Homelands agency may buy developed lots in Ka'u
By Kevin Dayton
Advertiser Big Island Bureau
HILO, Hawai'i — The Department of Hawaiian Home Lands plans to buy developed lots in Ka'u and lease them to homesteaders, reasoning it is cheaper to buy property that has roads, water lines and utilities than to develop its own land in the area.
If the deal closes, Hawaiian Homes Commission Chairman Micah Kane said he believes the proposed purchase of 80 lots in the Discovery Harbour subdivision would be the first instance in which the department has bought developed lots for homesteads.
Kane said he expects the department to publish notices in the next month seeking more developed property to buy, to accelerate its homesteading programs.
The commission yesterday authorized Kane to negotiate a sales price of up to $2.8 million for the Discovery Harbour lots, which works out to $35,000 per lot, said Lloyd Yonenaka, Department of Hawaiian Home Lands public information officer.
That is more than triple the value set in an appraisal done for landowner Discovery Harbour Holdings LLC, according to a report prepared for the commission by Hawaiian Homes staff. That appraisal put the market value of the lots at $830,000 if sold to a single buyer and set a "retail" value of $2.06 million if the lots are sold separately.
"Ultimately I think it depends on how badly we want the lots," Kane said. "The negotiations haven't been finalized, and I think, no question, one of the biggest considerations is our fiduciary responsibility to spend trust money appropriately."
Hawaiian Homes owns about 10,000 acres in the area, but Kane said it would cost the department $50,000 to $60,000 per lot to put in roads and utilities. Buying finished lots also will allow homesteaders to obtain leases more quickly, Yonenaka said.
Ka'u has been struggling with high unemployment since the last sugar plantation closed in 1996. Still, Kane said he is confident there will be demand for homestead leases in the subdivision, about 70 miles from Hilo and 55 miles from Kailua, Kona.
Discovery Harbour is an 820-lot subdivision developed in the mid-1970s. Homeowners have built on about 125 of the lots, according to the Hawaiian Homes staff report.
According to the report, Discovery Harbour Holdings LLC bought 96 lots in the subdivision in a sale that recorded June 1, 2000. The conveyance price was $484,000, or an average of about $5,000 a lot, according to the report.
When Discovery Harbour Holdings initially approached the department about a sale early this year, it proposed a sale price of $40,000 per lot, according to the report.
Gerald Wong, general manager for Discovery Harbour Holding LLC, said the owners are local investors, but wouldn't name them. State records list the agent for Discovery Harbour Holdings LLC as Satoru D. Ikeda, also listed as a member of the corporation.
Ikeda was unavailable for comment, and Wong declined to discuss the transaction, referring questions to Hawaiian Homes officials.
Reach Kevin Dayton at kdayton@honoluluadvertiser.com or (808) 935-3916.
