Stung by another setback in their nearly five-year battle to build a veterans center in Kaunakakai, a group of Molokai veterans now believes legal action might be the only option.

Larry Helm, a 25th Infantry Division veteran of the Vietnam War, said yesterday he still hopes a lawsuit against Maui County can be avoided with a new settlement before the end of the week.

The latest dispute centers around a conditional use permit, which Helm maintains would resolve only an issue dealing with a water pipeline, but leave the veterans group vulnerable to other possible lawsuits dealing with the construction of the center. Helm is executive director of the nonprofit organization Molokai Veterans Caring for Veterans, whose membership accounts for more than half of the 600 veterans living on the island.

Planning for the 1,890-square-foot center and an adjoining 1,100-square-foot pavilion began in 2005 after Molokai Ranch donated a 17,000-square-foot parcel in Kaunakakai.

In July 2009, the Molokai Planning Commission approved a special management area permit for the center after a two-year review.

But on Oct. 14, the Maui Department of Water Supply rejected the veterans’ building permit because the existing 4-inch water line did not provide an adequate flow needed for firefighting. Maui officials said the veterans group would have to install an extension that would have added $38,000 to the project’s cost.

Last month the veterans said they believed the issue was resolved when the county proposed an ordinance that would give the Fire Department the responsibility of dealing with fire protection matters in building permits. However, the Maui County Council Water Resources Committee deferred action on the legislation Tuesday.

On the same day, Helm said the mayor’s office asked the veterans to sign a conditional use permit, which a mayor’s spokeswoman said would enable them to start construction.

Mayor Charmaine Tavares, in a written statement issued by Mahina Martin, county spokeswoman, said: "The county has proposed an agreement that will allow them to obtain a building permit prior to the completion of a public works project that would install a water line that would meet building permit requirements for water source."

Martin said Maui County has an existing public works project to address the water line need. That project is expected to be completed by October.

Helm said Jim Fosbinber, the group’s attorney, said the permit would only resolve the current water flow issue and could leave the nonprofit organization liable for future lawsuits dealing with the construction of the center.

"We left the meeting (on Tuesday) disappointed," Helm added. "All around we are back where we were 4 1/2 years ago."

After Tuesday’s meeting, Helm said the veterans met with Roy Silva, Tavares’ assistant, and gave him until tomorrow to come up with another option.