A long-stalled, more than $1 billion housing project on Hawaii island could be close to a restart after recent progress struggling through bankruptcy and regulatory challenges.
The developer of the planned 2,266-home project now known as Town of Aina Le‘a filed an environmental impact statement preparation notice Tuesday with
Hawaii County that aims to address a 2016 county order that halted construction on the project’s first phase.
Developer Aina Lea Inc. also had a financial reorganization plan confirmed in U.S. Bankruptcy Court in May, and this provided $5 million for the firm to continue work while settling $42 million of debt claims mainly by extending loans or converting loans into company stock.
Bob Wessels, company CEO, said working through the latest challenges has been difficult, so he’s pleased to be advancing a project that also had been delayed earlier by an adverse state Land Use Commission ruling that resulted in litigation and a Hawaii
Supreme Court reversal.
“We’ve had a number
of hurdles over the last
10 years, but it’s actually been rewarding,” he said.
The project previously known as Villages of Aina Lea stretches back more than 30 years under four different developers beset by extreme challenges.
California-based Signal Puako Corp. started work with a plan for 2,760 homes, a golf course and retail center on 3,000 acres mauka of Mauna Lani Resort in South Kohala in the 1980s.
Two years after Signal
obtained LUC approval in 1989 to convert the land from agricultural to urban use, Japanese developer Nansay Hawaii Inc. acquired the project and recast it
for six golf courses and
1,550 homes.
Nansay’s plan, however, was derailed amid Hawaii’s flagging economy in the early 1990s, and the firm lost the property through foreclosure in 1998.
Next up came an affiliate of U.S. Virgin Islands-based real estate and lending company Bridge Capital, which acquired the project in 1999 and announced plans in 2005 for an initial 1,924 homes along with two golf courses and a retail center on about 1,100 acres.
One key to Bridge’s plan was relaxing a state mandate that 60% of all homes be
affordable to moderate-income buyers.
Bridge negotiated a reduction to 20% with the LUC in 2005 and in return agreed to deliver the 385 affordable homes within five years.
That deadline proved untenable after delays that
included a surprise requirement in late 2007 to produce an environmental impact statement in response to a legal ruling tied to the Hawaii Superferry. Then a global financial crisis hung up financing.
In an attempt to meet the deadline, Wessels of Aina Lea Inc. predecessor DW Aina Lea Development LLC got involved, and in 2009 bought 61 acres slated for the initial housing phase.
Still, Wessels and Bridge missed the deadline. So in 2011, with only about 30 affordable townhomes largely built, the LUC rescinded its land-use approval. In 2014 the Hawaii Supreme Court invalidated that decision.
Aina Lea, led by Wessels, bought the balance of 1,099 acres from Bridge and tried to advance a revamped plan for 2,266 homes, a golf course, a lodge and a shopping center for Town of Aina Le‘a.
Yet construction got hung up again when Hawaii County determined in 2016 that the developer failed to meet several rezoning conditions and ordered that work cease until the company produced a supplemental EIS. Producing this document became a challenge amid bankruptcy reorganization initiated to avoid foreclosure actions by two creditors.
Currently, 40 affordable townhomes are substantially complete. Two model homes also exist.
Aina Lea said in its EIS preparation notice that it has arranged $108 million in two loans from Bellwether Enterprise Real Estate Capital and Summit Investment and Financial Group to complete 432 affordable homes in the first phase, dubbed Lulana Gardens.
Finishing the master plan is projected to take 15 to
20 years.
