FIRST OF 3 PARTS

Jim Camit and Glen Maghanoy are neighbors, friends and sons of Kahuku Sugar Mill workers. They both grew up in plantation housing, where there was a sense of shared destiny that blurred property lines.

   Recently, though, a wedge has been driven through the community, separating landowners from renters.

Camit became a homeowner in February and Maghanoy, who continues to rent, is fighting eviction.

Camit accepted an offer to buy his home and nearly 14,000-square-foot lot for $150,000 from Continental Pacific LLC, the mainland developer that acquired the plantation village seven years ago. He praises Continental for the way it has handled his and other home sales to neighbors.

Maghanoy opted not to buy his home, and Continental moved to evict him and several other residents so it can sell their lots. Maghanoy blames Continental for tearing his community apart.

“They’re not helping us,”he said.“They’re helping themselves to us … They’re trying to make their millions on us.”

The dispute playing out in this small Kahuku neighborhood mirrors an important chapter in Hawaii’s land ownership history, when property was once largely concentrated in the hands of a few powerful plantation companies and workers struggled to get a foothold.

Most of the state’s plantation workforce made the transition decades ago from company-owned housing to homeownership or private rentals, often resettling in urban and suburban areas.

The same is true for most of Kahuku. After the plantation shut down 42 years ago, many residents bought their plantation homes or replacement homes at affordable prices.

But one neighborhood in the town, Kahuku Village V, or KV5, where Camit and Maghanoy live, got left behind.

KV5 residents are mostly children of former sugar cane workers who remained in 72 plantation homes that long ago were supposed to be replaced and the occupants resettled.

It’s a pocket of rural living that got stuck in time, and the latest effort to bring it into the present has been anything but smooth.

The differing views have torn apart what was once a tightknit community. Residents being evicted are at odds with the developer but also have come into conflict with their neighbors who have bought their homes and are seen as supporting the developer.

Passions have run so hot that there have been reports of tires being slashed on the cars of residents who recently bought their homes and dead chickens left on construction machinery to protest the new owner.

It’s still unclear what kind of community KV5 will become in the coming years, but it won’t be what many of the former plantation worker families long sought or even what Continental envisioned when it bought the land.

It was 2005 when the Florida-based real estate investment firm began buying hundreds of acres of mostly agricultural land around Kahuku from Campbell Estate as the local trust prepared to dissolve.

Continental, led by JereHenderson, set its sights on KV5 as a prime opportunity. In 2006, Continental announced its plan to buy the village along with its two cemeteries, the oceanfront Kahuku Golf Course and adjacent properties — 172 acres in all.

Continental said it planned to sell residents their homes and lots for $75,000 and would credit rent payments toward purchases and serve as a mortgage lender for buyers.

The plan also called for improving and maintaining the nine-hole public golf course, creating two public beach parks and a camping area, and developing 95 additional residential lots, including 18 fronting the beach.

The entire development would maintain the character of the historic plantation community, and “keep Kahuku, Kahuku,”Continental proclaimed.

Most of the new house lots would be sprinkled among the existing homes, filling empty spaces where old plantation homes had been demolished over time often because of poor condition.

Eighty-four of the 167 lots would be reserved for KV5 residents and their families as required by county affordable-housing rules the developer was using to divide the property.

Campbell Estate said it was hopeful that the plan would be a “win-win for everyone involved.”

The beachfront lots would bring in the “reasonable return on investment”the developer said was necessary to sell the former plantation homes and lots for $75,000 each.

“The development on the ocean kind of paid for everything,” said Reynolds Henderson, a Continental partner and Jere’s son.

That payoff, however, sparked an immediate conflict that hinted at the sharp divide that would develop.

“We’re not going to block up that beachfront, no way,” KV5 resident Margaret Primacio declared at the unveiling of the developer’s plan. “There’s no way we’re going to sell out for that.”

Fellow resident Sherry Martinez viewed the plan as an acceptable give-and-take. “We could lose the entire beachfront,” she said at the time. “We could lose everything, but we’re not.”

In 2007, Continental asked residents who supported the plan to sign letters of intent to buy their homes. In response, 53 tenants representing 74 percent of the community signed.

It was a victory for Continental.

The company was ready to start construction in mid-2009 and hoped to finish by mid-2010.

But this is Hawaii, and rarely do projects this large move so fast.

The barriers began popping up. There were environmental issues, Hawaiian burial issues, a floodway and lingering resistance to new beachfront homes.

ENVIRONMENTAL BLOCKAGE

In a 2008 draft environmental assessment, Continental noted that the village’s substandard roads, cesspools and homes didn’t meet current building codes and would need upgrading.

