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The Honolulu Advertiser
Posted on: Monday, June 16, 2003

Homes for rich on Kaua'i fuel us-them debate

 •  Chart (opens in new window): Permits for large Kaua'i homes

By Jan TenBruggencate
Advertiser Kaua'i Bureau

LIHU'E, Kaua'i — Megahomes — ones many times the size and cost of the houses in which most working folks live — are being built at breakneck pace on Kaua'i, and some residents are suggesting that may not be a good thing for the larger community.

Several Kaua'i megahomes are fitted with walls and gates, and at least two entire subdivisions are gated, including this one on a bluff along the Ha'upu Range, overlooking the 'Alekoko Fishpond and Nawiliwili Harbor.

Jan TenBruggencate • The Honolulu Advertiser

This year, the county has issued four building permits for homes costing between $1.7 million and $2.1 million. They'll join 11 other million-dollar-plus house permits issued during the past two years.

Most of the activity is on the island's north side. Ten of the 15 million-dollar-plus permits are for properties north of Kapa'a.

Increasingly, island residents, planners and sociologists wonder about the effect of the influx of extremely rich folks into a rural, generally working-class island.

"There's a big socioeconomic impact that they've had on Kaua'i, and it's not been good," said Jeanne Childs, a Lihu'e legal secretary.

Many of the homes of the super rich aren't full-time homes. Some of them rent out their homes to other wealthy vacationers when they're not around. Some have walled compounds and big gates. At least two entire communities on the island are gated.

"It's challenging. On the one hand, you want to encourage investment, to attract capital into the state. But there's an appropriate way to respect community traditions," said Karl Kim, a University of Hawai'i professor of urban and regional planning, now serving as interim vice chancellor of the Manoa campus.

There are some benefits from the big houses. They pay their fair share of taxes. The spending on megahouses helps the economy of the construction industry. And, said former Mayor JoAnn Yukimura, now a member of the County Council, people with a lot of money can sometimes help meet community needs.

"Megahomes are bringing in people who have the wherewithal to provide a lot of support to the community financially," Yukimura said.

But other effects are not so sanguine.

An influx of big-money buyers, paying a premium for property in your neighborhood often means your property taxes will go up.

"We are required to value land based on market sales," said county real property appraiser Kim Hester. A single high-priced sale is often considered an anomaly and may not be used to determine neighbors' values. But if there are several, county appraisers have little choice, she said.

County deputy finance director Eric Knutzen said Kaua'i properties — particularly coastal ones — are often competing in outside buyers' minds with oceanside properties in the most desired places on the planet.

"What they take out of their wallets is based on how close they can get to the ocean and how much ocean view they have," he said.

Some island residents are responding by trying to launch a local initiative like California's Proposition 13 to freeze property taxes because of the recent rise in values.

Residents say neighborhood values are lost when strangers live behind the wall next door.

"I think people here like to know who their neighbors are," said North Shore community activist Barbara Robeson. "But are these people who can watch my yard or baby-sit my dog? Can I do some shopping for them or babysit their kids? That's what neighbors do."

The economic differences between the megahome buyers and traditional working-class, local residents are often dramatic, said Jon Matsuoka, interim dean of the University of Hawai'i's School of Social Work. He has studied these issues on Lana'i, where megahomes are being built downslope from the old pineapple plantation town of Lana'i City.

"On the island of Lana'i you're seeing increases in crime rates and outmigration of the most promising young people. There is a multitude of changes and shifts. (When a poor or lower middle-class person is faced with so much wealth) people can feel that their options are closed," Matsuoka said.

"It generates an us-them conflict," he said.

Big properties that are gated and fenced may end up closing off traditional paths to natural resources like a fishing spot, a surfing area, a pig hunting or hiking region, a mountain stream — pathways used for generations but never formally dedicated to public use. Yukimura calls them de facto public accesses, and she says their loss is a serious issue.

The arrival of the rich tends to feed on itself. There are Kaua'i properties owned by author Michael Crichton, entertainer Bette Midler and rumors of a recent high-end purchase by actress Jennifer Lopez. Folks like Hollywood producer Peter Guber and AOL-Time Warner's Steve Case have extensive holdings.

The sales seep down through the island's properties, and the island's popularity drives many former long-term rental units into the vacation rental market.

"Why would you take $1,000 a month if you could get $1,000 a week?" said one North Shore resident.

Patty Ewing, owner of tony Kong Lung Store in Kilauea, said rising housing prices have driven a lot of local people into housing never-never land.

"On the North Shore, any kind of mid-range housing is simply non-existent. Anyone making $10 to $15 an hour can't even rent a condo. I struggle along with my employees — it causes so much personal trauma in their lives," Ewing said.

The housing that remains available is lower-quality units that are not suitable for vacation rentals or high-end sales, said Michael Ching, manager of the Hanalei shopping complex, Ching Young Village. And even here, "the price of long-term rentals is on the rise. It's supply and demand," he said.

"It's becoming impossible for local people to compete," Yukimura said. "Some people are facing the realization that they can't get housing no matter how much they work. There is a kind of despair that comes with that."

She said there may be some help in such things as property tax breaks for owners of long-term rentals, cooperative housing, and buyback provisions in housing developments to prevent high-cost resales. Ching said that if owners could write off losses on one rental property against another — as they once could — it might encourage the development of more long-term rental properties.

Mayor Bryan Baptiste and the County Council have appointed a taxation task force to study revamping the island's property taxation system, so residents are not driven from their homes by valuation hikes caused by high-end purchases.

That doesn't address what some observers say is one of the most corrosive effects of rich estates with walls and gates.

"This is a throwback to the plantation days, a regression to when there was a huge division between rich and poor," Matsuoka said.

Kim argued that older Hawai'i communities like Manoa and Nu'uanu have a mix of homes of different values, a mix that reflects a healthy Island history. "The whole notion of gated communities, residential enclaves separated by money or class, is really kind of antithetical to what makes Hawai'i a special place," he said.

Reach Jan TenBruggencate at jant@honoluluadvertiser.com or (808) 245-3074.