HomeMy WebLinkAboutPlanning Commission Subdivision 9-11-12 Minutes KAUAI PLANNING COMMISSION
SUBDIVISION COMMITTEE MEETING
September 11, 2012
The regular meeting of the Planning Commission Subdivision Committee of the County of Kauai
was called to order by Chair Herman Texeira, at 8:56 a.m., at the Lihue Civic Center, Moikeha
Building, in meeting room 2A-2B. The following Commissioners were present:
Mr. Hartwell Blake
Camilla Matsumoto
Mr. Herman Texeira
Discussion of the meeting, in effect, ensued:
CALL TO ORDER
Chair Texeira called the meeting to order at 8:56 a.m.
APPROVAL OF AGENDA
Staff Planner Dale Cua noted corrections to the agenda as follows: New business item
D.L, "Tentative Subdivision Extension Requests" should be "Final Subdivision Extension
Requests". Regarding D.l.a., S-2006-45, "12-lot Subdivision" should be"48-lot Subdivision"
and D.Lb., 52006-46, "12-lot Subdivision" should be"28-lot Subdivision".
Deputy County Attorney Ian Jung suggested a formal amendment to the agenda to reflect
the changes.
On the motion by Camilla Matsumoto and seconded by Hartwell Blake to amend
the agenda as described by Mr. Cua, the motion carried by unanimous voice vote.
On the motion by Camilla Matsumoto and seconded by Hartwell Blake to approve
the agenda, the motion carried by unanimous voice vote.
MINUTES--Meeting of August 14, 2012
On the motion by Camilla Matsumoto and seconded by Hartwell Blake to approve
the minutes of August 14,2012, the motion carried by unanimous voice vote.
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OCT 2 3 2012
COMMUNICATIONS
Mr. Cua noted that two sets of correspondences were distributed relating to agenda items
D.La, and D Lb. In addition, a supplemental agenda was also distributed for correspondences
relating to D.I.a, and D.Lb.
On the motion by Camilla Matsumoto and seconded by Hartwell Blake to receive all
items for the record, the motion carried by unanimous voice vote.
UNFINISHED BUSINESS (For Action)
Tentative Subdivision Extension Requests:
5-99-45 Allen Family LLC/Moloaa Be Ventures, LLC/Three Stooges, LLC, 12-lot
Subdivision, TMK: 4-3-003:001. Kapaa, Kauai.
Mr. Cua noted that this matter was deferred at the previous subdivision meeting on
August 28, 2012. The extension request is to obtain final subdivision approval for a 12-lot
subdivision situated on a property adjacent to the Kapaa Middle School.
Planning Director Michael Dahilig stated that the Department is going to stand by the
report recommending denial of the l 01h request for extension. He distributed an email via the
Mayor's office concerning the issue of water on the project. The concern has been how the farm
dwelling unit subdivision that was originally proposed in 1999 has morphed into a project that is
now entertaining more units and more density and no longer reflects the original proposal. Part
of it was to assist the County in providing more affordable housing to be facilitated by a change
in the subdivision conditions to allow for the development of the water system. He was
informed that an email was sent to the Mayor's office notifying the County that they have
decided to pull off on negotiations with the Department of Water and are moving forward with a
private water system. The initial premise of the proposal was that leniency was being given
because they are trying to work out the larger water system that will assist a County need. Now
it is unclear what the goal is with the proposal of the private water system and whether it
comports with the original approval given by the Commission in 1999 with respect to,farm
dwelling units, not the larger project. It provides further support for the Department to
recommend that the extension be denied.
Chair Texeira noted that the applicant's representative has requested a deferral so the
Commission can focus on the Kealia properties development.
Max Graham, representing the applicant, stated that as Mr. Dahilig has indicated, the
applicant has been unable to resolve the differences with the Department of Water concerning a
proposed agreement on a water system involving a well that would be donated to the Department
of Water from the applicant's property in exchange for storage in the Department's tanks. The
applicant is now proposing a private water system on the property, storage and source, and has
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developed tentative plans. He is requesting the opportunity to explain it more fully to the
committee but he understands the full agenda with the 2nd item, and felt it would be fairer to the
applicant and the committee's time to defer the item for two weeks.
Mr. Dahilig stated that the Department has no objections to a deferral.
There was no public testimony on this agenda item.
Commissioner Blake asked for clarification that originally it was going to be an ag
subdivision but because of problems that were encountered it morphed into a housing project on
ag land. He questioned if there were other proposals by the applicant as to how the homes would
be marketed to the public.
Mr. Dahilig stated that the only entitlements for the property are a general plan
designation for a residential community. There is no Land Use Commission designation that
would have to convert the land to urban in order to realize what they had proposed as part of
their affordable housing/market housing concept. It has been incumbent on the Land Use
Commission to take action in order,to facilitate what they believe is their vision for this project.
The Commission's approval in 1999 cannot be expanded any further given the limitations of
State law as it applies to this parcel, so it has morphed, but the original project is for the farm
dwelling units.
Commissioner Blake questioned the initial total density.
Mr. Cua stated that it was approximately 50 farm dwellings.
Commissioner Blake questioned the density under the new proposal.
Mr. Graham stated that the subdivision is 50 farm dwelling units. He stated that it would
take time to explain how the project has changed and is requesting a deferral.
Commissioner Blake questioned if it would be more or less.
Mr. Graham stated that the residential project within the portion of the property that is
under the general plan designation of residential community would be approximately 700 units
that is a separate application going through the State Land Use Commission. The relationship
between that project and the subdivision is that the applicant was trying to get the Department of
Water to accept the proposal on the donation of the water facilities and agree that if and when the
residential project came into fruition,that the water source and storage could be used for that
project.
Chair Texeira questioned why the committee is going through this exercise if the
proposal is going through State Land Use Commission.
Mr. Graham stated that they want to get the ag subdivision done in the meantime. If the
residential project is not approved, it would be a backup.
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Chair Texeira stated that if the State Land Use Commission approves the residential
project it would need to be taken into consideration even if the Commission denies this proposal.
Commissioner Blake questioned if it is a new subdivision application and what the
Commission would do if an extension is granted.
Mr. Cua stated that what is before the Commission is an agricultural subdivision. The 700
unit plan development would be considered through a separate action. In order to accommodate
that development they would need to re-designate State Land Use from agriculture to urban.
Then the applicant would have to come back to the County to amend the zoning from agriculture
to various types of residential zoning. Once zoning is achieved, they would come with a
subdivision application.
Mr. Graham stated that lots 1-5 of the subdivision, located in the State Land Use Ag
district and not within the general plan designation, would continue to be ag lots. A portion of
the property, if the subdivision is approved, would be the subdivided lots 1-5 and would remain
in the ag district. Lots 6-12 would be part of the parcel which would be transferred into the
urban district and the appropriate residential districts by the County,
Commissioner Blake stated that this is an ag subdivision application,potentially
rezoning.
Mr. Dahilig stated that it would be rezoning at the Council level because it would go
through a Zoning Amendment if the Land Use Commission approves, and then go through a
subdivision as well as a Class IV zoning permit for the project. The Department's philosophy has
always been that they do not look lightly on proposals that appear to be land banking. The
Department believes that in this particular case, given the approval in 1999 and this being the
1 Ot extension request, it would not be the last request given the dovetailing of the Land Use
Commission approval that would lead into other approvals that would be needed to entitle this
land fully for residential development. It does not promote progressive use of the entitlement
and leaves things undeveloped, leaving the County without the needed exactions that were
normally proposed as part of the hearings process.
Commissioner Blake questioned what is expected to happen before the next committee
meeting.
Mr. Graham stated that he may have a more concrete proposal on the water plans. If the
water plans can be approved, the project could receive final subdivision approval within another
year. It's not going to be a situation where the project would continue to come back for
extensions. The holdup is the water system. Whether or not the residential project is approved
the subdivision with the water tank is a viable project.
Chair Texeira questioned if the extension request is justifiable.
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Commissioner Matsumoto stated that she would be in favor of deferring due to the
complexity of the situation.
Commissioner Blake stated that he would expect to hear deadlines as to when the water
problem will be solved. He felt that if the applicant knew they were not convincing the Water
Department, they should have been working on an alternate solution long ago. He would expect
to hear when they will start drilling and what the hydrologists say would be the potential for a
successful well that could support the ag subdivision. If they plan to come back to discuss
housing development, then it should be part of the report, not another extension to drill another
well.
Commissioner Matsumoto agreed with Commissioner Blake.
Chair Texeira questioned any preliminary hydrology reports and if any engineers have
discussed the project.
Mr. Graham stated that he will present all of that at the next meeting, but there has been a
successful test well.
Chair Texeira questioned if they will be drawing from the same aquifer as the existing
water that is being tapped by the Department of Water.
Mr. Graham stated it is a different aquifer and there is a lower well that the Department
has installed.
Chair Texeira stated that at the last meeting the Department of Water proposed a storage
facility in the Ornellas area. He stated that it seemed like it was part of a large reservoir.
Mr. Graham stated that they can have someone explain the water situation at the next
meeting. This path is different from the one the County is using to fill the stables camp tank and
very close to the bottom of any runs so it won't tap anything that the Water Department is
working with.
Chair Texeira.stated that he would vote to deny this application because the applicant has
come on ten different occasions and he can't see why the Commission would want to extend. He
questioned if the Committee would want to allow other Commissioners an opportunity to
discuss.
Mr. Dahilig suggested that he Committee refrain from discussion with other
Commissioners. As advised by the County Attorney's office, before the full body can discuss
and entertain the matter, the Committee would need to come up with a recommendation first.
On the motion by Camilla Matsumoto and seconded by Hartwell Blake to defer this
item to the next Subdivision Committee meeting, the motion carried by the following votes:
Ayes: 2. (Hartwell Blake, Camilk Matsumoto),loos: I (Herman Texeira)
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NEW BUSINESS (For Action)
Final Subdivision Extension Requests:
5-2006-45=Kealia Properties.LLC. (formerly Plantation Partners Kauai,
LLC/Kealiakealanani), 48-lot Subdivision, TMK: 4-7-003:002,Kealia, Kauai.
S-2006-46=Kealia Properties LLC (formerly Plantation Partners Kauai,
LLC/Kealiakealanani), 28-lot Subdivision, TMK: 4-7-004:001,Kealia, Kauai.
Mr. Cua stated that he will be describing the two items together, but action would need to
be taken separately.
Mr. Dahilig requested that the applicant's agent also address both applications for
discussion purposes at the same time.
Mr. Cua reported that the Kealiakealanani agriculture subdivision is located on the mauka
side of Kuhio Highway just north of Kapaa town, situated directly across the 1.ealia Kai
subdivision. The project involves parcels on both sides of Kealia Road and the combined land
area of the project is approximately 2,029 acres. Once completed a total of 188 CPR units will
be available for purchase.The Makee parcel is being developed in conjunction with the
neighboring parcel to the North, identified as Tax Map Key 4-7-04:01 being processed through
subdivision application 5-2006-46. The proposed subdivision establishes a total of 44 lots within
the agriculture and open zoning districts and for roadway lots. The subject parcel is
approximately 944 acres in size and extends from Hauala Road to the west and Kuhio Highway
to the east. The Kumukumu parcel is developed in conjunction with the neighboring parcel to
the south identified as TMK: 4-7-03:02 processed through subdivision application number S-
2006-45. The proposed subdivision establishes a total of 24 lots within the agriculture and open
zoning districts and four roadway lots. The subject parcel is approximately 1,085 acres.
