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The Honolulu Advertiser
Posted on: Friday, December 21, 2007

Waimea developer can't pay his debts

By Kevin Dayton
Advertiser Big Island Bureau

Two companies headed by Waimea developer Fred Yamashiro have filed for bankruptcy in Honolulu, with the companies showing estimated liabilities of between $1 million and $10 million, and assets in the same general range.

The filings for Fredco Inc. and Menehune Development Co. Inc. on Wednesday are for liquidation under Chapter 7 of the U.S. bankruptcy code. According to the filings, the companies have between 200 and 999 creditors.

Yamashiro's financial problems have stalled work on dozens of homes being built for the state Department of Hawaiian Home Lands on three islands.

Yamashiro, president of Fredco and Menehune, has said he mistakenly underbid the projects several years ago, and cannot complete work on 132 lots at various stages of development on the Big Island, Kaua'i and Lana'i.

The delay has alarmed homesteaders who borrowed money that was released to Fredco to build homes that still aren't completed. Those borrowers are still required to make payments on the mortgages, but can't move into their homes because they aren't finished.

Hawaiian Homes Commission Chairman Micah Kane has said responsibility for completing construction now falls to bonding company Hardware Hawaii, but Kane said Hawaiian Homes will be involved in solving the problem because it was Hawaiian Homes that selected Fredco to develop the projects.

Fredco was the developer for a dozen Hawaiian Homes units on Lana'i, and another 29 on Kaua'i. On the Big Island, the company was developer for 37 homes in Kaumana, another 17 in Pana'ewa, and 37 in Lalamilo in West Hawai'i.

Yamashiro has said he bid the project two or three years ago at $125 per square foot, but since then increases in materials and labor costs pushed his costs to $165 per square foot today.

Staff writer Jim Dooley contributed to this report.

Reach Kevin Dayton at kdayton@honoluluadvertiser.com.

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