Kona land deal moves forward

State senators have revived the effort to have the state negotiate to acquire more than 7,780 acres in an isolated area of South Kona called Kapua, a land deal that was one of the dying wishes of the late Sen. Gil Kahele.

Lawmakers last month failed to reach agreement on a bill to authorize the Department of Land and Natural Resources to open negotiations to buy the Kapua lands or exchange state lands for the property, but on Wednesday a Senate committee approved a resolution that asks the department to begin negotiations anyway.

Senate Resolution 46 asks the DLNR to begin talks with the owners of the Kapua makai lands with the goal of acquiring or leasing the Kapua lands in perpetuity. The measure was unanimously approved Wednesday by the Senate Committee on Water, Land and Agriculture, and then approved by the full Senate on Thursday.

Hawaii developers Kevin M. Showe and Jeffrey R. Stone each have an ownership interest in the South Kona lands, an area where Kahele’s family lived when he was a child. Kahele (D, Hilo) for years had wanted the state to buy the property and signed a bill the night before he died in January to authorize the state to negotiate to acquire the land.

Showe is the former employer and former investment partner of Senate President Ron Kouchi, and the proposed South Kona purchase is one of two items senators considered this year that are linked to Showe’s business interests.

In addition to the proposed Kapua deal, senators also inserted language into the Senate draft of the state budget bill this year to provide $5 million to Kauai County to buy a Kauai apartment complex called the Courtyards at Waipouli that is owned by one of Showe’s companies.

Courtyards at Waipouli is a workforce housing project developed by Showe under a 2007 agreement with the County of Kauai that required Showe to provide affordable housing as a condition of rezoning for a resort project called Kauai Lagoons.

Showe’s company K D Waipouli LLC developed the 82-unit Courtyards at Waipouli, and Kouchi represented K D Waipouli before the Kauai County Board of Water Supply in 2009 on issues related to the project, county records show.

Kouchi, who was appointed to the state Senate in 2010 and became Senate president last year, has done business with Showe for years. Kouchi has invested with Showe, and worked for at least seven years for Showe’s companies as a community relations representative, according to state and county records.

Kouchi said he played no part in inserting money for the purchase of Waipouli in the Senate draft of the budget. However, Kouchi did introduce a bill at the outset of this year’s session that would have authorized the state to provide $5 million to Kauai County to purchase the Courtyards at Waipouli.

That measure was Senate Bill 2036, which Kouchi introduced at the request of the Kauai County Council on Jan. 20.

Kouchi (D, Kauai-Niihau) said he discontinued his work for Showe in 2014, and therefore did not see a problem with introducing a bill that potentially benefited Showe.

“I guess I could have asked somebody else (to introduce the measure) … but I didn’t even work for the Showes (at that time), so it never even crossed my mind,” Kouchi said.

Kouchi noted that he also introduced a variety of other measures this year at the request of Gov. David Ige, the Hawaii State Association of Counties and other organizations, which is a customary practice for the Senate president and the House speaker.

Council members submitted testimony to lawmakers this year explaining the county agreement with Showe requires that Courtyards at Waipouli remain as affordable housing only until 2019. After that, the units can be sold or rented at market rates.

Providing money to the county to buy the project “will enable the county to purchase the Courtyards project and keep those units affordable in perpetuity for generations of local qualified families,” said County Councilwoman JoAnn Yukimura in written testimony to lawmakers.

SB 2036, providing money for the Waipouli purchase, died in the Ways and Means Committee in February, but an appropriation to enable Kauai County to purchase Waipouli then appeared in the Senate draft of the state budget that was made public in early April.

State Sen. Donovan Dela Cruz, who compiles the Senate version of the construction budget, said Kouchi did not instruct him to include the money for Courtyards at Waipouli in the Senate draft of the budget

Dela Cruz (D, Wahiawa-Whitmore-Mililani Mauka) said he and Kouchi discussed “housing as an issue, yes,” adding, “What projects go in, no. He never told me point-blank ‘Put this in.’”