Pursuant to the requirements specified in Section 9-3.6 of the Subdivision Ordinance, Kauai
County Code, once construction plans have been approved,the applicant has the option to
proceed with constructing the necessary improvements prior to seeking subdivision map
approval or entering into an agreement with the County guaranteeing the completion of the
improvements within a reasonable time period. Once executed by the respective party the
applicant can then obtain final subdivision map approval by the Planning Commission. In this
instance,the subdivision obtained final subdivision approval from the Planning Commission on
September 11, 2007 and the applicant executed a subdivision agreement which specified that the
improvements would be completed within a five year period. The construction plans for the
project were approved in 2007 and since then,the project has changed ownership twice; once to
foreclosure and there has been no construction activity at the project site. Section 9-3.5(e)states
that the approved construction plans are in effect for only one year unless construction has
started. If the construction plans were to lapse, the subdivider is required to resubmit the plans
for review in order to get recertified. The purpose for the recertification is to assure that the
construction plans are designed to comply with the construction standard that exists at the time
of approval.
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Mr. Dahilig stated that the applicant is requesting additional time to complete the
infrastructure improvements and to substitute the existing surety bond,which was letters of
credit, for a first mortgage held by the County of Kauai to be valued approximately in the range
of$18.4 million. They are asking for an eight year extension from today,the lapse day of their
current subdivision agreement. They are proposing to provide community improvements; a rodeo
parcel that they proposed to renovate up to $500,000 and then donate to a non-profit corporation,
a community sports park that would be donated,specifically lot 2 in the Kumukumu subdivision
of approximately 14.7 acres to the County for the purposes of a community sports park,they are
willing to give up to $350,000 in constructing tentative improvements to the Kealia Country
Store LLC, and they are willing to construct a poi mill on the property with improvements up to
$.5million. The proposal is contingent upon successful resolution of the real property tax
appeals that are currently pending concerning what they have been assessed back to 2008. The
proposal was formally submitted on July 25,2012 upon which they requested this matter be
taken up by the Commission before the subdivision agreement lapse date. The best that the
Department can do based on the information provided as well as subsequent correspondences is
break down the request into three parts: the subdivision time extension,the surety substitution,
and then how they recommend moving forward. Based on what they were able to ascertain from
submittals and documents,they do not feel that the applicant has been meeting the standard of
progressively working toward the improvements. When the original agreement was executed in
2007,the applicant opted to go with subdivision agreement versus constructing the subdivision
required infrastructure before final approval. Based on that, it kicks the requirements for
subdivision agreement to have approved construction plans to be evaluated by the Department to
ascertain the appropriate value of the bonding for the proj ect. When the Department looks at
Section 9-3.6 of the Kauai County Code,what they understand is that subdivision agreements are
contingent upon that approval by the Water Department and the Department of Public Works
with respect to construction plans. Construction plans were submitted in 2007,they were
certified and evaluated, and gave the applicant the ability to request and was approved for a
subdivision agreement at which time was bonded by a construction bond,by the then contractor,
as well as letters of credit that were posted by the applicant. The subdivision agreements with
the bonding have to be in an amount equal to all work that is valued by the Department of Public
Works and the Water Department. There was a requirement in 2007 that had approximately
$18.4 million to be guaranteed through letters of credit by the then developer. The Department
sees no progress on completion of the improvements. The first question the committee needs to
decide upon is whether or not the request goes beyond the normal extension of time. The
Department believes that it goes beyond the normal extension of time because it entertains the
folding in of new improvements as well as the substitution of the security which in the
Department's opinion substantially changes what was agreed on back in 2007. In order to
essentially get a re-approval of the final subdivision agreement with the new conditions,the
Department believes that the first line of Section 9-3.6 which requires approval of construction
plans is a necessary element for the Commission to entertain the proposals of the applicant.
Based on the Department's understanding and what has been submitted the applicant has not
given the Department a certified and approved construction plans based on section 9-3.5 of the
Kauai County Code that states approvals of construction plans are only in effect for one year
unless construction is started. The Department believes that construction has not been started
and it states that if the construction has not started within the one year period. They do not have
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any evidence from the applicant that the Department of Public Works has given approval of the
construction plans to move forward for a re-approval of the subdivision agreement. The
applicant has asked for time to meet the submittal requirements as set forth in sections 9-3.5 and
9-3.6. The Department states that they do not think the Commission has the necessary
information to move forward with the subdivision agreement modification, however,they will
leave it up to the Commission's judgment whether they believe it is prudent to provide the
applicant more time to provide the submittal documents notwithstanding their submittal did not
have the required information. If the Commission decides to move forward with the application
notwithstanding the submittals requirements have not been met under.sections 9-3.5 and 9-3.6,
then the next question that has to be asked is whether the first mortgage is an appropriate
security. The Code,under 9-3.5(e) states"cash negotiable bonds or other securities acceptablq to
the Planning Commission in an amount equal to that prescribed for a surety bond under 9-
3.6(b)(2)(A)". The Commission based on the law has the discretion to determine other security
acceptable to the Planning Commission. The applicant has proposed a blanket mortgage or first
mortgage on the actual property that is an amount equal to the surety bond. The difficulty is they
have to, from a recommendation standpoint,provide what is equal to. The Department does not
believe there is enough information to make a determination that a mortgage is a.security that is
acceptable, and that the security is actually equal to what needs to be bonded based on the lack of
approved construction plans and the lack of a valuation. They are working off of the$18.4
million figure that was proposed in 2007 to guide the Commission with some judgment on their
proposal. The Department does not believe that the first mortgage is an appropriate security to
be deemed by the Department as something acceptable in lieu of cash or negotiable bonds. The
purpose of the subdivision guarantees is to provide the County with enough liquidity to actually
go in and complete the project. In his circumstance the County would have to come;in upon a
default, acquire the land though a foreclosure proceeding, and then go out into the public and sell
the property to raise the capital necessary to complete the subdivision requirements. They do not
think that a first mortgage provides the County with like liquidity that cash, letters of credit,or
negotiable bonds would in the event of a default. In terms of the phrase"equal to",they have to
look at whether or not the land that is being guaranteed is equal to approximately$18.4 million,
but they don't' have the valuations or the approved construction plans to ascertain whether or not
it is equal. The applicant will probably discuss issues concerning Chapter 343 which is the
State's environmental disclosure statute. He determined that environmental disclosure does
apply over the applicant's objection, and based on the letter of August 8, they are willing to only
post those properties that have no improvements on them in order to not trigger 343. It is a point
of issue that can be appealed to the Environmental Council by the applicant. He believed that
given the need and desire to move forward on some type of determination from the Commission,
they are willing to post only those properties for the mortgage that do not have improvements on
them.
Chair Texeira questioned if any of the properties have improvements.
Mr. Dahilig stated that the submittal under the August 30 correspondence provides a list
of parcels that the applicant believes have improvements on them. For the purposes of first
mortgage discussions,those have to be taken out when you are trying to consider that mortgage
being posted is equal to. There is recourse for the applicant to make a determination whether his
determination on the 343 issue is an error, but for the purposes of discussion for the Commission,
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they are only looking at those parcels that don't have improvements on them. The principle of
liquidity looks at what they can get for the property on the marketplace. The Department wants
to be very clear that the Real Property assessments that are currently public information on the
parcels are valuated in the ballpark of about$85 million,but the Department doesn't believe that
is the appropriate valuation with respect to the issue of liquidity and being able to determine
what cash the Department can get if they have to sell the property out on the open market place
and raise cash to complete the project. They believe the purchase price of$21 million is an
appropriate benchmark for the Department to 19ok at with respect to an amount"equal to".
Based on a back of the envelope analysis, if you were to take out proportionally the amount of
land that is in the applicant's list of improved properties and do a simple ratio,the Department
does not believe that even if a first mortgage would be acceptable to the Commission,the actual
lands to be posted would be equal to $18.4 million. They don't believe that you could raise the
amount of capital with the unimproved lots. The first question would be if the applicant met the
submittal requirements to ask for a modification to the subdivision agreement. The second
question would be cash,negotiable bonds, or other securities;if the mortgage is an appropriate
security for the applicant to move forward on the subdivision modifications. The next question
that the Department feels is appropriate for the Commission is with respect to merits of the actual
extension. If the Commission makes a determination that they will give the applicant time to
meet the subdivision application requirements for a subdivision agreement, and the Commission
has sequentially determined that the first mortgage is okay and is equal to,then it falls on the
Commission to determine whether the extension is warranted on the merits. What is being
proposed is an eight year extension on the application. The Department has never given an eight
year extension recommendation. They look at whether an applicant is progressively working
towards completion of the project, especially after final subdivision approval. Subdivision
extensions on the order of one,two or three years are typically recommended given the
Department's desire to want to compel completion of the project versus land banking.
Essentially,the effect of an extension is that the applicant is asking for grandfathering of laws
that have been passed since their approval in 2007. The Department has ascertained two
important laws that have changed the way they do development on Kauai; one is Ordinance 896,
the ag open law,which treats open zone lands the same as agricultural lands for density purposes
and the other is Ordinance 860,the affordable housing law. Under normal circumstances,if the
applicant were to come forward and seek anew approval of the same project,the density allowed
would be 115 farm dwelling units and they would be required to provide 56 affordable housing
units or approximately$5.5 million in lieu fees to the County Housing Agency. The effect of an
extension would be that the applicant would not have to meet the new requirements. For
example,they have proposed construction of 188 farm dwelling units. If the new laws were to
be applied it would be an amount of reduction of 73 units and they would be required to provide
56 units of affordable housing or in lieu fee of approximately$5.5 million. The Department
believes that the Commission should look at whether the proposal merits non-alignment with
what is current public policy today and whether the benefits of this project warrant an extension
to grandfather them from the requirements. The Department also looks at the proposal regarding
what they're planning on putting on the table, specifically the rodeo,the poi mill,the park and
the Kealia Store. The difficulty is that when you look at the appl'icant's July 25 submittal,those
proposals, absent the park, do not outline a public benefit and the difficulty with not outlining a
public benefit is that they cannot generate a nexus to say that it should be included in the
discussion for subdivision extension purposes. The projects provide private enhancements to the
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community and he concurs that they are great things,but based on the submittals,they are
unclear and concerned that no public benefit has actually been outlined in the proposals. For
example,the proposal mentions the rodeo being open for State sanctioned rodeo events,but he
questions practice time, and public use time.. Based on further information they don't know
whether the non-profit that is being created specifies a public benefit. They can't gb into
specifics about whether they believe it has a public benefit. The poi mill is great to generate
agricultural activity and provide value added products for the island,however they have no
information to ascertain whether there is an actual opening of the facility, like a certified kitchen,
for other people to bring in their products. There is not enough information on whether there is
actually going to be a public benefit that can be folded into the application. The Kealia Store
issue is a private matter and the Department does not recommend that the Commission consider
it as something to compel action because it is a private proposal between two parties. They are
not saying that it is a negative thing,but they are unable to ascertain that there is a public benefit
to say it should be part of the requirements. In looking at the merits the only thing they can
ascertain as a fair public consideration is the 14.7 acre sports park. Regarding the mortgage, it
has to be viewed from a standpoint of the Commission acting as bankers. They have to consider
whether acceptance of the mortgage is fair, given what the County is going to be taking on as
with risk. The Department's evaluation is that normally when a contractor pulls a construction
bond based on the price that is supposed to be bonded the amount to be guaranteed, usually 14%
of that price,is considered a premium. Annually they will pay 1-4% off of the actual amount to
be bonded. if you take eight years of an extension and bond premiums,going off of the
approximately$18.4 million from 2007,the County would be saving the developer in the range
of$1.5 to $6 million in cash. When discussing whether a mortgage should be accepted by the
County,there should be some fair consideration to discuss what the County would be getting in
lieu of risk that is being taken by assuming the mortgage. All that can be ascertained at this point
is that the only additional item on the proposal that is a clear addition directed toward the County
of Kauai as a government body is the 14.7 acre park. The other items are noteworthy,but they
can't ascertain the public benefit because there have been no guarantees in the submittal
documents to say that the rodeo will be open based on public purposes on certain days, or that
the poi mill will be open to other farmers. The Commission should look at what is fair. The
Department also feels the Commission should look at precedence. The acceptance of a first
mortgage is a real cash flow savings to the developer. So as a developer wants to maintain a
project,they have to over the course of trying to develop it,continue to pay a bonding company
to ensure that the entitlements are secure. The applicant is currently in default because the letters
of credit that were posted as part of the 2007 submittal lapsed in 2009. There is currently no
bonding io meet the full extent of what they are required under the 2007 agreement. The
Department is concerned from the standpoint of precedence because they believe that other
developers that are currently maintaining subdivisions are going to come to the Commission and
also ask for the same type of consideration when it comes to substituting bonds for first
mortgage. The Department is recommending on the merits,that the Commission consider what
is fair, whether there are public elements to what is being proposed, and also whether they want
to open the door for other applicants with other pending subdivision approvals to ask for the
same type of treatment. Beyond the grandfathering of Ordinance 896 and Ordinance 860 and the
mortgage,the Department from a standpoint of merits does not recommend an extension of the
project. Public policy has been very clear with respect to gentlemen farm subdivisions and that
these types of entitlements are antiquated with respect to what is current public policy on
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development of large scale ag lands. He suggested that the applicant be allowed to make their
presentation and then the Commission can have further discussion.
