Kealanani: A Kauai project mixes ag and houselots

Observers argue whether the project will preserve or undermine the island's agriculture

STORY SUMMARY »

Reactions to Kealanani, Kauai's newest mixed-use agricultural/residential community, are as mixed as the proposed crop spread at the development.

Many bloggers, journalists and citizens have waxed eloquent on Kealanani's potential to serve as a model of agricultural sustainability and a vehicle for agritourism. However, others have expressed concern that the project will fall short of its lofty goals and become just another community of faux farms where rich people plant a few flowers in exchange for tax breaks.

While luxury agricultural/residential subdivisions are not new to Kauai, Kealanani -- where homeowners must all grow something -- is something of a hybrid.

Developed by Plantation Partners Kauai LLC, the 2,021-acre community on Kauai's northeastern shore will consist of 190 three- to 100-acre home sites that offer a combination of nature preserve, farmland, ranchland and farm dwellings. Developers also are given credence to their agrarian concept by establishing their own 100-acre tea farm.

Along with all of its amenities, Kealanani has several homeowner restrictions. Buyers must have an approved agricultural plan in place before they can construct anything on their home sites. The development's homeowners' association also can put a lien on the property if buyers default on this part of their sales agreement. Critics wonder, however, if these restrictions will be enough to keep this development from turning into just another gentleman's farm.

Kealanani » Location: Kauai's northeastern shore » Address: 2371 Kealia Road, Kealia, HI 96751 » Web site: www.kealanani.com » Developer: Plantation Partners Kauai LLC » Agriculture: Nearly 70 percent of Kealanani will be set aside for agricultural use. Tea, taro and cacao will be the predominant crops. However, all owners will be required to farm or raise livestock on their parcels. » Residential: The first phase will include 190 home sites ranging from three to 100 acres and priced from $500,000 to $3 million. » Timetable: Lots are currently on sale. Construction on the infrastructure is scheduled to begin in late March and will end in late 2008 or early 2009 when homes construction can begin.

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Bryant LaFerriere and his family have enjoyed frequent Kauai vacations since they purchased a timeshare in Poipu about six years ago.

However, the family's most recent real estate purchase in Kealanani, one of the island's newest agricultural/residential communities, will transform them from visitors who enjoy playing on Kauai's rural lands to homeowners who must work the land.

"We love the rural beauty of Kauai," LaFerriere said from his Lake Tahoe, Calif., home. "We've looked at a lot of properties over the years, but this one appealed to us because we enjoy being a part of the land when we are over there. We want to be more than just tourists."

Agricultural/residential subdivisions are not a new concept on Kauai. In recent years, developers have been drawn to the relative ease of permitting such projects and to their requirement for fewer infrastructure improvements.

Likewise, buyers have been drawn to the broader tax breaks that agricultural subdivisions offer. As a result of this climate, the use of agricultural land for speculative housing, second homes and fake farms has been growing on Kauai, where the planning department has estimated that nearly 80 percent of the agricultural lands are not owned by farmers.

Proponents of mixed-used subdivisions such as Kealanani, which appeal to tourists and kamaaina alike, have argued that they promote agriculture and tourism on Kauai and seek to preserve the island's rural heritage. However, others have said that ultimately these developments will undermine island agriculture.

A quick online search of Kealanani shows that sentiments on the project are mixed. While many bloggers and journalists have waxed eloquent on Kealanani's potential to serve as a model of agricultural sustainability and a vehicle for agritourism, others have expressed concern that the project will fall short of its lofty goals and become just another community of faux farms where rich people plant a few flowers in exchange for tax breaks.

"It's time to crack down hard on the shibai 'ag subdivisions' that are turning thousands of acres of good farmland across the state into rolling lawns around a manor house owned frequently by someone who lives somewhere else," said Joan Conrow, a freelance journalist who has lived on Kauai for 20 years.

While the Kauai County Council is currently considering a moratorium to halt the development of these mixed-used communities that have replaced many of Kauai's sugar cane plantations, working farms and cattle ranches, even if such a measure passed, it would have no impact on Kealanani, which is being touted as Hawaii's first legal mixed-use agrarian community and, as such, made it through the permitting process in record time.

"My concern is in regard to the sheer size of Kealanani -- 2,000 acres is a huge development for any community," said Jerry Ornellas, president of the 300-member Kauai County Farm Bureau. "If they decide this could be done profitably, we could lose our prime agricultural lands rather quickly."

In addition to driving up land prices, the spreading popularity of Kauai's mixed-used agricultural/residential communities has resulted in community conflicts between real farmers and those who are more interested in the bucolic lifestyle of a country estate, Ornellas said.

"You would not buy a piece of property in an industrial area and build a home and then complain when the surrounding businesses operated," he said. "And, you shouldn't be able to do it in an agricultural zone. Frankly, this is not appropriate for agriculture."

Of course, when it comes to Kauai's luxury agricultural/residential subdivisions, Kealanani is something of a hybrid. Developed by Plantation Partners Kauai LLC, the 2,021-acre community on Kauai's northeastern shore will consist of 190 three- to 100-acre home sites that offer a combination of nature preserve, farmland, ranchland and farm dwellings. The development is even unique enough to have been featured in the New York Times real estate section.

