STAR-BULLETIN / NOVEMBER 2001 Key to the deal reached yesterday is the city's sale of 20 acres in Manana to Wal-Mart, which already is in Kunia, above.

Sandy Beach
dispute settled

Everybody's happy with
a land swap that preserves
open space and precludes a trial

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By Debra Barayuga
dbarayuga@starbulletin.com

The city has agreed to turn over the proceeds from the sale of 46 acres in Manana in exchange for 32 acres of privately owned ocean-view property near Sandy Beach for use as a public park.

The land swap, which includes the sale of 20 acres in Manana to Wal-Mart Stores Inc., was at the heart of a settlement the city reached early yesterday with Kamehameha Schools, the state's largest private landowner, and lessee Maunalua Associates.

Romy Cachola, chairman of the Council's policy committee, helped broker the deal, which was approved by the nine-member Council late yesterday.

The settlement package -- estimated at $60 million to $70 million -- ends nearly 15 years of litigation and controversy over two parcels of land known as Golf Course 5 & 6.

Developer Maunalua Associates had obtained a special management permit to build 171 residential units there in 1988, sparking a referendum to preserve the land.

The settlement also warded off a trial, scheduled to begin next week, that could have cost the city more than $120 million in damages and attorney's fees, Cachola said.

"This global settlement will save the city and taxpayers a substantial amount of money," Cachola said. He had previously said the city may have to raise property taxes to pay for damages.

Mayor Jeremy Harris noted that "the settlement will protect 30 acres of the Ka Iwi coast from development by designating the area for park use in perpetuity."

Hamilton McCubbin, Kamehameha Schools chief executive officer, praised the settlement, saying it reflects an acknowledgment that the actions the City Council took in 1989 were unconstitutional.

It also provides "fair value to Kamehameha Schools in compensation for the taking," McCubbin said.

Dave Matthews, who founded the Save Sandy Beach Coalition 14 years ago, called the settlement the "ultimate victory."

"This is what should have been done 14 years ago when we first started out," he said. As much as possible, Matthews said, "it should be left as a great big hunk of open space."

The coalition sparked the initiative in which 160,000 people voted against developing the property.

Although the Hawaii Supreme Court ruled that the 1988 initiative was illegal, and even after developers had obtained a special management permit, the city enacted a moratorium on issuing permits for the property, then passed an ordinance downzoning the parcels to preservation.

Developers Maunalua Associates and KRDC Inc., successors to Kaiser Hawaii Kai Development Co., sued the city in 1989. The trial would have settled how much the city owed developers for their losses.

Circuit Judge Sabrina McKenna ruled in March 2000, that the developers had a vested right to build homes based on the permits that were issued before the parcels were downzoned.

She also ruled that the downzoning violated the constitutional rights of the landowners by taking the property without compensation and denied the developer's due-process rights by revoking the special management permit when there were no procedures in place to do so.

Under the settlement, the city will pay $5 million to the plaintiffs within 30 days after notifying the court that the parties have agreed to the settlement. The city included the $5 million in its 2001 budget.

Closure of the Wal-Mart deal -- four parcels with a net worth of $17.5 million -- will end the lawsuit forever, Cachola said.

Wal-Mart has already made an offer to the city for two parcels above the Pearl Highlands Center where the company already operates a Sam's Club. Wal-Mart officials in Honolulu declined comment on the sale or their plans for the property.

The city will also pay an additional $400,000 cash and convey additional properties, most of which are adjacent to existing Kamehameha Schools properties, to the plaintiffs. The properties include two streets and a parcel at the old Gem store in Kapalama.

Once the city sells the remaining 26 acres at Manana on Kuala Street across from the Wal-Mart parcels, with the proceeds going to the plaintiffs, Golf Course 5 & 6 will be turned over to the city.

According to the settlement, the city would condemn Golf Course 5 & 6 if the remaining Manana parcels are not sold by December 2003, and the parties do not believe they can be sold in a reasonable time or achieve a fair price. The city would then pay just compensation for the condemnation but would receive credit for the $5.4 million it already will have paid. Also, a portion of the proceeds from subsequent sales of the remaining Manana parcels would go to Kamehameha and Maunalua.

Ken Kupchak, attorney for Maunalua, said the agreement has the prospect of a "win-win situation" but the parties must work hard to achieve the best and highest price for the parcels.

"It's everybody's hope that they will sell, but it gives everyone incentive to market the properties," Kupchak said. "We're committed to giving this approach its best chance of success."