The Royal Kunia
A Royal Rip-off of Hawaii Taxpayers?
Sightings from The Catbird Seat
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August 4, 2006
Land sale key to next
phase of Royal Kunia
By Andrew Gomes, Advertiser Staff Writer
The 2,000-home second phase of Royal Kunia in Central O'ahu, stalled for more than a decade, may finally proceed following a land auction in bankruptcy court this month.
Up for auction are 161 acres of urbanized former sugar cane fields — the primary asset of original Royal Kunia developer Herbert Horita's Halekua Development Corp., which declared bankruptcy in April 2003.
At least two local developers, Castle & Cooke Hawai'i and Stanford Carr Development, are expected to vie for the property at the Aug. 16 court auction in a bid to develop the homes.
Finishing Royal Kunia would add to a swelling pipeline of more than 40,000 homes planned for Central and Leeward O'ahu over the next 20 or so years, contributing to affordable and market-priced housing opportunities but also to the traffic congestion plaguing the region.
Royal Kunia's second phase didn't break ground in 1994 as planned because of a flagging housing market and Halekua's financial difficulties. In addition to the new homes, restarting the project likely will lead to construction of an elementary school, state agricultural park, county park and private industrial park.
Many Halekua creditors holding roughly $43 million in claims would receive payment from the land sale, while some existing Royal Kunia residents will be pleased to see their master-planned community finished.
"Phase 2 is very important," said Albi Mateo, general manager of the Royal Kunia Community Association. "This community here is basically half built."
Mateo said existing residents have only part of a recreation center that still lacks a pool and multipurpose facility that were supposed to be added with the second phase.
The school also would relieve overcrowding at nearby Kaleiopu'u Elementary School in Village Park.
"It's a mess," Mateo said. "It's not fair for the people in Phase 1."
HURDLES REMAIN
However, several unresolved issues leave some uncertainty over whether the project can be revived and in what form.
Some area residents say Kunia Road, the main artery connecting their community with the H-1 freeway, is already overwhelmed and cannot handle more traffic from several thousand new residents and businesses in a second phase of Royal Kunia.
"The infrastructure part of it has to be addressed before they build more homes," said Linda Dooman, a Royal Kunia resident who bought her home about three years ago not knowing about plans for the second phase.
Horita conceived his master plan for Royal Kunia in the late 1980s as a two-phase development of roughly 4,000 homes, three golf courses, a commercial center, light industrial park, agriculture park and other facilities on about 1,200 acres of mostly farmland owned by the Mark A. Robinson Trust.
Much of the first phase with about 1,900 homes and a commercial center was built by a partnership led by Castle & Cooke, which invested in the project after Horita encountered financing and permitting delays.
The two golf course sites in phase one were sold to Japan-based developers, but only one course was built. The undeveloped golf site was bought last year by a California firm that has floated an idea to build homes on the property, which can't be done without a zoning change.
Royal Kunia's second phase covers 655 acres and includes a public school site, 10-acre county park, 150 acres for farming, a 123-acre industrial park, a potential third golf course site and 2,000 homes, of which 600 must be affordable under county rules.
The land to be auctioned is Royal Kunia's main undeveloped residential parcel, and is zoned for single-family and condominium homes. The developer will be responsible for providing land for the school and county park and for developing some roads and other infrastructure.
How many homes a developer will be allowed to build on the 161-acre site is uncertain.
Halekua previously sold 50 acres of the residential-zoned land in Royal Kunia's second phase to an affiliate of The Harry & Jeanette Weinberg Foundation, which still owns it and is entitled to build 400 to 500 of the planned 2,000 homes.
The balance of 1,500 to 1,600 homes possibly can be built on the 161 acres, though that would be subject to the property's new owner salvaging old agreements with the state and county that conditionally approved Royal Kunia's second phase.
AGENCY MUST OK SALE
Halekua defaulted on several conditions, including transferring land with infrastructure connections to the state for the agricultural park and school. The county also was to receive at least 10 acres for the county park.
The broken commitments led the Land Use Commission in 2003 to consider revoking approval for the project, but Halekua filed for bankruptcy before a decision was made.
Anthony Ching, executive officer for the commission, said the sale of the 161-acre parcel is subject to approval by the agency, which will require a prospective new owner of the property to demonstrate its intent and capability to satisfy Halekua's commitments.
Specific provisions Halekua hasn't met include conveying 12 acres of land to the state for an elementary school, contributing $500,000 for a road to the school site and developing other infrastructure up to the site.
Halekua did convey a 150-acre parcel to the state for a planned farming subdivision, but failed to provide infrastructure to the site as required.
