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HomeMy WebLinkAbout2020-10-15 Leeward Exh E (AMEND SMA 388) LEEWARD PLANNING COMMISSION COUNTY OF HAWAII HEARING TRANSCRIPT OCTOBER 15, 2020 A regularly advertised hearing on the application of DPM ACQUISITION LLC DBA DIAMOND RESORTS INTERNATIONAL (FORMERLY PACIFIC MONARCH RESORTS, INC.) (AMEND SMA 388) was called to order at 1:56 p.m. via live-stream online meeting, with Chairperson Nancy Carr Smith presiding. COMMISSIONERS IN ATTENDANCE: Nancy Carr Smith, Barbara DeFranco, Perry Kealoha, Mark Van Pernis, Michael Vitousek, Faith "Faye"Yates, and Max Newberg (from 2:05 p.m.) ALSO IN ATTENDANCE: J Yoshimoto, Esq. (Counsel for the Commission), Michael Yee (Planning Director), John Mukai, Esq. (Counsel for the Planning Director), Jessica Andrews (Planner), Jeff Darrow (Planning Program Manager), Alex Roy (Planner), Tracie-Lee Camero (Planner), Rachelle Ley (Secretary to the Planning Director), Kim Tanaka(Secretary to Boards and Commissions) and Noriko Sauer(Leeward Planning Commission Secretary) APPLICANT: DPM ACQUISITION LLC DBA DIAMOND RESORTS INTERNATIONAL (FORMERLY PACIFIC MONARCH RESORTS, INC.) (AMEND SMA 388) Application to amend Condition No. 2 (Time to Complete Construction) of Special Management Area Use Permit No. 388, which was issued in 1998 to allow the development of a commercial/condominium complex and related improvements on 76,739 square feet of land. The property is located on the makai side of Alii Drive bounded by Alii Drive and Kahakai Road, south of Royal Kona Resort and north of Kona Reef Condominium, Pua`a 3rd, North Kona, Hawaii, TMK: (3) 7-5-018:011. Secretary's Note: "- - -" indicates indiscernible speech due to internet/technical difficulties or simultaneous talk. CARR SMITH: It's 1:56, and we'd like to move on to Agenda Item number 2. Applicant is DPM Acquisition LLC dba Diamond Resorts International, formerly Pacific Monarch Resorts, Incorporated. This is to amend SMA 388: Application to amend Condition 2, the time to complete construction, of Special Management Area Use Permit 388, which was issued in 1998 to allow the development of a commercial/condominium complex and related improvements on 76,739 square feet of land. The property is located on the makai side of Alii Drive bounded by Alii Drive and Kahakai Road, south of Royal Kona Resort and north of Kona Reef Condominium, Pua`a 3rd, North Kona, Hawaii. TMK is (3) 7-5-018: Parcel 011. Staff? Jessica, you are going to present for us on this one. Thank you. ANDREWS: Yes, thank you, Chairwoman. I'm going to start off by sharing my screen—let's make sure that it shares properly here. Okay, is everybody seeing this initial introduction screen? 1 EXHIBIT E CARR SMITH: I believe so. Thank you. ANDREWS: Thank you. So, as you said, the applicant is DPM Acquisition LLC dba Diamond Resorts International, and this is an application to amend Condition number 2 of Special Management Area Use Permit number 388. Here we go. So what you are seeing is the location map. The project site is in Kailua-Kona in the Kona district. The project site here is outlined in red. The applicant is requesting to amend Condition number 2, time to complete construction, of Special Management Area Use Permit number 388, to grant a five-year time extension. SMA 388 was issued in 1998 to allow the development of a commercial/condominium complex and related improvements. The most recent design, which was granted final Plan Approval in 2017, proposes four levels of resort timeshare units above an existing concrete parking garage for a total of 46 three-bedroom units, two of which are ADA accessible. This map shows zoning for the project site and the surrounding area. So the project site is zoned Resort Hotel that's the V-.75, and the project site is outlined in red. And you can see that there are, there is a whole variety of zoning nearby ranging from Residential Single-Family to CV, which is Village Commercial, RM is Multi-Family, and there is some Ag further mauka from the site. The entire area around the site and the site itself is designated Urban State Land Use. And the General Plan designates the site as Resort Node, with a small portion being Open Area. Nearby this site, there is also Medium-Density Urban designation. This is the site plan, the proposed site plan, which was provided by the applicant. This was included, or this is the site plan that was part of the Plan Approval, the final Plan Approval that was granted in 2017. So, you can see their roof plan of the site proposal here. These are the proposed elevations that was part of the same package of drawings from 2017. Proposed perspective views that were part of the plans showing the four levels condominiums above the existing garage level. And this is the existing aerial view. The, what you are seeing inside the blue outline is a concrete pad that's existing at the site, which is the parking garage. And here you can see it as seen from Alii Drive. On the left is a photo facing north on Alii Drive; the project site is on the left. And on the right side of the screen is facing south, so the project site is on the right. 2 EXHIBIT E And this is a turn, this is a view of the turn from Alii onto Kahakai Road. So that would be the entrance to the parking garage. And then this on the right side is a view of the property from Kahakai Road, looking mauka. The planning director's recommendation is approval with conditions. That concludes my presentation. I am happy to address any questions from the commissioners. CARR SMITH: Thank you, Jessica. If you could close your presentation, I'd appreciate it. ANDREWS: Yes, let me CARR SMITH: Thank you very much. Question, Commissioners? Mr. Van Pernis. VAN PERNIS: Could you go back to your presentation, please? ANDREWS: Yes,just one minute, let me CARR SMITH: What was it that you want to see, Mark? ANDREWS: Which slide? VAN PERNIS: Let me try to ask question without the presentation. I noticed that none of the drawings provided by the applicant showed the office building, which is built makai of the project on basically the same property, or indentation of the property, so that the office building is surrounded on three sides by the subject property. ANDREWS: Yes. VAN PERNIS: Were you aware of that? ANDREWS: Yes, that's a separate parcel. That's been a parcel - - - VAN PERNIS: Yes, it is. Are you aware of why the applicant didn't include that in the drawings? CARR SMITH: Does the applicant own the parcel? ANDREWS: Not to my understanding. It's a separate parcel, separate TMK. VAN PERNIS: Yes, separate ownership. And do you know when that office building was constructed? ANDREWS: I don't know, that being not part of the project site. VAN PERNIS: It was after the original application of this property, isn't that true? 3 EXHIBIT E ANDREWS: Yeah, so, again, I don't, I don't know the history of that office building that is not part of this project site. VAN PERNIS: The applicant has, or the applicant's predecessor from whom it purchased, built certain improvements on the property, including a parking garage, right? ANDREWS: Sorry I didn't understand that question. Could you repeat it? VAN PERNIS: The applicant, be it Diamond or its predecessor seller Monarch, built certain improvements on the property, right? ANDREWS: On the subject— VAN ubjectVAN PERNIS: Yes, on the subject property. ANDREWS: Yes, there has been, there has been work done over the course of the past years. That's correct. VAN PERNIS: Do you know when that work was done? ANDREWS: If you look in the background, there are some—let's see, it would be the parking garage that you are talking about. I believe that was done in about 2008 and 2009, but the applicant could probably address that, more specific dates to the exact date. There were building permits pulled for that work. VAN PERNIS: As per the original approval, weren't the applicants required to improve the roadside with sidewalks and gutters, and improve—on Alii Drive—and improve Kahakai Road? ANDREWS: Well, we can look to you are asking me about the original conditions. VAN PERNIS: Yes. CARR SMITH: Item number 4, the Condition number 4 addresses that. ANDREWS: Yeah, on the original permit, that was Condition number 6 there, "Ah'i Drive and Kahakai Road shall be improved along the property's frontage with curb, gutter, and sidewalk construction, pavement widening, drainage improvements, and relocation of utilities along the Alii Drive and Kahakai Road frontages meeting with the approval of the Department of Public Works " VAN PERNIS: So they built a parking garage but not those improvements for the public. Is that right? ANDREWS: That's what has happened so far, Commissioner. 4 EXHIBIT E VAN PERNIS: And isn't it true that both tourists and locals walk along Alii Drive on that side? They can't walk on the other side because of the walls and construction at the road. Isn't it true that they walk, or try to walk where they are supposed to be and cannot- - -the sidewalk in front of the Hilton Hotel? - - - hotel was there? ANDREWS: Yeah, as far as the condition, what I can say is the applicant is expected to comply with the condition as stated. VAN PERNIS: By when? ANDREWS: That's part of what's being approved is whether there is a time extension to do all of the work. VAN PERNIS: So they partially built but didn't do the improvements to the roadside. Is that correct? CARR SMITH: So it's one of the conditions, Mark, and you want to know when it's going to happen? Is that— VAN hatVAN PERNIS: Yes. CARR SMITH: Okay, let's ask the applicant that when we get a little further along. Thank you. Any other questions from the commissioners for staff? (No audible response) Okay, thank you very much, Jessica, appreciate it. ANDREWS: No problem, thank you. CARR SMITH: Oh, Jessica, I did want to ask you if you had any comments or anything else to say because of the testimony that was given, any response. ANDREWS: Because of the public testimony? CARR SMITH: The testimon-the public testimony that was given earlier. ANDREWS: I personally don't have responses to that. I'm sure that the applicant may be able to address some of the testimony. CARR SMITH: Okay, very good, thank you. ANDREWS: Sure. CARR SMITH: All right, moving onto the applicant. Mr. Fuke, you are here on behalf of the applicant. Nice to see you again. Evan Oueam I saying your last name right, Evan? OUE: Oue, yes, that's correct. 