Chair Texeira questioned if Commissioners had any comments regarding the staff report.
Commissioner Blake questioned if the original plans are still effective as far as accuracy.
Mr. Dahilig stated that whether they are accurate or not, they have not received any
indication from either the applicant or the Department of Public Works that the Code
requirement concerning certification of the plans have been met, and under the Code they would
have to submit whether they are accurate or not.
Commissioner Blake stated that since they don't know whether they are accurate, they
wouldn't know the cost estimates.
Mr. Dahilig stated that they are going off of the 2007 approval as a guide, but noted that
it has not been certified by the Department of Public Works with respect to certified plans.
Commissioner Blake questioned that by asking the County to accept the mortgage the
applicant wants the Commission to bind the County to act like a bank for holding the mortgage, a
potential realtor, and a bonding company for assessing risk.
Mr. Dahilig stated that from what they can ascertain from the submittal documents that is
what is being asked. The active phrase in the Code is "other securities acceptable to the Planning
Commission in an amount equal to that prescribed for a surety bond."That's where the
Department's ability to go deeper into the nuances of mortgage financing and risk are limited
because they do not engage in financing however, the way the Code is written it seems as if the
law makers have provided an opportunity for the Commission to ascertain whether a mortgage is
an actual sufficient security which may bind the County to some degree of risk.
Commissioner Matsumoto questioned whether the Department considers first mortgage
to be outside of the term "progressively working toward".
Mr. Dahilig stated that they view"progressively working", especially after final
subdivision approval, as the progression of the actual dirt; if grading and construction have been
going on-' or efforts in meeting the other off-site improvements been made. In this particular
case, when the new owners took over the property, the Department engaged in a lengthy
prolonged discussion about the first mortgage security. If the applicant had posted the traditional
securities and got the plans certified,they could have started to turn dirt on the project sooner.
The Department does not view the proposal to substitute the mortgage as evidence of
progressively working. From a valuation standpoint, there are quicker paths to get to the
construction. Instead they have gotten into a discussion about financing that the Department
believes puts the County at a riskier position. The Commissioners can disagree with how the
Department views "progressively working".
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Chair Texeira questioned if the Commission has the right to bind the County without
Council approval or consideration regarding the$18 million surety bond.
Mr. Dahilig suggested referring the question to the County Attorney's office. He did not
believe it is appropriate for the Department to weigh in on something that involves the risks,
duties, and obligations of the County as a corporate body.
Deputy County Attorney Jung stated that the idea of a mortgage is a relatively govel and
unconventional approach. They haven't had the time to spend over the issue,so they would
appreciate the question be submitted in writing,but note that the Housing Agency enters into
second mortgages on the properties they purchase and sell. The siginators on those documents
are the Finance Director and the Housing Director.
Chair Texeira questioned how this application relates and comports to the Important Ag
Lands study.
Mr. Dahilig stated that IAL study is not a publically approved document,but the
Department has been engaged in a process of trying to implement the IAL law that was passed
by the State Legislature. The way the County has moved forward in trying to evaluate the lands
that are in agricultural lands as designated by the State of Hawaii is to look at eight elements that
the Legislature found as important to determine whether land should be designated with more
controls and more restrictions in order to protect its potential for intensive agriculture down the
line. They agree with the findings because there has been a fractionalization of ag lands as well
as an abandonment of the intensive ag elements. The study is looking at cropping,not
necessarily ranching, so the study assigned points to each of the eight criteria. The technical
advisory committee made up of farmers,businessmen, and community laymen scored the
importance of the eight criteria and provided the consultants with enough information to apply it
into a geographic information systems database to score lands acre by acre across the county.
Based on the scores,the Department was planning to recommend a score of 28 as a threshold for
IAL designation and protection. For information purposes they ran the parcels through the IAL
database online and both parcels scored in the range of about 30 so they would be earmarked
potentially for candidates for IAL designation if their report goes out. He noted that this
information has not been formally adopted,but it is public because of the descriptions that were
given to Council and the online tool that is used. What is being looked at in terms of IAL is high
density,high intensive, agricultural types of cropping and not things like grazing.
Chair Texeira questioned if the fact that these lands are important 4griculturally should be
a point of consideration in looking at the ag subdivision as proposed.
Mr. Dahilig stated that it would be something to add to the table,belt wanted to provide
the caveat that it's not official yet. Anyone can take a look at what the consultant has been
providing as public information,but however it weighs into the calculus of decision making is up
to the Commission.
Commissioner Blake questioned if the subdivision were to receive final subdivision
approval as presented, and then IAL becomes law, if it would apply to this subdivision.
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Mr. Dahilig stated that the Land Use Commission would have to make judgment calls
and there are other things that need to fall into place. When trying to stitch together large
portions of acreage to engage in what IAL considers high yield,high impact types of farming,it
raises the difficulty of that farmer to become successful. Throughout the State it has been an
enigma to figure out how to solve the ag problem and how to get people farming. It may not be
the only issue,but it is an additional burden that a potential farmer who wants to do a large scale
operation is going to have to manage along with the books,the labor,the weather and everything
else. To make it that much more difficult on those who are trying to farm is something that the
Department has to try to mitigate because they want to make it as easy as possible for large scale
farming.
Commissioner Blake questioned if IAL becomes law and they have agricultural
subdivisions, if they can satisfy IAL requirements by planting papayas,macadamia nuts, coconut
trees, the same as in TVR ag plans.
Mr. Dahilig stated that the issue of enforcement of farming is an enigma that the
Department heads across the State have been trying to figure out. They have difficulty trying to
ascertain the definition of farm under Chapter 205 of the State law. It was a predominant
discussion during the TVR situation when farm dwelling units that were being used for vacation
rentals were engaging in what some Commissioners and others in the Department would
characterize as shibai farming, for example growing one papaya tree and selling the papayas at
the farmers market and saying to the State that they made money off the papayas they grow. It's
a complicated answer that he is unable to provide based on the question. It is a loophole in the
law that is problematic. Everyone w,ho lives on these properties engages in farm dwelling
agreements,but whether they actually are fanning or not,it would be difficult to say.
Chair Texeira asked if the applicant had any comments to the staff report.
Lauren Sharkey,representing Kealia Properties, LLC, dba Kealiakealanani stated that the
applicant is asking for an extension to complete the improvements including the community
improvements outlined in the request which include the rodeo parcel and renovations to comply
to make it a State sanctioned rodeo, community sports park for the community,improvements to
the Kealia Store, as well as a poi mill facility plant. These are community benefits and they
benefit the Kealia community. They are supposed to be done in the first two years of the
extension. Rather than the typical subdivision development where the developer comes in doing
all the market and then once it earns income or revenues,ties in the community benefits to the
last stage,here the developer is requesting to take on the improvements at the onset, at least$1.5
million not including the sports park. There are specific improvements and renovations that are
contemplated and they are the expected amounts. To the extent that the Planning Commission
has certain concerns as to whether the improvements will be done or what kind of improvements
will be done,the amendment to the subdivision agreement can clearly outline and attach as
exhibits the specific details for the community improvements. They believe they are community
improvements and would be done irrespective of the market homes. It was processed as an
agriculture subdivision and there is a very large and detailed agricultural master plan that
contemplates use of the property for agricultural purposes, so it isn't gentlemen farms.
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Specifically,the reason they are requesting a long extension is they want to do the improvements
first and substitute the first mortgage they are proposing with security that is acceptable to the
Commission before any construction is done or any sales are engaged for-the rest of the property.
That provides assurance to the Commission and the County that it isn't something that is going
to put the County at risk. She expressed concern with the phrasing of putting the-County in a
position of a bank, because that is not their intention. The mortgage shows a genuine
commitment of the developer to put its own property at risk in order to secure the entitlements.
A mortgage may not be as liquid as cash,but she would offer that it is more liquid than a surety
bond where you would have to go to a surety company and request that they pay out. There are
tons of cases with trying to get a surety company to pay out on a surety bond. The County is in
control of enforceability of that mortgage. The subdivision agreement and the Code is very clear
that the Planning Commission has the right to grant an extension as mutually agreed upon. It has
the right to accept renewals of security and is contemplated in the subdivision agreement. The
Code allows the Commission to accept security that's acceptable to the Planning Commission.
She questioned what risk there is to the County. The applicant is prohibited from engaging in
sales,prohibited from pulling any permits for any type of construction for the market homes. It
wants to engage in the community improvements. Regarding the comments about savings to the
developer or money saved because of the 1-4%not paid on the bond,she was not clear where
that information was coming from. There are provisions in the construction contract which
provides that they have to pay for increases in the bond. The developer has a construction
contract that has been entered into within the last two months and has provided a performance in
payment bond to the County showing that it has progressed 4nd it is trying to proceed with the
development. In the last year they have been engaged, not only in discussions related to
substitution of security,but also in going out to the community and seeing what the community
needs,looking at it, and articulating what community improvements would help the Kealia
community. It is clear that there has been change of ownership over the five years, but the
commitment by the developer and the applicant to do these community improvements shortly
after any approval for the request for extension shows that it wants to actively progress and
commit, and has done its work in making sure what community improvements would benefit the
community. Regarding the comments on whether recertification of the construction plans is
necessary in order to request an extension,they would say that it's not. They have always been
committed to compliance with the Code and recertification of the construction plan before
improvements. The request for extension specifically states they want that additional time in
order to proceed with the process for recertification of those plans. What the Planning
Department is stating is that you need that recertification before they can even ask for an
extension. That is not anywhere in Code or subdivision agreement. The Planning Commission
can condition the amendment to the subdivision agreement to comply with the recertification of
the construction plans. There is no indication that the valuation that was done in 2007 that was
used for the purpose of valuing the security is not valid. If the Planning Department and the
Commission wants that revaluation,there's nothing that bars approval for the request for
extension conditioned upon recertification of those plans and determination that the valuation
that was done before is still valid,despite the fact that there's nothing in the Code that requires a
revaluation or recertification prior to the request for the extension. Regarding the Planning
Department's position that the first mortgage is not a valid security,anybody that has a mortgage
on their home recognizes the threat and how a mortgage encumbers a property. It is public
record that the County would have an interest of the$18,420,000 secured against the property. It
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is noticed to the world that the County is encumbered by that. It provides adequate assurance to
the County that the developer is committed to the progress of the development. In addition to the
first mortgage,they also provided a valid construction contract and the performance and payment
bond that is required under the Code. The Code allows that the Planning Commission can
determine what other securities are acceptable. The question is whether it is a valid security and
what the County would need to do as far as enforcement. The developer has committed that it
will not engage in any construction or pull permits, or engage in any sales before substituting the
first mortgage. During the period of time that the first mortgage is in place,they will focus on
the community improvements which total about$1.5 million excluding the sports park. There is
certainly enough valuation with respect to the first mortgage for that. The other concern is
whether an EA is triggered. They would argue that an EA is not triggered because an EA is
triggered when there is a proposed use of County funds. Here there is just a possibility of a
contingent use of County funds that they think can be addressed in a way in a mortgage which
states that any of the filing fees that would be involved in filing any foreclosure action would be
reimbursed from the sale. There is nothing that requires the County to purchase the property
once you proceed with foreclosure. The first mortgage is to secure the improvements. The
improvements that they are focused on are the community improvements,but in the event that
the Commission wants to take the clear reading of the subdivision agreement,there is other
recourse for the County. They don't need to execute on the first mortgage. They can hold the
first mortgage as pure security,but they also have the ability to void the subdivision approval
map and void the subdivision if there is any default for purposes of the developer not proceeding
with the community improvements or if they try to pull a permit. They can take any such other
action as may be reasonable under the circumstances. Nothing requires the County to become a
bank or bond holder for purposes of the first mortgage. It shows a genuine commitment to the
County that the developer is risking the whole property because he is committed to the
development of the property and the community improvements which he is willing to do without
engaging in any market or sales of the property. As to the valuation of the property with respect
to the improvements,the developer has initially proposed a first mortgage on all of the parcels
not only the ones that were unimproved. Through discussions and correspondence with the
Planning Director,he was concerned about EA triggers despite their position that it does not
trigger an EA. The developer is committed to a first mortgage to the whole property and sees no
reason why the whole property cannot be mortgaged. With respect to the valuation, even if they
use the purchase price which is$21 million,the$18,420,000 is less than$21 million purchase
price. They offered up the real property tax assessment value because that is what the County
provided to the applicant as the valuation for the property. It does do an adjustment for the cost
of the improvement, so that is the current property assessment. Even if they use the purchase
price,it is still in access of the mortgage amount. The developer would submit that the eight
year period request is justified. It would be for the first two years committed to the community
improvements, recertification of the construction plans, and completion of the infrastructure and
believes that amount of time is necessary to do all of that. It has been progressing, is engaged in
discussions with the Planning Department relating to the substitution security, as well as
discussions on the community improvements. The second issue as to the first mortgage as
stated,they feel is a valid security,protects the County's interest and shows a genuine
commitment by the applicant.
