Efforts to redevelop the former Coco Palms resort have collapsed, with the two Oahu men behind the project facing foreclosure after defaulting on $11.2 million in financing they used to purchase the property five years ago.
Two Utah-based companies involved in financing the project said on Monday that the Coco Palms property, which consists of about 20 acres on Kuhio Highway at Kuamoo Road in Wailua, was in default and that the ruins of the hotel were being put on the market. The property is owned by Coco Palms Hui, LLC, formed by two Honolulu developers to take over the former hotel famed for hosting dozens of stars, most notably Elvis Presley.
The development follows several years of increasing uncertainty of the viability of the project to redevelop Coco Palms as a modern resort. The property has been in disrepair since it was heavily damaged during Hurricane Iniki in 1992. Coco Palms Hui is headed by Chad Waters and Tyler Greene, who run GreeneWaters, LLC, a Honolulu real estate development firm.
In addition to the 20 acres Coco Palms owns, the resort also occupies 14.8 acres of state land, which Coco Palms has leased since 1983, according to the Hawaii Department of Land and Natural Resources. Lease rights cannot be conveyed to another party without further approval by the Board of Land and Natural Resources, a DLNR spokesperson said.
Rumors of the potential failure of the project have abounded for more than a year. Both former Mayor Bernard Carvalho Jr. and Mayor Derek S.K. Kawakami have voiced frustration that little has happened at the site, which is gradually being taken over by graffiti vandalism and jungle overgrowth.
Neither Waters nor Greene responded to requests for comment on the situation over the weekend or on Monday.
Announcement of the loan default and new work to find a potential buyer for Coco Palms came in a news release from Utah-based Stillwater Equity Partners. Stillwater is working with Reef PCG, a lender and loan servicer, according to Aaron Gerszewski, Stillwater’s asset management director. Both firms are based in Alpine, Utah.
Gerszewski said the collapse of the Coco Palms project had evolved over the last two years or so, after Greene and Waters were unable to deliver on commitments to find funding to avoid default. Although foreclosure proceedings have not been initiated, he said, it would be a logical next step if Greene and Waters are unable to pull together enough money to cure the default.
In a news release distributed later Monday, Stillwater said Coco Palms received most of its working capital from PCG.
“GreeneWaters originally intended to pay off the loan from PCG by obtaining a construction loan, but were unsuccessful and defaulted on the loan in 2017,” Stillwater said.
“To avoid litigation that could potentially delay the project even further, PCG arranged a workout plan with GreeneWaters which included appointing Stillwater Equity Partners as the manager of Coco Palms Hui in exchange for granting GreeneWaters a final attempt at formalizing a plan and securing capital commitments.”
Stillwater said Greene and Waters have not, so far, produced evidence of new financing.
Stillwater added that it is “currently seeking a buyer or partner with hotel experience that can contribute the capital and resources needed to make Coco Palms an iconic hotel as it once was.
“Stillwater has engaged Colliers International to market the project domestically and internationally. In the event a buyer or partner is not found in the coming months, Stillwater is exploring other alternatives for the site that would benefit the community while paying off the PCG note and maximize the value for existing shareholders of Coco Palms Hui.”
The company added that: “In the meantime, SEP is already working with local crews in Kauai to clean up the frontage of the hotel and parking lot to minimize its dilapidated appearance and improve the overall image to potential investors as well as local residents.”
A county spokesperson confirmed that a Stillwater representative was on Kauai late last week and met with Managing Director Mike Dahilig and Planning Director Kaaina Hull in what was described as a “meet and greet” at which Stillwater disclosed that Coco Palms was formally in default on its loans. Stillwater said it broached the subject of county acquisition of the property, but that county officials said there is no available funding.
Kawakami has publicly supported the idea of making Coco Palms into a park and cultural center, but, the spokesperson said, the mayor did not meet with Stillwater’s representative and that the ongoing reality is the county has no way to finance such a transaction.
Gerczewski said Stillwater remains confident that Coco Palms could be redeveloped as a hotel, but that the location and modern hotel economics on Kauai suggest that it would have to be a budget property without the trappings of a luxury resort.
Coco Palms operated as a resort hotel from 1953 until it was devastated by Hurricane Iniki. After the hurricane, owners were unable to secure funding to rebuild, there were disputes over insurance, and the property and it sat abandoned for more than two decades.
In its heyday, Coco Palms was a favorite celebrities and Hollywood show business figures. Its most famous guests included Elvis Presley, Frank Sinatra, Rita Hayworth and Bing Crosby. The hotel served as a location set for several motion pictures, including “Miss Sadie Thompson,” in which Hayworth starred, and “Blue Hawaii,” a Presley film.
Coco Palms Hui was formed in 2013 by Waters and Greene, who insisted they would rebuild the abandoned hotel and restore it to its former glory. They had announced a $150 million project, but were only able to complete a partial demolition, in which interior and exterior walls were removed, leaving abandoned concrete skeletons of the original hotel structures.
Demolition began in 2016. Waters and Greene also announced that Hyatt hotels had signed a management agreement to operate the rebuilt Coco Palms.
Oh, surprise. Who wants a hotel on the wrong side of the road with today’s traffic?
check it out
I recently got back from a time travel trip to 2092, the 100th anniversary of Hurricane Iniki, and was driving by the old Coco Palms Resort. First of all, I have to say that the traffic is just terrible on Kauai in the future, even with the faster and more efficient ion drive cars. I really think they should consider widening the road from 2 to 3, or maybe even 4 lanes, and I told a local just that. His rather curt response was to yell “Eff off, haole” at me. Anyway, I was a little surprised to see that no one had bothered to cut back the vegetation that completely covered the remnants of the iconic hotel. Seemed a shame that something that was on the National Historic Register of Historic Places would be allowed to become so dilapidated. After all, people were coming from all over the world to see it.