5 EXHIBIT E CARR SMITH: Okay. And Kim Ishibara? OUE: Yoshimoto. CARR SMITH: Yoshimoto, okay. K. YOSHIMOTO: Thank you, Chair. CARR SMITH: You're welcome. And that's it, right? That's your group? Is there anyone else here for your, on behalf of the applicant? FUKE: That's it, Madam Chair. K. YOSHIMOTO: Yes. CARR SMITH: Okay, very good. Could you folks please raise your right hand? Do you swear or affirm to tell the truth before the Planning Commission today? FUKE: I do. OUE: I do. K. YOSHIMOTO: We do. CARR SMITH: Very good, thank you. You received the background report and the conditions, correct? FUKE: Yes. CARR SMITH: Okay. You can go ahead and let us know what you think of those, the response, and give us any other presentation that you'd like. FUKE: Sure. Good afternoon, Madam Chair, Members of the Commission. Again, for the record my name is Sidney Fuke. I'm the planning consultant for the applicant. I've been kind of retained indirectly by the attorney, Ms. Kim Yoshimoto and Evan Oue, whom you introduced earlier. So, the attorneys—if you have any questions regarding the land ownership, the applicant themselves, they've been in the position to answer. My role is essentially just to discuss the planning related issue. In specific response to your question about whether the applicant has had a chance to review the staff's background report and the recommendation, the answer is yes, and I'm happy to say I'm personally very relieved that the staff's recommendation in this count is a favorable one unlike the last one we had to go through, so I'm very, very relieved. Thank you very much, Planning Director and Jessica. 6 EXHIBIT E I'd like to, you know,just give somewhat of the history and then directly kind of answer Commissioner Van Pernis's question. As I recall, the existing building that has been straddled by this property was there when the initial permit was secured. And if I recall correctly, it was a real estate office by C. J. Kimberly. Whether she is currently there or not, I'm not really sure. So all of the improvements that you see there like the foundational work there, it's kind like they have occurred subsequent to the, you know, the existence of the real estate office. Normally you know, Jessica had explained what, the final Plan Approval was granted, the one in 2017 and so, if you look at it from the fact that the property is already zoned Resort, it's within the GP Resort area, consistent with the Kona Community Development Plan, so on and so forth, that if you have a property along those lines, then very simply, you know, you need to have like Plan Approval. And Plan Approval is a process that is issued by the, you know, it's handled by the Planning Department. Their role, you know, on a Plan Approval, is essentially to decide whether the project use is consistent with the zoning, you have the required setback, you have the required parking, landscaping, so on and so forth. And once you secure your Plan Approval, then your next step is to go straight into your construction permit, and that will be your grading and your building, electrical, plumbing, so on and so forth. In this situation, you know, the reason why we are before you again is like, it's the Special Management Area permit requirement. And just to give the Commission a 30-second understand- sharing, rather, of the SMA law, it was passed in 1975 by the state, and basically it was designed to provide special control, you know, within area along or approximate to the shoreline, and the law delegated the enforcement responsibility to the counties. So, you know, under Rule 9, the Commission's Rule 9, you know, you have a way that the boundaries are established, and you have the permitting process. And so, in situations like this, your rules call for having the planning commission make the decision on a Major SMA permit. Essentially, however, the SMA permit, the rules and regulations relating to SMA permit basically want to make sure that, you know, you don't, the project does not degradate the coastal area, it properly addresses historical, archaeological issues, it's got to make sure that it's consistent with the General Plan and the zoning code, there is an appreciation for the protection of native Hawaiian rights. So these are your, all of your, the guidelines and the criteria, from which then a decision is made either by the planning director for a Minor SMA permit or by the planning commission for a Major SMA permit. I'd like to kind of like segue just a bit and share with the Planning Commission a very significant judicial decision that was rendered by the Intermediate Court of Appeals back in 1993. The planning, it was called—and I'm sure that Commissioner Van Pernis being an attorney is well aware of that decision back in 1993 the county planning commission had denied an SMA permit for a two-story office building, proposed office building on the corner of Kuakini Highway and the Seaview Circle, and that property was already zoned Commercial, they came in for an SMA permit, then the commission, because of traffic-related kinds of concerns raised by surrounding property owners, they, the commission in their wisdom denied the permit. So the person, the applicant, Larry Topliss—not topless, I mean, L-I-S-Sso he had appealed, then finally went all the way to the Intermediate Court of Appeals. And essentially what the court said was that—and I'll just kind of read it to you—it just says that traffic from a development within the SMA is not shown to have a substantial effect on the coastal environment, then it cannot be used as a basis to deny the SMA permit. And so as a result, if you look at it, you know, from that standpoint, and you look at your laws for like zone change time extension, like the one, you know, we just went through on the Pua`a/Suffolk, there was already a requirement 7 EXHIBIT E for a traffic impact analysis report, that is called for because you are trying to amend the zoning. As it relates to SMA, however, there is no statutory requirement for a traffic study, you know. So that's - - - is a major difference. So, essentially, what you are looking at here is now, looking at the guidelines for, you know, for an SMA permit, and take - - - lenses for a zone change. So the reason why I say this is it's very critical, I mean, you look for a time extension as it relates to SMA versus time extensions for zone change, you have different kind of lenses that you pretty much, you know, must wear. So I say this because like the public's, you know, comments both the written as well as this morning's testimony, they generally, you know, follow along the line of like visual, you know, it's going to block my view, from whether it's Kona Mansion or Kone Reef, it's excessive traffic, the noise, we don't need more commercial developments, it's unsightly, and there is some safety issues; I think that, you know, the applicant has had a chance to review all of these concerns, they understand them, and but the critical issue, you know, from an SMA standpoint, do those kind of concerns necessarily rise to the level that, you know, that this project violates the SMA goals and policies and objectives? And we would say no. You know, like, specifically, if you look at from an archaeological, cultural perspective, you know, there is, none of those issues. We don't have a sea level rising or erosion concerns because this is definitely not a shoreline parcel. I do recall like one of the testifiers saying that, you know, it's going to have an effect on Honl beach; but Honl beach, that area, is located south of the Kona Reef project, and so it's away from this, so it has none of this kind of coastal erosion sea level rising issue. In terms of like shoreline access, this is not a coastal access; however, the fact that the project, the existing conditions already require that the project, before it can get occupancy, have curb, gutter, sidewalks fronting Alii Drive and also down on Kahakai, you know, I think, would help out rather than deter the public access question. I think that the planning director's recommendation is really like on point because you are looking at it purely from the standpoint of whether the project meets the SMA guidelines. Now come to kind of explaining a little bit to, you know, the entitlement issue on the project. The first SMA permit for the project was approved in December of 1998, so it was granted a five-year construction window. They didn't do it,but in the meantime in 2002 the property was then purchased by a group called Pacific Monarch Resorts. So they came in for a time extension that was the first-time extension, administrative time extension, in 2002. They secured final Plan Approval, and then they got the planning commission extend it, which would have been the second-time extension in 2008. But Pacific Monarch did not necessarily sit still; what they did was they made quite a bit of improvements to the waterline along Walua Road, it paid water commitment fees, they also applied for a foundation building permit, they had, built an elevated slab. Those all occurred, as your staff had indicated, from about 2007 to 2009, during that general period. The plan sets that were reviewed at that time showed that the access would come in from the makai side of the project, and so that's where would be the entrance to the project, and so that's the parking lot entrance. So the parking lot is not coming from Alii Drive, it's not coming from the mauka-makai road to Kahakai; it's basically coming from the, you know, makai side of the building. So in the meantime Pacific Monarch Resorts, you know, they had some financial problems, and the one that picked up the ball is the applicant, Diamond Resorts International. So they came in and purchased, or acquired, the total interest back in 2013. 