(The Committee Recessed)
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Commissioner Matsumoto requested maps of the location that shows the scope and scale
of the area. She questioned how the community improvement areas were identified and when
they first engaged in the discussions.
Andy Friend,representing Kealia Prope>_-ties stated that the improvements;the arena,the
poi mill, and the store improvements go back to the original plan. The arena was a focal point of
the plantation and is the oldest arena on the island. There was a requirement from the seller that
the arena should be refurbished,renovated, and dedicated to a non-profit. As they met with
various groups and individuals it was easy to pick up the significance and broad appeal that a
rodeo and equestrian facility was needed and received. It was part of the original agricultural
master plan. The tenants of the facility indicated what was needed and the key action point was
the State sanctioned facilities. They worked on an internal list of the kinds of materials and
facilities that are needed to hold a State sanctioned rodeo. The desire of the applicant is for the
facility to be for equestrian and rodeo use in perpetuity for the community. The poi mill taro
production is one of the three main agricultural components of the master ag plan. They entered
into a lease with the Kauai Taro Company and part of the they indicated that at some point in the
future they would need a mill, so a mill was incorporated into the overall studies and concept of
a plan. It is somewhat of preservation for the future of the taro activity to have a mill. They can
control their own destiny by the ability to process their taro. The store is over 80 years old and
working with the tenant who has a long term lease, she has done research and consultation on
what improvements were needed. It would be a makeover and expansion to bring the building
up to code. In the original plan, once the project gets going she is on the leased area that is
required to have a farmers market as a way to market the produce and agricultural products that
is grown on the property. The community sports park was a result of recent community input
with the need for soccer fields that could access north shore kids. The owner was receptive to
that suggestion so that particular parcel was selected because it's one of the few parcels that has
access to electricity and is somewhat flat. It was a request by the community.
Commissioner Blake questioned whether the donation of the facilities to the public were
conditioned on acceptance of an alternate security; winning of the tax appeal.
Ms. Sharkey stated that it would be a resolution. They are currently ongoing discussions.
with the County Attorney's office in conjunction with the Director of Finance for a resolution. It
deals with the property and the valuation. It's not a win of the appeal but whether the parties can
agree to resolve it so they can move forward with the project. They are requesting the extension
and substitution of the security.
Commissioner Blake questioned if the County stands firm if it would it be a resolution to
the applicant.
Ms. Sharkey stated that if the County stays in its current position, she did not believe it
would be a resolution. It would have to be something that the parties mutually agree. For
purposes of this subdivision,they wanted to explain that they are ongoing with the discussions
and hope to have them resolved very soon.
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Chair Texeira questioned if the current purchaser of the property owns the land fee
outright.
Ms. Sharkey stated that the County would have a first mortgage so there is no debt on the
property.
The applicant submitted their communication for the record.
Mr. Dahilig stated that there is a list of people signed up to testify. He also noted written
testimony that was received from Council member Tim Bynum in support of the Planning
Department's recommendation, Rayne Regush of the Kapaa/Wailua Neighborhood Association
in support of the Planning Director's recommendation, an email from Elle Ward in support of
the Planning Director's recommendation, a letter from E. Dunbar in support of the Planning
Director's recommendation, an email from Mary Mulhall in support of the Planning Director's
recommendation,a letter from Melody Pigao in support of the extension request,a letter from
Jerome Hew in support of the extension request, and a number of petitions that are in support of
the extension request.
S
On the motion by Camilla Matsumoto and seconded by Hartwell Blake to receive
the items for the record,the motion carried by unanimous voice vote.
Mr. Dahilig noted that there were 25 individuals signed up to testify.
Chair Texeira reminded all speakers that they will be allowed three minutes to testify and
requested that there be no duplication of the same comments due to the number of speakers.
They would entertain new comments that have not yet been spoken.
Mr. Carl Imperato on behalf of the Kauai Sierra Club urged the Commission to deny the
request to extend the lives of the subdivision permits. Approval would be contrary to public
policy and the interest of the people of Kauai. It would exempt the project from scrutiny
regarding what truly should be allowed on ag lands and open zone lands under current policies
and Ordinances. Extension would exempt the project from requirements of Ordinance 896
limiting the project to 115 farm dwellings rather than 188 gentlemen estates. Extension would
exempt the project from requirements of Ordinance 860 which requires 56 affordable housing
units. It is only fair and just that the public policies and rules that are in effect today should be
applied to the project. Extending the subdivision permits would allow a 64%increase in the
number of gentlemen estates compared to what would be allowed under current policies.
Extending the subdivision permit by eight years would exempt them from new regulations that
occur through the year 2020. Approval of the extensions would set dangerous negative
precedence. Their proposal would allow for subdivision without a surety bond from a financial
institution. The Council would be providing a subsidy to the developer to promote a project
whose primary objective is contrary to the General Plan and current policy. The financial risks
and costs that are implicit in this$6 million cost of performance bonds would implicitly be taken
on by the County and tax payers. Allowing this developer to subdivide without performance
bonds eliminates any performance bond requirements because the County would need to do this
for every developer in the future. The County should not go into business of financing or
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subsidizing private developer subdivisions. Finally, approval of this extension isn't warranted in
any way. For years there have been concerns about the lack of expiration dates in many of the
permits issued in the past. Here is a case where there is an expiration date,there has been no
progress for five years, and the County instead is being asked to ignore that expiration date. It
would set precedence for the future. The only course of action that is fair,just, and reasonable is
to allow the permits to expire and start over. He thanked the Department and the Director for the
recommendation.
David Dinner stated that he will be departing from his written testimony because
everything has already been said. He stated that Mr. Dahilig did a beautiful job summarizing and
Mr. Imperato made a beautiful comprehensive statement. He added that he has been on the
island for 13 years and sees a four lane highway starting to creep around the island as well as
growth taking up all of the space that is beautiful which is changing the nature of the island.
Some change is positive but much is taking away the quality of why people live here and the
quality of why people visit. He expressed compassion for the builders and their jobs,but there is
also respect for the land and at some point they have to say enough. They are not able to feed
themselves with the agricultural lands they have and they are not using it in the best way they
can. In 2008 the voters elected to limit Transient Vacation Rentals because they are tired of the
traffic,the overcrowding, and pollution. The Council has passed an Ordinance to try to limit the
open.land. In his view they have an opportunity to look at something where a development is
larger and more extensive than it should be in a beautiful piece of property. They recommended
very careful consideration and not approving the extension especially under the circumstances of
the very questionable business possibilities involved. He thanked the Commission for the
opportunity to testify.
Maka'ala Ka'aumoana representing Hui Ho'omalu I Ka`Aina stated that they are
respectfully offering testimony although it relates to land and uses outside of their ordinary
purview in Mokuhalelea. Their organization supports all cultural uses of the lands and currently
some of the land referred to in the application is being used in many cultural ways by the right
people, however they are in support of the Planning Director's recommendation. The owner of
the land is not using the value of this land in a cultural way and certainly not in a pono way. It is
no accident that the good farmers,paniolo, small business owners, and community people and
supporting the Iand owner;they have a lot at stake. The applicant is requesting special treatment
that has been given to no other,promising the people they can continue to farm and use the land.
There is no guarantee the uses will continue. There is nothing in writing and there is good
reason to believe this land will not be developed any time soon,possibly sold to someone who
has little interest in farming or rodeo. The uses are not protected no matter what the Commission
does. The promises should not be contingent on an unprecedented request from the County. An
extension for an additional eight years which voids conditions and opportunities for others in the
community and to request for the County to be the mortgage holder also a precedent which
brings risk and liability to all the tax payers is too high a price to pay for promises. This is a
creative strategy to pit the people against each other; for those in need of affordable housing to
go against the farmers,for those who love t#e heritage and future opportunities of rodeo to go
against those who do not want to put the County in a risky financial position, and for most who
are looking for security in community sustainability to feel blackmailed by one of the mega rich
in the society. The Commission must take the larger view on the issue. This is one of the most
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serious matters that has come before the body in a very long time. The extension request takes
away the protections of agricultural uses,takes away the limitations on gentlemen farming,and
takes away compliance with affordable housing, and replaces it with the County holding the bag
for the loan and the community manipulated,used, and divided. The only thing this land owner
has accomplished is to build a constituency for an extension. She asked the Commission to
support true community benefit,not blackmail. Deny the request,do not be bullied by the land
owner, and don't let him bully the people. Support continued use of this land in legitimate
agriculture.
Joe Adorno,full time resident of Kapaa,home owner, and small business owner/operator
stated that he is in favor of the eight year extension. The project seeks to restore,renovate and
revitalize a historic area of the island. The donation of land as park increases the opportunity for
recreation for visitors and residents. The renovation of the rodeo and the surrounding property
will highlight the paniolo tradition on the island and provide a point of interest for visitors and
residents. While providing recreational and historical continuity,the applicant's plan for the
reintroduction of historic agricultural practices with the construction of the taro milling site will
ensure that keiki and visitors can see and experience a major component of our island tradition.
The applicant is willing to provide financial security that will benefit the County and community.
It seems proper for the Commission to allow more time for completion of a project of this scale
and importance. He urged the Commission to grant the extension and help revitalize an
important part for Kauai.
Marge Freeman stated that the Planning Department has done a wonderful job explaining
how things are and she agrees that an eight year extension is not warranted. When deadlines are
placed on developers they should be enforced otherwise why put them on. The request for the
County to back their bonds is outrageous and the County should never think of doing any such
thing for any for profit developer. She requested that the Commission vote against the extension
and follow the Planning Department's suggestion.
