Tee'd off

By Andrew Gomes
Advertiser Staff Writer

For 10 years James Baptist has wondered when the golf course that was touted as an amenity to the Royal Kunia subdivision he lives in would replace the scrub land beyond his back yard.

Back yards of homes in Royal Kunia were to face a golf course when the master-planned community first began to be developed in the late 1980s. Today, the homes look out onto scrub land, as homeowners wait for the promised amenity. Photo illustration by Martha Hernandez • The Honolulu Advertiser

Instead, the 51-year-old airport worker is concerned about brush fires flaring up on the site behind his house, which retains a lower value without adjacent golf links.

"Our so-called view lots were supposed to be golf course lots," Baptist said. "It looks like an old cane field. It is an old cane field."

For Baptist and close to 300 other homeowners at Royal Kunia — a master-planned community that began taking shape from Central O'ahu sugar cane fields in the late 1980s — the 172 acres of unmanicured landscape running up against their property may change.

The Japan-based owner of the long-planned golf course referred to as Royal Kunia No. 1 has listed the property for sale through a local broker.

Just how likely it is that someone will buy the land and build the golf course is uncertain, however.

Hawai'i's real estate market has been attracting strong interest from primarily Mainland institutional investors seeking all types of property.

Though less attractive than residential, retail and resort property, golf course real estate also has been selling.

Recent examples include a California investor who in January paid $4.2 million for the run-down Hawaii Country Club in Kunia. In December, a hui led by Ko Olina Resort & Marina master developer Jeff Stone bought Makaha Valley Country Club for an undisclosed price. And last July a Japan-based investor bought the Sandalwood Golf Course and the shuttered Grand Waikapu Country Club on Maui for $12.5 million.

But those sales were for existing golf courses. Selling undeveloped property approved for golf use is viewed by industry observers as a bigger challenge.

At Royal Kunia, valuable house lots surrounding the envisioned golf land have all been sold by the community's master developer Herbert Horita and partner Castle & Cooke Homes, further reducing the opportunity for a prospective buyer to make money.

The asking price for the Royal Kunia No. 1 site is $8.5 million. But the land, which long ago received zoning approval for golf course development, may be subject to a $25 million county "community impact fee."

The City Council approved the $25 million fee to the ire of then-Mayor Frank Fasi, who sought to exact $100 million for any new golf course permit to share in what was seen as the incredible profits Japanese companies stood to make by selling personal golf memberships for $100,000 to $200,000 or more.

Horita sold the land for Royal Kunia No. 1 to Japan firm Koei Hawaii Inc. in 1989 for $13.5 million. But the bursting of the Japanese investment bubble left Koei unable to make the initial $3 million impact fee installment, barring the company from starting construction in 1992.

The second planned Royal Kunia golf course was completed in 1994 by another Japan-based company, but wasn't allowed to open because a $13 million balance on its $25 million impact fee was not paid.

In 2001, a lender who took over the idle Royal Kunia Golf Course negotiated to resolve the $13 million debt by paying the city $2.5 million plus $1 per round for the life of the course, which finally opened two years ago.

It is unclear whether a similar deal could be cut by a buyer of the Royal Kunia No. 1 land, or whether Koei has been able to restructure its obligation to the city.

Chaney Brooks & Co., the local real estate firm representing Koei, doesn't address the impact fee in marketing materials. A Chaney Brooks employee working on the sale said it wasn't clear to him what is owed on the impact assessment.

The city Department of Planning & Permitting could not immediately give the status of the impact fee on the property.

Royal Kunia residents Norma and Willy Agunat, who bought their home in 1996, would like someone to fulfill the golf course plan.

"That was a selling point of the subdivision," Norma Agunat said. She said she and her husband were "enlightened" about the financial problems of the golf course land owner only after they bought their house, though she said no one guaranteed a golf course would be built.

Roberta Ching, a neighbor of the Agunats who bought her house in 1995, had a similar recollection. "When we bought the place (the developer) always said it was going to have a golf course, but they always said 'proposed,' so it wasn't a promise."

Still, Ching and many other Royal Kunia home buyers had hoped the golf course would be built and had the expectation that when it was built, their property values would go up. Baptist guesses the value could easily rise by $100,000.

Some residents fear a buyer of Koei's land could try to build more houses, though that would require a difficult change from the existing general preservation zoning that allows a golf course but not much else.

"I don't want to look out on a neighbor's home, a shopping mall or a parking lot," said Dennis Sant, who bought his Royal Kunia home a year ago partly because of the suggestion that there will one day be a golf course beyond his back yard.

"That was part of the sales pitch," he said. "That was part of the reason I bought it."

At the very least, Sant would like the property to remain covered with vegetation, which is something that long-time resident Baptist also would accept.

"If (the golf course gets built), we were expecting it," Baptist said. "If not, I've lived here for 10 years. If it stays this way, I wouldn't really mind."

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.