8 EXHIBIT E So in all fairness, like, you know, I realize that you are looking at the period of 22 years from 1998 to where we are right now, but effectively, the applicant had only like control of the last six years. And I respectfully request that the commission take that into consideration when you make a decision. So, bear in mind now the applicant gets who control of the property in 2013, they had a window, so they applied for one extension in 2014. So that puts it—because they just acquired it—you know, 2014 to 2019. The difficulty in that situation was that during that period, when the property was acquired, it was a publicly traded company, and then they gradually transitioned to private. And so for the first two or three years during the transitional period, they really couldn't do much until that, that business transition, you know, was finalized. It got finalized in 2017, so they applied for the Plan Approval, I think as Jessica had mentioned, you know, with the timeshare,parking lot, four-story structure, so on and so forth. So now, you know, we are taking you to the year 2017, and you have to understand that they have to finish construction by the year, May of 2019. So it was something like about a year and half window, within which to finish up the construction. But they had a lot of things to do, because, bearing in mind that they had foundational, the previous developer had some foundational work done, you know, starting the parking area and all that stuff. So they had to do their own evalu-the current, Diamond, Diamond Resorts, had to evaluate to see whether they can or cannot use the existing improvements. So it took a lot of time for them to do that kind of evaluation, and they knew that they weren't able to complete it before May of 2019. So as a result, they applied for the extension, and this is where we are right now. So,you know, like, and I think that Kim and Evan, you know, the applicant's attorney, can attest to the fact that the developer is, you know, ready, willing and able to do the development. They've spent like over 30 million dollars for the last ten years, you know, within the State of Hawaii. It's a large timeshare company. They have offices in the Royal Kona Coast Resort. You know, and obviously, if you have only like about a year and half window before it expires, you know, they can't really do much, so what they were doing was they were kind of like holding off pending the outcome of any, you know, like this time extension request. I think that the only thing that I would like to add, and, you know, and having this further discussion with the owner this morning, you know, like as the public was testifying, there was a lot of concerns relating to like the building is unsightly, people were kind of like doing drug activity, you know, all this kind of stuff, and the owner, when I spoke to the owner's rep in, who listen in Florida this morning, he said that they are committed to making interim improvements, you know, until they can get, you know, like the building permit finalized and start the construction. They are willing to do, you know, to address, do something to address the safety and the unsightly visual kind of comments that were made. So what we would like to kind of propose is like a condition that would essentially state as follows: that"the applicant shall submit a site maintenance program to the Planning Department within 60 days from the effective date of this third amendment. The said program shall also include an implementation timetable and shall terminate upon issuance of a building permit pursuant to this SMA permit." So, essentially then, you know, like one of the person testified saying that, you know, we try contacting a certain-certain person, and nobody answers the phone, you know, that kind of stuff, well, you know, we would visualize that this site maintenance program would include contact information. It would be no different than like how, I think, the planning commission had required for like on geothermal permits or certain activities, you have like contact, contact information provided. So 9 EXHIBIT E this is in concept, you know, what the applicant would like to propose is an additional condition. Aside from that, I mean, you know, we are prepared to answer any questions that you may have. CARR SMITH: Thank you, Sid. Do you have anything to add to what else that maintenance program would consist of besides contact information? FUKE: Well, not specifically, but, you know, like the owner has heard about that, the issue of like graffiti and people illegally, you know, tramping through the property, trashing it, and so it's unsightly. And I think it's just really like just trying to be a better neighbor, and that's the whole objective in coming up with a program like that that will be vetted with the Planning Department. CARR SMITH: Thank you. Commissioners, questions? Faye, go ahead. YATES: Okay. Mr. Fuke, my first question I have for you is, do you live in Kona? FUKE: No, I live in Hilo YATES: —live in Kona? FUKE: I live in Hilo. YATES: Oh, in Hilo? FUKE: Yes. YATES: Okay,just wondering. It just seems like—and this is along Alii Drive, right? FUKE: Correct, yes. YATES: And, you know, it seems like in the last few months we've had quite a number of people who have bought property along Alii Drive and had applied for permits, and they were going to build, they were going to build, then they couldn't build, then they sold, then they sold, then they, etcetera, and then we have this problem of, you know, congested Alii Drive and, you know, having hurricanes, etcetera, etcetera. And here we want to build another one there, which is right on the highway there, and we are talking in excess of—it said 119 parking stallsso I'm assuming they'll have a hundred-plus cars there. So, again, we have the problem of traffic congestion. And if these people, who had bought it in 2017, were so anxious about building there, why didn't they start in good faith? I know you are saying there are a lot of things that have to be done, but in good faith, would you not have thought that they would have started something? And then, you know, then they can show us what, this is what we've done, you know, we've cleaned up the place, we've done this, this, this. But it doesn't seem like that. And every time, there is always somebody coming in, they want to extend another five year, extend another five years. And then, I'm just wondering about the people who live in that area. You know, it's like, it is very congested there. So I think that's a good reason, you know, for people to be upset about that. 10 EXHIBIT E FUKE: Yeah, I can understand, I can understand the traffic issue that you raised and the neighbors also raised, and so that's why I have to kind of like preface my presentation by noting that, you know, like the permit that we are going for right now is not a zone change permit, it's not an extension for zoning; it's like for an SMA permit, whose primary policies and objectives are kind of like coastal related. And, you know, the other thing in terms of like, you know, the owner picking up the property and why didn't they do anything within the last year and a half? I think I tried to explain that, you know, they had some organizational issues, and so until that organizational issues, you know, the company itself, were settled, and then from there they can kind of move on to determining how to make the improvements. And the question was, the major question that they had to ask themselves is that, do they tear down and restart again or do they do something that takes advantage of something that's partially completed right now? So that's an evaluation that they had to make. And at the same time they were faced with the deadline of having the SMA condition stating that you had to be done by 2019. And if you have like less than a year to complete the construction and not knowing where you are going to go if the extension is denied, then it doesn't make sense for any reasonable person to spend money not knowing whether you can complete the project within the window that's allowed. CARR SMITH: Understood. Mike, I think you had your hand up next. Go ahead. VITOUSEK: Thank you. My question is in regards to the applicant's—let's see nonperformance of the conditions. So, the reasoning, the justification stated in our recommendation packet is that, "According to the applicant, there were numerous reasons [for the delay], which include financial [fiscal] challenges with the previously proposed design of the project that make it impossible to meet the current deadline [to complete construction]. After assuming ownership of the property in 2013, Diamond Resorts had the opportunity to conduct a feasibility study to determine the current actual cost for the original design of the project. The study revealed that the actual cost exceeded the budget allotted for the project by a range of 20 to 30 million dollars." Is that, was that feasibility study done on the 2017 Plan Approval? FUKE: Commission- - - can II'm not aware of the feasible study per seso, can I defer that question to the applicant's attorney who are based on Oahu right now? VITOUSEK: Sure. CARR SMITH: Evan, would you like to respond to that, or Kim? K. YOSHIMOTO: Aloha, Chair, thank you. So, from my understanding, the feasibility study was conducted prior to the 2017 Plan Approval, but they were still, you know, and they currently are still revisiting the design. So it was prior to that, in answer to your question. VITOUSEK: So, would that have been satisfied by the design that the applicant submitted in the Plan Approval? 11 EXHIBIT E K. YOSHIMOTO: Would that have been satisfied? I think - - - VITOUSEK: - -VITOUSEK: Right, their concern was—hold on, one second their concern was that the proposed, the permitted project was too expensive, and if that feasibility study was done prior to the 2017 Plan Approval, one would assume that the project that they submitted for a Plan Approval would be a project that they could afford to build. K. YOSHIMOTO: Right, so I was assuming it was done before, but I need to confirm. But they were looking for financing options during the entire process. VITOUSEK: So I believe that that's completely material in the justification for nonperformance in that either they submitted a Plan Approval application for a project, and then when they got that Plan Approval back, they realized, wow, we can't afford that, which means they designed the project that they can't afford, which is no one's fault but their own. K. YOSHIMOTO: Well, they didn't design it; they inherited the project. So they did the feasibility project once they acquired the project. VITOUSEK: So the Plan Approval that was submitted in 2017 was submitted by the current applicant, correct? K. YOSHIMOTO: Correct, but again VITOUSEK: So the design had changed from the applicant, the previous Plan Approval by the previous applicant to the current Plan Approval by the current applicant, correct? K. YOSHIMOTO: Yes. VITOUSEK: Okay, so the applicant submitted plans K. YOSHIMOTO: But let me, let me VITOUSEK: for their construction, and those plans were approved by the county. The discussion in hand is whether it's the applicant's fault whether they could afford those plans or not. And my contention is that they've either redesigned that application and submitted a plan that they can afford or they designed something that they can't afford; in either case, in my opinion, that's the applicant's fault as a developer. FUKE: I can, if I can kind of add to that—am I muted? CARR SMITH: No, you are good, Sid, go ahead. FUKE: If I can add to that like, Commissioner Vitousek, you know, Plan Approval they did retain the services of an architect, and so the architect basically just did the design taking off of the existing foundational work, or the original plans, and so they had omitted like a significant portion of the, you know, the proposed retail area,but the basic configuration was the same. So 12 EXHIBIT E usually what happens is that, you know, Plan Approval just provides a broad design, and then your next phase is, you know, like once that's done, your next phase is to really do the construction drawings pursuant to the broad design. And so before they did the construction plans, they did some preliminary investigation in terms of what the cost implication would be between utilizing the existing