The state leases the land to Larry Jefts Farms. Without water or power connections, the state cannot subdivide the parcel as planned and lease it to multiple small farmers who were supposed to be able to build homes and live on the property.
Another provision Halekua never satisfied was turning over at least 10 acres for a county park. Halekua also has unpaid county property taxes that a new landowner is required to pay.
Several private agreements are also tied to the land sale, including providing infrastructure to the planned industrial park site owned by the Weinberg affiliate, HRT Ltd.
HRT also is owed fill material estimated to cost $6 million, which a buyer of the 161-acre parcel must deliver or pay for.
Jerrold Guben, a bankruptcy attorney representing Halekua, said he expects bids for the property to be more than the $34 million owed to secured creditors in the case, and probably enough to pay off some of the additional $10 million in claims held by unsecured creditors.
Castle & Cooke, according to bankruptcy records, is owed about $25 million, mostly as Halekua's partner in Royal Kunia. Stanford Carr is owed about $5 million via claims the developer acquired from other creditors.
Other local developers have inquired about the property, but as of last week had not submitted a required $1 million deposit to the court to register as a potential bidder.
Mateo of the Royal Kunia Community Association said she is eager to see who buys the land and what their vision is for the property.
"At least we won't be in limbo anymore," she said.
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April 26, 2003
Royal Kunia developer
files for bankruptcy
Horita's Halekua Development Corp.
owes the city $220,335
By Tim Ruel, Honolulu Star-Bulletin
A Herbert Horita company that is developing Royal Kunia on Oahu sought Chapter 11 bankruptcy protection yesterday, owing between $50 million and $100 million in estimated debt.
One of Halekua Development Corp.'s larger creditors is the city, which is owed $220,335.
"This action is needed to buy time for the company," said company spokesman Jim Boersema. Halekua expects to emerge from bankruptcy within 120 days, clear off its debt and move forward with the development of Royal Kunia II, a 2,000-home subdivision in Waipahu, Boersema said. He declined to provide further details.
Halekua's assets are worth less than $50,000, according to the bankruptcy filing.
According to the bankruptcy petition, Halekua's five biggest unsecured creditors are:
>> Ayers Corp., owed $1.4 million.
>> Park Engineering, $702,082.
>> Larry Mehau's Hawaii Protective Association, $415,126.
>> AFW, $350,000.
>> Stubenberg & Durrett, attorneys, $276,515.
Other creditors are a unit of the Harry & Jeanette Weinberg Foundation, the now-defunct Oahu Construction Co. and former City Councilman Jon Yoshimura.
Another Horita company, Royal Kunia Apartments Inc., declared bankruptcy in 1999 and sold off three townhome projects on 27 acres for $30 million.
Horita was the original developer of the Ko Olina Resort and Marina in Leeward Oahu, envisioning a string of hotels, condominiums and golf courses, but plans fizzled when Japanese backers withdrew funding in the late 1980s.
Halekua owes a total of $5 million to its 20 largest unsecured creditors.
Steven Guttman, Halekua's bankruptcy attorney, could not be reached for comment yesterday.
Because of Halekua's bankruptcy filing, the state Land Use Commission postponed a hearing in which Halekua was to argue why it should be allowed to keep 503 acres of undeveloped former agriculture land in Waikele classified as urban district.
As a condition of the rezoning, Halekua was to have developed infrastructure for an agricultural park and conveyed that park to the state by December of 1999. Since the developer had failed to comply with that requirement, the state Office of Planning had petitioned to have the land revert to an agriculture classification.
http://starbulletin.com/2003/04/26/news/index2.html
September 11, 2000
Kunia complex selling for $29 mil
The sale of the 402-unit rental community to a
Denver firm has been OK'd by bankruptcy court
By Tim Ruel, Star-Bulletin
A Denver-based company will buy developer Herbert Horita's bankrupt Royal Kunia Apartments on Oct. 16 for $29.53 million, according to a U.S. Bankruptcy Court filing.
Royal Kunia Investment Co. is purchasing the 402-unit Central Oahu rental community, comprising three separate residential projects on nearly 27 acres. The court approved the sale on Aug. 28.
Royal Kunia Investment must assume all current tenant leases, and a zoning condition that requires a certain level of affordable housing.
The rental townhomes, grouped into 65 two-story buildings, are almost fully occupied, said Leonard Kacher, vice president of Realty Management Corp., a Horita affiliate that manages the townhomes.
Royal Kunia Investment is planning improvements for the projects, such as new parks, but cannot release details yet, said attorney Jerrold Guben, who represents the buyer.
