Maui project plans sale
By Andrew Gomes
Advertiser Staff Writer
Hawaii Land & Farming Co. has proposed selling portions of its master-planned Maui residential project Kehalani to five developers under a plan to avoid foreclosure of more than 1,000 acres of company assets.
In a court hearing yesterday, Hawaii Land & Farming said that selling eight parcels covering 110 acres at Kehalani would allow the company to pay off more than $10 million in delinquent loans and remain a viable real estate development business.
A Sept. 16 foreclosure auction date has been set to give the company time to try to complete the voluntary sales.
Hawaii Land & Farming said it has contracts to sell one lot to Hawai'i homebuilder Schuler Homes and two others to Strand Capital Corp. It also said it has letters of intent with developers Paul Quong and Steve Wood. Three other lots are expected to be sold to Hearthstone, a real estate investment firm.
"It's a way for Hawaii Land & Farming to remain a viable company and go forward," said Bill Meheula, an attorney representing a dozen Kehalani homeowners trying to collect a $2 million judgment from Hawaii Land & Farming for faulty home construction by the company's predecessor, C. Brewer Homes.
Meheula said his clients agree with Hawaii Land & Farming that voluntary sales are preferable to a forced bulk liquidation.
Hawaii Land & Farming expects to generate $16 million if it can complete the sales contracts. The amount would be enough to pay off $10.6 million in delinquent loans due Bank of Hawaii, which on Wednesday sold its claims to residential builder Towne Development of Hawaii.
A Towne official could not be reached yesterday.
Maui Sierra is owed $5.6 million, but it has yet to be decided whether that firm will be paid before or after the dozen Kehalani homeowners, according to Meheula.
The homeowners have waited five years to be paid for damages after soil under their C. Brewer-built homes expanded and caused cracking of interior walls, misaligned doors and other problems.
A spinoff of C. Brewer & Co., Hawaii Land & Farming had run into financial difficulty and was delisted from the Nasdaq stock market in 1998 after struggling with a weak housing market in the early to mid-1990s.
In 1999, Honolulu developers Stanford Carr and Howard Hamamoto partnered with Maui Sierra to buy the company for $4 million plus the assumption of roughly $20 million of debts.
A year ago, the partnership tried unsuccessfully to sell Hawaii Land & Farming's main asset, Kehalani, a largely undeveloped project designed for about 2,000 homes, a school, a commercial center and a park.
The bank filed the foreclosure suit last September, and a judge earlier this year ordered Hawaii Land & Farming assets be sold at auction.
Subject to foreclosure are roughly 700 acres at Kehalani, a couple hundred acres on the Big Island, about 60 acres on Kaua'i and at least 100 acres on Maui near 'Iao Stream.
Carr, who is president of Hawaii Land & Farming, said through a spokeswoman yesterday that he anticipates the arranged sales will close before the scheduled auction.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