The Waipouli item was eventually removed from the final version of the state budget that House and Senate lawmakers approved Tuesday.

Del Cruz said the Waipouli appropriation was deleted from the budget after officials with the Hawaii Housing Finance and Development Corp. told lawmakers the agency would prefer to fund another Kauai affordable housing project instead of Waipouli.

Kouchi said he met with Senate Ways and Means Chairwoman Jill Tokuda (D, Kailua-Kaneohe) as well as county and state housing administrators to discuss state-funded housing projects, and it became clear that Kauai Mayor Bernard Carvalho preferred another affordable housing project in West Kauai called Lima Ola.

“Mayor Carvalho identified Lima Ola as his top priority, so that’s the project I pushed,” Kouchi said. Kouchi said he never discussed the possibility of providing state funding to purchase Courtyards at Waipouli with Showe.

Sarah Blane, spokeswoman for the Carvalho administration, said officials in the Carvalho administration were aware of the Council’s proposal to have the county purchase Waipouli, and were interested in the idea if it would help provide affordable housing. However, she said it was “no secret” that the mayor’s top housing priority has been Lima Ola.

“The administration did not oppose the Council’s desire to acquire Waipouli Courtyards, but rather expressed that additional time was needed in order to determine the financial feasibility of the project and felt it was premature to request legislative assistance at this time,” Blane said in a written response to questions.

“Lima Ola has and continues to be a top priority project for the administration,” she said. “This has been continually communicated to Council members, state legislators and the community since the start of the mayor’s term.”

Kouchi also has said he was not directly involved in the effort to push Senate Bill 3071 through the Legislature to acquire the Kapua makai lands, but said he did have a role in meetings related to the deal.

Kouchi said he set up a meeting between Gil Kahele and Showe shortly after Kahele took office in 2011 to allow Kahele to make a pitch for the deal, and attended a meeting last year between Kahele and state Board of Land and Natural Resources Chairwoman Suzanne Case to discuss the Kapua lands.

Kouchi has acknowledged he was both a senator and a Showe employee in 2011 when he arranged the meeting between Showe and Kahele. Kahele had been advocating for a state purchase of the Kapua lands since at least 2003, and immediately began pursuing a state acquisition after he was appointed to the Senate in 2011, Kouchi said.

Kouchi, who served for 22 years on the Kauai County Council before he became a senator, worked for Showe for at least seven years, and last year closed out an investment he had in one of Showe’s companies that earned him more than $100,000.

Kouchi’s annual disclosure form filed with the state Ethics Commission shows he was a shareholder in a real estate company called Leahi LLC from 2011 to 2015, and Kouchi’s 2016 ethics filing values that investment at between $100,000 and $150,000.

Leahi LLC lists Showe Land & Marine LLC and Kauai Development Manager LLC as its members, and Kevin Showe is listed as member and manager for both of those companies.

Leahi involves a group formed to purchase the site of the former Kyo-ya Restaurant at 2057 Kalakaua Ave. in Waikiki, which was sold to Japanese investors last year for $30.5 million. Kouchi said the $100,000 to $150,000 in value listed on his ethics filing this year represented his share of the proceeds from that sale.

When Gil Kahele died, his son Kai was appointed to the Hilo Senate seat to replace him, and Kai Kahele said Wednesday the state should follow through and make the Kapua purchase to preserve the land. Kai Kahele contends that stretch of coastline from South Point to Milolii is arguably “the most pristine, culturally rich lands in the entire state of Hawaii.”

A holua slide on the land is on the National Register of Historic Places, and heiau, caves and petroglyphs are also on the property, Kai Kahele said.

“Those lands need to be preserved for generations,” Kahele said. “It needs to be preserved for future children of Hawaii so that they can go and experience the same feeling that Gil Kahele experienced when he grew up there in the 1940s and lived at Kapua.”