20 homes proposed for East Oahu ridge

It’s not a $100 million-plus gated ridge-top subdivision once envisioned, but an effort has resumed to develop homes on an East Honolulu hillside between Niu and Kuliouou valleys.

Two mainland investment firms that backed a failed plan to build a luxury housing subdivision on Paiko Ridge a decade ago have formed a development team to add 20 homes on four acres zoned for residential use within 337 acres the companies own on the ridge.

The new plan represents an effort to earn a financial return from the property on a smaller scale, but it isn’t sitting well with some neighbors.

“We don’t like it,” said Roy Shigemoto, a 29-year Kaeleloi Place resident who lives across from the developer’s property.

Shigemoto and other neighbors have concerns about the proposed development disturbing rocks on the hillside, how the homes will affect rainfall runoff that is already a problem, and the addition of more cars in the valley where drivers have to pull over between parked vehicles to let oncoming traffic pass on narrow streets.

Paul Shinkawa, a local development consultant working with the ridge owner, said the proposed project is within what is allowed under state land use and county zoning regulations for the property.

“It’s not the large development that was anticipated 10 years ago,” he said.

Shinkawa is scheduled to present detailed plans on the housing project called Hokulei at Thursday’s meeting of the Kuliouou-Kalani Iki Neighborhood Board.

The cluster of three-story homes is being proposed for smaller-than-normal lot sizes through a city permit for cluster housing. The city Department of Planning and Permitting generally regards cluster housing as infill development encouraged by the city’s East Honolulu Sustainable Communities Plan.

Local planning firm Belt Collins Hawaii LLC submitted a preliminary cluster housing plan to DPP for feedback in September and is preparing to submit a formal application.

Construction isn’t expected to begin until next year if permitting approvals can be obtained without major difficulties.

If successful, developing the homes would have far less impact than the previously floated plan that envisioned 150 to 225 luxury homes on the ridge. Nearly all of the ridge is zoned for preservation and is outside the city’s urban growth boundary. It also contains cultural artifacts that include what some believe to be the last rock wall boundary that once separated Oahu into six districts known as moku.

The earlier plan was promoted by Paiko Ridge Partners, a California-based company led by Charles Zaloumis and Alan Ada which bought the property in 2004 for $2 million from an affiliate of St. Francis Medical Center.

Zaloumis previously said that initial plans involved building homes on the land and using proceeds to build a free medical clinic in downtown Honolulu. But in 2006 Paiko Ridge Partners marketed the land for sale as an opportunity to develop “one of the most prestigious ridge property developments on Oahu” with 150 to 225 house lots anticipated to sell for $750,000 to $1.1 million apiece.

The company projected that it would take at least $20 million to develop infrastructure, while profits could be more than $110 million.

Area residents prepared to contest the developer’s plan, which would have needed approvals from the state Land Use Commission and the City Council, and the project was abandoned.

In 2007 two companies that had loaned money to Paiko Ridge Partners, Levy Family Partners and RedHill Realty Investors LP, sued to foreclose on the property. The two companies repossessed the property in 2009 and are the current owners doing business as LevRed Investors LLC.

Levy Family Partners is affiliated with Chicago investor Larry Levy. RedHill Realty is a San Diego-based investment firm.

In 2012 Livable Hawaii Kai Hui, a nonprofit group that was opposed to the subdivision, worked with The Trust for Public Land to buy the ridge property from LevRed and obtained a $3.5 million award from the city’s Clean Water and Natural Lands Commission to help fund a purchase.

LevRed was willing to negotiate a sale price, according to an application from the nonprofits for the city grant.

The nonprofits in their application expected it would cost $7 million to buy the property and said this price included a $2 million discount from an estimated $9 million fair market value.

The purchase, however, was subject to an appraisal and conditions that a sale price could not be more than a value determined by an independent appraiser.

Ultimately, the nonprofits and LevRed failed to agree on an acceptable price for the property.

The city, for property tax purposes, values the land at $2.2 million.

Last year the $3.5 million award expired, though Livable Hawaii Kai Hui still remains interested in acquiring and conserving LevRed’s preservation land, which contains several cultural and historic artifacts.

Among the artifacts is a roughly 4-foot-high, dry-stacked rock wall that starts near the bottom of the ridge and runs mauka to meet the Koolau mountain range. Livable Hawaii Kai Hui said the wall is possibly an ancient moku marker between the Koolaupoko and Kona districts of Oahu, which as such would be a cultural treasure deserving of protection.

The property also contains a bluff shelter that was the source of several historical items now in the Bishop Museum. The ridge also has lava tubes, native plants and burial caves, according to the grant application.