State takes issue with plan for ranch

Some North Shore residents recently expressed resignation that the city will approve a plan to carve up Mokuleia’s historic Dillingham Ranch. But one state agency isn’t OK with the project as it stands.

The state Department of Agriculture has raised concerns about the proposal by Beverly Hills, Calif.-based real estate investment and development firm Kennedy-Wilson Inc. to create and sell 106 house/farm lots on the ranch’s 2,700 acres zoned for agriculture.

Kennedy-Wilson’s $30 million project is proposed as an "agricultural subdivision" under state and county regulations that allow farm dwellings as accessories to primary agricultural operations on ag-zoned land. The company touts its plan as a way to enhance farming on the ranch, which primarily raises cattle and boards horses.

The city Department of Planning and Permitting is in charge of subdivision permits and has said it must issue a permit if a plan meets all criteria.

Yet in part because of issues raised by the Agriculture Department, Kennedy-Wilson has encountered a setback in its effort to obtain the permit.

The Agriculture Department doesn’t object to Kennedy-Wilson’s stated goal of subdividing the ranch and expanding agriculture by selling lots to buyers who engage in commercial farming. But the agency said the developer’s farm plan and weak city zoning regulations make it doubtful that much, if any, of the enhanced farming touted by the developer will take place.

"We’re perpetuating gentlemen’s estates that produce no agriculture on agricultural land," said Scott Enright, the agency’s director.

Agriculture Department officials are particularly concerned about Dillingham Ranch because, if subdivided, it would become the largest ag subdivision on Oahu and might encourage similar projects on more big chunks of farmland.

The department’s concerns came to light after a special North Shore Neighborhood Board meeting Aug. 10 at which Kennedy-Wilson executives gave their first public presentation of the plan. In a 12-0 vote, the neighborhood board asked DPP not to allow the subdivision after the nearly three-hour meeting at which area residents railed against the plan.

Still, many people who attended the meeting were resigned that DPP will issue a permit, in part because DPP granted tentative approval in 2008 for a similar plan that Kennedy-Wilson called off amid the Great Recession.

Unbeknownst to many area residents at the meeting was the fact that Kennedy-Wilson had submitted a subdivision application to DPP in August 2014.

That application, however, expired Aug. 5 — five days before the neighborhood board meeting.

Part of the reason for the expiration was the need by Kennedy-Wilson to address issues raised by city and state agencies. Many of the issues, some of which deal with design elements such as lot shapes and drainage, have been addressed by the developer.

But the farming issue raised by the Department of Agriculture in a May letter to DPP has persisted.

Kennedy-Wilson attempted to address the agency’s concerns, revising an agricultural feasibility report and farm plan in June. But the department, in an Aug. 5 letter to DPP, said the revised plan, in its view, actually weakens the likelihood of farming on the subdivided lots.

Representatives of the developer did not respond to requests for comment last week.

Kennedy-Wilson describes its vision for the ranch, which dates to the 1800s, as a way to enhance agriculture by adding avocado, mango, orange, tangerine and lime orchards on the historic property where cattle ranching and equestrian activities diminished in recent decades under prior owners that unsuccessfully pursued resort development.

Under the plan, residential use would happen on 91 lots of at least 5 acres each — 28 lots envisioned with fruit orchards, 48 lots envisioned with irrigated pastures for horses and 15 lots envisioned with nonirrigated land for cattle grazing. Also, a 125-acre parcel envisioned with a fruit orchard would have a cluster of 15 homes.

Kennedy-Wilson created a roughly 150-page farm feasibility report filled with technical information on soil, climate, fruit varieties, irrigation systems, fertilizer requirements, pollination, pest and disease control, market demand and other useful farm material.

The report, which also projects that mature fruit trees under the plan could generate about $1 million in annual revenue, would be given to lot buyers. However, Kennedy-Wilson wouldn’t prepare farm plots, install irrigation or plant crops. Actual farm development and management would be left to lot buyers.

The Department of Agriculture wants more to be done to ensure that lot buyers engage in commercial farming, possibly with changes to the subdivision plan or DPP enhancing its regulations and enforcement.

DPP, after receiving the Agriculture Department’s letter in May, instructed Kennedy-Wilson to address the concerns and then have the department inform DPP of a resolution.

In the developer’s original farm plan dated August 2014, an entity called Dillingham Ranch Agricultural Services would provide farm services for owners while the ranch could manage tasks such as clearing and preparing land for planting, installing irrigation, planting orchards, maintaining trees, harvesting crops and distributing fruit for sale.

Kennedy-Wilson, which owns the ranch through affiliate Dillingham Ranch Aina LLC, also initially said that successful execution of its farm plan would be highly dependent on a farmers cooperative involving lot owners.

The plan revised in June eliminated the notion of a cooperative and said lot buyers will decide how to conduct agricultural activities on their property.

"Dillingham Ranch Aina LLC will not offer any such services to prospective purchasers," the revised plan states. "The engagement of a third-party (entity) for agricultural services and management will be strictly optional and a matter for prospective purchasers to pursue, either individually or cooperatively, after they become owners."

Enright, in his Aug. 5 letter to DPP, called the agricultural services entity and the cooperative "integral" parts of the ag subdivision.

"These are two organizational concepts that we believed would have increased the likelihood that agricultural activities and uses would have occurred on the project area in compliance with relative state and city plans, ordinances, rules and laws," Enright wrote. "Without cooperative effort among the lot owners … the full implementation of the farm management plan may be impaired and may result in the kind of agricultural subdivision that the city’s North Shore Sustainable Communities Plan does not support."

The community plan proclaims that agriculture should be the primary use of ag lands. "Do not allow token farming (i.e., ‘fake farms’) or ranching as a ruse to exploit agricultural land," the community plan states. The quoted material includes: (i.e., ‘fake farms’)

DPP is responsible for enforcing the requirement that housing on ag land be an accessory to a primary use of farming, though the department has concluded that the regulations allow almost any agricultural activity that generates any amount of revenue.

In its farm report, Kennedy-Wilson suggested that a lot owner keeping a horse on its own pasture would constitute income generation because the owner would not have to pay for commercial boarding that can run $200 to $250 a month.

"The ‘negative expense’ or savings would represent imputed income to the family occupying the farm dwelling," the company said in its farm plan.

Enright said zoning rules shouldn’t allow subdivision and home development without ensuring that real farming happens.

"We at the Department of Agriculture take issue with that," he said.