improvements, the foundational work, or tearing down and starting it. And so I think I'm just kind of, you know, - - -right now but it's probably during that phase when after the plans were, you know, from a design standpoint, was accepted, they were starting to, the architects starting to work in the specific numbers, and kind of like decided like, you know, this preliminarily might cost you this much. I think it's no different than any person doing like a residential home; you know, you've got something this is what you kind of want, and as you go through the process, you realize that, wow, this is too expensive, it's kind of overbudget, so then you've got to kind of scale back. And I think this is kind of like where they were. VITOUSEK: So, I mean I totally get that, get the process that we are alluding to and all very familiar with that, working in the development industry in Hawaii. I know very well that the Plan Approval that goes into it, you've already baked in a certain amount of requirements that then have to be detailed in the construction plans,but you've basically set your bar on what you need to construct in that Plan Approval; you can't alter that after you've gotten Plan Approval. So, again, you know, we don't have the developers here to be able to tell us one way or another, but either they designed a project that they can afford or they've designed a project that they now can't afford. But this is, this is their project that has Plan Approval on it, the current developer. CARR SMITH: I think- - - FUKE: Go ahead, Kim. CARR SMITH: Jessica, I think you wanted to respond, go ahead. ANDREWS: Yeah, it's more just pursuant to this train of conversation regarding Plan Approval. The Plan Approval actually is currently expired, so—it expired in 2019—so they, the applicant will have to resubmit plans, and maybe that will include a redesign, as Kimberly alluded to. But there will be another round of Plan Approval review and another final Plan Approval. So,just so you know that the Plan Approval actually is expired right now. CARR SMITH: Mike. VITOUSEK: Sure, yeah, I mean, totally get that, that the Plan Approval is expired now, because—and my understanding is the SMA permit is also expired now. Is that correct? ANDREWS: Officially yes. VITOUSEK: But what we are discussing is the reasons for nonperformance prior to the expiration. Along those lines, though, I would like to discuss the duration of time between the applicant's request for time extension, which came in prior to the expiration of the SMA permit, until now when we are post-expiration of the permit. What is the reason behind that? 13 EXHIBIT E ANDREWS: I can kind of begin, and I'm sure Kimberly and Evan can chime in, but the primary reason actually is related to making contact with SHPD regarding a comment that OP included in their agency comments, and there was a series of months - - - and I'll let the applicant's agent address this more, where they multiple times tried to make contact with SHPD. We as the county Planning Department reached out to SHPD to try and receive more comments regarding this project, but we were almost entirely unsuccessful in being able to contact them. CARR SMITH: Kimberly, go ahead. K. YOSHIMOTO: Thank you, Chair. Yes, we applied in November of 2018, and we were proceeding with the process. And there was a lava tube found on the property prior to Diamond Resorts acquiring it. And based on the, you know, the information we had, they - - - it was filled and, you know, I think it was in 2008 planning commission minutes, it was determined by the planning director that there were no concerns. So,you know, this process kept evolving. We thought that was sufficient, but then in working with Jessica, the Planning Department—and I appreciate this concernthey wanted us to get a direct written confirmation as to SHPD's perspective from SHPD. So we proceeded to do that. So we had to pause the timeline, which created another really long delay for the developer. We tried to reach SHPD many times. We were unsuccessful, as Jessica mentioned. So finally, we coordinated with I think it's Jessica and Jeff, and because they were working with SHPD on a number of other projects, including ours, with regards to these kinds of delays. And finally, we were able to get a letter this year; the letter was dated March 2019, but we got it this - - -. So from that point we've worked with Jessica to continue this process. CARR SMITH: Does that satisfy you, Mike? VITOUSEK: Well, so, my question is then, are we dealing with an expired ordinance, I mean, expired SMA permit, or is this, because there was delays from - - - government agencies, is this still a valid SMA that can be extended? ANDREWS: We might need Jeff or Michael Yee to weigh in, but we, this has been postponed, so we've been considering it still as a current application. I'm not sure that totally addresses your question, Mike. VITOUSEK: So we are, basically, we are treating it as if it's not expired because of the delay between the application and hearing back from the Historic Preservation Division? FUKE: My understanding is that the application for a time extension was filed, was timely filed. It's just that disposition of it is like, is past the deadline. CARR SMITH: Jeff, did you want to weigh in? DARROW: Sure. I think Jessica had talked about, as well as the applicant, when this came in, it came in prior to, quite a distance before the expiration, and we had realized that there was this issue that was being brought up regarding a lava tube, and it was concerning to us, and we 14 EXHIBIT E wanted to make sure that there was some sort of response from SHPD. And the applicant was ready to proceed, but we had asked them to put the brakes on. We had made a number of attempts to reach SHPD and request a comment letter. They had made a number of requests. We had finally received a comment letter, and basically, they said that they had no objections, go forward. And it was like, okay, and that was that. And that's our, Planning Department Exhibit 14. CARR SMITH: Mike. VITOUSEK: So, that letter from SHPD that reviews the time extension, that is the only thing that they provided in order to get any documentation that Condition 5 had been adhered to in the treatment of the lava tube? DARROW: That's exactly what we asked for. We were saying, look, our condition is very explicit; it says when you come across these things, you need to stop, you need to contact SHPD and us, and you need to, you cannot proceed until that's resolved. And we wanted some sort of response from SHPD that they had done that, and—because we had nothing in our files. VITOUSEK: Yeah DARROW: Again, SHPD, the only thing we got from them was our, was that March 14'h letter. VITOUSEK: Which says that they are not reviewing it because it's a paper transaction, and they will review it if there is ground disturbance. DARROW: We had, we - - - something specific to the lava tube. That's what we wanted. VITOUSEK: Yeah ANDREWS: Mike, we actually, we actually received that letter, you know, in March of 2019, I believe it is, from SHPD, and we took the time, you know, as Jeff said, we were concerned, we actually reached out to SHPD in this series of contacts saying, are you sure this is your final assessment, we would like a little more elaboration. VITOUSEK: Yeah ANDREWS: There was, there was nothing. VITOUSEK: Wow, that's, that's really too bad. Okay, well - - - for my purposes then, I feel like we have to treat it as if the applicant is in time. DARROW: Yeah. CARR SMITH: Thank you, Mike. I think I saw Max's hand up next. Go ahead, Max. 15 EXHIBIT E NEWBERG: Thank you, Madam Chair. I apologize, I think I might have stepped into the meeting a few minutes late there. I don't think this would fall into a Board of Ethics issue, but just on a clarity, I did meet with Boe Greene with Diamond Resorts when they were at the Kailua Village [Design Commission] presentation for their design, but have had no communications with him since. I just wanted to make that as a disclaimer. My issue, one, to echo Commissioner Vitousek's, you know, seemingly maybe a submission on a project plan that far exceeded their budget, for myself, seeing that original plan that looked very high-end for the area here on Alii Drive, and, you know, obviously, there is going to be something resubmitted. My hope with that design thought in process they were proposing could possibly create a renaissance of Alii Drive, you know, to kind of bring it back to the lost or what it once was back in the 70's when it was a newer resort area. With all those things said, I would like to hear more about the site plan. It may be proved to be, might be a little bit early for that, but my concern is, in looking at the site, the location and the issues that it has had (indiscernible–noise) to go through and most likely have to demo, demolish what is existing, and then within the current plan of hopefully having a safe and hard barrier that would be lit and possibly with security,proceeding into construction. I don't see that's my only concern with this area, you know, listening to the complaints and concerns, and then also looking at as a, as a process through construction. Looking at the elevations from street level to the top of existing concrete, you know—it's four blocks away from where I currently am—and it's logistically difficult. So, you know, besides the concern of submitting a- - - (At - -(At this time, around 2:50 p.m., there was an internet connectivity issue in the area where the WebEx host was located, which disrupted the YouTube live-streaming and recording for approximately eight minutes.) LEY: - - -we lost feed, had to like restart— CARR estartCARR SMITH: Okay LEY: YouTube stream, so if anybody was watching, they are going to have to reconnect- - - they reconnect. If they just, you know, refresh their browser, it will come back up. CARR SMITH: Okay. Thanks, everyone, for your patience. I guess this is as good a time as any for me to ask the commissioners a question here. So you can see on our screen, we have Wendy Reinoehl; Wendy was, evidently she signed up for, to be a testifier and she signed up in time, but she just got missed by accident from getting put on the list. I don't believe she was on this morning, because I didn't, I don't remember seeing her name and I did ask if there were any testifiers that I missed, and nobody spoke up; however, she is here, it's this agenda item. And so it's up to you guys if you want to open public testimony to hear Wendy. Go ahead, Mike. VITOUSEK: I move to reopen public testimony to allow Wendy Reinoehl the opportunity to provide her three minutes of public testimony. CARR SMITH: Okay, very good. 16 EXHIBIT E YATES: Second. CARR SMITH: Faye, thank you. Second by Faye. All in favor? COMMISSIONERS: (Inaudible response) CARR SMITH: Anybody opposed? (Inaudible response) Okay, Wendy, are you there? Let's hope she is there. Her placeholder is there. Wendy, if you are available VITOUSEK: She just sent in a note that came upon the side that says that she doesn't have a microphone, and that she is sorry. CARR SMITH: Oh, I see that now, okay. All right. Well, we tried. VITOUSEK: In that event, I'll make a motion that we close public testimony. CARR SMITH: Thank you DEFRANCO: Second. CARR SMITH: motion to close, seconded by Barbara. All in favor? COMMISSIONERS: Aye (and inaudible response) CARR SMITH: Thanks, you guys. Okay, so, where were we? VAN PERNIS: I was asking questions. CARR SMITH: Okay. VAN PERNIS: There was no traffic study in the 1990's with the prior owner. Apparently, there is no study now. The traffic 22 years later is much heavier, and this project is across from the intersection of Alii and Walua Road, as well as Kahakai. So I'd like to ask the applicant—and those are substandard roads, by the wayI'd like to ask the applicant whether he would agree to do a traffic study of this project's impact now and in the future on the traffic on Alii Drive, Kahakai, and Walua, and the intersection of Walua and Alii. I believe a traffic study would be required, if there was a new application. Are you going to do a traffic study and defer this so we can see a traffic study? Twenty-two years later? CARR SMITH: Sid, are you there? I don't see you. Or do you want Evan to FUKE: Here I am. CARR SMITH: Okay there you are—go ahead, if you'd like to respond. 