Councilwoman Joann Yukimura stated that when she was told of the potential request for
extension a year ago, it sounded like a reasonable idea and the proposed community benefits
were exciting and many hard working, good hearted people want to see the community projects
completed. In reviewing the Planning Department's analysis and recommendations,however,
and in expanding her understanding of the magnitude of the action; 2,000 plus acres of prime ag
land at stake,the unprecedented and non-liquid nature of surety substitute, and the fact that the
County will be facilitating a private land banking of entitlements that are outdated and contrary
to current law, she felt responsible to speak out. She believes they are all good intentions. Some
of the developer's initiated covenants go beyond the County requirements in trying to ensure ag.
The poi mill will be an agricultural asset. But, as was pointed out in the Department's report,
there are not clear system controls for ensuring that the contributions to private entities will be a
sustained public benefit. She noted there are no restrictions against the nonprofit selling the
rodeo site to a for profit entity if things don't work out. Current proponents wouldn't think of
selling it,but we have to think in perpetuity and it might happen. Are there protections to ensure
that the community benefit will last in perpetuity? The key question is; are community benefits
legitimate criteria for whether an ag subdivision should be extended; is it part of the criteria for
ag subdivisions? The excellent report of the Planning Department is helping to keep a clear
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mind about the main purpose of ag subdivision requirements. Their main purpose is to provide
land to farmers within a reasonable time and if that cannot be done,the subdivision should lapse
with the developer able to come back at another time to propose another subdivision and also
make contributions to the community. It is not right to let the developer hold on to his
entitlements and yet escape the new requirements of housing and density which reflect the
current law. Why should the developer be able to refresh and extend his expired entitlements
without the County also refreshing its requirements? She thinks it would be very bad to give a
six to eight year extension to a subdivision that is obsolete. The purpose of surety is so that the
County can complete the subdivision if the developer doesn't,but why would the County want to
complete an obsolete subdivision? Get the subdivision in order with the current law first and
then consider a subdivision request. She also has concerns about the first mortgage and the
precedence it would set which would allow other subdivision requests in the future to ask for
similar surety.
Ilima Rivera stated that she is a singer and has a voice to speak for her children and other
people who are in favor of the Kealia project. She has faith and believes that the project will
benefit the Kealia community,the community of the island,and the visitor industry that brings in
the people. Kealia is a very historical place for the island. It is like a quaint town in Hanapepe;
the visitors walk through the town and enjoy it. She supports the fact that they will have a future
poi mill to feed the keiki and to educate many. -She thinks that is a positive step. Each
community has a park and Kealia should have one too. She fully supports the project in Kealia.
Lihue Kinnimaka Lopez stated that she is the proprietor of Kealia Store. She was born
and raised on Kauai and her family has very deep roots. She has been a part or the Kealia
community all of her life and has owned and operated the store for 15 years. The building that
she occupies is close to 88 years old and a renovation is well needed. The Kealia Post Office has
250 boxes for community members that will also be renovated. She is in favor of the Kealia
extension and with her years of being there, she has seen so many things happen. Kealia is a hub
for the community where people talk story,play music, and gather. Never has she rejected a
community member from using the property that they occupy. She felt it is really important to
the community of Kauai that the extension goes through. Kealia Post Office is a historical
landmark. She asked the Commission to consider the extension.
Keoni John Durant stated that he is in favor of the proposal and he felt that it is very
important that the agriculture continue there. He believes the community is growing and there
are a lot of people on the beach. It looks like there is going to be a big community there. What
he sees is that agriculture helps to feed the people. The community park is very impdrtant for the
children to play games and engage in community activities. He suggested a youth center. The
Hanamaulu youth center was very beneficial and they learned to play nicely. Education is very
valuable and he believes they can be a role model for other places on the island that would be a
beginning to teach children how to act and respect their elders. Without the elders they would
not know who they are and what to plant,where to plant, and when to plant. He is a
kanakamaoli. Kealia has the opportunity to make it happen. If they extend the permit,
everything can be fixed for the benefit of the community and it will become successful. He
believes that all of the problems can be resolved. The children need guidance. Lihue has given
him the opportunity to come onto the land and be a part of the community. He teaches his
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culture. He feels very supportive that he has the opportunity to reach the people of Kealia. He
feels the Commission should allow this to continue. Kealia is not really growing and this is the
opportunity to make it grow and good things will come of it.
Alexander Young, Pastor of U-Turn for Christ on Kaual, stated that he has watched
men's lives turn around for good and is thankful for the support that has come to help the
ministry. He supports the project because it provides opportunity for small entities to dream big.
He doesn't see it as bullying the people. He sees it as a big brother giving opportunities to the
small entities that desire to grow and be a positive influence. He believed that if they continue to
work toward it, everything will work out for the good. He prays that the Comzxlission will also
give favor to it.
A letter was submitted from Dustin Alf ler on behalf of the Kapaa Pop Warner in support
of the extension.
Joe Lopez, co-owner of Kealia Store, stated that he was born and raised on Kauai and
lived in Kealia when his father worked for the plantation. He felt that he project should be
allowed because agriculture can help sustain the island in the future. The new land owner needs
a chance. The population at Kealia Beach has increased. He used to be able to walk on the
beach and find glass balls, but today you don't see anything like that. He feels that the project
should do well and the island can be sustainable.
Mr. Dahilig announced that the committee will be breaking for lunch at 12:15pm and will
reconvene in an hour.
Pastor Tom Lannucci, former Police Commissioner, stated that as a parliamentarian he
would humbly suggest that public testimony be allowed first in the future, then hold the meeting.
He stated that he is in support of the extension. He understands the pros and cons and as a
Commission,they can hold the applicant to their bench marks. He stated that extensions have
been given to Coco Palms, and this applicant is trying to do something for the community. The
developers have helped the U-Turn for Christ ministries, and seem to be above board. He is in
support of the rodeo and Kealia Store. He agrees they should have a community center. He
thinks the rodeo is one of the best drug free, alcohol free, family community events on the island
and hopes the Commission will support it.
Hanna Asquith and Shawn Asquith provided testimony (testimony provided ip Hawaiian
language) in support of the project extension.
Adam Asquith, father of Hanna and Shawn Asquith, stated that he is one of the taro
farmers who would be a direct beneficiary of some of the improvements. He noted that they do
not make any money farming and all of their activities benefit the community. The Planning
Department's recommendations border on technical hyperbole. The agricultural problem on
Kauai has been solved. The best fertile contiguous area of agricultural soil on the island is in
Mana which has been given to multi-national corporations, instead of the community,that
produce privately owned products that are then sold to other multi-national corporations to grow
commodities that are sold to other multi-national corporations as products that are then sold to
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national and regional corporations that come back and eventually make their way back into the
children's mouths. In contrast, they have a private land owner who is committing and investing
his own money and land in hyper local,traditional agriculture, and culturally appropriate food
for the keiki. He brings a lot of school children to the farm and asks who is kamaaina. He noted
that technically,in an analysis,the constituents that make up their body is from Nebraska, a
product of Monsanto. That is what distinguishes our keiki from the kupuna because the kupuna
ate food from the land so they are physically kamaaina. He thanked the Commission for their
service. They make a lot of tough decisions,but this is not a tough decision. They have an
opportunity to help the people in Kealia make kamaaina again. He requested that the
Commission support the extension and allow them to build a kamaaina program.
Stewart Wellington stated that there are many issues he wants to address. The main thing
is clarifying things that have been discussed. The way the improvements benefit the community
has been a little misleading. The rodeo arena can be visited any Tuesday, Thursday and
Saturday. It's all about the kids. He stated that the people in support are representing
themselves because it is a community benefit. There are generations of cowboys that are
grandfathers and fathers who are watching their kids utilize this place. He wanted to clarify that
it has a big impact. The issue of security is big but he urged the Commissioners to have a full
understanding of first mortgage. He didn't feel that it would put the County at such a big risk as
discussed. Because the owner is prohibited from selling the property or pull permits until he
initiates or converts the first mortgage back into a letter of credit,it reduces the risk taken on the
County's part. The intention is to reduce the risk to the County. The new owner has just
purchased the property. The discussions have stated that the developer is being allowed to carry
the approvals for five years. It is not true. The project itself has been active for that long,but it
hasn't been the same person. The owner has expressed through what he has provided and
offered the County a commitment that he is responsible. Being responsible and requesting
extensions and in return providing community benefit up front, he is taking the risk that if the
market doesn't develop,he ultimately loses it. At the end of the extension,he would lose his
approval and entitlement. He feels the benefit of the community outweighs the benefit of the
developer. He begs the Commission to see who is behind him because the majority is a cross
section of Kauai. He proposed that the Commissioners move for the extension and the
acceptance of the mortgage as a security.
Lei Wann a native Hawaiian educator in the community stated that she supports the
agricultural side of this project. She has been fortunate to bring over 300 students to the property
during the summer. They teach kids about sustainability through small gardens and small plots
and farming aspects,but to teach on a big scale and what Kauai will need to look at in the future
she believes the things they have been doing in Kealia supports what the kids will be looking at
in the future. Kauai is in the high 90%of import. If that gets cut off how will the keiki survive?
She asked the Commission to think about the agriculturalists in Kealia and what they are trying
to propose. Students have come from the Big Island to look at Kealia Kai and the area for its
historical use. There is history beyond the past office to Hiiaka I Ka Pole O Pele and the
agriculturalists are aware of that and can educate the kids on what Hiiaka did in the area
thousands of years ago. She asked the Commission to consider at the project and the community
interest.
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Phil Villatora stated that everything has already been said. He was born and raised here
and started a non-profit organization called Na Keiki O Ka Aina. He stated that the Commission
is aware of who they are as cultural practitioners and how they live. They are truly fighting for
the area and to see kids turn their lives around because of what Kauai has supplied from the food
source. He thanked the Commission.
Rich Olson stated that this is a great pay it forward development. Giving to the
community first is a novel idea and is important in this time. He is a farmer in Kealid and thinks
that being able to have this farming land dedicated permanently is very important. The best soil
on the island is the bottom lands. The poi mill is a great idea. The rodeo is wonderful for the
community. He thinks from a development standpoint, it's a good idea and hopes the
Commission supports it.
(The Committee recessed for lunch at 12:13 p.m. and reconvened at 1:15 p.m.)
Chair Texeira stated that they are still in the process of receiving public testimony. He
noted that Councilwoman Yukimura requested a statement.
Councilwoman Joann Yukimura stated that she needed to be at an interview at 2:30pm,
but wanted to clarify her previous testimony to state that if the Commission is considering
granting an extension, she suggested extending it for six months to allow the parties to address
the needs of the Planning Department because there are so many lose ends that would make it
difficult for the County to give a six or eight year extension from how the subdivision might
meet the new current law,to how the non-profits might be tied down to assure long term
community status,to how they could work the financing.
Mr. Dahilig stated that they will take her testimony into consideration.
