The long-shuttered Coco Palms Resort on Kauai — largely made famous by an Elvis Presley movie 60 years ago — failed to attract competitive bids Monday at a foreclosure auction.
A company representing a collection of lenders that sued a local development firm in 2019 over a past-due loan secured by the property was the sole bidder at the auction outside the state courthouse in Lihue.
Private Capital Group submitted a $22.2 million bid in the form of credit representing the original principal value of a loan obtained by a developer that bought the Coco Palms site in 2016 but failed to redevelop the property as planned.
The company’s bid is subject to a confirmation hearing, at which a Circuit Court judge could entertain further bidding by qualified prospective buyers that are willing to pay at least 5% more than Private Capital’s bid, which equates to $23.3 million.
No confirmation hearing date has been set.
Scott Batterman, a local attorney representing Private Capital, said it’s premature to say what will happen with the property in Wailua if the bid for the lenders is confirmed.
Some community members oppose redevelopment of the site for resort use, and a handful showed up at the auction with signs that displayed messages including “No hotel on sacred land!” and “End the desecration!”
Coco Palms was established in the early 1950s as a 24-room lodge next to a lagoon amid a coconut grove across from the ocean on land that was once home to Kauai’s last reigning queen, Deborah Kapule Kekaiha‘akulou.
After Honolulu hotel executive Lyle Guslander acquired the property in 1953, it grew under the vision of his wife, Grace Buscher Guslander, into a resort with more than 400 rooms, suites and bungalows where early guests included Presley, Bing Crosby, Frank Sinatra and other celebrities.
The 1961 movie “Blue Hawaii” featured the Kauai resort as the site of a wedding for Presley’s character and boosted its popularity, especially for weddings.
Hurricane Iniki ended the resort’s famed existence in 1992, causing extensive damage that went unrepaired as a dispute over insurance dragged out over six years.
Over the decades since, a few developers have unsuccessfully tried to redevelop the property, including a Maryland firm that paid $12.3 million for the site in 2006 and gave up ownership to a lender in lieu of foreclosure in 2014 after trouble that included an economic downturn.
Honolulu-based Coco Palms Hui LLC — led by local developers Tyler Greene and Chad Waters in 2013 — announced an estimated $135 million plan to convert the property into a renewed resort managed by Hyatt, and bought the real estate in 2016 for
$17.8 million, according to property
records.
However, the project was beset by delays that included regulatory approvals as well as protesters who occupied the site and filed an unsuccessful lawsuit claiming ownership.
In 2019, Private Capital filed a foreclosure lawsuit against the developer after efforts to sell the property or refinance the developer’s $22.2 million loan were unsuccessful. The company representing several lenders that made the loan claimed that the developer owed $45.6 million, including interest and other charges.
Circuit Court Judge Randall Valenciano ruled in favor of the lenders in June and authorized the auction.