17 EXHIBIT E FUKE: Sure. I think I had indicated earlier that a traffic study was not required, you know, for SMA applications. They would be definitely required for a time zone, rezoning time extension, you know, provided that you have like 50 or more movements. And I was, you know, that's the reason why I kind of pointed out to the Topliss Intermediate Court of Appeals decision that provided guidance to planning commission in terms of how to address traffic as it relates to SMA. CARR SMITH: Okay. VAN PERNIS: The application is concerning the Special Management Area Use Permit number 388, not an SMA. So I'll take the answer as a no;you are not willing to do it regardless of that court decision you referred to. Next, Diamond bought the price from, did they buy the property from Pacific Monarch or someone else? FUKE: I'm going to have to defer that question to the attorneys. K. YOSHIMOTO: Pacific Monarch. Commissioner, it was Pacific Monarch. VAN PERNIS: When Diamond bought the property, did the price and cost, or the price was determined, as well as the terms of sale; in other words, no claim of prior misrepresentation by seller, right? K. YOSHIMOTO: No, but I also want to—and I don't have all of the details but Pacific Monarch went insolvent because of the recession, and Diamond acquired a number of their assets, including this property. VAN PERNIS: Diamond took on the risk of completion when they brought from Monarch, right? K. YOSHIMOTO: Sure, if you acquire a property, it's your property and you need to do what you need to do. VAN PERNIS: So just like Diamond decided whatever upgrade, whatever upgrade in design cost that might add to the project, and they voluntarily assumed the risk of the feasibility study, and one was to be conducted, and one might reveal, correct? A feasibility study was not a condition of the purchase. K. YOSHIMOTO: We acquired the property in 2012. VAN PERNIS: Without a condition of learning feasibility study, is that right? CARR SMITH: Without what? K. YOSHIMOTO: (Low-volume private conversation with Mr. Oue) 18 EXHIBIT E VAN PERNIS: So the cost of construction was your risk and should be no surprise. Isn't that right? K. YOSHIMOTO: I'm sorry, Chair, I couldn't und- I couldn't— VAN ouldn'tVAN PERNIS: The cost of construction was a risk assumed by Diamond and should be no surprise whatever it is. Isn't that right? K. YOSHIMOTO: I suppose so, but circumstances change every year and through different economic cycle. VAN PERNIS: And the increase in price over, natural increase over five or ten years or more was assumed by Pacific - - - look into it, and then assumed by Diamond (indiscernible–noise). Isn't that right? K. YOSHIMOTO: I'm sorry I - - - CARR - -CARR SMITH: Could you repeat that, Mark? VAN PERNIS: If there was an increase in cost over the period of time on Pacific first built, that increase over five or ten years or more was something that Diamond assumed. K. YOSHIMOTO: Yes. I think we can all agree that's a true statement. CARR SMITH: - - - can we move on, Mark? Is there VAN PERNIS: There is more. CARR SMITH: something else that you don't already know that we can maybe find out from these folks? VAN PERNIS: Well, if you let me finish. Your application referred to the feasibility study as a reason why you wanted another delay. But then all these things, the cost, the time involved, and the upgrades, and—well, I wouldn't—did you assume that risk? K. YOSHIMOTO: So I don't know what you mean, Commissioner, about application with regards to the feasibility study. There have been a number of reasons why there have been a delay. Sidney initially spoke to some of the corporate changes; it went public in 2013, it went private in 2016 VAN PERNIS: - - - K. - -K. YOSHIMOTO: that's just part of what happens in a corporate environment. Sometimes there is a change in who controls its assets - - - changes in terms of construction costs and what 19 EXHIBIT E was feasible certainly. We had agency issues. So there have been a number of reasons why there have been delays outside of just the initial acquisition and the risks we took on at that time. VAN PERNIS: Going public to private, and when and how much you had credited, is something other than one's control, right? K. YOSHIMOTO: Uh VAN PERNIS: No one forced them to go private or prevent them from getting credit whenever they thought might be a good idea. K. YOSHIMOTO: I don't think that decision is under, in any one person's control; that is a larger decision than I can speak of VAN PERNIS: Well - - - I don't mean to interrupt. If I interrupt, please let me know. CARR SMITH: Okay, can we move on? Do any other commissioners have questions? VAN PERNIS: There are several other questions I'd like to complete CARR SMITH: Well, we need, you can't just go on and ask 20 questions when there are other commissioners who might have questions as well. They might have one or two. You can't— VAN an'tVAN PERNIS: While they might have one or two, I'd like to hear the answer. Now, the Kona Reef neighbors got 15 years of the nothing, and you want another five years, no curbs, gutter, sidewalk, one of the substandard roads even though they are heavily used for walking traffic. Is the applicant willing to install the sidewalk and other related improvements, if this matter is further delayed? K.YOSHIMOTO: Commissioner, you are speaking to the current condition that's already part of the prior approval. Yes, certainly, certainly, if- - - VAN PERNIS: You are willing to do it right away? K. YOSHIMOTO: I can't I can certainly go back to the client I can't commit to a particular date right now. FUKE: You know, like normally, if I might, normally like outside infrastructure improvements are done in conjunction with the project itself for a couple of reasons: One, it relates to cost; and the other one is that if you make this off-site improvements and then you are going to bring in heavy equipment that's going to result in the destruction or the relocation of improvements already made, somehow it just kind of like doesn't make sense. And that's the reason why in the original condition, which I think is a wise one, is to time the completion of the improvements in conjunction with the, any use of the property. 20 EXHIBIT E VAN PERNIS: So you built the underground garage and the foundation, but you don't want to build anything that might help the public like the roads and sidewalks that you are otherwise required to build. Is that right? FUKE: The project is CARR SMITH: Can I speak FUKE: The project is obviously like far from completion—and, Madam Chair, like if I might want to make, you know, a request maybe of either you or your counsel, you know, I'm just trying to see where some of these questions are leading to as it relates to the guidelines and the objectives of the SMA. CARR SMITH: I understand, yeah, and I VAN PERNIS: - - -permit— CARR ermitCARR SMITH: I wanted to comment because I thought the same thing that you did, Mark, I thought why wouldn't they be doing this sidewalk ahead of time to benefit the community. But if you think about what Max said, and if you think about the logistics of building this project, you don't want people walking directly in front of it, underneath it. They need to have that space to work - - - VAN PERNIS: I think that, but—can I interrupt— CARR nterruptCARR SMITH: - - - don't interrupt me, Mark, please don't interrupt me, and I'm moving on to VAN PERNIS: I'm sorry, I thought you were finished. CARR SMITH: No, I'm moving on to other questions. Mike, go ahead. VITOUSEK: - - - CARR - -CARR SMITH: Mike, unmute. VITOUSEK: Thank you. Also I just wanted to affirm what Commissioner Van Pernis said about the—let's see—going public and then going private as being result of the applicant's decision that was not outside of their control. You know, these are decisions that they made, that affected their ability to do the project within the conditions (indiscernible–noise). Moving on from that, you know, we are looking at a project where we've seen multiple revisions and redesigns and are now again looking at another redesign. And my question is, at what point does the redesign go so far as it is no longer in line with the existing SMA permit, and a new SMA permit would be needed for this newly designed project? 