Kaua‘i planning commission meeting sparks Coco Palms revelations

LIHU‘E — After an eye-opening hearing on Tuesday, the County of Kaua‘i Planning Commission ruled in favor of Coco Palms hotel developers and shut down a petition to void their permits due to lack of progress.

The hearing produced a series of revelations about the project, as the development team surprised commissioners and audience members alike with major course changes.

The game of musical chairs among development leadership continued Tuesday, as Utah-based real estate investment firm Reef Capital Partners announced it had axed plans to sell the property and intend to go forward with the development themselves.

Representatives of the firm previously said the site was in escrow to new developers Victor Kimball and Mitch Burton, and that they only planned on maintaining a small investment in the property.

“We were looking at it like a lender does,” Patrick Manning, a partner at Reef Capital, told the Garden Island after the hearing. “I’m more on the development side. When I started looking into the project, I realized I want to develop this, not sell it. It’s an important piece of property.”

In 2015, Reef Capital served as lenders to Tyler Green and Chad Waters, whose highly publicized efforts to redevelop the hotel ended in failure and foreclosure. A group affiliated with the lenders then took over the property at auction for $22 million in 2021. Before that, multiple plans for redevelopment with different groups fell through following the destruction of the historic hotel in Hurricane ‘Iniki in 1992.

Reef Capital representatives reported the ownership group, Coco Palms RP 21 LLC, which now controls the property, represents both individual and institutional investors, all managed by Reef Capital.

Manning, who will now serve as point man on the project, said he would hold community presentations to speak with the public on plans for the project. In August 2022, representatives for the development said they would hold community outreach events in fall 2022. These events did not occur.

Another new announcement came Tuesday from architect Ron Agor, who reported that developers are now pursuing a renovation rather than the demolition of the structure closest to the highway. But at an August 2022 Planning Commission meeting, a representative of Reef Capital reported they planned to demolish this structure within six months.

“After looking into it, we found that the structure is nonconforming, and if we were to take it down we wouldn’t be able to rebuild it,” said Agor.

Agor also said he had been deliberately holding off on submitting a permit in order to avoid potential legal challenges over lack of progress. The development has secured 24 out of 25 required building permits.

He said with the permits they have currently been granted, they can begin certain work on the site.

‘Substantial progress’

The Planning Commission discussion revolved around a petition filed by attorney Teresa Tico, which argues that permits issued for the project in 2015 had lapsed because the developers had not made substantial progress during that time period.

Reef Capital representatives argued they had invested a significant amount of time and money cleaning the property and prepping for demolition, and the Planning Commission did not have the authority to make the ruling Tico requested.

Tico is a member of community group I Ola Wailuanui, which filed a lawsuit last month against developers and the state Board of Land and Natural Resources, arguing that recently renewed BLNR permits were granted to a defunct LLC without the proper environmental impact assessments.

The group hopes to purchase the property, where it intends to build a Native Hawaiian cultural center. Though the group met with the developers in fall 2022 on the possibility of purchasing the site, conversations were largely unproductive because the group was unable to raise the amount of money required to make the buy.

“There is no way we can buy out the developers’ interest right now,” Tico acknowledged Tuesday.

The meeting saw a significant number of in-person testifiers, with the majority advocating in favor of Tico’s petition. Wailuanui member Gary Hooser called attention to potential conflicts of interest among the commission leadership, citing Chair Francis DeGracia’s affiliation with the carpenter’s union and Vice Chair Donna Apisa’s former role as a Realtor for previous Coco Palms buyers.

DeGracia and Apisa then made formal announcements of the potential conflicts, and both matters were referred to the County Board of Ethics.

As is often the case at Planning Commission meetings, testimony drifted from the narrow issues under consideration and into broader discussions of development, climate change, and Native Hawaiian rights.

“This project should have been dumped a long time ago, but they’re still pushing it, ‘cause the kala (money)”, said Rupert Rowe, the executive director of the Kaneiolouma nonprofit, which is focused on Native Hawaiian restoration projects. “We don’t need money, we need ‘aina. ‘Aina gives us our identity.”

The seven commissioners unanimously sided with the developers on the petition, but many expressed concerns about the lack of trust created by the shifting plans.

“Regardless of how the vote goes, statements were made that were quite honestly glaring,” said Planning Commission Director Ka‘aina Hull before the vote. “I think that members of the commission were shocked. I don’t think these statements have any bearing on the issue before you today … But it does have bearing on whether or not revocation or modification of those permits should be proposed.”

Commissioner Helen Cox added, “The vote today is not the end of the issue.”

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Guthrie Scrimgeour, reporter, can be reached at 808-647-0329 or gscrimgeour@thegardenisland.com.