Friday, December 14, 2001

Developer revives
Kihei home project

Gensiro Kawamoto seeks to
construct nearly 900 homes
on the slopes of Haleakala

By Tim Ruel

Gensiro Kawamoto, a Japanese developer known for buying sprees of Oahu real estate during the high-priced bubble period, has resurrected plans for a controversial residential project in Kihei that the businessman dropped in the mid-1990s over disagreements with the Maui County Council.

If Kawamoto thought he had a hard time with the project the first time around, it may be even worse this time, said one Maui Council member.

The project, located on fallow agriculture land on the slopes of Haleakala, calls for 360 single-family homes, 420 multi-family units, 50 zero-lot-line homes and 50 elderly housing units.

Kawamoto owns the 147 acres in fee simple, and is seeking to change the land's classification to urban from agriculture. A hearing has not yet been scheduled for Kawamoto's petition, which his attorneys submitted Nov. 29 to the state Land Use Commission.

Kawamoto plans to finance the project on his own, according to the petition. The businessman estimated it would take a year to rezone the property, upon approval from the commission, and another two to five years to build the project.

Kawamoto bought the Kihei land for $19 million in late 1989 and proposed a 1,050-unit development at the encouragement of then-Mayor Hannibal Tavares. The Land Use Commission reclassified the property to urban, but Kawamoto dropped the project in late 1995, saying the county council wanted too much money for water, sewers and drainage. Kawamoto sold the property to Japanese investor Ryusuke Kumagaya for $1.5 million, taking a loss of $17.5 million, but then Kawamoto bought the land back for $1.15 million in 1998, records show.

As before, Kawamoto is promoting the project for its affordability, saying that roughly half the units would be affordable for residents earning 80 percent to 140 percent of median Maui income. Per-capita income on Maui was $24,312 as of 1999, according to the U.S. Department of Commerce.

The problem with that promise is that homes on the 140 percent end of the spectrum are already plentiful on Maui, said council member Alan Arakawa (R, Kahului). "How many at 80 percent and how many at 140 percent?" he asked.

Arakawa joined the council in 1995, the year Kawamoto scrapped the project, and is now chairman of the council's Land Use Committee. Arakawa said yesterday he is concerned the project would worsen traffic and consume too much water. The development comes on top of two other pending projects on Maui -- the 1,400-unit Wailea 670 golf residential community and the 1,100-unit Makena Resort project. "They're getting battered as well," Arakawa said.

Maui residents want to preserve open space as a quality-of-life issue, said Arakawa, who is planning for another run for Maui mayor next year. "We don't even want to come close to [being] another Honolulu," he said.

Kawamoto's local attorney Carol Y. Asai-Sato said the need for affordable housing on Maui should outweigh concerns about water and traffic. "I think that there's a huge number of people who can't afford home ownership in this state," she said.

Hawaii has one of the lowest home ownership rates in the nation, at 55.2 percent, according to the U.S. Census Bureau. Maui's population has jumped 80.6 percent to 128,241 residents since 1980.

"We do have need for affordable," Arakawa acknowledged.

Asai-Sato described the project as a gift to the community, and said Kawamoto does not expect the 880-unit development to show a profit. The last time around, Kawamoto had said he expected to lose $10 million on the project.

In addition, Kawamoto is offering 5.5 acres to the county for a park, according to his petition.

Previously, Kawamoto was reportedly using the earlier project to deflect criticism that Japanese investors had pumped up the high cost of living in Hawaii. Asai-Sato denied that. She said Kawamoto has no ulterior motive for running a money-losing venture.

"He looks at it as a service project to people in the state," Asai-Sato said.

"I believe Mr. Kawamoto was very honorable," said Arakawa. "I never questioned his sincerity."

Other Maui developers have used goodwill to spur developments. Last year, Everett Dowling proposed giving 20 acres of South Maui land to the University of Hawaii. Four months later, the Maui Council gave his firm a zoning change to develop a separate 24 acres.

Kawamoto has no other land holdings on Maui, records show. On Oahu, he owns units in the Royal Capitol Plaza high-rise condominium in Kakaako, and a slew of residential homes in Hawaii Kai's upscale Portlock neighborhood, for a total of about 160 units, Asai-Sato said.

In 1988, Kawamoto bought the former Kaiser estate for $42.5 million in leasehold, but walked away from the property when landowner Bishop Estate asked for $26 million for the land.

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