KAHULUI - Construction of a large retail center and affordable housing project in north Kihei suffered another setback Thursday when the state Land Use Commission found the project in violation of several conditions placed on the parcel in 1995.
Eclipse Development Group of California has plans to develop a 700,000-square-foot retail shopping outlet, and Honua'ula Partners wants to build 250 affordable homes. They must hold off on their plans while the commission decides what to do next. That meeting was not immediately scheduled Thursday.
The commission's 6-3 vote was purely to decide whether the current project met the conditions imposed by the LUC and not on the merits of the developments. In 1995, the commission granted former landowner Kaonoulu Ranch a land reclassification from agricultural to urban for a light industrial development. The commission imposed 20 conditions on the development.
Current plans by the new developer call for a retail outlet as well as the affordable housing units tied to the Honua'ula master-planned luxury golf community of the same name above Wailea.
Last year, the Maui Tomorrow Foundation, South Maui Citizens for Responsible Growth and Kihei resident Daniel Kanahele prompted the commission to take up the current developments in the context of the 1995 land-use change and conditions.
The interveners contended that there were violations of the original land reclassification conditions.
"We're very pleased with the LUC's ruling," said the interveners' attorney, Tom Pierce, after the meeting at the Courtyard Maui Kahului Airport hotel. "The LUC confirmed the interveners' position. The current landowners failed to follow the written conditions in the 1995 order. That order is binding on any landowner of the property. The current landowners could have developed the light industrial project originally proposed. Or, they could have gone through the proper evaluation process before the LUC to see if their current proposal would be approved. They chose to do neither."
Maui Tomorrow Executive Director Irene Bowie said she was pleased with the decision and thanked the commission for its "time and thought;" she also thanked the community members who made the case possible.
Bowie said she appreciated officials of the state Office of Planning "for the clear position they took on this matter."
Office of Planning officials had said that the current developer should have gone before the commission to amend conditions placed on the parcel and that the current proposed project is different from what was initially proposed.
Bowie said after the meeting that she agreed with what commissioners and the Office of Planning said about the importance of giving up-to-date information on a project as well as being able to analyze the impacts from the current proposed project.
"This is really a victory for the rules of law and a planning process that makes sense and is respected by the community," Bowie added.
Charlie Jencks, a representative for both projects, said he was "really disappointed in the conclusion reached by the commission."
"It's a definite setback for the economy . . . jobs," he said. "It pushes back the development of affordable housing, possibly."
Developer representatives have said the project would generate 200 construction jobs and 1,800 retail jobs from clerks to regional managers.
Jencks said prior to the meeting that a lot of money is tied to the project because the land value is $20 million, and developers had to pay a cash subdivision bond for $22 million to the county to ensure that improvements would be completed. Those include improvements to Piilani Highway and construction of a 1-million-gallon water tank on the property.
Now, the 88 acres slated for the projects sit idle, with just a black dust fence set up around the property north of Piilani Highway and east of Kaonoulu Road.
During the decision-making process, commission member Lance Inouye said the issue is "a difficult decision."
He reiterated that he would like to get this project moving, but added, "It's too many things involved." Now, the impacts of the current project need to be examined, he said.
"We need to make sure we are doing the right thing for everyone," he added.
The commission's majority found that the current project violates three conditions in the panel's "decision and order" in 1995. Those were for the property developer to:
* Develop the property in substantial compliance with the representations made to the commission.
* Improve Piilani Highway at its intersection with Kaonoulu Street and provide for a frontage road parallel to Piilani Highway and other connector roads within the development area.
* File annual project reports with the commission.
The three commissioners who voted "no" for the panel's finding were Sheldon Biga, who holds the Maui seat, as well as Commission Chairman Kyle Chock, who has an at-large seat, and Thomas Contrades of Kauai.
Jaye Napua Makua, who is from Maui but holds an at-large seat, voted in favor of the commission's finding of violations.
In closing oral arguments, Piilani Promenade North and South's attorney Jonathan Steiner said that what the commission approved more than 10 years ago was a "conceptual plan" that contained commercial and light industrial components. He argued that nowhere in the petition does the commission or anyone limit the commercial use of the property or require the property to focus on light industrial.
Piilani Promenade North and South are the landowners of the retail developments controlled by Eclipse.
Steiner added that the condition that the developer develop the property in substantial compliance with the representations made to the commission does not mean the developer is required to build the same conceptual project.
Steiner said that, in testimony made to the commission back in the 1990s, a developer's expert said that ultimately the market would dictate what is built on the property and that retail was a possibility.
There was no violation of the project not building a frontage road parallel to Piilani Highway, he said, because the state Department of Transportation advised against it, warning that it would be dangerous with current plans.
If the Transportation Department advised against the condition, then there is no violation, he maintained.
In the interveners' arguments, Pierce noted two exhibits: one of the old plans for the area and the other the new plans, noting that they were plans for different projects.
What was shown as the project in the '90s was a 123-lot light industrial subdivision, he said.
Pierce said the developers were making a "fine-print argument," by telling the commissioners and the public that they had to look at the market study to see what the developers were proposing and that the developers were reaching in the "broadest terms" what they are entitled to.
He added that it's not the purpose of a market study to show what the developers' plans are.
Pierce said a recent attorney's testimony before the commission showed that impact studies were done and shared to the commission on the old components of the project but not new proposed items, such as the large retail area as well as residential use.
Pierce added that the developer said it was not going to develop the frontage road, so that would consist of a violation of a condition.
The Haiku attorney also argued that the developers violated the annual reporting condition.
In documents filed with the LUC last year, the developers said that they did not violate any measure. The development's annual reports contain no misrepresentations or false information because the proposed project is "in substantial compliance with every condition of the order and the representations made by Kaonoulu to the LUC."
Prior to closing arguments made by the developers and the interveners, Maui County and the state Office of Planning also made their own oral arguments. Maui County maintained its stance that what was being proposed is allowed on the parcel and that no violations occurred.
Thirteen people testified, with most speaking about the project's merits and how it would create jobs and be a benefit to the community. More than 100 people packed the Haleakala Room of the Courtyard Maui Kahului Airport hotel at the beginning of the meeting. Some even stood out in the hallway.
Most were construction workers and union members, with some wearing blue ILWU shirts.
* Melissa Tanji can be reached at email@example.com.