Sid Jackson, Secretary of the Wailua/Kapaa Neighborhood Association, read a
communication from the association that was approved by the directors and signed by the Chair
Rayne Regush stating that the controversial subdivision was approved in 2007 to create
gentlemen estates. The applicant was given five year's to complete infrastructure improvements,
but there has been no construction activity according to the staff report. It appears there is
inadequate bonding and other surety guarantees that are routinely required for subdivisions. The
Wailua/Kapaa Neighborhood Association strongly urges commissioners to adopt the Planning
Department's recommendation to deny the request for extension. The unprecedented eight year
extension sought by the applicant is not justifiable for a number of additional reasons clearly
defined in the staff report. There is a lack of assurances that the four proposed community
improvements will be made,the risk on this project is high given past defaults and the requested
length of extension,and the application has not met the submittal requirements and supporting
information as requested by the Department. Approving the extension may clear the way for
setting unwanted precedence leading to the abuse of the Subdivision Ordinance. The applicant
proposes mechanisms never allowed in law or practice that appear to give the developer
extraordinary latitude without adequate commitment of tangible assets on their part. The
association asks that the Commission concur with the Department's recommendation against an
extension. There may also be ethical questions about the County and its officials using their
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position to secure a financial benefit for a private entity. It has become a norm for the County
and if it is okay for one development, is it okay for others. They noted the 2000 General Plan
called for an end to gentlemen estate subdivisions that masquerade as farm dwellings on
agricultural land however Kauai is the only county in the State that still allows this type of
agricultural subdivision and sadly the Council has failed to modify their practice with their
rejection of Bills in 2000, 2002,2008 and 2010. The Association requests that the Commission
deny the extension and when the developer is seriously ready to complete the required
infrastructure,they can reapply for a tentative subdivision approval. The community would be
afforded greater benefit because the current Ordinance requires a decrease in density and
contributions for affordable housing. They commend staff's in-depth analysis and exemplary
leadership as evidenced through the forward looking report. Please heed the Department's legal
assessment and concerns about the County taking precedence setting actions. They strongly
encourage the Commission to adopt the Department's recommendation to deny Kealia Properties
subdivision extension request.
Wendy Raybeck thanked the Department and the Director for taking their position and
stated that they have to go back to the law, especially when there is a lot at stake. The laws were
designed for a good reason and the people who designed the law came up with what they felt was
the best for the island. She does not support the extension and believes the development project
had five years to come up with nothing except for selling a couple of times. She thinks they are
asking for eight years in hopes of getting a couple of years and she is not against the idea, it's
just in the wrong place. She is surprised that the Kealia community would trade out 2,000 acres
for a soccer field; 2,000 acres of pristine, sacred,beautiful land because someone says they can
have a soccer field. They are going to trade it for a bunch of mini mansions with papaya trees
and a little garden. She stated that she knows it has more merit than that,but the land is ag land
and open land zoned by the leaders that we elected. She would like to see the laws upheld. If
they want to start over,they are welcome to start from scratch and try again.
Scott Simms, a veterinarian on Kauai,stated that he did not think there is any risk with
the County taking on a first mortgage. If they own the land,they can just let it sit,no expense.
The upside would be getting the land back,but no down side. He feels there is tremendous
public benefit to having athletic facilities,whether it be rodeo or otherwise for the community.
He thinks that the people who want to have the facilities should be mandated to open them to the
public in perpetuity and that it doesn't revert back to some private entity. He is worried about an
eight year extension,but perhaps a compromise with a series of targets would be acceptable to
everyone. His personal experience in using the arena is that he gets to see the horses there and
they have never been denied use in the past and assumes they would not be denied use in the
future.
Bob Farias stated that this is the third time he is speaking about this project. Economic
times have set in and other people were not able to make it. He stated that laws are made to be
followed,but they are here to affect the laws. Even if Kealia sits for another eight years it will
not really affect the impact on Kauai. It is a nice, scenic place,unlike Coco Palms that should be
done with as soon as possible. Kealia has time. They have advanced commitment for
community benefit and he thinks it should be referred to as an equestrian center not just a rodeo
arena. An equestrian center goes much farther and all walks of life participate in equestrian
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facilities. His children grew up in the equestrian field and his grandchildren are in it now. He
asked the Commission to not just throw it out the window and try to come to the table for a
conclusion.
Ken Taylor thanked the staff for a well written report and would recommend that the
Commission follow the request of staff in denying moving forward with the extension request.
There has been a lot said about not having a rodeo, store, etc, if the project is not approved.
Those activities have been going on for a long time, and he did not believe they would disappear
in the future if the project extension is denied and allowing the developer to reapply for a new
project. In the long run the community would be better off There was a project approved in
2007 and nothing has happened since then.; Now is the time to pull the plug and move into the
future with a better project and better benefits for all of the community.
Paul Kino stated that he was on the original development team for the 2007 subdivision.
He clarified that when they came up with the concept for the project,they wanted it to be a
project that serviced the needs of the community. When they came up with the idea to repair the
rodeo arena,they wanted it to be State sanctioned as Kauai is the only island that does not have a
State sanctioned arena. The other items were necessary for the community. They knew it would
be an equestrian,rodeo,agricultural community and with the master ag plan,they worked with
the prior Planning Director,Ian Costa, in determining the needs of the community and not
making it a gentleman farm agricultural subdivision. They wanted to do an agricultural
subdivision that had some teeth behind it. They did the subdivision behind an ag master plan
that had three major ag components to it. Every home owner that was to buy a lot was to do their
own ag and there were deed restrictions. The homeowner's association would put liens to keep it
in force. The last Commission unanimously approved the project because of all the additions.
Mr. Costa was impressed and said he wanted to use it as a model for future ag subdivisions. It
was new and different. The new owner wants to take the pieces that were offered to the
community and give them up front to show his commitment to stick within the plan,but he
bought the property in the worse downturn in the economy. He thinks that he wants to commit
himself but doesn't know if it will be developed in three years or five years and that is why he
has come in with the eight year request. Regarding the first mortgage, it is unique but puts the
County in a better position than other types of surety,and it will not be precedent setting because
they bought the property for cash. 99%of other developers are leveraging their money and have
first mortgages. They would be unable to make a commitment like this to the County. This
owner owns the property free and clear and is willing to put the County in a position to walk
with the property if he strays off the agreement.
Bruce Laymen stated that he and his son Marcus Laymen will be testifying together. He
stated that he can appreciate that everyone is entitled to their own opinions and beliefs on
whether someone is sincere or not or really committed to living up to their word. He has been
here his whole life,has a landscape company, and ranch that his son runs. He has been involved
with a lot of people that have promised the world to the island. Maybe that's why some of the
sentiment is so negative. He understands their position,but hearing words like blackmail and
bullying are not fair assessments. He met the owner, Peter Nolan, and the first question was if he
was committed to being a good partner in the community. His answer was yes and that he wants
to do what is right by the community. He nosed that two of the top stories on the news last night
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related to Coco Palms. It has been languishing for 13 years. He stated that perhaps there have
been reasons why they have been given so many extensions,but the Planning Director stated that
for an extension to be given there should be actionable activity. He questioned what actionable
activity has been going on a Coco Palms for the past 20 years and what activity has warranted 13
years of extensions. He is also not aware of anything that has been offered to the community and
the island up front. He stated that it may be convenient to think negatively,but he asked that the
Commission take note of the people who took time to be here because they believe in the
benefits for the community. He asked the Commission not to play the Devil's advocate and to
look at it on behalf of the community. Maybe the precedent could be set in reverse that this
person got this one time extension because of what he was willing to give to the community up
front. Someone finally put it in writing and is doing it up front to benefit the community. He
asked the Commission to think positively for the community that is hurting economically. It is a
wonderful educational opportunity for the bids.
Avery Youn stated that he was there for a couple of reasons. Many people here are his
friends and he wants to see them supported. Secondly,he wants to try to keep the integrity of the
subdivision process in tact. He has a lot of family and friends here, so it was hard to come up
and say anything negative or go against the project,but he noted that this project already failed
once and promises were made that were not kept. He knows that surety is usually a bond or
letter of credit or cash bond, and the idea of providing a first mortgage is commendable and
thinking very creatively, especially when you can establish a bond or a first mortgage without an
approved construction plan approval first which is what everybody else is required to do. The
purpose of the subdivision agreement is to sell lots prior to its completion and if you are going to
put a condition on the agreement that you're not allowed to sell any lots, it doesn't make any
sense to go through the subdivision agreement. There was always a housing element, and it's
totally silent in this case, so to ask for a final approval using a different form of surety that is not
quite proven yet,he asked the Commission to protect the County's interest as well as the people
seated behind him to be creative just as they are. He stated that the community has been
showing up for six or seven years and they haven't gotten anything yet. They have been used to
support the project, so he would give them what they want. It's already final approval, it's
already been created,already has electricity and water,they can.create a deed and convey it
immediately. He suggested the deed be a part of the exhibit to the subdivision agreement.
Secondly,he personally felt the second mortgage should be a letter of credit, but in this case if it
is not,then there should be many things that should be addressed since it could go wrong. First,
the mortgage can be sold. Second,the land could be sold,then they'd be dealing with different
parties again. Third,he asked the Commission to assure that the County does not become liable
for providing the improvements if the project fails. The County would not.be able to do it. The
development cost was in excess of$33 million and any County agency is not capable in finishing
a project of that scale. Forth,he suggested that if they have to do a subdivision agreement,that
they have strict performance clauses like automatic sunset clauses if they don't perform. If the
letter of credit goes to the County,if it fails,the current procedure would be that the subdivision
agreement would have to be nullified by the Commission first. He questioned if within the
subdivision agreement itself,in addition to having a draft deed to convey the property to the
rodeo,if they could have another one that should the developer renege on their promises that a
draft deed be given to the County as well.
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Mr. Dahilig noted that is all that have signed up to testify.
Chair Texeira closed the public testimony.
Mr. Dahilig stated that the Department was available for any further questions. Based on
the Department's understanding on the rules of practices and procedures, before this matter can
go to the full body for action, some type of recommendation has to come out of the committee
before it can be forwarded.
Deputy County Attorney Jung clarified that the way the rules are structured is that the
committee would have to dispose of the matter; evaluate the project and make a recommendation
to either approve, deny, or approve with modifications. They can deliberate and discuss now,
pose questions to the Department and the applicant, or they can suspend the rules and allow other
Commissioners to participate,but they won't be able to participate in the vote of the committee.
Chair Texeira asked other Commissioners if they would like to speak on this item.
Deputy County Attorney Jung stated that once the subdivision committee makes its
recommendation, it is forwarded in the form of a report to the full Commission for ratification or
disapproval. They can take their own action, or refer it back to the committee for more
information. First approval, denial, or approve with modifications has to come from this body
and eventually the full Commission will be able to evaluate it and make their own decision.
Commission Chair Kimura questioned the applicant about affordable housing on the
property. His understanding is that the property that was assigned for affordable housing was
now donated to the park.
Ms. Sharkey stated that there is also another parcel slotted for affordable housing. When
the project received final approval there was no affordable housing requirement at that time. The
applicant voluntarily submitted two parcels for affordable housing. One of those parcels is better
suited for a sports park based on discussions from the community, but the other parcel is still on
the map and reflected as affordable housing. She doesn't want to have a retroactive application
of new laws on something that was approved in 2007 because she thinks that is unfair to the
applicant to be forced to comply with new laws enacted after the approval.
Commission Chair Kimura stated that he understands but if they want an extension, then
he feels the community should have something in return and one of them would be affordable
housing, whether volunteered or by law.
Ms. Sharkey stated that even when there was no law imposing affordable housing,the
subdivision project contemplated affordable housing and it still does. There is still a parcel that
is allocated for affordable housing, in addition to the sports park,which would be up front.
Commission Chair Kimura noted that there were two parcels for affordable housing and
now one is gone. He questioned if they would be able to find another piece of property out of
the 2,000 acres and still have two parcels for affordable housing.
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Ms. Sharkey stated that they can definitely look at it.
Commission Chair Kimura stated that he would do anything for kids,but he also has to
think about the community and affordable housing is the most important thing besides the park.
If they could still have two pieces of property for the affordable housing, plus the sports park, it
would give the applicant an edge in his opinion.
Ms. Sharkey stated that the Ordinance in the staff report mentions a certain count if it
were applied.
Mr. Dahilig stated that if Ordinance 860 were applied to the present proposal, 56 units of
affordable housing would have to be constructed,not just land dedicated, or an in lieu fee of
approximately$5.5 million would have to be given to the Housing Agency. Even though the
project contemplated affordable housing,the new law requires actual vertical construction with
the infrastructure or an in lieu payment to the Housing Agency.
Ms. Sharkey stated that she would have to look at the parcel that is still in there. She
thinks it may be 48 units which is very close to the requirements and they can see what they can
do with that.
