GREAT-11(20) Reso 23-107 LITIGATION MATTERS (RESOLUTION 23-107, RELATING TO SETTLEMENT AUTHORIZATION: KAREN GOO, ET AL. V. MAYOR ALAN ARAKAWA, ET AL.; CIVIL CAAP-17-0000858) (GREAT-11(20))
Transfer of Maui Lani Fairway Lots to Maui Health Foundation and Na Hale O Maui (GREAT-11(20))
Dear GREAT Committee Chair U’u-Hodgins,
It is my understanding that you will be reviewing item GREAT-11 (20) relating to Resolution 23-107 and Correspondence from Corporation counsel 03-09-2023 regarding the settlement of outstanding litigation related to the Maui Lani Fairways lots in your committee meeting next week. We are very grateful that you will review this issue, and I wanted to take this opportunity to brief you on the background and our progress thus far on the Maui Lani Housing initiative.
Background: As you may be aware, in the early 2000’s the County (under Mayor Alan Arakawa) permitted the development of 50 residential lots (and 5 additional lots for access and drainage easements), now called the Maui Lani Fairways. The permit allowed the developer to bring in substantial fill (raising a portion of the project ground level by approximately 30 feet), with substantial impact to the adjacent residential community. The County and the developer, along with all associated parties, were subsequently sued by a collective of the neighbors, and the suit was settled when the County purchased the lots from the developer for $11,000,000 in 2011. Since that time the 50 lots have remained vacant, while the developed roadways, light fixtures, and other infrastructure have severely deteriorated. The County has continued to pay annual dues to the Maui Lani Home owners association of approximately $400,000/year, in addition to periodic mowing and other expenses. The County’s current investment in the property is well over $13,000,000 to date. The neighboring community still harbors concerns over the lots that were filled, as well as drainage and flooding issues in the adjacent neighborhoods, and concern remains about the potential of Iwi on the property, although archeological reports have already identified areas requiring protection.
In 2022 the Maui Health Foundation, in collaboration with Na Hale O Maui approached Mayor Victorino and the County Council with a proposal to divide the Maui Lani lots into two separate phases. Phase 1 would allocate the existing 33 lots that did not impact the adjacent neighbors to the two nonprofits to develop leasehold housing. The land would remain in perpetuity under the respective nonprofit, while the leasehold homes would be sold below market value due to the lack of the land costs. For the Maui Health Foundation the houses would be restricted in perpetuity for Health Care Providers; for Na Hale O Maui the homes would be restricted in perpetuity for buyers at the 140%AMI or below. Phase 2 of the project would focus on the remaining 20 lots still owned by the County, and be addressed by the County at a later date.
In May 2022, the Council voted unanimously to support the administrations proposal to donate 16 lots to the Maui Health Foundation and 19 lots to Na Hale O Maui, utilizing the phased approach.
Both nonprofit organizations have spent the balance of 2022 working diligently with the County in an effort to complete the land transfer. We are now scheduled to close on the lots on June 30, 2023. We are in the diligence process, and remain hopeful that no major unforeseen mitigation will be required to make the lots buildable. Unfortunately we have encountered another barrier that has caused delay. This was the discovery of outstanding litigation clouding title to all 50 of the Maui Lani Fairway lots.
Outstanding Litigation: When escrow was opened for the lots it became apparent that there was an outstanding lawsuit against the County, clouding title for the lots. Neither nonprofit felt comfortable accepting title while the suit was still pending. After conversations with the Plaintiffs’ attorney, Lance Collins and Mayor Victorino, we believed we had reached a settlement in which the County would pay $60,000 in legal fees to the plaintiffs, and the remaining litigation would be dropped. In the final days of the previous administration, it was our impression that the County ultimately agreed to pay only $45,000 towards the settlement. In an effort to see the issue resolved, the Maui Health Foundation found a donor and agreed to pay the $15,000 balance. Unfortunately Mayor Victorino’s administration did not finalize the settlement, and this issue remains unresolved.
Fast forward to today. Mayor Bissen has asked his corporation counsel to assist in resolving this issue.
The request before your committee is for the County to pay the $45,000 to see the litigation settled. Through the generosity of a donor, the Maui Health Foundation will pay the balance as proposed above. Once this is resolved, all 50 lots in the Maui Lani Fairways will have clear title (not just the 30 already earmarked for Na Hale O Maui and the Maui Health Foundation). Clear title is deemed essential in order to finance development, obtain mortgages, etc.
I would be happy to answer any questions you might have about the project. Our objective is create affordable homes for our central Maui workforce, particularly our desperately needed health care providers.
