The state is prepared to pony up $20 million to buy a scenic stretch of coastal real estate from Maui Land & Pineapple Co. to protect the area from possible development and shore up pension obligations of the financially struggling company.
Lawmakers approved $20 million of general obligation bond financing in the state budget as a capital improvement project to buy 270 acres north of Honolua Bay at Lipoa Point in West Maui.
Two early versions of House Bill 1424 that proposed the purchase included funding, but the funding language was removed from HB 1424 before it passed. HB 1424 instructs the state Department of Land and Natural Resources to negotiate a purchase.
The $20 million was included in the budget bill, or HB 200.
The effort to preserve Lipoa Point has drawn overwhelming support, largely from Maui residents and preservationists who testified on the bill. But some observers commenting on a March Star-Advertiser story about the effort characterized the deal as a bailout for Maui Land.
Maui Land has pledged substantially all of its 23,000 acres of mostly agricultural land on Maui as collateral for debt obligations, including its pension fund.
The bill states that many company retirees would have to turn to state services and programs if the pension plan fails.
The bill also states that Maui Land has committed to completely pledging any revenue from selling the Lipoa Point parcel against its pension fund, and that DLNR shall ensure "to the maximum extent practicable" that the company uses sale proceeds to benefit its pension plan.
The land is zoned for agriculture, and its value is appraised at $2.6 million by Maui County for property tax purposes.
Maui Land suggested in written testimony that a purchase price should be based on the property’s highest and best use, which could be residential or some other commercial use.
Lipoa Point is in state agriculture and conservation districts, but some preservationists fear that up to 20 homes could be developed on the site under lax state and county rules governing development on agriculture land.