21 EXHIBIT E CARR SMITH: Does the county want to respond to that? Or Sid? Go ahead VITOUSEK: I'd love for the county to respond to that. CARR SMITH: Yeah. Jessica, are you there? ANDREWS: Yes, hi. So at what point, it would have to go beyond the bounds of the original permit in order to, in order to require a complete resubmittal. VITOUSEK: So, is that the parcel boundary, or is that the boundary of the footprint of the proposed project? ANDREWS: It would be the, it would be the proposed use; it would be the proposal for the development, for the use. VITOUSEK: That's not super clear in that if they are proposing a retail and condominium project that house 48 units and now they are requesting an extension with language in here that it's going to be a redesign, and we don't know what that redesign is going to be like. How, how can we approve an extension when we don't know what's being proposed? ANDREWS: Yeah, I hear your, I hear what you are saying exactly. It will have to, again, it will have to go through Plan Approval, and Plan Approval is pursuant to the SMA Use Permit and would have to comply within the bounds of the SMA Use Permit. So Plan Approval will not be granted basically, if it doesn't meet what was described in the [SMA] Use Permit— VITOUSEK: ermitVITOUSEK: So the Leeward Planning Commissionoh, sorry, go ahead, I apologize. ANDREWS: Oh, yeah, no, I just wondered if Jeff Darrow wanted to elaborate on that at all based on when a new SMA Use Permit might be required. DARROW: Well,just as what you had mentioned. It's, I mean, there is a number of factors that can come in to play. If the application expands, usually that's the issue. Something goes beyond what was originally requested, not less than but more than, whether it's more land area, whether it's a greater project, a greater use. In this particular case, it appears that there are actually, they have less units than what was originally proposed; they let go of the office and commercial, or a majority of it. The other key factor that is unique in this particular application is time; very rarely do we see an application that comes before us where we see somebody asking for a third or fourth time extension. And this is the discussion that we had about a year ago when we went through the talk about time extensions and permit amendments. And that was a thought about the direction the Leeward Planning Commission was considering that there comes a point where we need to change the rule to say that if you've gone beyond a certain amount of time, you need to come back in with a brand new permit, not just a time extension request. Unfortunately, that rule hasn't changed at this time. The other factor was that that would play in if the applicant didn't come in within a timely manner; let's say that the time stopped a year or two, I mean, they came in a year or two or three after the actual time. In this case they came in in a timely manner to request a time extension. 22 EXHIBIT E The other matter I wanted to bring up on this is that—and I know Sid has been touching upon it—is the matter of traffic and its relationship to the SMA. There was that court case, the Topliss case, that you may be familiar with, that we put in our applications at times to refer to the relationship between traffic and SMA approvals. Unless there is a clear nexus regarding traffic impacts to the SMA, usually that is not something we can incorporate. It's unique to see this condition in here, Condition number 4, where it's requiring the applicant to put in curbs, gutters, sidewalks, and other improvements; in an SMA permit, without a change of zone, that is usually, nowadays that's a tough, that's, there is a line there that we may sometimes get challenged on. But in this case, the applicants were amenable to it when it originally was approved. Topliss I think came after that. And the reality is without curbs, gutters, sidewalks on this project, it would not be a safe project; it would not be a good project. But to be able to require the applicant to do a traffic study and out of that traffic study require them to do improvements, off-site improvements, that's where our challenge comes at times with just SMA permits. Normally, it's with change of zones where you are increasing the density or you are—in this case this is zoned Resort, they are coming in for just the SMA permit. I didn't mean to go off track there. I wanted the main issue that you were asking is when do we really require a new permit. And, again, at this point it would be the commission's request. In this particular case being—if the commission needs additional information to be able to come to a decision, and the only way to do that is to have particular information that has not been provided to be provided as part of the application, or to come in with a new application—in this particular case, the director has recommended that the application is sufficient, and that the conditions are sufficient, and he is recommending approval. CARR SMITH: Thank you, Jeff. VAN PERNIS: I have two amendments I plan on offering, and I'd like to question about that since you cut me off. CARR SMITH: Since I cut you off—sure, go ahead, Mr. Van Pernis. VAN PERNIS: Thank you. Electric vehicles are going to come in - - - increase in the future. A lot of car companies are buying more and supplying more, and rental cars are your timeshare clientele. This project originated in the 90's onto different hands. And it's time that developers and this commission get into the 21" century. Would the applicant be willing to agree to installing four electric vehicle charging stations as common elements to the condominium during initial construction? And I point out that retrofitting electric charging stations is much more expensive than putting them in originally. Representative of the developer answer that question? FUKE: Madam Chair, is the question whether the applicant is willing to accept a condition that mandates electric charging stations? Is that the question? VAN PERNIS: Yeah. CARR SMITH: Is that already a condition? Is that what you are saying, Sid? 23 EXHIBIT E FUKE: Whether - - - VAN PERNIS: - - -not a condition. FUKE: Whether that's the request that Commissioner Van Pernis is making, whether the developer is willing to have that as a condition? VAN PERNIS: Yes. CARR SMITH: I think so. FUKE: Can we have a moment to kind of confer on that, and in the meantime having, continue with his other request? VAN PERNIS: Okay. The other matter is that I don't see another five years will result in construction. It is conducive to a sale. And I would like to know whether a sale or further delay for sale is in the works. The, you can all talk about that at the same time. The last issue is, will the applicant agree to filing a new permit or additional permit to be reviewed by the Planning Department director, the planning commission, then go to County Council Committee on Planning, and the full Council, if the project doesn't get built in the next five years? CARR SMITH: Okay, who wants to answer? Sid? Evan? Kim? FUKE: Yeah, what it is is like, the way the staff is proposing the condition, the staff's condition is that if the project is not completed in five years,then any extension requires this entire process again. Because the site is zoned Resort, there - - - County Council involved; it's pure and simple, planning commission's discretion to approve or deny the request. CARR SMITH: Thank you. FUKE: Yeah, so the short answer to Commissioner Van Pernis's question is that if the project as conceived is not completed or developed in five years, then it'll have to be vetted by the same commission again. VAN PERNIS: But that excludes the Planning Department, planning director, and County Council, as far as adding conditions. That statement that you take from the recommendation offers only to the commission. My question is, would the applicant be willing to go in front of all of the aforesaid parties as a new application? FUKE: Well, you know, if the time extension were approved, then, as the staff had pointed out, there is a need for a Plan Approval because the current Plan Approval expires, and so the issue is like whether the plans for Plan Approval that will be submitted again to the Planning Department for approval, whether that will be identical to what was considered back in 2017, whether there 24 EXHIBIT E will be some change that's generally consistent with the envelope and the other guidelines that, of the original SMA. VAN PERNIS: I take that as no, because I'm not asking for Plan Approval; I'm asking whether they'll agree to application, which may include Plan Approval conditions, everything a new application might involve. FUKE: I'm sorry, so, in other words like hypothetically if this time extension were approved and then there is nonperformance that'll enforce to any extension, then there would be like a mandatory new application be filed. In other words like no further time extension VAN PERNIS: Correct. FUKE: is that correct? Oh, I see, okay. CARR SMITH: Sid, he was also asking if, if there is a sale in the works. FUKE: Not to my knowledge, but I'll defer that; maybe the attorneys may know more that I do on that. CARR SMITH: Go ahead, Kim. K. YOSHIMOTO: I know of no sale. There is nothing on the table. CARR SMITH: Okay. Max, I saw your hand up. NEWBERG: I'm not sure if this is within the realm of possibility, but given some of the discussions being towards the uniqueness of the original application in SMA, you know, now being well within a period of hopeful stability for Diamond Resorts, is there anything that would maybe lean towards precedent of maybe a plan, in good faith only perhaps, but a plan being submitted in a timely manner for approval in the next 24 months to at least lean towards hope of completion of construction in five years? I don't know if that's a question for the county or a good-faith reasonable question towards Diamond Resorts. But looking at a five-year timeline, if it was granted, you are going to design, you are going to submit for approval, you are going to come up with your construction team, contractors, all of these issues, and complete within a reasonable amount, within five years. Has that, you know what I'm saying, been done before, or agreed to, even that would- - - I mean somewhat alluding to this might be the last extension or, you know, if we are going to put it within the realm of possibility in five years? CARR SMITH: Go ahead, Jeff. DARROW: Thank you. This actually was a topic of discussion at our last County Council meeting. And it's the reality of things is that when the planning commission, or the planning director,puts on a time frame to complete construction, it doesn't take into account all the, all the moving parts that have to happen before you can even put a shovel in the ground. And sometimes that can take a long time. And by the time you get your Plan Approval, your building 25 EXHIBIT E permits, your grading permit, your all, all of that, you have very little time left to be able to construct the project, and you find yourself in a position where you have to come back to the commission and/or Council for a time extension. So one of the discussions was, to be able to begin that time of construction at the time that they have received approval of these previous permits, one of them being Plan Approval. So, in your question, Max, what we can do is put a time frame that the applicant has two years to be able to secure Plan Approval, and that once they secure that, that is the beginning of construction and they have five years to complete. NEWBERG: Got you. DARROW: That allows them to submit this plan that's approved, and so everybody knows what's going to be built for this project, they are able to start, have five years to construct this project. Is that something what you are looking for? NEWBERG: I guess in a polite way, given the location, the history of it,just trying to light a little