Cemetery plans tied to bankruptcy
by Andrew Gomes
Advertiser Staff Writer
A Chicago development firm yesterday sought bankruptcy protection to keep its plans alive for creating a 69-acre cemetery in Hawai'i Kai.
An affiliate of PRM Realty Group headed by Peter R. Morris filed Chapter 11 to reorganize its debts and prevent foreclosure of the undeveloped property in Kamilo Nui Valley.
The affiliate, PMP II LLC, listed assets and debts both in the range of $10 million to $50 million in the filing made in U.S. Bankruptcy Court in Dallas.
William McCorriston, a local attorney who has worked with PRM on its cemetery development plan, said the developer hopes to resolve its problems with the lender on the Hawai'i Kai property, an affiliate of hedge fund D.B. Zwirn that filed a foreclosure suit in December 2008. Zwirn has since been taken over by another company, Fortress Investment Group.
"There is a potential resolution being discussed, and we're hopeful and optimistic that we can work something out," McCorriston said.
Beyond the mortgage debt owed by PMP, the company owes its 20 largest unsecured creditors $1 million, including about $436,000 to a dozen Hawai'i companies.
PMP's largest unsecured creditor is a Dallas law firm owed $526,400. Local engineering firm Belt Collins Hawaii Ltd. is the next largest unsecured creditor with a $172,196 claim, followed by McCorriston's firm, McCorriston Miller Mukai LLP, at $109,232.
Much of PRM Realty's financial trouble stems from Mainland development projects following the financial market collapse more than a year ago. The firm and Morris also have filed for bankruptcy.
Morris has long been involved in Hawai'i real estate, having at one time owned several hotels including the Hyatt Regency Waikīkī as well as office buildings such as the Pan Am Building and Davies Pacific Center. Through PRM Realty, Morris in recent years also developed the luxury oceanfront subdivision of Maluhia in Wailea, Maui.
PMP's primary asset is the planned cemetery parcel.
The project, dubbed Paradise Memorial Park, would be the first cemetery and mortuary built on O'ahu in nearly 50 years since Valley of the Temples Memorial Park and Mililani Memorial Park opened in 1960.
The cemetery plan to accommodate 60,000 burials was initially proposed in 2000 by local developers Robert Gerell and Joe Leoni, who bought the land that year for $1.1 million.
The Hawai'i Kai Neighborhood Board approved their plan, though there was significant community opposition to the project over traffic and other impacts.
In 2003, a company affiliated with PRM Realty that also included former City Councilman John Henry Felix and Royal Contracting acquired the property for $8 million. PMP bought the land in 2006 for $11.4 million, according to property records.
Some ground preparation work and stockpiling of dirt has been done on the site, but construction anticipated to begin as far back as 2004 was delayed by financing difficulties.
Two years ago, the city imposed more than $240,000 in fines against the developer related to stockpiling dirt, which some residents complained was being washed into Hawai'i Kai's private marina during heavy rains. The company corrected the violation, but financing trouble continued to inhibit moving forward with construction.