comscore Housing credits topple deal for land donation | Honolulu Star-Advertiser

Housing credits topple deal for land donation


A day after news broke about plans being canceled for a Makaha Valley "learning community" aimed at improving the lives of Leeward Coast residents, a new reason for the failure emerged.

Developer Jeff Stone and the state Department of Hawaiian Home Lands said Thursday that the third partner in the deal, Kamehameha Schools, offered an alternative plan for the project, known as "Plan B." Kamehameha Schools sought to change the original deal agreed to in early 2010 so that it could receive potentially lucrative affordable housing credits from DHHL, said Stone. Kamehameha Schools’ pursuit of Plan B and other alternatives led to Stone’s decision last week to cancel the project, Stone said.

Under the original plan, Stone was going to donate 300 acres of land for the project — giving 66 acres to Kamehameha Schools and 234 acres to DHHL.

The plan called for 400 affordable homes to be built by DHHL for Hawaiians connected with educational enrichment facilities that Kamehameha Schools would develop for Hawaiian and non-Hawaiian children along the Leeward coast.

Under Plan B, Kamehameha Schools offered to buy all 300 acres from Stone for $8 million, negating the developer’s gift. Also under Plan B, DHHL would build the homes and give the affordable-housing credits it earned to Kamehameha Schools.

Such credits, according to those familiar with them, are hard to value but conceivably could be worth up to $120,000 apiece, or $48 million for the 400 homes.

Kamehameha Schools could use such credits to help satisfy a state requirement to provide affordable housing as part of its plan to build up to 2,750 condominium or apartment units on land it owns in Kakaako.

Stone said he objected to Plan B because he wanted to give the land to the project, not sell it, and because he did not envision the affordable-housing credits being used.

When the original plan was announced in April 2010, Stone said he did not need and would not use, transfer or sell the credits, making the whole deal a charitable contribution or, as he said, a gift "from the heart."

DHHL director Alapaki Nahale-a said Thursday that his agency had no preference whether the plan changed because it would still build 400 homes on the 234-acre site under either version of the plan.

Kamehameha Schools spokesman Kekoa Paulsen said his organization did pursue a purchase of all 300 acres from Stone, but he disagreed with Stone that this proposal killed the project.

The original plan called for the land to be transferred to Kamehameha Schools and DHHL by Feb. 11.

Nahale-a of DHHL said due diligence reviews of its part of the deal, including soil studies and consultation with beneficiaries, took longer than expected and caused the agency to miss the deadline. DHHL requested an extension to Aug. 30.

Paulsen said Kamehameha Schools was willing to accept the gift under the original agreement by the February deadline, and would have completed that deal had DHHL been ready to take its piece of land.

Stone didn’t grant the extension. He said he turned down the request because Kamehameha Schools would not agree to it as it was already pursuing Plan B.

Stone said Kamehameha Schools came back with a new proposal on June 7, offering to accept the 66 acres with the expectation of developing the learning community if DHHL later acquired its piece.

Stone said he couldn’t accept the latest offer because it was inferior to the original deal and didn’t ensure that the learning community vision would be realized.

The original plan, Stone maintains, could have been executed had Kamehameha Schools not switched gears in favor of buying the land and obtaining the housing credits.

Stone said Wednesday, and repeated on Thursday, that if DHHL and Kamehameha Schools are willing to accept original terms of his gift offer, then he will donate the land to the two parties so the learning community can be developed.

Nahale-a said DHHL would agree to the original plan. "We absolutely believe in this vision," he said. "Kamehameha Schools is the driver here."

Kamehameha School’s Paulsen said the original offer expired, so the three sides would have to revive it in legally binding documents before Kamehameha Schools could consider it.

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