With heartfelt mahalo,
Tamar Goodfellow
Volunteer President, Maui Health Foundation
808-269-2844
Transfer of Maui Lani Fairway Lots to Maui Health Foundation and Na Hale O Maui (GREAT-11(20))
Dear GREAT Committee Chair U’u-Hodgins,
It is my understanding that you will be reviewing item GREAT-11 (20) relating to Resolution 23-107 and Correspondence from Corporation counsel 03-09-2023 regarding the settlement of outstanding litigation related to the Maui Lani Fairways lots in your committee meeting next week. We are very grateful that you will review this issue, and I wanted to take this opportunity to brief you on the background and our progress thus far on the Maui Lani Housing initiative.
Background: As you may be aware, in the early 2000’s the County (under Mayor Alan Arakawa) permitted the development of 50 residential lots (and 5 additional lots for access and drainage easements), now called the Maui Lani Fairways. The permit allowed the developer to bring in substantial fill (raising a portion of the project ground level by approximately 30 feet), with substantial impact to the adjacent residential community. The County and the developer, along with all associated parties, were subsequently sued by a collective of the neighbors, and the suit was settled when the County purchased the lots from the developer for $11,000,000 in 2011. Since that time the 50 lots have remained vacant, while the developed roadways, light fixtures, and other infrastructure have severely deteriorated. The County has continued to pay annual dues to the Maui Lani Home owners association of approximately $400,000/year, in addition to periodic mowing and other expenses. The County’s current investment in the property is well over $13,000,000 to date. The neighboring community still harbors concerns over the lots that were filled, as well as drainage and flooding issues in the adjacent neighborhoods, and concern remains about the potential of Iwi on the property, although archeological reports have already identified areas requiring protection.
In 2022 the Maui Health Foundation, in collaboration with Na Hale O Maui approached Mayor Victorino and the County Council with a proposal to divide the Maui Lani lots into two separate phases. Phase 1 would allocate the existing 33 lots that did not impact the adjacent neighbors to the two nonprofits to develop leasehold housing. The land would remain in perpetuity under the respective nonprofit, while the leasehold homes would be sold below market value due to the lack of the land costs. For the Maui Health Foundation the houses would be restricted in perpetuity for Health Care Providers; for Na Hale O Maui the homes would be restricted in perpetuity for buyers at the 140%AMI or below. Phase 2 of the project would focus on the remaining 20 lots still owned by the County, and be addressed by the County at a later date.
In May 2022, the Council voted unanimously to support the administrations proposal to donate 16 lots to the Maui Health Foundation and 19 lots to Na Hale O Maui, utilizing the phased approach.
Both nonprofit organizations have spent the balance of 2022 working diligently with the County in an effort to complete the land transfer. We are now scheduled to close on the lots on June 30, 2023. We are in the diligence process, and remain hopeful that no major unforeseen mitigation will be required to make the lots buildable. Unfortunately we have encountered another barrier that has caused delay. This was the discovery of outstanding litigation clouding title to all 50 of the Maui Lani Fairway lots.
Outstanding Litigation: When escrow was opened for the lots it became apparent that there was an outstanding lawsuit against the County, clouding title for the lots. Neither nonprofit felt comfortable accepting title while the suit was still pending. After conversations with the Plaintiffs’ attorney, Lance Collins and Mayor Victorino, we believed we had reached a settlement in which the County would pay $60,000 in legal fees to the plaintiffs, and the remaining litigation would be dropped. In the final days of the previous administration, it was our impression that the County ultimately agreed to pay only $45,000 towards the settlement. In an effort to see the issue resolved, the Maui Health Foundation found a donor and agreed to pay the $15,000 balance. Unfortunately Mayor Victorino’s administration did not finalize the settlement, and this issue remains unresolved.
Fast forward to today. Mayor Bissen has asked his corporation counsel to assist in resolving this issue.
The request before your committee is for the County to pay the $45,000 to see the litigation settled. Through the generosity of a donor, the Maui Health Foundation will pay the balance as proposed above. Once this is resolved, all 50 lots in the Maui Lani Fairways will have clear title (not just the 30 already earmarked for Na Hale O Maui and the Maui Health Foundation). Clear title is deemed essential in order to finance development, obtain mortgages, etc.
I would be happy to answer any questions you might have about the project. Our objective is create affordable homes for our central Maui workforce, particularly our desperately needed health care providers.
With heartfelt mahalo,
Tamar Goodfellow
Volunteer President, Maui Health Foundation
808-269-2844