Maui Real Estate & Development

A recent report revealed that in November, Condo sales had more than doubled!  The Realtors Association of Maui reports 69 condos selling in November 2009 compared to 29 units sold in November 2008.  We’re on track to sell about as many condos this year as last year.  This is a sign of a buyers market and hopefully the beginning of the market coming back.

At the same time, November was up 122 percent in foreclosures across the state of Hawaii, according to sources with the Associated Press.  Maui was noted as having the worst month for foreclosures with 197 in November.

People are still hurting and are losing their homes.  This makes for a ripe time for those that can buy a home or condo.  In our honest opinion, these are all signs that things are changing soon.  Our island has been through some very difficult times, but 2010’s real estate outlook seems to be sunnier on Maui.

Wells Fargo, trustee for the registered holders of the commercial mortgage securities of which secured the property, filed a foreclosure lawsuit on Monday.  Everett Dowling and Morgan Stanley’s partnership, created to purchase the 1,800 acre resort, owes $192.5 million in principal, interest and late charges.

Dowling Company and Morgan Stanley bought the resort and hotel just a little over 2 years ago from Seibu Group of Japan.  Though the future of Makena Resort is uncertain, Dowling Co. is moving forward with its other Makena Project called Maluaka.  This development has been considerably altered in plans from 69 luxury condominium units to 13 custom homes and a club house.

To read more about this latest Maui Real Estate News, see the BizJournal Article.

UPDATE:

Maui Prince Resort to Stay Open with Name Change!

The Maui Prince Hotel will now be called the Makena Beach and Golf Resort.

Prince Resort Hawaii told the public that it would be shutting down the Maui Prince in 2 weeks, but Wells Fargo bank, trustee of the resort, countered this statement by saying they will keep it open and that funds have been made available to pay off vendors and suppliers that were owed as well as continue payroll.

Management will need to be restructured as the Maui Prince Resort has been showing around a 1 million dollar loss per month.

The Maui Island General Plan provides a guide for the future growth of the island to the year 2030. The Maui Island Plan establishes a vision and a set of long-range guiding principles, goals, objectives, policies and maps to guide the growth and development of the island.

At this time, this Maui Island General Plan is in the “stage 2″ of the review process.  First, the Planning Director took the recommendation of the GPAC (General Plan Advisory Committee). Second the Planning Director’s original draft as well as the newly revised draft with GPAC recommendation are reviewed by the Maui Planning Commission. So far the Maui Planning Commission  had 3 meetings on this already.  A few more meetings are scheduled with the Maui Planning Commission before they finalize their own recommendations regarding the location and amount of future growth for Maui. If you are interested to come, below are the dates, time and location:

August 4, 2009 from 1:30 PM to 8 PM in the Lahaina Civic Center

August 18, 2009 from 9AM to 5 PM in the Planning Department Conference Room

August 25, 2009 from 9AM to 5 PM in the Planning Department Conference Room

This Maui Real Estate And Development Blog will feature the Maui Island General Plan.  A series of posts are coming up here on this topic for us to weigh in on this very important decision for the Maui Island.  Stay tuned and looking forward to your comments.

On June 24th, 2009, a small town public forum was held at the Good Shepherd Church Hall in Wailuku, Maui.  The WMSA (Wailuku Main Street Association) Tri-Isle Main Street Resource Center hosted the event to further educate about the community-based issues of the new plan.  The program, “Maui Island Plan: How It Effects You,” was held for discussion between Maui County representatives, community stakeholders, and the public.

This meeting comes after the Draft Maui Island Plan was received for review on April 21st.  The Planning Commission was given 150 days to review and modify it before passing it on to the Maui County Council.

Members of the panel expressed concern about loss of small town identity.  With 1 policy to act over all areas, it was argued, there will be incongruent policy.  Different areas require different approaches. Examples were cited like the differences between growing industrial towns like Kahului and small farming communities like Kula.

Community leader Jan Yagi Buen explained that the overall problem with the new plan was that it is massive in comparison to the 1990 plan, something that would be difficult to modify.

Other issues with the plan are the lack of specifics in allocating water as well as the protection of diminishing agricultural lands.

A major foreseeable problem in Maui’s future is a lack of education and future jobs.  Once our kids graduate from High School, there’s really not much available to them on Maui.

Long Range Senior Administrator John Summers said, “We’ve got a lot of work ahead of us still.”

map from Honolulu Advertiser

I admire Andrew Gomes, staff writer for Honolulu Advertiser,  for efficiency, for his quick coverage on the Affordable Housing news on Maui. Yesterday the OEQC published the intent to revise EIS filed for the proposed Ohana Kai Village and Andrew picked it up right away.  He wrote a comprehensive article on Honolulu Advertiser today (as comprehensive as he can considering there are still a lot of variables on this proposed subdivision).

