The Hana Village Marketplace, which was supposed to have provided a center for economic development in Hana, remains an incomplete and now run-down sore point for the community physically and psychologically, The Maui News reported.

The half-finished shells of shops and a restaurant have been moldering for nearly a decade, but at least the financial underbrush has been cleared away, so that someone could try to start anew. No one seems to want to.

At the end of June, the Office of Hawaiian Affairs sued the landowner, Wananalua Congregational Church; the community-based developer, Hina-Malailena; and the state Department of Business Economic Development & Tourism, which provided part of the construction money for the multimillion-dollar project. OHA sought to recover $90,000 secured by a mortgage.

The lawsuit was dismissed without prejudice only a week later, but the complaint revealed an otherwise unpublicized financial arrangement with the U.S. Department of Commerce Economic Development Administration, in which OHA paid off the federal contribution to the fiasco, $600,000.

Clyde Namu'o, administrator of OHA, explained that the EDA's claim against the property would have prevented any entity from trying to either revive the project or start all over with the 20 years remaining on the lease.

"We paid them back," he said. "We had been going on with each other for two years," trying to determine exactly what the federal share had been.

In the mid-1990s, the construction budget was around $2 million, with most of the money put up by EDA. The county contributed $100,000, OHA chipped in and so did the state. When things started to unravel, OHA ended up guaranteeing the lease from the church. Namu'o said he didn't know exactly how much money had been lost.

"We think Hina-Malailena is still in existence, but it probably has no assets. ... The $90,000 will never be recovered."

Bill Chang, the founder and president of Hina-Malailena, could not be reached for comment.

Namu'o said OHA no longer has "any official role to play," but thought it was important to "clean up legal entanglements."

Whether OHA has an official role to play is in dispute. Denny Buckley, president of the board of trustees of the church, says the church's legal adviser believes OHA is responsible for the lease obligations. He said OHA made some payments but is way behind.

The drive to create a shopping center as a facility where Hana residents, and especially Hawaiians, could set up small businesses, goes back more than two decades. The church issued a 40-year lease in 1988 based on Chang's vision and an initial EDA grant.

Buckley said the church, which was founded in 1838, had two interests: to create an income stream to allow it to hire a permanent, full-time pastor and to create economic opportunities to benefit the people in Hana.

Hina-Malailena was organized as a community nonprofit foundation. It had a tumultuous history, with insurgents trying to oust the Chang-led board and, at one point in 1995, having two boards.

The anchor tenant of the center was supposed to be a full-service restaurant, a draw for tourists who swarm to Hana but find few occasions to spend money there. Local entrepreneurs were expected to congregate around the restaurant.

When the restaurant developer applied for a liquor license, the church campaigned against it. The would-be restaurateur contended that tourists would not patronize a restaurant where they could not buy a drink. The church said that it should not be a party, even indirectly, to encouraging alcohol, which is a serious social problem in Hana.

Buckley, who was interviewed by telephone from California and who did not have his trustee files available, said it was not true that the church's opposition to a liquor license torpedoed the project, and, in fact, the Liquor Control Commission approved the license.

He said the church never took legal action to dispute the license.

However, it did — in 1999, before Buckley became president — formally notify Hina-Malailena that the liquor application was "in violation of the ruling by the church's trustees and in breach of Section 1 of the lease which prohibits any use of the leased premises for any use which is 'offensive to a religious entity such as lessor.' ''

The notice added, "However, this breach is prospective only, but we are putting you on notice of it."

At that time, Hana Village Marketplace was already on the rocks. The same letter that warned about the liquor license also notified Hina-Malailena, OHA and DBEDT that the church considered the lease in default for failure to complete the building and to maintain what had been constructed. For example, "Wallboard and other building materials have been stored unprotected on the site for years and have deteriorated."

Both Buckley and Namu'o believe the structure, after almost a decade of additional decay, is beyond saving.

"They really do need to tear it down," said Namu'o.

Buckley said the church has had to live with the eyesore right next door for years. Boarded up shopping centers are a turnoff to any other potential business developers in the town.

"It's just the saddest thing," he said. If anyone wanted to revive the concept, he said, they "would find the church cooperative if they tried to put something together."

None of the previous investors wants to touch the project.

Len Smith at the Seattle regional office of EDA said, "We're out of it." He said EDA very seldom writes off job-creation projects. "Maybe once in 10 years. We don't like to do that."

Deirdre Tegarden, head of the county Office of Economic Development, had to go into the archives to learn what the county's role had been. No one in the office now had dealt with it.

County spokeswoman Mahina Martin said the county has no plans for Hana Village Marketplace, although if someone else wants to try, "at the end of the day, it would be good for East Maui."

"It has taken a long time and a lot of staff time to resolve this issue," Namu'o said, but he's happy to have concluded it.

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