Hokulia road settlement

BY ERIN MILLER | WEST HAWAII TODAY

American Motorists Insurance Co. will pay $12.5 million to Hawaii County as part of a proposed settlement agreement a series of lawsuits regarding the stalled Hokulia development.

The county also gets $20 million in collateralized interested in 1250 Oceanside Partners’ property, which the county can sell to cover the cost of building the bypass if Oceanside fails to build the remaining portion, which would run from Halekii Street to Napoopoo Road, Corporation Counsel Lincoln Ashida said Tuesday.

County attorneys are headed back to court to ask a 3rd Circuit Court judge to enforce the proposed settlement agreement, after a Lloyd’s Banking Group representative informed Hawaii County officials they wouldn’t support the agreement if 1250 Oceanside Partners is still required to build the second half of the bypass, according to court documents.

The settlement guarantees three things, Ashida said. One, the county gets $12.5 million in cash. Two, the county gets the first mortgage on $20 million in property if Oceanside doesn’t build the road within two years of the settlement being finalized.

Just what property would be used to secure that $20 million was unclear Tuesday.

Third, “the settlement would effectively place an end to litigation, ensuring road construction,” Ashida said.

It’s a good deal for the county, he added.

“It will ensure that construction will begin sooner than later,” Ashida said.

To get the full $32.5 million as a cash settlement, the county would have had to continue to prepare the case for trial, prevail in court and in subsequent appeals, Ashida said. That’s a lengthy process and would have further delayed the bypass’s construction, he added.

The county, Oceanside and property owners along the proposed bypass route have been in and out of court since the 3rd Circuit Court overturned a condemnation effort in 2000. The county last year prevailed, when the U.S. Supreme Court denied the Charles Coupe family’s request for a writ of certiorari.

Ashida referred questions about whether Oceanside was also receiving a settlement from American Motorists Insurance Co., which held the bonds securing the road construction funds, to Oceanside. Messages left for Oceanside’s attorney and CEO were not returned Tuesday.

A forensic cost expert in December revised downward the projected cost of completion, from $34 million to $27 million, Deputy Corporation Counsel Joseph Kamelamela said.

Perry Cacece, an attorney for Lloyd’s, wrote to Kamelamela Jan. 9, claiming his clients did not know the settlement agreement included requiring Oceanside to complete the road within two years.

Kamelamela responded via email the same day, noting the bank-designated director of Oceanside, Stephen Marotta, attended the Nov. 29 settlement conference.

“There is no evidence of a lack of good faith or fraud by the county to rescind the settlement,” Kamelamela wrote in the Jan. 17 motion, which was added to the case file at the 3rd Circuit Court Tuesday morning. “When the settlement was placed on the record, there was no agreement that the county was excusing Oceanside from its obligation to complete the bypass.”

Marotta did not respond to a voice message and email left Tuesday.

The settlement agreement also gives a portion of Oceanside’s collateral, lots at Hokulia, to The Club at Hokulia and The Hokulia Community Association to settle debts. Messages left for The Club’s and community association’s attorneys were not returned Tuesday.

A 1998 development agreement required 1250 Oceanside Partners, developers of the luxury Hokulia subdivision, to build the 5.5-mile bypass from the end of Alii Drive in Keauhou to Napoopoo. Roughly half of the road was completed several years ago, then opened to the public in 2010.

emiller@westhawaiitoday.com