Commission Chair Kimura stated that in the beginning there were two parcels for
affordable homes. He questioned what is stopping the applicant from putting up another piece of
property.
Mr. Friend stated that the original proposal was volunteered was for 100 units. They
spread it out with one parcel on Makee and one parcel on Kumukumu so there wouldn't be one
large mass of residential units. The one parcel on Makee that is still subject to that voluntary
effort is around 48 or 49 units. They can take a look at trying to hit a certain number. They are
open to consideration.
Commissioner Chair Kimura stated that all he is asking is that they go back and talk to
the land owner. They originally had 100 units, and the Commission appreciates that they are
offering the park,but if he had to choose between 100 units and a park,he would choose the 100
units. If they still want to donate the park and put up 100 units of affordable housing it would be
even better. All he is asking is that they go back to the land owner and see if they can come up
with a compromise. He noted that he has been fighting for parks for kids ever since he became a
Commissioner,but affordable housing does come first.
Ms. Sharkey stated that they can go back.
Commissioner Matsumoto stated that they mentioned the rodeo,the store, and the poi
mill were part of the older agreement. She questioned what if they were not in the agreement.
She stated that it almost feels like.they would have to do it anyway.
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Ms. Sharkey stated that there is a component that they are doing it up front. Many
developments have the community portions at the back end assuming full development of the
project. Here, they want to show the applicant's commitment to the project by putting the
community improvements up front and specifying the details of those community improvements.
It's very clear what is going to happen within the first two years of the extension period.
Commissioner Matsumoto asked if those improvements would be made no matter what
happens.
Ms. Sharkey stated that if the applicant doesn't do it, they would be in breach of the
subdivision agreement, and during that time, they cannot pull any permits and are prohibited
from any sales and the County holds the first mortgage on the property.
Commissioner Matsumoto's stated that her concern is that it was already in the plans
before the new owner purchased that land and the previous owner didn't do anything about those
projects either.
Ms. Sharkey stated that usually the community improvements are on the back end of the
development, so they wouldn't have seen that until full build out.
Commissioner Matsumoto questioned if it was not a priority back then.
Ms. Sharkey stated that she was saying that the project was developed in phases. She
knows there was a concern as to what happens to the project. In this case, there would be the
benefit of the community improvements. If the market does not sustain the development of 188
units, the 188 units don't have to be built, but you still have the community improvements.
Commissioner Blake questioned if they are deeding the property to the County before
they start anything.
Ms. Sharkey stated that they would execute the first mortgage to the County as part of the
subdivision agreement amendment.
Commissioner Blake asked for clarification that even if they are not able to finish the
subdivision project,the County would still own the four community benefits.
Ms. Sharkey stated that the County would have the sports park. The other community
improvements are improvements to the store,the construction of the poi mill facility, and the
donation of the rodeo/equestrian area to a non-profit which can be conditioned upon it being
used for rodeo purposes in perpetuity.
Commissioner Blake questioned the cost that the applicant is willing to put toward the
improvements.
Ms. Sharkey stated that it would be$500,000 for the rodeo, $350,000.for Kealia Store,
$500,000 for the poi mill, and then the sports park would be a straight donation.
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Commissioner Blake asked for clarification that the applicant is talking about giving the
County $1.35 million in addition to the actual items.
Ms. Sharkey stated that they are donating to the County the community sports park and
they are committing to the $1.35 million in improvements to the projects.
Chair Texeira stated that it would not be to the County.
Deputy County Attorney Jung clarified that the only direct County benefit is the 14 acre
sports park. The other two benefits that they are anticipating are referred to as community
benefits, not necessarily direct benefits to the County, and the Planning Director outlined that in
his report. It is an important distinction because if they want to give it up to the community, it is
up to them,but the Commission needs to focus on the park as the direct County benefit.
Commissioner Blake asked for clarification that the park is conditioned upon the
applicant resolving the tax appeal.
Ms. Sharkey stated that the applicant is currently involved in negotiations so they wanted
a period of time to wrap those up because it impacts the viability of the project since it is a
dispute over the valuation of the project.
Commissioner Blake asked for clarification that the answer is yes; if they don't resolve it
to their satisfaction, all bets are off.
Ms. Sharkey replied that is correct.
Chair Texeira asked what it would mean. He questioned what happens to the property if
the Commission approves the subdivision but the negotiations with the real property is not
approved to their satisfaction.
Commission Chair Kimura stated that his understanding is that once the Commission
gives approval of the extension, whatever is on the table stays on the table; the sports park is
automatically donated to the County and all the money that they are donating to the poi mill, the
rodeo, and the store is a done deal.
Ms. Sharkey clarified that the applicant's request is conditioned upon resolving its tax
issues.
Commission Chair Kimura asked for clarification that they may be going through all of
this for nothing.
Ms. Sharkey stated that the applicant wants the right to address the tax issues.
Commission Chair Kimura stated that his understanding from what he was reading is that
once the Commission approves the extension, whatever is on the table, stays on the table.
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Ms. Sharkey stated that the applicant is trying to resolve its tax issues.
Commission Chair Kimura asked for clarification that what Ms. Sharkey is saying is that
what he is reading is wrong.
Ms. Sharkey stated that the applicant is committed except that it has a condition in Cher
that it wants to wrap up its tax issues by the end of the month.
Commission Chair Kimura stated that his question is; will the County get the park if they
give the extension?
Ms. Sharkey replied not if the applicant is unable to resolve its tax issues.
Commissioner Blake clarified that it is a conditional offer.
Mr. Dahilig stated that is what the Department has been reading. The Department's
concern is that it is clearly and issue of timing and trying to beat clocks. The way the
Department looks at it is a situation where the subdivision agreement expires today. There was a
push to try to get this item handled before the actual expiration of the subdivision agreement.
The Department looks at providing conditional guarantees as a means of having their cake and
eating it too. To say that they have a tax appeal that is floating out there that has nothing to do
with the land entitlement issues, and to have the outcome of something that is outside of the
Department's and Commission's control guide and dictate the execution of the future
entitlements, has concerned the Department. This may be fodder for another round of discussion
if the tax appeal is not disposed of to the satisfaction of the applicant.
Commission Chair Kimura questioned if the item can be deferred until the taxes can be
worked out. No matter what the Commission decides, it is conditional upon the taxes.
Mr. Dahilig stated that it is an issue of timing.
Commission Chair Kimura questioned if they can defer the extension.
Mr. Dahilig stated that his recommendation is not to defer the extension because they are
not in the control of how external events impact what they are trying to do. It is very unusual for
the Commission to take an event outside of the Department's or the Commission's control and
have its approvals be contingent on something that has no parameters around. He noted that if it
is to the satisfaction of the applicant, it is up to them to say that they will or will not follow
through. The tax appeal could theoretically be years from settlement. In the meantime, there is a
land banking of years where they are holding on to the entitlement, and if they lose the tax
appeal and they don't see it favorably,then they don't have to move forward with the project.
Commission Chair Kimura questioned if they allow an extension for one year for the
applicant to get all their ducks in a row, work out their tax problem, and get everything the
Department is asking.
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Mr. Dahilig stated that the ducks that were to be in a row were supposed to be taken care
of before the submittal. It is up to the Commission whether they chose to take something the
Department feels has not met the statutory guidelines concerning what items need to be taken
care of before they change the subdivision agreement,before they came in for the request. It's
up to the Commission if they would like to give that leeway.
Commission Chair Kimura felt that they have a lot to lose with the sports park,the arena,
poi mill, and renovation of the store. He still feels the community will benefit from it and the
affordable housing. If they don't allow an opportunity to set the record straight,by getting the
taxes taken care of,they don't want to go through the whole process and it doesn't work out. He
questioned if they can give them 6 months to a year to figure out their taxes.
Mr. Dahilig stated that an extension would essentially be holding the etitlements in
abeyance while they figure out the finances. The Department holds a strict standard for
subdivision and permit requests. Regarding Coco Palms it is a travesty,but it was a consequence
of an approval that happened years ago. If they came in for an extension request, in terms of a
recommendation, they would be very hard on them because they have not made any progress.
Usually leeway comes when they evaluate a project and say there has been progressive work.
He did not want to minimize the fact that the community stands to benefit from the private side
with the poi mill and the rodeo that are available for public use,but public use is a very broad
word. Their concern with the public use element is that it would need to be defined as to how it
benefits the County. If they were given documents stating that the rodeo is going to be available
for rental for the public and the poi mill would be available for other farmers to use across the
island,they look at those kinds of details to hinge to approval,but there is no direct County
benefit that can be ascertained from the July 25 and August 30 submittals that give cause to say
that they should be folded into the application.
Commission Chair Kimura questioned if the only reason they are there today is for the
sports park and not the arena,the store, and the poi mill.
Mr. Dahilig stated that in terms of the driver for what supports an extension beyond
precedented means, and proposing a unique type of financing that has not been encountered
before,that what is being proposed in terms of a benefit is for all 67,000 residents of the County.
At that point,it becomes a clear public use that the Department can recommend to the
Commission that there is a nexus that those general public benefits are going to support the types
of discretionary calls the Commission will be making. He is not saying that the County stands to
profit. What he is saying is that all 67,000 residents have the ability to fairly and equally access
these facilities in order to hinge it to the approval.
Deputy County Attorney Jung stated that before the Commission starts talking about any
particular type of action or deferment,they need to separate the two issues; one of process and
procedure, and the other of merit in terms of whether or not to employ their discretion to allow
unconventional security. The first element of process is if they meet the requirements to come in
to get the amendment. The Director is saying no, and the applicant is saying yes. One of the
issues the Commission needs to entertain before they make a motion to extend,even on a
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temporary basis, is whether or not they met those requirements. He would argue against a short
term extension because there are certain procedural elements that need to come into play first at
the Director's request. Regarding a deferment,it would be up to the body if they need more
information. The application would still technically be alive but it will be deferred to the next
meeting if that is what the committee would like to do. First they need to address the procedural
issues,then the merits.
Commissioner Blake questioned if the subdivision committee accepts the Department's
premise that the conditions have not been met to justify an extension, and they deny it,if it
would preclude the applicant from applying again.
Mr. Dahilig stated that it doesn't preclude the applicant from applying again,but as they
mentioned in the evaluation,what they can ascertain that the applicant is trying to avoid is a
resubmittal of a new subdivision application because Ordiances 860 and 896 would apply which
are the affordable housing and density reduction.
Commissioner Blake stated that in the 2007 acceptance of the agreement and
Department's approval,the Department isn't precluded from imposing new regulations during
the five year period. His understanding is that it is a general provision of every approval.
Deputy County Attorney Jung stated that if they are talking about retroactivity of
Ordinances,then he would prefer that discussion in executive session to determine the level of
grandfathering that would occur and whether or not a project is vested. New regulations cannot
be retroactively applied.
Commissioner Blake questioned why the Director advised against denial for
reapplication.
Mr. Dahilig clarified that the recommendation is a full denial. As the code is written, it
does not preclude them from reapplying for the project.
Commissioner Blake questioned how soon they could reapply.
Mr. Dahilig stated that it would depend on the due process element based on County
Attorney's opinion regarding voiding of subdivision agreements. That process would have to
take place first before the entitlement is considered wiped off the books.
