Mokuleia pasture to host 106 new houses

It’s been eyed in past decades as a site for a resort, a golf course and a private club. Now a historic property on Oahu’s North Shore is again slated for development.

The owner, a California real estate investment firm, plans to carve up much of the 2,700-acre Dillingham Ranch into a subdivision for 106 houses and land for cattle, horses and orchards. All the envisioned homes are described as "farm dwellings" allowed under state and county regulations as accessories to a primary agricultural operation.

Dillingham Ranch Aina LLC, an affiliate of Beverly Hills, Calif.-based Kennedy Wilson Inc., recently submitted to the state a draft environmental assessment detailing an envisioned

$30 million transformation of the ranch, which dates from the 1800s and was the home of business tycoon Walter F. Dillingham.

Kennedy Wilson is pursuing development of the property six years after it sought approval for a smaller residential subdivision tied to reinvigorating cattle operations at the ranch.

The prior plan called for developing 77 house lots over about 400 acres and using most of the balance of the land plus portions of the 5-acre house lots to graze the ranch’s cattle herd, which was to be increased from about 140 animals in 2008 to about 230.

That earlier plan, however, was dropped amid the economic recession, and the Dillingham Ranch cattle herd is down to about 66.

Under the new plan, the developer proposes a subdivision for 106 homes on 938 acres concentrated toward the middle of the property, which borders Farrington Highway. The homes would be on 91 lots of at least 5 acres each, plus a cluster of 15 homes.

The developer said in its environmental assessment that existing commercial operations of Dillingham Ranch would be refocused on cultivating orchard crops — mango, avocado and lime — while maintaining significant cattle production and equestrian activities.

"Dillingham Ranch Aina LLC, the sole owner, plans to restore the ranch as the heart of the Mokuleia community,"the company said in the assessment.

The company said selling the home lots is necessary to generate enough income to invest in ranch improvements.

However, dividing and selling much of the ranch to buyers for residential use is part of a long and controversial trend in Hawaii real estate development sometimes ridiculed as producing "gentleman’s farms," where lot buyers often build luxurious estate-type homes and engage in little or no commercial agriculture.

Typically, plans for a few fruit trees or a couple of horses can be enough to permit construction of a home in an "agricultural subdivision" under state and county regulations.

Such subdivisionshave been developed legally for decades, mostly on the neighbor islands, under a lax section of state land use law. In recent years, they have cropped up on Oahu at projects that include Olomana Heights near Kailua, where

23 lots priced at about $1 million and up were marketed as "luxury Hawaiiana living at its finest."Growing fruit trees and building custom homes were among the offerings to Olomana Heights lot buyers.

Kennedy Wilson’s plan for Dillingham Ranch would be the biggest agricultural subdivision development on Oahu intended for house lot sales.

Michael Lyons, a Haleiwa resident on the North Shore Neighborhood Board, said such projects will further elevate real estate prices that attract wealthy foreign buyers and make it hard for local residents to live in the rural community.

"You can pretty much assure yourself (lot prices)will be a million-plus,"he said. "Where are the local people supposed to live?"

Lyons also questioned the infrastructure capacity to support 106 homes.

According to the environmental assessment, water can be supplied by new and existing wells. Building a wastewater treatment plant is also part of the developer’s plan along with fencing to guard against potential rockfalls above subdivision lots. Archaeological sites around the property would be preserved.

Kathleen Pahinui, area neighborhood board chairwoman, is more supportive of the development plan given the devotion to orchard crops and continued ranching.

Kennedy Wilson’s earlier plan received support from the Mokuleia Community Association and the state Department of Agriculture. The city Department of Planning and Permitting also gave the 2008 plan tentative subdivision approval.

The developer said in the environmental assessment that bona fide agriculture will take place on the property, and estimated that about

$1 million in annual revenue could come from fruit tree orchards after they mature.

"Each subdivided for sale lot will host agricultural activity including orchard crops, pasturage, or ranch activities,"the assessment said.

Kennedy Wilson said most commercial operations that exist now would continue. The cattle herd, which has dwindled to 66 head and generated $17,200 in 2013, would be expanded to between 220 and 250 head. In 2005, the ranch had about 400 cattle.

Equestrian activities would be expanded by adding training facilities, paddocks and pastures, the assessment said. About 75 horses are stabled at the ranch and generated $205,800 in 2013.

An existing coconut and palm tree farm on the property would be phased out and replaced by mango trees.

Renting out the Dillingham house for events also would continue.

The developer projected that the development plan could be implemented over five to seven years.

Ranching has taken place on the property since the 1800s. It was part of a

10,000-acre parcel known as Kawailoa Ranch where there were 2,000 head of cattle and more than 100 horses and mules, according to the assessment.

Benjamin Franklin Dillingham, founder of Oahu Railway & Land Co., acquired Kawailoa Ranch in 1897 but 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, polo field and pastures.

In the past 30 years, the property has traded hands several times and seen a couple development plans fizzle.

In 1979, a Milwaukee insurance firm bought the ranch. In 1987, Japan-based Sankyo Tsusho Co. bought the ranch for $15 million and pursued resort and golf course development plans staunchly opposed by the community in the early 1990s.

Washington state-based Metropolitan Mortgage & Securities Co. acquired most of the ranch property in 2002 with plans to rezone the land around a common theme such as a "private club or an equestrian based community." However, Metropolitan filed for bankruptcy in 2004 and put the ranch up for sale.

Separate investors bought 10 oceanfront lots that were previously part of the ranch property, and Kennedy

Wilson bought the mauka ranch lands in May 2006 for $26 million.