Sale of undeveloped islands tough task for local couple

By Andrew Gomes
Advertiser Staff Writer

Lu Nevels and his wife, Mary Ann, planned a tropical residential community in the Conflict Group. But the plan lacked a way to provide clean water and electricity. Jeff Widener • The Honolulu Advertiser

"A lot of our life is in here," the former Hilo circuit judge and retired real-estate attorney said, gesturing to a pile of maps, sailing charts and old photographs as he stood next to his wife, Mary Ann, in their Hawai'i Kai home.

The Nevelses are selling the Conflict Group, a chain of 23 uninhabited islands used as a coconut plantation for nearly three-quarters of a century.

The South Pacific paradise, which the Nevelses have informally called Aurora since acquiring the chain in 1973, has an asking price of $25 million. But having to sell the islands and their miles of white sand beaches, deep lagoon and coconut groves steams Lu Nevels, 79.

"It's damn sad," he said. "But age and health have a way of shaping one's life."

"It catches up with you," added his wife.

Lu Nevels said he and some partners invested in the Conflict Group to develop the islands. "We bought it thinking we would think of something to do with it," he said.

His partners early on passed their interests to the Nevelses, who fancied creating a tropical residential community on Aurora. But his plan back then lacked viable means for generating electricity and clean water.

"Those islands were waiting for technology to catch up," Mary Ann Nevels said.

"Unfortunately," Lu Nevels added, "the time for development has arrived too long after we bought them. This is the time to develop them, and now I'm too old. It irritates the hell out of me."

Nevels, who has visited the islands several times, is particularly attached to them, though he and his wife of 57 years have made many speculative investments in real estate.

Click to enlarge map. Illustration by Martha Hernandez • The Honolulu Advertiser

Nevels, who was born in Portland, Maine, moved to Hawai'i with his wife in 1949. After practicing law in Wahiawa and serving as a Territorial circuit judge in Hilo, he opened a law office on the Big Island and began advising real estate investors and joining investment huis. His wife, meanwhile, learned about the business running her own real-estate agency in Hilo.

At one point in the 1960s, Nevels said, he and one of his law partners owned about 10,000 acres of Big Island real estate.

"We speculated. No question about it," he said. "We'd buy property on agreement of sale — you put a little bit down then try and sell it before the next payment was due, and you tried to make a little money. We did pretty well."

Later, the Nevelses diversified during a four-month around-the-world trip in 1969-70 when they bought a bookstore after going into a real-estate office to ask for directions.

"We didn't even speak any Spanish," Nevels recalled.

"It was absolutely fascinating," his wife said. "All we wanted was directions at that point, and we ended up buying the property."

The encounter led the Nevelses to develop an apartment building in Spain with a group of European partners. Other investments turned sour, such as the French estate, Chateau de Levis, which was sold for a loss, and a cattle/cacao/coconut plantation on Vanuatu that was confiscated by the newly independent government established in 1980.

By the early '70s, the Nevelses were familiar to people in real-estate investment circles, and a timber firm with holdings in Washington and Fiji contacted the couple to see if they were interested in some islands off Papua New Guinea that the company acquired as part of another deal.

The Conflict Group, named for a British ship that wrecked on a nearby reef, had been a copra plantation since 1906 when the British government granted the chain to one of its empire administrators who set up the agricultural operation to produce dried coconut meat.

Over the years, Lu Nevels has visited the Conflict Group four or five times, once with his wife. "Oh, God, it was magnificent," he said, recalling one three-day, three-night trip in a native Papua New Guinea sailing canoe touring the islands — Panasesa, Gabugabutau, Itamarina, Aroroa, Panarakuum and others.

The copra plantation also was fascinating, though primitive. "The factory consisted of a hole in the ground with a fire," he said. "The natives sit down with a sharp knife, break the coconut open and pour out the milk on the ground. They scoop the coconut meat out with a curved knife and they cook it in an open fire on a grate over a hole in the ground. ... After it was cooked and dried, the copra was shipped out in 100-pound bags."

Though copra production ceased in 1979, coconut groves still cover nine of the larger islands.

A small airstrip is overgrown on another, but could be restored. One of the islands, Ilai, the largest at 240 acres, is big enough to build an airstrip for transcontinental planes, the Nevelses said. The smallest, Kolovia No. 1, is 1 acre.

Muriel Paterson, an agent with Honolulu real estate firm Earl Thacker Ltd., said she has received a few preliminary inquiries for the Conflict Group after running two ads in the International Herald Tribune during the past two weeks.

A Web site, www.conflictislands.com, recently created for the sale has received about 100 hits, she said.

Paterson said potential uses of the islands include a resort, ecotourism operation and a cruise-ship destination. A nature preserve, residential development or base for an exclusive yachting club are other possibilities.

Nevels will not say how much he paid for the Conflict Group, though he said it has significantly appreciated. His wife said the chain is hard to value, given the closest "comparable sale" is Palmyra, a chain of 54 islets covering 680 acres that Hawai'i's Fullard-Leo family sold three years ago to The Nature Conservancy for an estimated $37 million.

The Conflict Group is significantly larger, with 926 acres of land encircling a 95-foot-deep lagoon 5 miles wide and 12 miles long at its farthest points.

Lu Nevels, who is part American Indian, said he plans to use proceeds from a sale to establish a foundation to benefit disadvantaged Native Americans. He and his wife also said they want to contribute to their college alma maters on the Mainland, the University of Hawai'i, some local charitable organizations and their three children.

"A lot of our life was in Hawai'i," Mary Ann Nevels said. "So we want to give something back."

The Nevelses also would probably try to make one more visit to the archipelago that holds some of their longest and fondest memories.

"Maybe we could serve as a guide," Lu Nevels said. "The fishing is fabulous."

"It's everyone's dream ... their own South Pacific isle," Mary Ann Nevels added.