Commissioner Blake stated that the applicant is offering or requesting discretionary
decision from the committee,but there are unaddressed issues. He feels a project of this size,
2,000 acres, requires the applicant to anticipate these questions and answer them,not having to
go back and think about it. They are trying to avoid constant delays. Because it is a big and
complex project there will be issues that have never come up before, like financing and whether
or not the plans need recertification. He feels that if this is denied because of unanswered 'issues,
within an eight year period of time,they have time to explore and include the issues in a new
application and still have the normal five years to accomplish it. There is no question that this
project has definite community benefits if all the planets Iine up. That's the question. Will all
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the planets line up? If one doesn't line up, does it nix the whole thing? He has not heard any
testimony against the facilities. The developers are offering additional benefits. As stated, they
don't know if the tax issues will be resolved. Not only is the request unprecedented, but it's
asking the whole County to stand behind what the Commission decides in case everything goes
south. That's a big pill to swallow, especially to the people in Kekaha. It's not like they will
benefit from it immediately like the Kealia community will. If they are responsible,there has to
be a County benefit and it has to be reasonable. They discussed whether the County will be like
a bank holding the mortgage, whether the County is going to be a realtor if everything goes
south, whether the County should be a bonding company to assess risk. He questioned who
would do it here. There are too many ends that have to be tied. He thinks the applicant has been
creative and is trying to make it as attractive as it can,but they still have no answers to their
questions.
Commissioner Matsumoto questioned the process for executive session.
Deputy County Attorney Jung stated that there is a legal questioned posed on who has to
be the signator on a mortgage which they would need to go back to research. If the cornihittee
would like an executive session, it would require a 2/3 vote. The other Commission members
could be present. It's up to the committee.
Commissioner Matsumoto stated that she heard the applicant say by the end of the
month. She questioned if it is true and by what date they would know.
Ms. Sharkey stated that they submitted a proposal to the County Attorney's office and
they are waiting for a response. She can't say that they will receive a response before September
30. They anticipate being ready to negotiate and work it out by the end of the month. It just so
happens that the five year expiration date of the application is today. They are asking for some
consideration for that.
Mr. Dahilig stated that since the original proposal on what a settlement would look like,
the Department has not seen from the County Attorney's office any copy of a mortgage or any
type of proposal so it would be difficult to comment.
On the motion by Camilla Matsumoto and seconded by Hartwell Blake to move into
executive session, the motion carried by unanimous voice vote.
Deputy County Attorney Jung stated that there has been a motion and a second to go into
executive session pertaining to legal questions with regard to the mortgage and the potential tax
appeal settlement. This Commission may go into executive session on an agenda item for one of
the permitted purposes listed in Section 92-5(a) Hawaii Revised Statutes without noticing the
executive session on the agenda where the executive session was not anticipated in advance
pursuant to HRS Section 92-7(a)the executive session may only be held,however, upon an
affirmative vote of 2/3 of the members present which must also be the majority of the members
to which the board is entitled. HRS 92-4 The reason for holding an executive session shall be
publically announced. The purpose of this executive session for the subdivision committee of
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which there are three members which two will have to vote to go into is to discuss the tax appeal
as well as issues related to the purported security for a mortgage.
(The Committee moved into executive session).
The meeting resumed at 4:08 p.m.
Ms. Sharkey conveyed that she has spoken to the owner and he is committed to getting
the resolution off the table so they can move forward. The request contemplates a resolution by
the end of the month, so she is requesting that the applicant be given that amount of time to
resolve the tax matter so they can come back to the Commission at the first hearing in October to
take that condition off and they will know whether that has been addressed.
Chair Texeira stated that the next meeting is unknown.
Mr. Dahilig stated that the agenda is pretty empty for September so the second meeting in
September is pending the outcome of today's meeting. Public hearings are being scheduled for
October 9.
Ms. Sharkey stated that October 9 would be acceptable especially considering all of the
public testimony and the substantial issues that were raised. They will have time to resolve the
tax resolution.
Chair Texeira suspended the rules to allow non-committee members to speak.
Commission Chair Kimura stated that having read the Director's report, the first
mortgage is confusing and something new. He stated that his opinion is that it is not something
that he wants to have future applicants proposing. He questioned if Ms. Sharkey could speak to
the owner to come up with letters of credit instead of first mortgage, if the Committee decides to
defer.
Ms. Sharkey stated that she will speak to the owner.
Commissioner Blake stated that neither of those items, if they are included and a deferral
is granted, means they are looking at eight years. That is a separate issue. The remaining issue
is the certification of the plans. His problem is that with an application date,the original
applicant was given five years, then the new owner took over the fiver year deadline and the tax
appeal, and the Commission has been in discussion for six hours which tells him there are a lot
of unresolved issues. if he were asking for dispensation from the County he would try to
anticipate all of the unresolved issues and get them taken care of in advance of his final request
for an extension rather than coming to the expiration date with key elements of the financing in
question and other items for which many questions still exist. He would look to the applicant to
solve it before they come to the Commission and ask them to figure it out at the hearing date or
grant more time for the applicant to arrive at some kind of agreement with the Department.
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Ms. Sharkey stated that regarding the recertification,the applicant was under the
understanding,based upon reading the Ordinance that they could recertify the plans prior to
completion of the improvements. Not until August 13 were they advised that the Planning
Depdrtment was taking the position that the recertification needed to be done prior to the request
for extension. In the July 25 submission they included that part of the reason they wanted the
additional time was that they needed to go through the recertification process. They felt they
were compliant with the Ordinance and not until mid-August were they advised that Planning
Department's position is that before you can come in for a request for extension they need to go
through the six to one year process to recertify prior. The Ordinance contemplates specifically
that if after one year the plans expire,they need to get them recertified. There is nothing that
states that prior to coming in for a request,they need to recertify. It's a different reading of the
Ordinance. With respect to the security,they engaged in a number of discussions with the
Department to see if they could work it where it would be acceptable to accept the first mortgage
and it wasn't until they were not able to come to an agreement that they stated that they would
like the opportunity to make the request before the Commission. They did undertake a number
of discussions and were trying to come to the Commission with an agreement they felt the
Department could work with,but they were trot able to work it out. She stated that it is not an
excuse but she wanted to provide the background that they were trying.
Chair Texeira stated that if they entertained a deferment,they would be looking at the
next meeting which would be in early October. If that is the case,they want to be sure the
applicant has their ducks lined up.
Commissioner Blake stated that he would like an answer to all that was discussed today,
rather than they hope of they intend to.
Chair Texeira stated that if they can provide as much information as they can, it will help
the Committee in their decision making,but right now they don't have all the information they
need. In the case of the Planning Department,they also wanted other pieces of information if
they defer. One would be the information on the mortgage.
Mr. Dahilig stated that they have not seen any draft mortgage documents. They have
been discussing it directly with the County Attorney's office. Their last direct communication
regarding the mortgage was in April, and since then they have not been in the loop.
Deputy County Attorney Jung stated that one of the Commissioner's concerns was that
nothing has been presented.
Ms. Sharkey stated that they can provide a draft mortgage.
Deputy County Attorney Jung stated that he hasn't seen any specific mortgage yet, so if
they want to provide their office with a draft,they can share it with the Commission during open
session. They should have the level of detail they anticipate to put in the document. He stated
that the point is that the burden shouldn't be on the County to draft the so called mortgage if they
entertain it.
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Commissioner Blake stated that he doesn't like the idea of a mortgage for reasons that he
has already stated,but he is talking about something that he has never seen.
Chair Texeira stated that they have requested as much information as possible on the
mortgage instrument and also the possibility of a letter of credit. They would prefer to go in that
direction.
Commissioner Matsumoto questioned the tax appeal.
Mr. Dahilig stated that based on what the applicant has presented,the Department can
follow up on the progress of that for the Commission. given the discussion that he heard,the
Commission needs to make some kind of finding with respect to whether what was submitted
before September 11 is actionable under the law. For clarity,because they look at what is
submitted as meeting the requirements of the law or not,the Commission at least to provide the
Department guidance; would need to make a determination that what was submitted before
September I 1 is in fact actionable under the law, specifically Sections 9-3.5 and 9-3.6. The last
date for this agreement is September 11, and in order to retroactively say that if a decision is
made three or four months down the line that it dove tails back to a submittal before September
11, there has to be a finding that what was submitted meets the letter of the law concerning
Sections 9-3.5 and 9-3.6.
Chair Texeira questioned a deferral.
Mr. Dahilig stated that a deferral would not have baring at this point because there may
be questions that were asked regarding the issue of actionability in order to dovetail it back
before the deadline. They can still make that call dovfn the fine and say that what was submitted
before September 11 was actionable. Before they get into discussions about mortgages it has to
be the first discussion point for any type of movement on any other type of item.
Chair Texeira questioned if the applicant would like to comment on the discussion in
terms of actionable.
Ms. Sharkey stated that the applicant made the request for the extension, submitted the
documents requested by the Planning Department to the extent that was available. It has not
submitted the recertified plans,but there is nothing in the Ordinance that requires recertification
prior to the Commission entertaining a request for extension. This is a request for extension,not
approval of a construction plan. They are committed to compliance with the Ordinance to
recertify the plans. They disagree that the plans need to be submitted as part of the request. It is
a request of extension and the documents requested,they provided to the extent that they were
able. That request came on August 13:
Mr. Dahilig stated that based on their reading,what they assert is the Commission's
authority when a subdivision agreement is already executed,the only extensions without the
subdivision plans being certified that can be given are time extensions. What is on the table is a
substantial change to the actual subdivision agreement. In that respect,because it goes beyond a
time extension,they are saying that 3.6 needs to be redone because they need to approve a new
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subdivision agreement and it is premised upon an approval of the construction plan and if you
read back to Section 9-3.5 these approvals are only good for one year. Reasonable minds can
differ and the way that it was read by the applicant can be very well followed. This is just the
Department's recommendation on how it is being read. If the Commission were to move
forward they have to make a determination that what was presented was actionable. The
Department does not think it is, but reasonable minds can differ.
Deputy County Attorney Jung stated that in looking at this issue, as the Director
mentioned, the Commission can make this finding at a later time, if there is a motion to defer so
they can get information and documents to aid in their decision making. The beauty of the law is
that it can be interpreted in two ways. The Commission would make the final call. If the
Commission would like to defer, it is up to them. The applicant did launch their application
prior to the expiration date so it is an open item until action is taken. They should make a
finding on whether or not they met the requirements of the application before they take action. If
they need more information they can make a deferral or they can take action now.
Chair Texeira stated that they requested more information in their discussions.
Commissioner Blake questioned if it still leaves the Commission with the alternative of
extending with additional conditions.
Mr. Dahilig stated that if the Commission makes the finding that what has been presenter)
is actionable, then they get into the next step of the issues of conditions. The Department
follows the wisdom of the body and if the body finds that what has been submitted before
September 11 in the July 25 and August 30 submittals meets the letter of the law, then that is a
finding that the Department will follow for the Commission. if it does not believe that it meets
the letter of the law then no action can be taken. So, it is the first gateway finding that the
Commission has to make before they can get into a discussion on the conditions.
Commissioner Blake questioned if the answer is to his question is yes.
Mr. Dahilig replied sure.
Chair Texeira questioned if enough pertinent information can be obtained by the next
meeting to make a deferral justifiable.
On the motion by Camilla Matsumoto and seconded by Hartwell BIake to defer
agenda item D.La final subdivision extension request 5-2006.45=Kealia Properties, LLC.
(formerly Plantation Partners Kauai, LLC/Kealiakealanani),TMK: 4-7-003:002, Kealia,
Kauai, and agenda item D.Lb., 5-2006-46, Kealia Properties,LLC (formerly Plantation
Partners Kauai, LLC/Kealiakealanani),TMK: 4-7-004:001, Kealia, Kauai to the next
Committee meeting, the motion carried by unanimous roll call vote.
Commissioner Blake recommended that the applicant and the Department get together
immediately so the questions about whether issues have been addressed or not, what has and has
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not been done, and the issues that the Department wants fleshed so they can make a
recommendation to the Commission are known up front right.
Commissioner Matsumoto agreed with Commissioner Blake.
Chair Texeira questioned if it is a reasonable request.
Mr. Dahilig stated that they will meet the request.
Ms. Sharkey thanked the Commission.
ADJOURNMENT
The Committee adjourned the meeting at 4:33 p.m.
Respectfully submitted by:
Duke Nakamatsu,
Commission Support Clerk
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