Here’s an excerpt from the article:

Jesse Spencer of Wailuku-based Spencer Homes Inc. is proposing to build 1,100 single-family homes, for sale mostly at prices affordable to residents with more-or-less moderate incomes.

The new plan still faces what Spencer said is continued opposition from some area condominium owners and the county Planning Department — both of which opposed the former development plan in favor of keeping the site, which is zoned for agriculture, as open space.

But the developer said he believes the need for affordable housing and construction jobs will garner enough support for the estimated $400 million project to proceed.

To read the full article go to Honolulu Advertiser, click HERE.

More news on this proposed Ohanai Village will be found on this blog.  Stay tuned. We will be posting fresh updates on this proposed affordable housing on Maui, here at Maui Real Estate and Development Blog.

News about Maui real estate and development continue to be on the front page of the local newspapers.  Each of the news is worthy of discussion.   I should have posted each topic daily as it got published, but I did not get a chance. So tonight I decided to do a round-up. Feel free to comment on the topic that interest you. I will start with the most recent and move down to last week.

Panel Reviews Honua’ula Development Compliance.

A year after its approval, the controversial Honua’ula housing and golf course development in South Maui is moving slowly with a required environmental impact statement and the hiring of several consultants and consulting firms. The project came before the County Council’s Planning Committee Monday as it reviewed a mandatory annual compliance report by Honua’ula’s developers.  Honua’ula, designated Kihei-Wailea Project District 9 (Wailea 670) in the community plan, proposes 1,400 housing units, half of which will be priced as affordable under federal guidelines. Plans include the construction of a private golf course, water wells and a wastewater treatment plant.  Construction on the project is expected to begin in five years if permits are approved and if Honua’ula prevails in legal challenges to its plans. Continued on Maui News

Isle Luxury Projects In Limbo Over Financing.

Keaka, Everett Dowling’s development company, was at the Maui Planning Commission last week to seek an amendment to permits for its Maluaka project to drastically downsize the project from 71 luxury condominiums to 13 lots plus recreational facilities. The commission favored it, also praising Dowling for seeking LEED “green” certification on his development. Demand for luxury housing is down, but it appears that lack of financing is an even greater impediment to developments and redevelopments along Maui’s golden shores. ”We lost our financing,” Dowling said of his Maluaka project at Makena, even though half the units had been presold. For a while in February, he shut down the site work while he sought new lenders. ”We took it to 126 lenders and got one term sheet” - the response showing what the lender was prepared to do.  Dowling said he read about that lender, a bank, being in danger of failing, so he declined to pursue a loan. With memories of Maui Land & Pineapple Co.’s narrow brush with disaster at The Residences at Kapalua Bay when lender Lehman Brothers failed, Dowling said a repeat of that trap “was the last thing I wanted.” Continued on Maui News

Projects On Haitus Due to Scarce Fund

After large real estate projects, electricity generation is the biggest consumer of capital among private businesses in Maui County.  There are several costly projects pending, and while some developers say even today money will be available, the closer the project, the further off the lenders seem to be.  Money problems have stalled two projects being pursued by Kent Smith and his partner, Hilton Unemori - a biomass generator at Hamakua on the Big Island that was to have been fueled by eucalyptus wood and an expansion of Kaheawa wind farm on Maui. ”About the time we went to the markets, credit started to freeze up,” Smith said of the $200 million Big Island project.  Pacific Biodiesel was planning a 5-million-gallon per year refinery on the Big Island, and even though owners Bob and Kelly King were bringing in their own money for half of it, the relatively small amount of additional money needed is not yet there. Kelly King said: “Our Big Island Biodiesel plant has taken longer than expected to get fully funded. We are currently seeking the final 10 to 15 percent of funding before we can announce a groundbreaking.” Smith and Unemori’s expansion of Kaheawa is being held up more by slowness in reaching a power purchase agreement with Maui Electric Co., but Smith said financing is an issue, even with the financial clout of his much larger partner, First Wind. Even if the money can be found, the terms and collateral demands are no longer workable. “If the risk-to-return expectations are higher, (the offers) reduce the return to the developer,” said Smith, sometimes to the point where it is not worth the effort to go ahead. Continued on Maui News

It’s interesting that Maui News has a couple of news topics on its front page that are directly related to real estate development on Maui.  That’s a sign that real estate and development on Maui is not stagnant despite the current economic crisis.  Here are some of the highlights today:

Headline: TARGET aims for Maui Store.   Trendy retailer Target Corp is looking to open a store on Maui, but it can’t and won’t if the County Council passes a proposal that limits the size of so-called “superstores”.  Read the full article on Maui News. Then come back here and let us know what your thoughts are.  Do you want a TARGET store here even if that means another huge superstore on Maui paradise?  

