Jeff Stone plans 80-unit luxury hotel; limits may be lifted on Hanalei water sports activities

A perfect storm is about to strike Hanalei, but it’s neither a hurricane nor a tsunami.

Actually, it may be two separate storms that loom on the horizon for the small North Shore community, and although no provable tie between them can be discerned, they appear destined to occur simultaneously.

If both converge, Hanalei will confront an epic surge in tourism in an environment in which existing visitor capacity is already strained at least to the limit — but more likely already substantially beyond it.

The first of the storm centers is an 80-unit luxury hotel to be announced perhaps as early as this week by developer Jeff Stone. The Princeville Lodge and would be constructed on the ridge above Hanalei Bay that has been in play and the subject of intense community controversy for decades as a potential resort or luxury home development.

“We felt that a small, upscale, environmentally sensitive hotel project could be designed for this site, satisfying virtually all the major issues raised by the community about previous developments here,” Stone said.

“It ensures permanent public access, creates a low-visibility design in size, architecture and color, and it uses a smaller footprint than any previous built or planned resort on this site,” he added.

It would consist of cottages and a clubhouse, nestled in trees along and below the ridge line. A walk through the property on Monday suggested that many of Stone’s hotel units would have unobstructed views of the Hanalei Pier, Hanalei Beach and Black Pot Beach.

Hanalei leaders, including Makaala Kaaumoana and Carl Imparato of the nonprofit Hanalei Watershed Hui have vowed to challenge Stone in court, which could hold the project up indefinitely.

“The communities of Kauai’s North Shore, Hanalei, Wainiha and Haena are already overused and stressed,” Kaaumoana said. “The resources are bleeding and the people are feeling the pressure of losing their places. Proposing to add more boats and more hotels is adding insult to injury. Enough.”

Stone is clearly aware of that possibility.

“Projects in Hawaii do take on lives of their own, and all development involves risk. But things cannot improve if you just throw up your hands and quit,” Stone said. “Our view is that this project, with this design, marks a real line in the sand — smaller, lower, more appropriate to the land and culture, respectful of community rights of access. We have accepted the risk in this case, for something we really believe responds to the community’s stated desires.”

The project would be built more or less on the same site that has been used for at least a half-dozen development projects — some of which were built and operated for a time and others of which never got past the planning or early construction stage.

It is the same land on which billionaire Pierre Omidyar proposed to construct a 200-unit hotel and luxury home complex. But Omidyar was forced to pull out after intense opposition arose from the Hanalei community.

Although Stone has no direct ownership stake in the St. Regis Hotel, people familiar with his Princeville Lodge proposal see it as creating direct competition for high-end travelers with the St. Regis.

The Omidyar property in question was once the site of the Kauai Club Med and has history as a hotel location starting in the 1960s.

Proposal to lift restrictions

The second storm comes in the form of proposed regulatory changes by the Hawaii Division of Boating and Ocean Recreation that would remove limits that currently restrict activities of boat tour companies, surfing schools, kayak tour operators and other water sports businesses in Hanalei.

These changes, for example, would alter the rules restricting the number of boat tour departures by an individual operator.

Instead of being restricted to one or two trips a day with a dozen or so customers, boats could depart at will and carry as many as 25 or 30 passengers.

The agency “is still in the very beginning stages of rule-making,” according to a statement from DOBOR. “DOBOR is working with the County of Kauai and other stakeholders to review the rules and propose amendments as necessary.”

While the number of permitted boat operators would remain fixed at five, the increased number of trips permitted would open the way for an enormous increase in the number of such tours operating from the confined and ecologically fragile area where the Hanalei River meets the bay.

Development site impacts

The two issues coming to the fore simultaneously virtually guarantee an epic fight over the future of Kauai and the North Shore, in particular, with Hanalei, once again, at the center. Since the hotel site is one that has been controversial for decades, the battle this time may make previous encounters seem mere skirmishes.

When Omidyar originally proposed his controversial development, he purchased the land in question from Stone for $75 million. When Omidyar realized he was not going to be able to proceed with the project, Stone offered to repurchase the property for the same amount.

The arrangement that exists now is that Stone has a one-year option during which to move the project forward through the approval process and prepare to begin construction. If Stone is unable to do so, ownership of the land remains with Omidyar. The option expires at the end of 2017.

Stone, of course, is no stranger to development and controversy on Kauai, whether it’s his ownership and management of much of Princeville, the fate of the Prince Golf Course or expansion of the Princeville Shopping Center. His legend has been enhanced by the never-ending litany of complaints about the poor conditions of roads within Princeville that many locals ascribe to Stone.

“We believe that this low-density Hawaiian hale architecture design will re-establish the project’s Kauai roots. I hope it will help other properties follow this classic design feel — including the St. Regis, which I expect will likely undergo major renovations.

“(The) St. Regis is a separate hotel, under separate ownership. The sizes, scopes and designs of the two hotels are so different that comparisons are probably not useful. The St. Regis is a 252 (room) hotel with European design and 11 floors. Princeville Lodge is a classic Hawaiian hale design. The property would attract a different type of guest.”

Permits from past project

Stone may also benefit from the status of permits originally issued in the 1980s to Bruce Stark, a developer who got into the construction phase of a new hotel on the site before the economic situation collapsed and he abandoned the project. Indeed, many of the original walls constructed for Stark’s hotel still exist on the site and many are positioned where the bungalows envisioned by Stone would be sited.

In a letter from the Kauai County Planning Department sent to Stark in 1986, the department told him his zoning permit and project development use permit would remain in force “indefinitely,” while his permit under rules that government special management areas (SMAs) had expired.

However, Stone believes he can still get the SMA permit under the 1986 terms. Stone has said he intends to pursue the issue within a month. If the three permits are, in fact, valid in perpetuity, the county’s ability to influence Stone’s project may be limited.

The boating and water sports rules changes being considered by DOBOR may lack the dramatic impact of Stone’s proposal, but Kaaumoana and Imparato emphasized that the combination of adding new hotel capacity in an environment that will be hard pressed to absorb it and removal of business volume limits from boat tours and surf schools, in particular, are a recipe for havoc that could also create new risks for the public — residents and visitors alike.

One top county official observed in an email, for example, that the new boating rules with their intensification of tourist volume would potentiate the impact of Stone’s hotel.

“I’m concerned that DOBOR may be creating a perfect storm of very poor public perception,” the official said.


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