“The KV5 settlement is an awkward and unwanted artifact,”said the report prepared for Continental by Honolulu planning firm R.M. Towill Corp. “In essence, the village is not entitled to exist. In effect, when a house falls down, the resident cannot rebuild … the current residents of KV5 are living on borrowed time.”

Continental’s plan would replace cesspools with septic tanks, install new water lines with fire hydrants and pave the village’s gravel, coral and dirt roads. Continental was also prepared to move the beachfront lots off sand dunes back a bit onto land occupied by golf fairways.

Still, some KV5 residents and others in the broader community opposed the beachfront homes.

To permit beachfront homes, Continental needed an exemption to county development rules or a zoning change.

The city Department of Planning and Permitting raised serious issues, including problems with many homes being in a floodway, concern over one of the last natural shoreline dune systems on Oahu and permitting challenges for home sites on agricultural land.

The department suggested that a more thorough environmental impact statement would be necessary.

In response, Continental abandoned its plan, saying an environmental impact statement would be too costly.

NEW PLAN, NEW PRICES

In 2010, Jere Henderson let KV5 residents know that Continental preferred to sell the whole property, although a new plan to convert the village into condominium lots for sale to residents at affordable prices also was being considered, according to minutes from a meeting of residents.

Maghanoy said he tried to orchestrate a $3 million purchase by KV5 residents who formed Kahuku Plantation Residents Association for the effort, but they couldn’t get a loan, Continental wasn’t willing to provide seller financing and the offer was too low.

Reynolds Henderson said Continental paid more than $10 million for the village, the nine-hole Kahuku Golf Course and adjacent parcels. The company says it has spent another $5 million on infrastructure, permitting and legal fees. The $3 million offer was too far below costs, the company said.

Continental’s alternative plan abandoned the beachfront lots and other lots on agricultural land. To compensate, the price for existing homes was raised to $150,000, and offers of rent credits and seller financing were withdrawn.

Continental’s current plan calls for selling 72 lots, most of which are occupied, at a minimum of $150,000 each, which would bring in $10.8 million. The company is also marketing the golf course for sale at $11.5 million.

Reynolds Henderson, who took over from his father to execute the alternative plan, said the $150,000 price for current residents is “extremely reasonable”and had to be higher than the original $75,000 because Continental’s income will be much lower without selling the beachfront lots.

Continental is selling the homes and lots as condominiums, or “CPR homes” as it’s commonly called in Hawaii. Under Hawaii’s condominium law, tenants in a rental complex converted for sale as condo units must be given the first opportunity to buy their residences, though there is no requirement to offer below-market prices.

Continental split its condo plan into three phases. In November 2012, phase one began with Continental presenting plans to sell 52 lots to residents. The offer was good for 30 days.

SALE RESULTS

In response, 15 residents elected to buy.

A little more than 30 other residents — everyone who declined to buy and a few who Continental said were behind on rent or had caused problems — received eviction notices. A few other homes were vacated for other reasons.

Shortly thereafter, Elite Pacific Properties, a broker retained by the developer, began marketing 32 lots for sale to the general public as an “incredible opportunity to build your dream home” at prices ranging from $257,860 to $407,820.

So far, only four homes have been bought by non-KV5 residents, including three homes bought by Lex Smith, a local attorney representing Continental. Smith bought Maghanoy’s residence and two others for $200,000 apiece.

A fourth home sold for $344,240 to a couple listing a Haleiwa address.

Continental still plans to carry out phases two and three — one with eight homes and one with 12 homes — but hasn’t made sales offers yet to residents.

Some of the residents facing eviction got a reprieve in March when the city said they could stay in their homes until they die or until 2040. These residents live in a floodway and even if they did vacate their homes, Continental would not be able to sell the lots because of the potential danger. Continental rescinded its eviction notices for those tenants if they agreed not to pursue litigation. Some, but not all, agreed.

Henderson said it was unfortunate that the original plan with the beachfront luxury homes didn’t work out, but KV5 residents have been treated fairly.

“We were able to give these people an amazing opportunity,”he said.

Camit, whose father tended sugar cane fields, agrees that the developer fulfilled its pledge to sell him his residence at an affordable price. He expressed thanks to Continental in February when he became the first to buy a KV5 home.

“I’m happy to say I’m a homeowner,”Camit said.

Maghanoy, on the other hand, is appalled at what the developer has done to the neighborhood he grew up in as the son of a sugar mill crane operator.

“They are shoving people out of their homes,”he said. “They just have no remorse for us. They have no care at all.”