Group sought $50M to
settle, developer says

A lawsuit was intended to stop
construction of the Big Island’s
Hokulia luxury community

KEALAKEKUA, Hawaii » Opponents of the Kona luxury residential community Hokulia sought $50 million from the developer to settle their lawsuit against the project, according to the company.

Of that $50 million request, $14 million was for the plaintiffs and their attorneys, according to developer 1250 Oceanside Partners.

On Thursday the company posted a Web site -- www.hokuliaupdate.com -- with details of failed mediation talks earlier this year. According to the Web site posting, plaintiff Protect Keopuka Ohana proposed the $50 million settlement in April, and by June, Oceanside made counteroffers of $43 million for affordable housing, plus proposals to give up more than $100 million in planned developments.

"There's a couple of hundred million there," Hokulia Chief Executive John De Fries said yesterday.

The company's offer was turned down this summer by Protect Keopuka Ohana and four individuals who had sued to stop the residential project on agriculturally designated land.

"We won," said Protect Keopuka Ohana President Jim Medeiros, explaining why he rejected the company's offer in mediation.

Circuit Judge Ronald Ibarra issued a "second amended final judgment" against the company last month. The judge ruled that Hokulia was illegal because it violated state law on agricultural land use, and he ordered construction to cease until the land is reclassified by the state Land Use Commission.

Oceanside had worked since the 1990s to create the 1,550-acre community with 730 1-acre residential lots. The company has $350 million invested in the partially completed project, De Fries said. The lawsuit has blocked work for a year.

Barring an unexpected change of the final judgment by Ibarra at a hearing set for Tuesday, Oceanside faces several years of waiting while the case is appealed to the state Supreme Court.

De Fries had said the company would seek to enlist public opinion on its side before attempting an appeal.

When the company posted its version of the mediation proceedings on its new Web site this week, opponents cried foul. The contents of mediations are normally not made public.

"I did not expect this," said Alan Murakami, an attorney for Protect Keopuka Ohana. "I thought we were operating under what all attorneys in Hawaii understood about outside-of-court discussions. This is quite disturbing."

Murakami demanded Hokulia shut down the Web site.

The company "expressly violated an agreement between all parties," said a posting on the Web site www.protectkeopukaohana.org. The group describes itself as a coalition of Hawaiian cultural practitioners, farmers and environmental activists.

De Fries denied violating any agreement. If the group wanted a "perpetual" confidentiality agreement lasting after mediation, they should have negotiated one, but did not, he said.

Plaintiff's attorneys Murakami and Robert Kim said they would not disclose their client's positions.

In addition to the $14 million for the plaintiffs and their attorneys, the group wanted the company to provide $36 million for affordable housing, scholarships, cultural preservation and "sustainable development," De Fries said.

The company offered to give up plans for a hotel-like lodge, to reduce the number of buildable house lots from 730 at Hokulia to a total of 730 spread between Hokulia and a proposed second development on 660 acres nearby at Keopuka, to increase the no-development zone at the coastal hill called Puu Ohau, and to turn over ownership of an ancient trail to the state.

In addition to the $43 million in new payments, the company said it agreed to continue construction of a 5 1/2-mile highway through the property costing $55 million.

The real problem was not money, but control, De Fries said.

The group wanted to retain permanent control of cultural activities, which Oceanside believes should be broadly shared, including with all 180 Hawaiians with family and cultural ties to the land, he said.

On the legal issue of residential development on agricultural land, the company agreed to recognize Judge Ibarra's ban on similar future projects on agricultural land as long as the group would agree to continuation of the Hokulia project.