoreline to retain the sand and stabilize the beach. The project would widen the existing beach by 35 to 150 feet.

Buika’s presentation included a possible breakdown of costs and taxes by using the Community Facilities District. For example, if the Kahana project cost $24 million, and there are 1,200 owners in the district, each would be responsible for $20,000.

For a 20-year bond, that would equal around $1,000 a year or $83 a month for each owner, he said.

In addition to Kahana Bay, Napili’s erosion issue could be addressed with the special district, Buika said. Testifier Lynne Woods said that her neighborhood in Kula would like to establish a special district to repair an old private road, Kolohala Drive, which property owners in the area have been trying to fix.

Residents have been told that county refuse trucks may not be able to make the trek up and down because of the road’s poor condition.

The Community Facilities District law took effect a year ago and allows neighborhoods and community associations to fund public infrastructure projects, such as the sand project. More typical uses might be for streets, bike paths, parks and open spaces, according to council documents.

The extra payment would be included in a owners’ property tax bill.

Formation of a special district must be initiated by either property owners or Maui County Council. The council would vote on a resolution outlining the intention to form the special district and schedule a public hearing to approve the special tax.

If the council approves the special district, the public improvements can either be funded by bonds or on a “pay as you go” basis.

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