Investors sue over halted Big Island project

A judge previously ruled that the Hokulia subdivision violated state land-use laws

About 150 lot owners at a stalled luxury subdivision on the Big Island filed state and federal lawsuits yesterday against Hawaii County and the state, seeking $265 million in damages.

Construction on the Hokulia project on 1,500 acres above Kealakekua Bay began in early 1998, but was halted in 2003 when Circuit Judge Ronald Ibarra ruled it violated state law on agricultural land use. The ruling ordered construction to cease until the agricultural land was reclassified by the state Land Use Commission.

In July the lot owners who were denied building permits took the first step toward the lawsuit when they filed a claim with Hawaii County seeking to recover the $265 million in damages.

Robert Baker, an attorney representing lot owners, said his clients want their right to build their homes restored.

"To that end, the lawsuits filed today are first and foremost an effort to invalidate the 3rd Circuit Court decision which took that right away," Baker said. "If the effort to invalidate the decision is unsuccessful, however, the lot owners will then focus on recovering damages from Hawaii County, the state and others."

Bridget Holthus, special assistant to state Attorney General Mark Bennett, said Bennett hadn't seen the lawsuits and so couldn't comment.

Hawaii County's corporation counsel, Lincoln Ashida, did not immediately return calls seeking comment.

The lot owners have patiently endured the consequences of the Circuit Court decision for two years, John DeFries, chief executive of developer 1250 Oceanside Partners, said in a statement.

"It is understandable that they now feel compelled to take timely legal action to protect their investments and restore their property rights," he said.

Ibarra has also found the county government was in conflict of interest because it had entered into a development agreement with the developer, 1250 Oceanside Partners.

The county, which had granted the permit for the project, and Oceanside have appealed Ibarra's decision to the state Supreme Court.

The high court's refusal in September to grant a county request for a speedy decision meant there could be no final ruling for four or more years, Deputy County Corporation Counsel Ivan Torigoe has said.

Oceanside's attorneys have argued the Circuit Court didn't have the authority to rule on permits and approvals granted under the county's land-use and permitting process.

The developer won approvals from the Hawaii County Council in 1994 and 1996 to rezone the property to allow for one-acre agriculturally zoned lots.

The Hokulia project includes plans for 750 home lots ranging from $1 million to $8 million, a Jack Nicklaus-designed golf course, a spa, tennis courts, a beach house and a club.