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Waikoloa housing

Developer ignores critical funding process, costs skyrocketing

by Erin Miller
West Hawaii Today
emiller@westhawaiitoday.com
Wednesday, December 17, 2008 10:17 AM HST

The developer working on the Waikoloa workforce housing project has apparently pursued engaged vendors without contracts, failed to take steps to create a community facilities district to fund construction and avoided and denied requests by the trust governing the project, the project's chief executive said Tuesday.

Kamakoa at Waikoloa CEO Craig Dougall said his board expected site work, sewers, roads, among other things, would be paid for by the project's eventual homeowners, through a community facilities district. The developer, UniDev, was supposed to start that process, he said.

"UniDev, they never took the time to do that step, which was critical," Dougall said, adding that he had a trail of letters documenting Kamakoa officials' asking that that be done. "They have ignored (those) or not responded."

Spending on the Kamakoa at Waikoloa housing project appears to

have exceeded initial estimates, according to invoices received by the nonprofit trust governing the project. Preliminary findings by an auditor showed UniDev, hasn't signed contracts with vendors. Dougall said he received invoices submitted for costs well over initial line item amounts.

Interim Housing Administrator Leah Yanagi, responding to questions from agency board members, said the $40 million Hawaii County has loaned for construction has not been misspent. The bulk of that money, $28 million, was for the contract with Isemoto Contracting Co. and is being used for site grading, grubbing and laying of house pads.

UniDev officials, who were told of Tuesday's meeting but did not attend, also ignored other requests by Kamakoa's board, Dougall said. UniDev last month presented a new plan for the workforce housing, in which the homes would be sold through a rent-to-own program. The board ultimately rejected the proposal, because it was considered higher risk, because it would mean the nonprofit housing organization would need to sign for the home loans in hopes of eventually selling the homes to qualified county workers.

Dougall said board members were concerned with how UniDev responded to the request that information about the new proposal be provided prior to the meeting.

"UniDev refused to provide material in advance of the meeting," Dougall said. "They said it was too difficult."

In response to that lack of compliance, Dougall wrote a letter to UniDev Chief Executive Officer Myron Curzan and the company's executive vice president, Jeffrey Minter.

"We object to the way that UniDev has handled this entire financial presentation, as it was very unprofessional and self-serving, and appears to have been a deliberate attempt to keep (Waikoloa Workforce Housing) and the County of Hawaii in the dark," Dougall wrote.

Kohala Councilman Pete Hoffmann, who was again elected chairman of the county's housing agency board, said Dougall's presentation Tuesday was the first he had heard of the rent-to-own proposal, the audit and UniDev's failure to pursue the community facilities district. Hoffmann asked Dougall, Yanagi and the attorney representing the housing board if they were confident the county's investment, in the form of an appropriation for the project, was being handled properly.

"No money is missing," Dougall said. "The houses in this project will get done."

In other actions, the council's Public Works and Intergovernmental Relations committee voted to postpone discussions on the proposed changes to the county charter's chapter on sedimentation and erosion. The move should allow the new Public Works director, Warren Lee, time to review public testimony about the amendments' flaws, which community members have said will lead to significant flooding, council members said.

South Kona Councilwoman Brenda Ford, Puna Councilwoman Emily Naeole and Hilo Councilman Donald Ikeda opposed postponement.

Ford described the bill as defective and full of fatal flaws.

"I want to vote against it and ask Director Lee to start all over again," Ford said.

"I don't always agree Miss Ford, but I do now," Ikeda added. "The bill is quite bad."

Lee said he had not had a chance to review the bill or the concerns raised by council and community members. Responding to a question from North Kona Councilman Kelly Greenwell, said he would like time to review the bill, changes and community requests with Public Works staff members, and bring new changes before the council.

"It's better to have a vessel to start with," Greenwell said to Ford. "You've won your battle. Let's go for it."

There are 6 comment(s) comments to this story.

steveberkoff wrote on Dec 23, 2008 11:16 PM:

" Here on the Big Island we are blessed with large amount of retired professionals who always seem to show up at Council meetings to offer their help and support on the various issues we face. unfortunately, the Council seems to prefer expensive consultants from the mainland who all seem tied to one corporation or special interest group. The result is that nothing gets done right, on-time, or within budget! Let's have an ballot initiative that creates a citizen's technical resource council, and directs the Council to utilize them first in all technical questions. Stop the waste! "

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wheresthechange wrote on Dec 18, 2008 11:46 AM:

" The Waikoloa affordable housing project was doomed from the start. Even in the best of economic times with "innovative" subprime loans, qualifying for a $300,000+ home on leased land was a big, big stretch and the County knew it. Now the politicians are starting to run for their holes under rocks and the main culprit - Mayor Harry - is gone and untouchable. chuckf is correct but let's not blame the contracvtors without hearing their side of the story. Remember, the bigger the government the bigger the corruption. Government is the problem not the solution. "

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gmmonko wrote on Dec 17, 2008 9:07 PM:

" Sure there must be somebody in Hilo who will get their cut or at least a few contracts for their friends.
The Kenoi gang plans great things for the Island, too. "

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chuckf wrote on Dec 17, 2008 7:33 PM:

" Numerous affordable housing expert volunteers from community provided the county with already built and successful similar housing projects on the mainland. This gift was ignored by the county...this is stupidity. Partial audit of county public works department last year proved that DPW is not tracking contracts as required by law...this is incompetence and malfeasance. County hires consultants with political influence and power which is cronyism and corruption. Bottomline is Waikoloa housing situation is great example of systemic county government problem... willful ignorance, incompetence, malfeasance, and corruption. Who suffers? Tthose already suffering the most while rich get richer. "

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newshoes wrote on Dec 17, 2008 6:12 PM:

" kona has become quite the haven for crooks and morons.what a shame.and the authorities are out chasing mopeds. "

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swerdlow wrote on Dec 17, 2008 11:45 AM:

" Wiakoloa Housing project is another example of either cronyism corruption or morons or both involved in contracting agreements with developers. We seem to always get burned for our representatives lack of intelligence. Isn't there anyone in charge with brains that can prevent stupidity before it happens. "

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