(Dumb Dodo Bird: “I thought it was unethical for someone to represent both the buyer and seller???”)
Guben said the buyer is from Denver but would not give further details.
"They thought it was a good investment, given the recovering market here in Hawaii," Guben said.
Horita's company Royal Kunia Apartments Inc. filed for Chapter 11 reorganization bankruptcy last year, listing $30.5 million in assets and $33.4 million in liabilities. The sale would end the reorganization.
Horita built the first two projects -- Royal Kunia Gardens, Halekua Gardens I -- in 1990 and a third project, Halekua Gardens II, in 1994, Kacher said.
Current rental prices range $705-$790 for one bedroom, $810-$995 for two bedrooms and $920-$1,150 for three. Average square footage goes from 500 square feet to 1,024. All units come with parking stalls.
The sale follows the purchase of the nearby Royal Kunia Country Club earlier this year.
Liongain Hawaii Inc. bought the 163-acre, 18-hole golf course for $11.5 million in May from its Japan-based developer Royal Oahu Resort Inc.
The course, completed in 1994, has never opened because the city was owed a $13 million fee for the necessary permits.
http://starbulletin.com/2000/09/11/business/story1.html
Royal Kunia Investment Company Llc
Detailed Company Profile
Royal Kunia Investment Company Llc
855 S Harrison St, Denver, CO, United States
Phone: (303) 777-3046
SIC: Business Consulting Services, NEC
Line of business: Business Services
Year Started: 2000
State of Incorporation: N/A
Location type: Single Location
Est. Annual Sales: $63,000
Est. Employees: 1
Est. Employees at Location: 1
Contact Name: Charles Wathen
Contact Title: Member
August, 1999
From bankruptcy to billions
By Taketa, MariPublication
In Herbert Horita's view of things, 1975 marked the year the world - or at least his $30-million stake in it - fell apart.
Wiped out by a real estate slump, the local developer found himself $140 million in debt, his share in a 16-year-old empire of homes, office buildings, industrial parks and shopping centers reduced to his own house and two-story headquarters in Kalihi.
Sold for badly needed cash were titles and development rights to an array of trophies including Pearlridge Estates, Village Park and Waialae Iki IV - all Horita residential developments - and the Waikiki Sunset and Waikiki Banyan condo-hotels.
Horita owed roughly $750,000 in rent and other payments on a 530-acre coastal tract in Leeward Oahu and faced losing Ko Olina, the mega-resort he envisioned rising someday from those Ewa canefields. "I told the lenders, 'If you take my house and my office building, I'll file for bankruptcy,'" he recalls. "But I really was already bankrupt."
The threat worked. Bankers offered $25 million in operating and construction loans so the brash developer could stay in business. "They agreed to lend us money from project to project," says Horita, "so with every project we developed, the lenders took almost everything - for the next eight years."
Fifteen years later, Horita has done more than ride out a recession. His slate of 11,500 residential units statewide - from the 300-unit Pearlridge Estates to Maui Lani, a 3,300-home project planned for the center of the Valley Isle - ranks him among Hawaii's most prolific homebuilders.
Ko Olina, rescued with the help of a new partnership in 1978, is evolving into a $7-billion world-class resort that has carved out new lagoons and beaches on the Leeward coast and will add an estimated 5,100 jobs to its economy.
A state decision in June gave Horita and his partners the preliminary go-ahead to develop another major project - the coveted but controversial $1.3-billion convention center complex in the heart of Waikiki.
Horita's world in 1990 is expanding far and fast, with new developments foreseen for Maui, the Big Island and Washington, D.C.
Anchored by Ko Olina, his empire claims 75th place on this year's Hawaii Business Top 250, with revenues of $74 million.
Horita Construction, a separate company spawned in part by the magnitude of the resort project, grossed $26.7 million last year and takes the 172nd spot on the list.
"We're expanding our market into double and triple what it is now," Horita says.
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MORE TO COME
In the meantime, you can browse through the following as you’re having your breakfast birdseed in an alley, a parking lot or under a bridge somewhere...
CONFESSIONS OF A WHISTLEBLOWER
DIRTY MONEY, DIRTY POLITICS & BISHOP ESTATE
THE GRAND (and dirty) KO ‘OLINA
JAMES NICHOLSON, TRUSTEE VS. HARMON
MARSH & McLENNAN: THE MARSH BIRDS
THE EAGLE HOODED: THE 9-11 COVERUP
CENSORED >>> THE HARMON ARBITRATION <<< CENSORED
THE VULTURES IN MAUNAWILI VALLEY
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Last Update July 12, 2007, by The Catbird