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The Honolulu Advertiser
Posted on: Sunday, February 28, 2010

Hawaii’s rural development fight rekindled in valley on Oahu


by Andrew Gomes
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

Some area residents remain opposed to development — this photo was taken Jan. 22.

ELOISE AGUIAR | The Honolulu Advertiser

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Hawaii news photo - The Honolulu Advertiser

Local opposition to development has continued — this photo was taken in the area last month. The new owner of a foreclosed Waikäne property hasn’t announced his plans for it.

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A vast, largely untouched piece of land in Waikāne Valley long eyed by developers and once proposed for a golf course is in play again after a local businessman successfully bid to buy the Windward O'ahu property at a foreclosure auction earlier this month.

The property was part of a historic battleground against urban development stretching back more than three decades. And now community concerns are being reinvigorated in large part because the buyer of the 327-acre site hasn't disclosed his plans for the land.

Dominic Henriques, the owner of Rolloffs Hawaii subsidiary RRR Recycling Services Hawaii, made the high bid of $1.2 million and was the only bidder for the property other than the mortgage lender that foreclosed on the prior owner.

Henriques, according to his wife, was unavailable for comment last week.

State Rep. Jessica Wooley, D-47th, (Ha'ikū, Kahalu'u, Lā'ie), said she's working with community members to ensure the land is protected from any commercial development.

"The community forever has wanted that property not developed," she said. "Nobody wants to see Waikāne turned into an urban development or a gentleman's farm development."

Pat Royos, president of the Waiāhole-Waikāne Community Association, isn't presuming what Henriques might do with the land, but said the community will make another stand against commercial use if needed.

"We're not going to let it be developed," she said. "We're strongly, strongly against it."

The site, which a Japanese company tried to turn into an 18-hole golf course in the late 1980s, has been the subject of foreclosure twice in seven years.

Local lender Finance Factors initiated the latest foreclosure case on the property along with a 1,117-acre adjacent parcel that local developer Tom Enomoto acquired in 2005 from the golf course developer, SFM Enterprises.

The larger parcel was repossessed by Finance Factors after no one offered more than the $600,000 established by the bank as a starting bid.

The smaller parcel was once zoned for agriculture and includes two homes built more than 40 years ago. It is one of several sites in the area that over several decades have spurred residents to rail against golf course and residential development.

One landmark fight in the mid-1970s involved a plan by local developer Joe Pao to build as many as 7,000 homes in Waikāne and Waiāhole. That effort was met by emotional opposition that led the state to condemn much of the property.

A portion of the Pao site makai of the 327-acre property was proposed for a 27-hole golf course by Japan-based Pan-Pacific Development. In that case the city acquired the land with a plan to create Waikāne Valley Nature Park.

But the 327-acre site has remained in private hands.

The original golf course plan on the site was pursued by SFM Enterprises, an affiliate of Yokohama, Japan-based development firm Hoyu Kensetsu, which bought roughly 1,400 acres in 1989 for $9.5 million.

SFM faced vocal opposition to its plan from many area residents at the time. The late Frank Fasi, as Honolulu's mayor, also was critical of SFM as part of what was then a frenzied rush to build private golf courses for Japanese investors buying into exclusive membership clubs.

SFM attempted to sideline the mayor and the City Council by removing the property from county zoning through petitioning the state Land Use Commission to make the property part of the state's conservation district, a kind of state zoning.

Under conservation district regulations at the time, golf courses were permitted, and the Land Use Commission granted SFM's request in 1992.

SFM, however, ran into serious problems.

While the developer was seeking the land-use change, the state Department of Land and Natural Resources, which administers conservation land rules, was revising those rules, according to Sam Lemmo, administrator of DLNR's Office of Conservation and Coastal Lands. Lemmo said DLNR ended up prohibiting golf courses on conservation land in a move that stunned SFM.

SFM's parent, Hoyu, also filed bankruptcy a month before the land-use change approval. Over the next decade, SFM racked up $523,000 in unpaid property taxes, plus debts to companies affiliated with Enomoto, including construction firm Dura Constructors and Royal/Fountains LLC.

In 2003, SFM filed for bankruptcy, listing $10.5 million in debts, including a $9.5 million mortgage with Japan's Sanwa Bank Ltd.

Enomoto's Royal/Fountains sued to foreclose on the land, and in 2005 worked out a deal to buy the 1,400 acres for $5 million and pay off the city's tax debt.

After Enomoto's purchase, area residents renewed their expression against development, erecting large signs throughout the community proclaiming their opposition to such efforts while Enomoto remained low-key about his intentions.

Last May, a $2.3 million loan that Royal/Fountains took out with Finance Factors to buy the 1,400 acres matured. Finance Factors sued to foreclose in June, citing a $2.4 million unpaid balance. About $22,000 of property taxes also was owed on the property.

Royal/Fountains had tried to obtain new financing to pay off the Finance Factors loan and keep the property, according to the foreclosure case records, but a preliminary auction moved forward last month, an auction at which no one was willing to offer Finance Factors more than $1 million for the 327 acres or more than $600,000 for the larger parcel.

Though more investors registered to bid at the final auction last week, only Henriques submitted a bid. His bid, which required a 10 percent down payment, is subject to closing.

According to Lemmo, DLNR permits a variety of uses under certain conditions on conservation land, including single-family residences, farming and parks. Other operations, including some kind of recycling business, might also qualify if deemed a "public use."

However, Lemmo said any such use would require a conditional use permit that would involve public hearings and publication of an environmental assessment or a more rigorous environmental impact statement.

"There are limitations to the development of that land," he said.

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