Residents of an old plantation village on leasehold land in Kahuku face an uncertain future after the village’s landowner announced plans to cut out a nonprofit community association from representing residents in future ground lease negotiations.
The association, established by residents of Kahuku Village, has long tried to keep ground rents low for tenants in the village’s 71 homes.
But yesterday, landowner Continental Pacific LLC notified residents that the association’s role as property manager and master lessee for many of the homes will be terminated as of July 31.
After that, residents will be left to negotiate individually with Florida-based Continental Pacific over how much they pay to lease the land under their homes.
Residents are all on month-to-month leases.
Though Continental Pacific is not proposing a rent increase, some residents fear that the loss of collective negotiating power will allow Continental Pacific to more easily raise rent beyond what they can afford.
The change also will leave residents without a representative to handle maintenance, insurance and other functions the association provided as a property manager.
Jesse Schiel, a local attorney representing Continental Pacific, said the company sought the change because it will provide more flexibility on future options for the land.
“Continental’s hope is that the residents are not displaced,” he said.
Schiel said there are no concrete future plans, but that the association made it more difficult to pursue previous plans, which included improving, subdividing and selling the property to residents or other buyers.
“We’ve supported the community, learned a lot and have developed friendships in Kahuku over the past five years,” he said. “We’d very much like to continue this as our plans move forward.”
Deborah Sarsona, manager of Kahuku Village Association, said it’s not clear to her what Continental Pacific hopes to achieve by removing the association.
“We’re just totally floored,” she said. “We’re totally in shock.”
She said she received the termination notice from Continental Pacific yesterday and that residents were hand-delivered a different notice explaining the situation along with a cookie.
In the notice to residents, Continental Pacific told residents the decision should not affect them and that the company is committed to making a transition as smooth as possible. The company said it intends to contract with a local property management team to assume the association’s management functions.
Sarsona said the association has been under pressure to pay more ground rent to Continental Pacific since the company bought the land in 2006 from longtime Hawaii landowner and former sugar plantation operator Campbell Estate.
During Campbell Estate’s ownership, Kahuku Village households paid $100 a month to lease the land under their homes, according to Sarsona. Additional fees were collected by the association to pay for maintenance and other costs.
Continental Pacific sought to raise ground rent to $750 a month, but the association has been able to keep rents well below that level, Sarsona said.
Continental Pacific said Kahuku Village residents on average pay $488 a month to lease the land under their homes. Five elderly plantation retirees and widows pay $100 a month.
Some village residents have expressed support for the planned change, according to Schiel.
Junior Primacio, a fourth-generation Kahuku Village resident, said the association hasn’t done a good job maintaining the property, negotiating rents or communicating with residents. “KVA is supposed to represent Kahuku Village and its residents, but they’re not,” he said. “I lost confidence in KVA.”
Primacio said replacing KVA with a private management company and having residents negotiate lease terms directly with Continental Pacific could be good, though he acknowledges there is some uncertainty about how that will play out.
There appears little the association can do to avoid being removed. The association also is on a month-to-month lease, and owns close to 60 of the homes, excluding the land. Continental Pacific, in its letter to the association, said tenants in homes owned by the association must agree to direct lease negotiations, or those homes must be removed from the land.
Since July 2000 all Kahuku Village residents have been on month-to-month land leases.
At one time Continental Pacific had planned to sell the land under the homes to Kahuku Village residents for $75,000 on average. But that plan was tied to the company being able to develop 18 beachfront house lots on another parcel it bought from Campbell Estate.
The development plan also included giving Kahuku Golf Course to the city, donating two cemeteries to approved entities and building cabins at old Adams Field.
Continental Pacific blamed the city for permitting delays and costly requests, but the city said the company kept changing its plans.
Financial difficulties led the company to try to sell much of its Hawaii land, which includes other property in Kahuku, though last year Continental Pacific said it was still pursuing a plan to subdivide the land into condominium units and sell residents their homes.