Hawaii Land pursues deal
By Andrew Gomes
Advertiser Staff Writer
The president of Hawaii Land & Farming Co. said the real estate development firm plans to avert a court-ordered foreclosure of hundreds of acres of land on Maui, the Big Island and Kaua'i, including the company's master-planned residential project Kehalani in Wailuku.
A Maui judge last month ordered the properties to be sold at auction after Hawaii Land defaulted on about $10.5 million in loans from Bank of Hawaii.
The sale could have finally provided a dozen Kehalani homeowners $2 million for a previously ordered but unpaid judgment against Hawaii Land's predecessor, C. Brewer Homes, for faulty home construction. Now it is unclear whether the homeowners will be paid.
Stanford Carr, a local developer who partnered with fellow developer Howard Hamamoto and Maui Sierra LLC to buy Hawaii Land in December 1999, yesterday said through a spokeswoman that a "friendly buyer" has agreed to assume the delinquent loans.
Carr said through the spokeswoman that he could not identify the buyer because of a confidentiality agreement, and otherwise did not comment on the foreclosure case.
The deal has not been presented to the court but is expected. An attorney for Bank of Hawaii acknowledged there is a possibility for settlement.
The bank filed its foreclosure suit in September, nearly two years after Carr and his partners paid $4 million and assumed about $20 million in debt to acquire Hawaii Land.
A spinoff of C. Brewer & Co., Hawaii Land 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.
A year ago, Hawaii Land under its new owners tried unsuccessfully to sell its main asset, Kehalani, a largely undeveloped project designed for about 2,000 homes, a school, a commercial center and a park.
Bank of Hawaii said in its suit that Hawaii Land defaulted on two loans when it failed to reduce a $12.2 million balance to less than $5 million by the end of June. The outstanding balance totaled about $10.5 million as of Nov. 15, according to court records.
The bank would have been paid first with foreclosure proceeds, but it had yet to be decided who would be paid next between Hawaii Land partner Maui Sierra and the homeowners.
Maui Sierra has about $5 million in claims tied to mortgages on some of Hawaii Land's property on the Big Island and Maui.
About a dozen homeowners became a party to the foreclosure when a separate lawsuit they filed last year to collect a $2 million award from Hawaii Land and its new owners was consolidated with the bank's case.
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.
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 '?ao Stream, according to Wendell Brooks Jr., one of two court-appointed foreclosure commissioners.
Brooks, the former chief investment officer for Kamehameha Schools, said he and co-commissioner E. John McConnell, a retired Maui Circuit judge, have proposed holding six or more separate public auctions for the different properties.
However, Carr said through the spokeswoman that those auctions will not take place. But barring any court approval of the loans' assumption, a hearing to approve the auction plan is set for April 12.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