Residents of the community, which is bordered by the Kapaa Stream and Kealia Beach, will have access to a 14-acre park, nine valleys, waterfalls, Kapaa stream, and a 12-mile looped trail for strolling, hiking, biking and horseback riding. The trail will connect to a 2.5-mile pedestrian/equestrian path along the beach that leads to Kapaa and will eventually become a 17-mile oceanfront and hiking trail running from Lihue Airport to Anahola. A general store and post office are being renovated on the property, which also includes plans for a charter school and Hawaii's only state-sanctioned rodeo rink.

Homeowners, who have bought into the 2,021-acre community for between $500,000 and $3 million, will be required to use a portion of their land agriculturally, said Paul Kyno, co-developer of Kealanani.

"We wanted to create a unique, rural Hawaiian experience for our buyers," Kyno said. "Kealanani's purpose is to preserve Kauai's rural heritage where homeowners can enjoy natural goodness from their own land in a beautiful and vast agrarian community."

Twenty-two of the 47 lots in the first phase already have been sold at Kealanani, Kyno said. There will be a total of 188 lots. Buyers can start their plans and permitting process after closing, but won't be able to start actual building until infrastructure is completed. Construction on the infrastructure is scheduled to begin in late March and will end in late 2008 or early 2009 when homes construction can begin.

Primary focuses at Kealanani will include a tea plantation, a taro farm and the cultivation of tropical fruit tress, with an emphasis on cacao, Kyno said. While these three primary agricultural activities will establish the identity and focus of Kealanani, owners can make their own decisions regarding their individual agricultural activities, he said.

"People are coming up with really unique ideas," Kyno said. "There's been some discussion about agave, ginger, exotic fruits and palms, and oil palms for alternative energy."

Plantation Partners, which includes Kyno, Andy Friend and San Francisco-based equity partner Maurice Kanbar, who invented SKYY Vodka, also have given credence to their concept with the planting of their first test crop of tea under the Kauai Tea Co. label. Lynch Investments started as a partner and later sold out to Kanbar.

Kauai Tea Co., funded by Plantation Partners, will offer high-end specialty black, green and white teas. The tea, which will be produced using organic farming methods, will capitalize on demand for a Hawaii label, Kyno said. The company, which will oversee everything from production to processing and packaging and marketing, eventually will invest more than $1 million to build its own tea-processing facility, with an emphasis on energy efficiency and automated machinery. A visitor center, complete with a tearoom, retail store and tours of operations will eventually showcase company operations that are estimated to grow to 1,200 pounds of tea per day.

While all Kealanani owners will have the means to generate income from agricultural activities, for most residents of the community like LaFerriere, participating in agriculture is more of a lifestyle choice.

LaFerriere, who like many other buyers in the development has no actual farming experience, said that he and his family plan to grow fruit trees, hardwoods and palms on their three-acre tract that overlooks Kyno's tea farm and has mountain and ocean views.

"We're looking forward to getting our hands dirty," he said. "We're excited about farming, but I think that we are realistic. There'll be a learning curve. We don't expect this to be a primary source of income."

While Kealanani developers have said that they've kept prices relatively low on some of the largest parcels to attract broad-scaled farming operations, Ornellas said that he's concerned that most farms operating in the community are likely to be small-scale, niche agri-businesses that don't need to make a profit to survive.

When gentlemen farmers, who don't need to make a profit, compete with local farmers who must stay in the black to run their businesses, the results can be devastating, Ornellas said.

"Local farmers need to make a profit. They can't compete with those that are just land banking," he said.

Kyno said many Kealanani homeowners will support the agricultural industry by leasing lands for Kauai farmers to work. In addition, the company plans to build 100 affordable homes with qualifications based on Department of Housing and Urban Development guidelines, Kyno said.

"Local farmers, who have leased land to farm at Kealanani, might be able to buy these homes or rent them," Kyno said.

Ornellas said that it's apparent that local farmers aren't the target buyers since Kealanani is advertising in publications like the Wall Street Journal and the New York Times and lists its development with luxury real estate firms like Sotheby's.

"It's the emperor has no clothes kind of thing," he said. "Kealanani is not an agricultural subdivision -- its primary purpose is to be a playground for wealthy people."

Housing covenants require that homeowners in Kealanani farm a portion of their lands, but some Kauai residents such as Conrow, the freelance journalist, have said that they fear such restrictions will lack teeth.

"The big question with this is how motivated and how committed will this homeowners association be in regard to enforcing farming," she said. "In the past, agricultural/residential subdivisions have tended not to support farming and we've even had Kauai farmers that had to retain attorneys to protect their right to farm."

Kyno said that he and his partners have touted Kealanani as Hawaii's first legal agricultural community and they take that label seriously.

Kealanani buyers must have an approved agricultural plan in place before they can construct anything on their home sites, Kyno said. The development's homeowners' association can put a lien on the property if buyers default on this part of their sales agreement, he said.