Front Page: A&B  property designated as important ag lands on Maui -  The State Land Use Commission approved on Thursday a request by Alexander & Baldwin to designate more than 27,000 acres on Maui as important agricultural lands. At a glance this sounds like a real good thing. But is there a catch to this?  Read the article on Maui News and then come back here to let us know what you think.

Page 3:  Pukalani Housing Project Wins OK from Land Panel - Pukalani Associates’ Kauhali Lani would develop a 50 acre parcel west of Old Haleakala Highway with new homes, while the 39 acre parcel running along the new Haleakala Highway would be kept as an open area with trails and recreational amenities.  Do you see this as good news?

This is originally posted at Maui News, written by Harry Eagar

WAILUKU - This is the 50th anniversary of interim zoning in the county, and time may at least be running out on this stopgap method of land use control.

But until then, the County Council is ready to tweak the current zoning to at least give it some building standards, which it has never had; and to allow bed-and-breakfast operations in interim zoning.

The council’s Planning Committee voted unanimously Monday to recommend passing the revisions on first reading.

Planning Director Jeff Hunt called the changes “slight revisions” and said he hoped that the next round of revisions to the community plans would extinguish the pesky zoning category.

By putting in some standards, a revised interim zone would, for example, limit the height of cell phone towers, which has been an issue in a few places.

Most of the committee’s discussion concerned adding bed-and-breakfast operations to the list of permitted uses in the interim districts.

Council Member Wayne Nishiki was concerned that such businesses would not pay high enough property taxes.

Since there are no bed-and-breakfasts allowed in interim or rural zones yet, and only 13 in urban zoning, this would depend upon how the Department of Finance treats these uses.

In testimony, Dave DeLeon, the government affairs director of the Realtors Association of Maui, said that in an actual case last year, a bed-and-breakfast’s property was assessed at hotel rates, resulting in payments of five times as much as when the property was considered a single-family home.

Council Member Gladys Baisa pointed out that by applying for a permit, the operator gives up the homeowner deduction, “a very significant” tax break.

The Realtors association supported the change, and there was no testimony against it.

Now that the new bed-and-breakfast ordinance allows this use in the rural and agricultural districts, the extension to interim - as long as not prohibited by language in a particular community plan - seems consistent.

Continued at Maui News

Robert Webber resigned from his position as CEO for Maui Land & Pineapple (NYSE: MLP). He joined the company in 2006 as CFO and Senior Vice President of Business Development. When David Cole stepped down in March of 2008, Webber took the position as President and CEO of the company.

When asked why he was leaving, Webber cited that there is a need to “streamline and clarify leadership” at Maui Land & Pineapple Company and that he would seek other opportunities.

While the search for a new CEO occurs, Warren Haruki (Oahu businessman) has been appointed chairman and CEO by the board of directors.

Excerpt from Maui News:

WAILUKU - The Maui Planning Commission dipped its toes into the rough waters of general land use planning for the next 20 years Tuesday, getting a philosophical overview of the Maui Island Plan from Dave Michaelson of the Planning Department’s Long Range Planning Division.

It’s about more than zoning, Michaelson said.

“You make social decisions about who’s going to be able to stay on this island” when you establish land use policies, he said.

The commission has 180 days to review, refine and send its version of the Maui Island Plan to the County Council. The council will then meld the island plans being reviewed by the Molokai and Lanai planning commissions into an ordinance to manage growth for the next two decades - and, if Michaelson gets his way, for generations to come.

It’s a new approach to planning, he said, citing his mentor, Ian McHarg, and other academic experts behind the “New Urbanism.” And some of the ways the county does business will be changed “radically” if all the ideas in the Maui Island Plan are also endorsed by the commission.

Continued on Maui News

One of the headline this morning when I logged in the internet is the apparent suicide of Mr. David Kellerman, the acting chief financial officer of Freddie Mac.  That is very unfortunate.  It does not have to be this way. Suicide is not yet confirmed - who knows, he could have had a stroke or heart attack. But if it is indeed suicide, I just want to remind everyone that  suicide is never and should never be an answer to a problem no matter how great the problem is.  I thought I should post about it here since it involved Freddie Mac which is directly connected to many real estate and development transactions.

Let’s pray for the family of Mr David Kellermann.  This surely is a hard time …

Below is an excerpt of the news from Yahoo.com

WASHINGTON – David Kellermann, the acting chief financial officer of money-losing mortgage giant Freddie Mac was found dead at his home Wednesday morning in what police said was an apparent suicide.

The Fairfax County police responded to a 911-call at 4:48 a.m. at the suburban Virginia home Kellermann shared with his wife. The police would not release the cause of death or say if a suicide note was found.

Kellermann, 41, lived in Hunter Mill Estates, a well-off neighborhood of large single-family homes with manicured lawns. County records showKellermann’s home is worth about $900,000.  Continued at Yahoo 

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Another news article can be found at LATimes. Click here to go there.