Development firm proposes new Dillingham Ranch plan

A California development firm is making a new attempt at subdividing Oahu’s historic Dillingham Ranch for residential use, a year after a prior plan ran into trouble with the state.

The new plan from Kennedy Wilson Inc., which owns the 2,700-acre ranch in Mokuleia, would produce fewer home sites but also not as much envisioned agricultural use as before.

Beverly Hills, Calif.-based Kennedy Wilson laid out an overview of its revised plan in an environmental impact statement preparation notice published with the state on Friday.

The company is proposing to develop 70 lots for homes, down from 106 in last year’s plan. There also would be less agricultural use in the new plan, which eliminates new orchard farming that was part of the previous plan. Cattle grazing, which exists now on the North Shore ranch, also would cease under the new plan.

Under both the previous and new plans, existing equestrian activities and horse pasturing would be expanded, and a palm tree farm would continue operating as would use of the former ranch house as a lodge for weddings, retreats and other activities.

Kennedy Wilson also said in the notice that several acres near the lodge would be reserved for farm-to-table food production.

Each lot allowing a house would range from 2 acres to 77 acres.

“The proposed action represents a low-intensity use of agricultural lands that is consistent with the historic uses that have occurred on the property,” the company said in the notice.

Under the plan, lot buyers assisted by a management firm would be responsible for maintaining the lodge, palm tree plantation, equestrian facilities, farm-to-table operations and other common areas.

However, many community residents have previously objected to subdividing the ranch, which is on land zoned for agriculture, into lots for residential use under lax state and county regulations that allow “farm dwellings” as an accessory to agricultural operations.

The city Department of Planning and Permitting is compelled to issue a permit for such an “agricultural subdivision” as long as there is a viable plan for agriculture associated with the lots. There is no verification of actual farming or requirement for any certain level of farm revenue generation.

Such projects often are criticized as gentlemen’s farms, and Dillingham Ranch would be by far the biggest of them on Oahu if Kennedy Wilson’s plan is approved.

“We all know these are going to become gentlemen’s ranches,” area resident Celma Aoki said at a special North Shore Neighborhood Board meeting at which Kennedy Wilson presented its previous plan last year. “We all know we’re not going to eat from there. Keep the land the way it is.”

The neighborhood board voted 12-0 last year to oppose the prior plan.

Kennedy Wilson previously said it could not estimate how much lots would sell for, but touted the subdivision plan as a way to sustain and enhance the ranch.

The estimated cost for the earlier plan was $30 million, including road, water, sewer and other infrastructure work.

Dave Eadie, a Kennedy Wilson official working on the project, could not be reached Friday to say why the plan has been revised.

Last year, the state Department of Agriculture doubted whether the proposed subdivision would really foster agriculture.

In its prior plan, Kennedy Wilson suggested that a lot owner keeping a horse on a pasture would be engaged in agriculture because the owner would avoid paying for commercial boarding that can run $200 to $250 a month.

“The ‘negative expense’ or savings would represent imputed income to the family occupying the farm dwelling,” the company’s previous farm plan said.

The Department of Agriculture took issue with the plan.

“We’re perpetuating gentlemen’s estates that produce no agriculture on agricultural land,” Scott Enright, the agency’s director, said last year.

Enright added on Friday: “Regarding land use, the Hawaii Department of Agriculture will take issue with an agricultural subdivision that does not demonstrate viable agricultural production; and this is the case with this particular subdivision.”

Agriculture Department officials are particularly concerned about subdividing Dillingham Ranch because it could encourage similar projects on huge pieces of Oahu farmland with no zoning change.

Kennedy Wilson has noted that roughly 500 house lots could be permitted on the ranch given the amount of suitable land and minimum lot sizes allowed under existing zoning.

The new plan represents the third time Kennedy Wilson has proposed subdividing a property with a history of failed development plans.

Use of the land as a ranch runs back more than a century when it was part of a 10,000-acre parcel known as Kawailoa Ranch that supported 2,000 head of cattle and more than 100 horses and mules.

Benjamin Franklin Dillingham, founder of Oahu Railway &Land Co., acquired Kawailoa Ranch in 1897 and later sold pieces of the property.

Dillingham’s son, Walter, who formed Hawaiian Dredging Construction Co. in 1902 to dredge Honolulu Harbor, later established Dillingham Ranch with the family home, horses, a polo field and pastures on land stretching from the mountaintops to the sea.

The Dillingham family sold the property to a Milwaukee insurance firm in 1979.

In 1987 Japan-based Sankyo Tsusho Co. bought the ranch for $15 million and tried to build a hotel and two golf courses. The plan failed in the face of staunch community opposition.

Another redevelopment proposal came from Washington state-based Metropolitan Mortgage &Securities Co., which bought most of the ranch in 2002 and pursued plans to rezone the land around a common theme such as a private club or an equestrian-based community. Metropolitan filed for bankruptcy in 2004 and put the ranch up for sale.

Kennedy Wilson emerged in 2006 to buy most of the ranch, excluding 10 oceanfront lots, for $26 million. Two years later the company proposed its first subdivision plan that called for selling 77 house lots to buyers who would use their property to help graze the ranch’s cattle herd.

The herd had decreased from about 400 head in 2005 to about 130 in 2008. The 2008 plan aimed to expand the herd to between 220 and 250 head. In 2013, the herd was down to 66 animals.

DPP tentatively approved the 2008 subdivision, but the project was shelved because of the recession that emerged that year.

Kennedy Wilson applied for a new subdivision permit in 2014, but it expired without approval last year in part because of the Agriculture Department’s unresolved concerns.

DPP has not received a new subdivision application.