bit of candle of hope, one that we are granting this in good faith to Diamond Resorts, and also in good faith with Diamond Resorts wanting to move through this process and complete this project, and kind of alluding to as well that we are not certain of what's being designed, maybe it's a little different, you know, I like the fact that it seems it's been mentioned that it's been reduced in approximate volume. But, you know, if you are in Kona and you've driven down Alii Drive, you've seen this slab for a while; it would be great to just kind of put something forward that in good faith, or working towards something, not just a five-year window. That might lend a little more, you know, to what Commissioner Vitousek has mentioned, as far- - - you know, can we design something that's approved and feasible and, you know, it seems like everything is settled in with Diamond Resorts and this location, and if there is no sale pending, just a little more possibly leaning towards this is probably your last approval, what can we do as the commission and the Planning Department to not only favor, forward a favorable recommendation, if that's everyone's thought, but also lean towards, you know, what is really going to take to do this, which is going to be a substantial commitment. I just wanted to put that (indiscernible—noise) CARR SMITH: Perry, your turn. KEALOHA: Yeah, I'd like to kind of echo that. I'd like to see some kind of a cap on the time horizon. I mean 20 years later we keep asking for extensions, each one with a different story. It seems to be a recurring theme. So I would like to see some kind of language that allows us to say this is your final extension, you know, and put a cap on things. CARR SMITH: Okay, thank you. Mike. VITOUSEK: Yeah, I mean, we also have the ability to say that it has been long enough, that these extensions don't need the definition of, you know, something that was outside the control of the developer. What we are facing right now with the COVID-19 pandemic, that's something is outside their control that will have a significant effect on their ability to complete this project in five years. Diamond Resorts, they are a cruise ship owner, as I understand it, it's one of their business ventures, which has been completely shut down. I imagine the vacation industry as a 26 EXHIBIT E whole has taken a pretty big hit, as has our share in Hawaii over the past six months. So, to me, that, that is something that's outside the control of the developer. But what they are proposing here, what they are justifying here is not. And, you know, there is no one for us to delegate this to. We are not recommending this to the Council or anything; we, we are the approving body for Special Management Area permits, so, you know, if we decide that this has been enough, then we can do that. CARR SMITH: I just wonder, play a little devil's advocate here, that we've extended permits that have lapsed a lot longer than this one has, and the county feels that the applicant was in in a timely manner as well. So,just to keep that in mind. Jeff, go ahead. DARROW: With the concerns that have been raised regarding another time extension, I've never seen this before, but it is something to consider that you can include a condition that clearly says that there will no, there will not be a further time extension, that the applicant will have to come in with a new application for any additional time. And so that's a consideration that can be made in regards to seeing this thing continue on with more time extensions. CARR SMITH: Mike. VITOUSEK: So, you know, in my opinion, I mean, when you look at the second point about granting of a time extension would not be contrary to the General Plan, Kona Community Development Plan and Zoning Code, I agree that what's being proposed here is not contrary to any of those things. But the fact that appropriately zoned property has been held hostage from development for the past 22 years, is contrary to the Zoning Code, the Kona Community Development Plan that indicates that this is where this type of activity is supposed to happen, and because of the choices by the developer, that activity is not happening. CARR SMITH: Mr. Van Pernis. VAN PERNIS: Electric charging stations, please. CARR SMITH: I'm sorry? VAN PERNIS: I'd like an answer on the electrical vehicle charging stations, whether they are agreeable to it. CARR SMITH: Sid? Or Kim—go ahead. K. YOSHIMOTO: Chair, we haven't had a chance to confer with our client. That's kind of a big commitment; we need to be able to do that. CARR SMITH: Okay. K. YOSHIMOTO: I also just, if it's okay, I wanted to make a clarification, because it was stated that the changes in corporate structure was completely Diamond's fault. Going back to private was a hostile takeover, I didn't realize that, completely out of the control of those who were 27 EXHIBIT E operating at that time. And also,just, I just wanted to make a point that from, you know, we heard a lot of public testimony, talking to the client about it, they understand, they acknowledge, and it seems like people really want something to be built; their frustration is that nothing is getting built. And that is client's desire as well. It's an asset sitting there not making money. So to the extent we can get redesign and move forward, we want to. If the commission decides to make this an example and if we have to go back to the process, we'll do it, but it's just going to take longer. So I just wanted to sort of reiterate that, because we are listening to the community, and there is a commitment to being in Kona. CARR SMITH: Okay, thank you. Anyone else? (No audible response) okey, if there is no further questions—Mr. Van Pernis. VAN PERNIS: Yes, I'd like to propose several amendments in the form of additional conditions. CARR SMITH: Okay, what would that be? VAN PERNIS: The first condition would be that the applicants and their successors be required to provide four vehicle, electric vehicle charging stations as part of their condominium common elements in either their garage parking lot or wherever else they wish to put it on their property. CARR SMITH: Okay. Is that I though you said you had several. That was one, right? VAN PERNIS: That's first one. I thought you might want to vote on before I go into the other. CARR SMITH: Why don't you go ahead and tell us what the other ones are. VAN PERNIS: Okay. The others are that regardless of it being an SMA or special use permit application as stated in their application, a traffic study involving Kahakai, Alii and Walua be provided, and that this application be postponed until that traffic review is present and available for review. The third condi- or third proposed amendment is that the permanent requirement of certain roadside road improvements be constructed now. There are liability issues with the county encouraging walking in that unimproved area. So I would move as amendment that they comply with Condition 4 immediately. And lastly, my amendment would be, as Mr. Darrow referred to, that no further delays or application for delays or continuances will be granted, and any new proceeding will require a totally new application as a new project, and they shall also provide the Plan Approval process compliance. CARR SMITH: Thank you. Discussion about that, you guys? Max. NEWBERG: Just to clarify, if I can, Mr. Van Pernis, I did hear about four parking stalls for electric vehicles 28 EXHIBIT E VAN PERNIS: No, they are not parking stalls; they are electrical charging stations. CARR SMITH: Four charging stations. The second one, the second one is to require a traffic study, even though it's not required. The third is to make Condition 4 due upon accept-upon amendment, and to not require any further extensions. That's basically what he said. NEWBERG: I guess, as a point of discussion, yeah, I appreciate, you know, looking forward, electric vehicles, things of that nature. I, as far as looking at this project and really wanting to express at least my concern and optimism that this will actually get built, I'm hesitant to really go any further than beyond suggesting that their design that they come forward with. I would assume it would be a forward-looking design that would incorporate charging stations. I think, in all honesty I don't think doing road improvements immediately is going to be within a construction plan that's going to be feasible. So, with that extent, I guess by saying there isn't any other extensions, you know, I'm not sure on how to propose this, but—also given the effects that Mr. Vitousek made very clear, we may be looking at a difficult four years ahead in recovery of economy and things of that nature—what I would really like to see with this five years is at least have a substantial plan developed and actually have troubles in the ground and look at the foundation at least being completed. You know, obviously, once they are moving forward, we are not going to stop them. But to try and impress that, at least for my thoughts as being on commission, that this is something that really needs to happen within this window, and, you know, showing in good faith that they are moving forward and developing this project. How that happens, I'm not exactly sure how to put that together, but I think if we are willing to be flexible enough to extend this SMA, that I think, you know, I think everybody is under the impression we need to at least see construction has begun underway and is underway within this five-year window. That's my thoughts this time. VAN PERNIS: May I respond? CARR SMITH: Sure. VAN PERNIS: The electrical charging station amendment refers to when they carry out construction, they'll include that, so, and it makes their project more valuable, and it's less expensive than conversion later. In terms of the curbs, gutter, and sidewalk you refer as road improvements, I'm merely suggesting that they complete special Condition 4, which is severable from the other construction. And lastly, you say, well, we want to see them go forward, which I want to see them do, too, but I think they need to deal with the increased traffic and a turn lane that's, and the traffic study, and I think that the sidewalk improvements are severable. They have a foundation in place, so, saying, well, get a foundation in place in certain time is sort of frustrating to me. CARR SMITH: Sid, would, would DPW be dealing with the roadway and any required left-turn lanes or anything like that during Plan Approval? Is Kahakai even—is that a county road? 29 EXHIBIT E FUKE: Kahakai, Walua Road, Alii Drive, they are all like, fall under the county's jurisdiction. So Public Works would have to review the off-site improvement requirements like, as the Condition 4, curb, gutter, sidewalks. In terms of like, you know, what's going to be required on, or desired, at Walua Road intersection, I really don't