City readies citation against raceway

The city is preparing another property-related citation against the operator of Oahu’s only auto racing venue, placing another black mark on the company’s checkered history on that state-owned parcel.

The city Department of Planning and Permitting last week posted a violation notice on its website, indicating that grading was done without a permit on the 38-acre Kalaeloa property.

Jiro Sumada, the department’s acting director, said in a written statement that the notice had not been issued to the company as of Friday and that an investigation was continuing. Sumada would not provide any details other than to say the department recently inspected the property because of a complaint.

If issued, this would be the fifth permit violation since 2008 against Save Oahu’s Race Tracks LLC, which leases the property from the state Department of Hawaiian Home Lands for $2,000 a month.

Two violations cited in April for grading and stockpiling without a permit still are not corrected, according to city records, and the fine for those violations already has topped $100,000 and grows with each day they are uncorrected.

Adding to its financial problems, SORT recently fell four months behind on its rent to DHHL and has been delinquent before.

The company and its principal, George Grace III, also are facing problems with other state agencies.

Grace was fined $10,000 a few months ago by the Department of Health after he initially refused to let inspectors onto the Kalaeloa property to investigate a complaint. The agency had to go to court to get a judge’s order granting access a day later, but no violations were found.

The Health Department fine still is unpaid, but the company has requested a hearing to contest it.

SORT also is listed as "not in good standing" with the Department of Commerce and Consumer Affairs because it has yet to file its required 2012 annual report, which is nearly a year past due, according to DCCA records.

And the Department of Taxation has a lien against another Grace company, Paradise Lua Inc., for nonpayment of more than $250,000 in back taxes dating to 2004, state records show.

"Despite the challenges we are facing with the city and state, we are working with them to take care of it," Grace said in an email to the Star-Advertiser.

Emphasizing the positives of a safe and secure racing venue, Grace said negative reporting on him and his companies has no relevance to his group’s goal of maintaining a functioning raceway and to "hopefully keep our streets a little safer by keeping racing on the race track."

His company opened the raceway in 2010 and hosts auto and motorcycle races on dirt tracks. He holds a month-to-month permit to use the property.

DHHL officials say they are working with Grace, as they would with any other lessee facing difficulties, to resolve the various issues and get him current on rent. They denied he is receiving special treatment.

If the city issues the new citation, DHHL will require Grace to resolve that matter by obtaining an "after-the-fact" grading permit and giving him the time necessary to accomplish the task, agency spokes­man Darrell Young said. Grace also will be required to resolve the DCCA issue, Young said.

Critics of the way the department is handling the lease believe Grace is getting special treatment because of all the second chances he’s getting and a lack of any recent move by DHHL to evict him.

They also cite the involvement in the case of Bruce Coppa, Gov. Neil Abercrombie’s chief of staff.

"I feel (Grace) is getting preferential treatment, absolutely," said Evelyn Souza, who with her husband initially partnered with Grace and his wife to develop the raceway. The couples eventually had a falling out, and the Souzas no longer are involved with the operation.

Shortly after becoming chief of staff in October 2011, Coppa met with Grace and DHHL officials to try to get the two sides to resolve long-standing issues, Abercrombie spokes­woman Louise Kim McCoy said in a written statement. Coppa did not know Grace at the time and did not agree to or commit to anything with Grace, she added.

Grace had called Coppa to complain about permitting, stockpiling and historic preservation issues he was having with DHHL and other agencies, McCoy said.

Grace received no preferential treatment, and Coppa did not provide any direction to DHHL on how to handle the various issues, McCoy said. After the meeting, Coppa, who works with all state agencies and the public and receives numerous requests for help, asked DHHL to keep him informed about the matter, she said.

That same day, Coppa toured DHHL properties in the area.

Michelle Kauhane, who attended the 2011 meeting as DHHL’s then-deputy director, acknowledged that it was unusual for the governor’s chief of staff to come to Kapolei to meet with a DHHL lessee. But she said Coppa did not provide any pressure on how to deal with Grace and supported the way she was handling the case.

Kauhane, who left DHHL in December, said Grace was frustrated in part because of the frequent turnover in DHHL leadership — he has dealt with four different directors in recent years — and because "each of the administrations has told him something different."

But the agency also was frustrated with Grace because he didn’t follow up on things he promised DHHL, Kauhane said.

"There have been concerns on both sides," she said.