Hana shopping center
plan stalls for lack of funding

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By Gary T. Kubota
gkubota@starbulletin.com

WAILUKU >> An estimated $3.5 million in government money has been spent on a shopping center that has never opened in rural Hana.

But a number of residents say part of the reason is the lack of money to complete the project -- apparently an additional $1.5 million.

The Hana Village Marketplace, a project begun by the Hana nonprofit group Hina Malailena, was intended to give more residents in East Maui the opportunity to sell their farm produce and crafts in a community where employment opportunities are few.

Residents hoped the center would help to increase the amount of retail and restaurant space in Hana, where most commercial spaces are owned by the Hotel-Hana Maui.

Hina Malailena Executive Director William Chang said about $2.2 million has been spent in construction, including $350,000 from Maui County, $90,000 from the Office of Hawaiian Affairs, $100,000 from the state Department of Business, Economic Development & Tourism and $1.76 million from the U.S. Department of Commerce.

About $1.3 million in federal funds has been spent for operations and lease rent, Chang said.

"I think we need more small businesses in the area for the residents," said John Hanchett Sr., a former Hina Malailena board member and a retired vice president of Hana Ranch.

Chang said the group, led by a volunteer board, leased 1.12 acres of land for the shopping center from Wainanalua Church in 1989 and hoped the development would take several years instead of more than a decade.

He said the delay stemmed from a number of factors.

Chang said commercial lenders would not give his group a loan, so they looked for financial help from government agencies -- work that involved years of grant writing and applying for assistance.

Chang said the group was able to secure about $2.2 million in construction funds from government agencies, started work in 1996 and completed the exterior of the building in September 1998.

He said the group had to wait for a year while the county reviewed the work and eventually allowed the complex to pass final inspection.

Chang said his group was ready to proceed with the final phase of construction at the center in 1999 when an argument arose with the landlord, Wainanalua Church, about allowing alcohol to be served at a restaurant in the complex.

He said the argument resulted in a lender backing away from loaning $600,000 to the group to complete the interior work.

Chang said his group also found that prospective tenants needed some financial help in finishing the interior of their businesses.

He said his group applied for financial help to OHA but that OHA trustees decided two years ago they did not want to commit more money without having fiscal control of the center.

"We've been waiting ever since," Chang said. "It just goes on and on and on."

Chang said the composition of the church board has changed, and Hina Malailena is now able to proceed with its original plan of a restaurant that serves alcohol, but the business climate is no longer as positive, especially with another Persian Gulf war on the horizon.

Chang said the Hina Malailena board is in dire need of help.

"The property taxes haven't been paid," he said. "We haven't paid the rent."

OHA official Richard Pezzulo said the agency is in the process of renegotiating the 40-year shopping center land lease with Wainanalua Church, before seeking more funds to complete the development.

Pezzulo said according to a contractor, the work to complete the exterior and interior for occupancy will cost an estimated $1.5 million.

Pezzulo said his office is taking a more active role in the development because OHA is the guarantor of a $1.7 million federal grant used toward building the center and that unless the project is finished, the agency could be liable to pay back the grant to the federal government.

Church trustee Chairman Anthony Angelini said the congregation wants to see the shopping center up and running.

Angelini said if OHA wants to renegotiate the lease, the church wants to renegotiate other matters as well, including the consumption of alcoholic beverages.

Asked if the church would oppose the sale of liquor at the restaurant, Angelini replied, "I cannot say at this time."

He said there were too many "unknown" factors, and the church would want conditions put in place to maintain its primary religious mission.