Stalled 1,200-home Maui project gets approved

A developer won state approval last week to proceed with a long-stalled Maui housing project after agreeing to provide community benefits and reverse a move to deliver fewer affordable homes.

Maui Oceanview LP, led by Dallas developer Paul Cheng, received unanimous approval from the state Land Use Commission to proceed with an amended version of a plan for up to 1,200 homes on 300 acres of former pineapple fields makai of Kapalua Airport in West Maui.

The LUC decided Thursday to amend its 2006 decision that allowed the conversion of the agricultural site to urban use for the master-planned community called Pulelehua.

Maui Land &Pineapple Co. initially proposed Pulelehua in 2004 as a “working-class” community that would help provide housing for the company’s workers and other West Maui residents facing some of the highest home prices in the state.

“It’s a major concern with home prices going over $600,000 now on the west side (of the island),” Bob McNatt, senior vice president of Maui Land subsidiary Kapalua Land Co., said in 2004 before home prices rose even higher. “We want to take care of our employees and take care of the West Maui community.”

However, Maui Land got caught up in the national real estate and financial market meltdown a few years later and never proceeded with developing Pulelehua. Three years ago the company sold the project site to Maui Oceanview for $15 million.

Cheng, who heads a firm that has developed mainland master-planned communities and owns the Maui Harbor Shops retail complex, petitioned the LUC in 2017 to approve changes to the project.

As originally approved, Pulelehua was slated for 882 homes, an elementary school, a commercial complex, parks and possibly 300 accessory dwelling units.

Under an affordable- housing agreement, Maui Land was bound to make 325 homes affordable for sale to Maui households with low to moderate incomes. An additional 125 affordable homes were also required to satisfy a requirement tied to a Maui Land project called Kapalua Mauka.

Maui Oceanview petitioned the LUC to change the housing component of Pulelehua and said the change would result in more open space.

The new developer sought to build 800 rental homes, 100 residential lots for sale and retain the possibility for 300 accessory dwelling units while cutting the number of affordable homes.

Maui Oceanview proposed reducing the main affordable-housing requirement to 180 rental homes from 325 homes for sale to reflect a change in Maui County policy that reduced affordable-housing requirements since 2006.

The developer also proposed expanding the cost range of affordable homes to include rents for residents with above-moderate incomes, and asked whether it had to produce the 125 affordable homes tied to Kapalua Mauka.

Maui County signed a negotiated agreement with the developer in March that required production of 280 affordable rental homes, including 125 tied to Kapalua Mauka.

Still, some community groups and residents raised concerns.

An initial LUC hearing in September was paused so the developer could resolve issues that were raised, including a call for better interaction with community groups. From there a further revised plan took shape.

The plan approved last week includes 400 rental homes that will be kept affordable for low- to moderate-income residents for 30 years, according to the developer and LUC documents.

The developer also agreed to contribute $1.7 million to a pair of independent nonprofits, will prohibit transient vacation rental use in the community and will prevent affordable rental unit tenants from paying community association fees.

Of the $1.7 million, $1.6 million will go to a trust that will help long-term West Maui residents and Native Hawaiians purchase homes in West Maui by lending them money for down payments. The other $100,000 will go to the nonprofit West Maui Preservation Association. An additional $100,000 also is pledged to support a study for moving Honoapiilani Highway more mauka.

Cheng said in a statement following the LUC decision that he appreciates contributions from community members who helped shape the development plan approved by the LUC.

“We are honored to be a part of the community and are committed to providing housing solutions for local families,” he said. “We look forward to contributing to this community for decades to come.”

Maui Oceanview anticipates taking about a decade to develop the more than $400 million project.