More than meets the eye in Princeville road dispute

A recent TGI lead article dealt with disputes relating to the entrance area roadways and facilities in Princeville. Significant issues are involved. This column will add some historical and other information about the matters in question.

Almost 50 years ago, Consolidated Oil and Gas Co., the initial developer, acquired the over 10,000-acre Princeville Ranch from Gay & Robinson and initiated a multi-phased project.

Incident to obtaining governmental approvals for the project, the developer promised the county that it would be largely self-sufficient with its own water and sewage facilities and privately owned roads and streets.

Phase I consisting of about 1,000 acres zoned for single-family residences, condominiums and two hotels and including a 27-hole golf course was the initial development. Its status is now substantially complete. Early on, the developer created the Princeville at Hanalei Community Association (PHCA) and conveyed to it substantially all of the roadways it had built in that area. Since then, PHCA has maintained the condition of these roadways at considerable cost. This year, its budget for such costs is over $500,000.

In the late-1980s, with the Phase I project progressing satisfactorily, a new developer created an elegant triple fountained public use entrance way to serve Phase I and the proposed Phase II. PHCA was assured that the developer would incur the construction and maintenance costs for the new entrance way and that PHCA and its members would not have any obligations for these costs.

Under the terms of the PHCA charter, the developer had reserved rights to add to the Phase I area by transferring additional property to it. However, by a 1993 agreement between the developer and PHCA, such rights were terminated except for certain properties within the Phase I area. The agreement allowed the developer to convey to PHCA a short segment of the entrance road in Phase I, but required it be in good condition prior to the transfer. Maintenance of the roadway was neglected and, as it remains in poor condition, it has not been transferred. The agreement also served to further preclude the developer from burdening PHCA with ownership or costs relating to the new entrance roadways or any part of them.

The development of Phase II was retarded by Hurricane Iniki and its aftermath. Presently, it has less than 10 percent of the residential units in Phase I.

In 2005, Jeff Stone and the entities he controlled succeeded to ownership of the developer’s Princeville properties.

Two items of concern confronting the new owner were that the costs of the entrance way fountains were approaching $400,000 annually and the entrance roadways were in sorry condition and needed renovation and servicing. Precluded by the commitments made from seeking recompense of the fountain costs from PHCA, Stone needed to rely on agreements with a consortium of owners, principally the two hotels to reimburse his entities for most of these costs. However, the road cost exposure remained. Only modest maintenance work has been done on the entrance roads since 2005 and these roads are in seriously deteriorated condition with numerous potholes and other defects.

Although the financial ability of the Phase II community association is probably fragile and inadequate for the renovation and maintenance of the roadways, in 2013, the Stone group conveyed the bulk of the badly dysfunctional entrance area roadways to the Phase II association, which then sought cost contribution from PHCA.

Mediation between the associations was held relating to the entrance roadway issue. Successful mediation requires good faith on both sides. In the mediation, although denying any liability, PHCA reasonably proposed that if the roadways were brought to a good condition at no cost to it, PHCA would share in future maintenance costs. No responsive proposal was forthcoming from the Phase II association. The mediation was ended without any progress.

Last summer, the Phase II association, over which the Stone group has voting control, filed a lawsuit against PHCA seeking relief from entrance area roadway costs. Related suits were also filed. It would appear that by this action, Stone is seeking to try to do indirectly what the commitments made precluded him from doing directly.

It is to be recognized the PHCA members and their tenants and guests derive a benefit from use of the entrance roadways. However, PHCA does not have control over and, in my view, should not be accountable for vehicular usage by or for its members.

When disputes of this type arise, it is unfortunate that they cannot be amicably resolved by the parties.

If Mr. Stone persists in failing to accept the responsibilities I believe he has, it appears likely that Princeville area residents and visitors will have to endure bad road conditions for the foreseeable future while resolution of the disputes is processed by lawsuits.

Walter Lewis is retired attorney who lives on Kauai and writes a regular column for TGI.

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