Great response!
Time for a park.
Time for a theme park!
Isn’t it time to bury this corpse?
Aloha Kakou,
Since we’ve watched Coco Palms Hotel slowly deteriorate over the last 27 years and it appears likely that may go on another 27 years…
And since there have been at least a few developers who have come and gone, one claiming that since the County would not allow them to add a Spa to the property that they were out of here also…
And since the Hawaiians were not given a chance at Coco Palms, nor to memory does it seem their plans for Coco Palms were even told to us (?)…
And since the Kuhio Highway back in the day fronting Coco Palms was just another County Road…and today the traffic level is deserving to be a 3 lane each way Freeway…
And since both the Coco Palms Hui and the County have no funds to move forward…
And since the Coco Palms Hui is in default (see ya later) on their loan and their note holders have made no notice to take over and move forward on bringing back Elvis..or Rita…
May we make a few sensible suggestions to end the eyesore and bring back Coco Palms better than it was…
In the meantime the Coco Palms Hotel changes it’s name to the Arica Palms Nobel…
And affordably with local available materials the front and 2 sides of the new Arica Palms Notel is surrounded by…and you guessed it, multiple rows of Arica palms to hide the mess it is now showing…
With an Arica Palms new image, in a few years we will all forget there ever was a Coco Palms Hotel, gladly crawling by The Arica
Palms Notel in our cars stuck in the traffic the County (or state) will never solve…(and why not a contest open to the public for suggestions to fix the traffic, with the winner getting a 1 day Round Trip non stop police and fire truck escort with sirens and horns blaring from Coco Palms,excuse me the Arica Palms…to Haena’s Kee Beach with a buffet lunch waiting on the beach, when the road finally opens of course, and the winner of the Traffic Solution and 50 friends enjoy the KEE BUFFET, and get back in the County Busses for the one time only non-stop ride back to the new Arica Palms Notel…
And as a surprise The Arica Palms Notel will form a new Hui, the Arica Palms Hui, and will form a secondary hui…the Z-Gates Buffet…
That’s right the Mark Zuckerberg, Bill Gates, Warren Buffet Hui to bring back the Coco Palms Hotel for pennies on their Trillion Dollar assets…
With AI robots of Elvis and Rita roaming the property with live Hawaiian Music every night…
We’ll be waiting for a Garden Island front page picture of Mayor Derek and the Kaua’i County Fabulous 7 with shovels in hand beginning the planting of the Arica palms along the Kuhio Hwy fronting the new Arica Palms Notel.
Mahalo,
Charlie
Great news. I am so happy for the Kanaka.
So not only is the state not being paid for the leased portion but now paying for the cleanup?
So what was that 2 or 3 days of clearing the Kuhio-Kuamoo corner? A gift to the people of Kaua`i?
And how many lies were told to the County?
It’s about time. Tear it all down the Elvis has left the building n who ever else is gone .its time for change .put the land to a good use for everyone n not the chosen few. It’s time for the county to wake up we don’t need another hotel n the traffic that will come with it.
Yes, it’s the perfect time & opportunity to develop this property into a park & cultural center. Perhaps Mark Zuckerburg could show his aloha and appreciation for the island of Kauai through the purchase of this property? Donated to the country? That would be awesome!
The homeless population in Wailua will increase starting today.
This story doesnʻt even include a history of Hawaiian participation on this land, from earliest days to recent protests. Solution is simple: Make it a non-profit Hawaiian cultural center among the palms, away from the road so that can expand if needed. It can have a modern movie component but that shouldnʻt be the focus. Maybe Mark or some of our other local zillionaires would be wiiling to contribute to such a project. Maybe itʻs a fund-raiser. Or both. We all have a stake in seeing this mess become wonderful again, with its cultural antecedents intact and celebrated.
what about a hybrid solution? Cultural education and Hawaiian village similar to the Polynesian cultural center. Restore the land, educate the visitors and create positive change for our island economy… invest in education instead of resorts.
Perfect Idea!!
Best to give it back to mother nature as open space and turn the little pavillion into a shady place to watch the surf. Fix the parking lot so people can use the beach there easily and without looking for parking. Its an easy fix and re-use the rocks for another project or sell and donate to a non profit. What a waste of time and money and a serious eye sore for years. No surprises here. No need for more traffic on that stretch. And speaking of, why not fix the light, and hire a few local traffic experts to keep the flow going so there is no traffic. It can be done people. Seriously.
“just talking out loud.. March 26, 2019 11:49 am” A cultural center as a tribute to Queen Alii, Kekaihaakulou (Deborah Kapule’s Hawaiian name) …
I love all the ideas. I cannot wait until I am rich so people can tell me how to blow my money, like the idea of a park that the county will not maintain. County cannot even clean a porta potty and people think it’s a good idea to give the county another 30 acres to maintain…
We absolutely need a cultural center! The location is perfect and people wouldn’t have to travel to the Community center in LIHUE.
Hmmm .. perhaps create a new ” red dirt resort ” instead.. one era out as a new one arises !!
I grew up across from coco palms. I remember the beautiful land, canoes in the ponds and the sound of the monkeys in their mini zoo. It is a shame what it has become. It should be turned into a cultural park where history of our wailua is told, have a playground and dog park for locals as well as visitors to enjoy. I believe any hotel or living site would be a very negative outcome for this area. Traffic alone would add so much stress and congestion in an already traffic pron stop. There could be a parking fee that goes to the mantanance or have community service carried out here. I wish I had millions to invest or donate, this land is so worthy of respect and to be enjoyed by all of Kauai and not just another hotel for profit!