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By Gary Kubota, Star-Bulletin
The infrastructure for the Villages of Leialii has already
been built, but the area is now closed off, pending the
results of a 1994 OHA lawsuit.

VILLAGES OF LEIALII:

On hold

Land disposition issues at
the proposed site of a Maui
subdivision leave potential
buyers out in the cold

By Gary Kubota
Maui correspondent

LAHAINA -- Amid the dead grass, knee-high weeds, weathered light poles and sidewalks, Maui resident Edwin Sera walks across a plot of state land overlooking the ocean and points out what once was the planned site for his house.

"It was a yearlong process to get loan approval," recalled Sera, a hotel bartender and father of two children. "We went all the way down to selecting the color of our carpet."

Nearly six years later, the legal dispute arising from the proposed development of the state's Villages of Leialii is scheduled for trial on Sept. 11 before Oahu Circuit Judge Sabrina McKenna.

The trial seeks to resolve whether the state has the authority to sell ceded lands, property once owned by the Hawaiian Kingdom and now held in part to benefit native Hawaiians.

The state Office of Hawaiian Affairs, which filed the lawsuit in 1994, has argued that the state should not be able to sell the ceded lands.

At a separate trial yet to be scheduled, OHA, on behalf of native Hawaiians, will also be arguing that the state's formula for the land sale fails to provide just compensation.

"I believe it will be a very historic case. It will be very significant," said Deputy Attorney General Dawn Chang, who is representing the state.

Native Hawaiians say the preservation of ceded lands is important to protect their future claims against the federal and state governments regarding illegal taking of Hawaiian lands as a result of the overthrow of the Hawaiian monarchy in 1893.

Hawaiian rights attorney Melody MacKenzie said that eventually, after native Hawaiians form a sovereign entity, they will go to Congress and negotiate a return of land.

"Those lands may be part of some major settlement, so to lease them now or dispose of them will definitely affect what's available for a settlement in the future," MacKenzie said.

Courts already have determined that native Hawaiians are entitled to 20 percent of ceded land revenues. Legal observers say this case could give them authority to participate in the future disposition or use of ceded lands, including many airports and harbors.

Of the 4.1 million acres of land, the state owns about 1.4 million acres. About 98 percent of the 1.4 million acres are ceded lands, including 200,000 acres managed by Hawaiian Homestead.

Native Hawaiians say that at the time of annexation in 1898, property once owned by the Hawaiian Kingdom totaled an estimated 1.75 million acres of land.

Some 343,810 acres of these ceded lands are held by the federal government.

An estimated 40,000 acres of land owned by the Hawaiian Kingdom were sold or leased for public homesteading to 800 people, shortly after the overthrow.

A number of native Hawaiians have criticized the state's leasing and selling of ceded lands and the lack of what they believe to be just compensation.

Sherry Broder, OHA's attorney, said the land represents more than money to the Hawaiians.

"The land is an integral part of their culture and definition of themselves as a people. It's irreplaceable," Broder said.

Clayton Hee, OHA chairman, said the profits from ceded land sales at Leialii were going to the housing builder and not the state.

"What is being disputed is whether the state had the legal right to dispose of ceded lands at no compensation to the public land trust," Hee said.

"This is the first case where the Office of Hawaiian Affairs has taken a proactive step to prevent the state from reducing the inventory of public lands."

Hee said the state also wanted to appraise the land at its value for sugar-cane cultivation, rather than its highest and best value for residential and commercial uses.

The Leialii development, initiated during Gov. John Waihee's administration, was to eventually include some 4,800 homes on 1,120 acres of ceded lands near the Lahaina Civic Center.

About 60 percent of the development was to be priced in the "affordable" range, with 40 percent priced at market. In 1993, homebuilder C. Brewer Properties Inc. projected that the average sale price for a single-family dwelling in Phase I would be $169,600 for an affordable unit and $265,100 for a market-priced unit. The affordable units were to be partially subsidized by profits from the sales of market-priced homes.

While the infrastructure, including streets and sidewalks, was laid for the first phase of 103 homes, no houses have been built. Much of the 1,120 acres is vacant brush land.

Some $35.5 million of state money has been spent on infrastructure to develop a makai portion of the Leialii site.

Gov. Ben Cayetano's administration has decided that even if the state wins the lawsuit, there will not be a full-scale development at Leialii. Cayetano has expressed philosophical opposition to the state competing with the private sector in the housing market. His advisors say the 4,800-unit project is too big for the market.

"We don't feel there's a market for that large a demand," said Ronald Lim, the governor's special assistant for housing.

Maui County officials agree. They say that while there remains a substantial demand for housing in West Maui, there isn't as much of a crisis as there was 10 years ago when a rise in hotel building increased the number of construction employees.

"The demand has diminished considerably," said Alice Lee, director of the county Department of Housing and Human Concerns.

Hee said OHA is willing to negotiate a settlement of cash or land at Leialii for native Hawaiians.

OHA has not opposed recent development of ceded lands that benefited Hawaiians and did not involve the sale of lands. At Villages of Laiopua in West Hawaii, state officials have built a high school and a 225-unit Hawaiian Homestead housing development.

Sera said he and his wife, Kathleen, had hoped to sell their small house in Lahaina and use the money to buy a larger one at Leialii for $240,000 to $260,000.

While single-family homes are selling for about $200,000 in central Maui, housing prices in West Maui are higher -- about $267,500 in Lahaina and $308,000 from Kahana to Honokowai.

The Seras are still waiting.

"I was kind of disappointed in the beginning. We thought the state had done its homework and apparently it didn't," Sera said.

"I think it (the lawsuit) should be settled. The way it's sitting right now there's no use out of it."