know, because it's, it's a relatively complicated intersection because it comes like at a Y is where the intersection with Alii Drive, and it's not a standard T. So I can kind of like, you know, move off of that and just follow up on what Commissioner Newberg was saying. And I'm just trying to, you know, scribble my notes all over here is that like, one is like the, you know, to—and even if you have like a five-year construction window, you've got to want to see some plans submitted like earlier rather than later and such that, you know, a person doesn't come in like at the fourth year and say, oh, I really don't have enough time and all that stuff. So, as Jeff had indicated, you know, there have been some other conditions where there is a requirement that Plan Approval be submitted by X period of time, and the project be completed by Y period of time; now, if you, for example, have a condition that says that Plan Approval must be secured within a two-year window, then presumably you have a three-year construction window. I understand what Mr. Vitousek and Mr. Newberg is saying, too, because of COVID, you know, there is always the potential that it could slip, especially the construction end, so you may not necessarily complete it within a five-year window. But I would kind of like suggest that if what you want to see is still construction activity going on, then perhaps to be tied in with the building permit process, so if you secure a building permit and you keep it active, then you know that you have to kind of like somehow do it. And Jessica used to work for Building, so perhaps maybe she can clarify for me or collaborate that, you know, if you don't do anything, then obviously the permit expires. And you could tie in another condition that would say that any, you know, subsequent, you know—if you don't comply with the condition, that requires a resubmittal, or a new submittal, in other words like this sunset date on this current SMA application. CARR SMITH: Mike, go ahead. VITOUSEK: So one of the difficulties that we have in establishing a realistic timeline for when this development can be done, is that we don't have the developer here. We've got attorneys on Oahu, and we've got Sid, but we don't have the developer here where we can ask them how long do you need to get the plan together, to redesign the project so that you can submit for Plan Approval, because you know, I agree with what Kim said; what people want is people don't, people want this to be developed, people don't want to have this structure, taking away from our community, we don't want to have our tourists seeing this and thinking, man, this place is kind of a ghetto, you know, maybe we should have gone to Maui. But what we, what we want is we want completion, and the history of this developer has shown that they are not capable of doing that right now, or having been capable to date. The only way I would be comfortable moving forward is if we can tighten down the requirements for them to get Plan Approval within a certain amount of time, and if that's not met, then we can't tie this up any longer, and it's got to trigger the need for them to come back with a new SMA permit. I would love to talk to the developer and ask them how long they need. But the fact that they are not here, to me, indicates that they don't have serious plans to develop this,you know, the fact that we've been told that 30 EXHIBIT E there is going to be a redesign instead of being presented with the redesign plan, hence that this isn't really a priority. So, either we tighten down the language and say that they've got a year to get Plan Approval and show us that they are serious, or they've got move on and come back with a new SMA permit when they are ready to do something. CARR SMITH: Sid, do you want to respond to that? FUKE: So, yeah, Madam Chair, you know, the applicant actually is listening in on the web, and he is right now like in Florida, so, you know, there is a significant time difference. What I would like to request—and, you know, we've already had this discussion with the, I've already had discussion with the attorneys that there are like, there have been like a number of questions or issues raised by the commissioners, and I think all of them are goodI think if we can go back to the applicant and, you know, try to see if we can address some of the questions relating to trying to tie down a little bit more specific construction timetable so that we can appropriately come up with some conditions that may be acceptable to the planning commission, you know, assess his views relative to the idea of having a sunset clause on this SMA application, that is to say if you don't perform, then it automatically runs away, you know, have him, you know, consider the, what Commissioner Van Pernis is asking about maybe four electrical charging stationsI mean, personally, I don't know what the cost is, you know, but they as being in the construction, or construction related industry, would have a better idea whether they can accommodate that. And, you know, and lastly, tied in with that is like what we originally had proposed, which was trying to come up with the sort of like a nuisance mitigation plan, you know, during the interim while these things are all working its way through, to help address some of the concerns raised by the neighbors. So in light of that, we would like to request the commission to kind of defer this matter and give us a chance to evaluate it, and then we'll work with your staff in terms of having it, having this item rescheduled before the planning commission. Whether it's going to be next month or the year, the following month, I really don't know, but bottom line is kind of deferral subject to I guess the call of the chair or the planning director. CARR SMITH: Okay, thank you, Sid. Max. NEWBERG: I appreciate all these recent discussions. Mr. Fuke, are you in communication at this time, or are you able to ask the developer a question at this time? The question beingI think deferral may be a good idea, but given that we are kind of floating with an expired SMA if we do defer, are they willing to commit to having some substantial answers and at least perimeters by December of this year? So this isn't just going out, you know, beyond this year, you know, now we—is that, is that something you are able to ask? FUKE: I'm, yeah, Commissioner, I think I'm very certain that the, if anything, the latest would be, a request for a hearing, no later than the end of this year. So November possibly, but I would say more than likely December. NEWBERG: And with that commitment, I guess, one, would that be acceptable to other commissioners, and, is that feasible for upcoming schedule with the Planning Department to fit that in? 31 EXHIBIT E CARR SMITH: Jessica, I don't know if you can speak to that or Jeff needs to weigh in on ANDREWS: We'll have to, we'll have to check the availability of the schedule. Jeff, do you know that offhand now? DARROW: Yeah, we, there is no problem putting it on. December is going to be an earlier meeting; I think it's the 13'', if I'm not mistaken. It's, it's like the second Thursday instead of later because of Christmas and everything. But there wouldn't be an issue getting it on the agenda. CARR SMITH: Okay, thank you. Do I have a motion? Max. NEWBERG: That was a subject of timing, and I wasn't going to put forward a motion. But I guess it seems appurtenant with everything on there. I would like to forward a motionI apologize I misplaced my agenda in front of me for agenda item 2, DPM Acquisition LLC dba Diamond, doing business as, Diamond Business, Diamond Resorts International, that it be deferred to no later than December 2020's commission meeting, and strongly implying that they should have site plan mitigation, that they should have at least the number of units that we are looking at, the number of floors, if there is a commercial contingency, some form of a plan, as well as hopefully a construction schedule to lean towards their commitment and feasibility of this project at this given time, which is uncertain time, but, to hopefully defer and come back to us with some answers and a plan set forth. VAN PERNIS: And may - - - CARR - -CARR SMITH: - - - motion went on a little bit. VAN PERNIS: May I, I'll make a second and amendment to that motion? CARR SMITH: Well, you are seconding the motion, so—is that what you are doing? Are you seconding the motion? VAN PERNIS: No, I'd like to amend it first. CARR SMITH: Okay, at the moment I'm looking for a second because we have that on the table. Go ahead, Mike. VITOUSEK: Second. CARR SMITH: Okay, we've got a motion to defer by Mr. Newberg and a second by Mr. Vitousek. Discussion? Mr. Van Pernis. VAN PERNIS: Yes, I'd like to amend the motion. I think it's a friendly amendment to delete the December meeting and say when the applicant is ready, because there is a lot of things that the motion asks of the developer. 32 EXHIBIT E CARR SMITH: I think we want them to come back as soon as possible, so I don't know that we want to leave it open-ended, right? Perry, are you, do you want to say something? KEALOHA: No, I'm listening in and CARR SMITH: Okay, sorry, I thought—anybody else? Barbara. DEFRANCO: Yeah, I'd like to see it sooner, this year sometime, and I'd also like to include the idea of the mitigation to the community of what's going on there, that they do something about it, you know, with the homeless people living in the parking structure. CARR SMITH: Okay. So the motion was to defer, and it, the reasons were in order for them to come up with a plan, right? A construction plan, at least something so that we can see what we are looking at, and a time frame. Is that right? And what else? And what else did you mention, Max, in your motion? Because it went long, so NEWBERG: Thank you, Madam Chair. To clean it up a little bit, I would say a motion to defer until December 2020 meeting for the SMA permit and their application pending three subjects, would be the mitigation of the existing site; two, at least a description of how many units in what we are talking about, floors, commercial space, square footage; and then, three, hopefully, a timeline of when they plan to submit their plan for approval and possibly a construction schedule. CARR SMITH: Got it. Is that what you seconded, Mike? VITOUSEK: Yes. CARR SMITH: Okay. SoJ, did you want to say something? J. YOSHIMOTO: Yes, Madam Chair, real quick. Just for the record,just to be clear, I notice that the applicant's attorney is Kim Yoshimoto, but we have no relationship. Just so it's clear for the record. I wanted to say that at the beginning, but I'm going to say it now. Just so everyone knows. Thank you. CARR SMITH: Disclosure of no relationship, okay, very good. Jeff. DARROW: Just to correct the record, the December hearing is December 17''. CARR SMITH: 17''. DARROW: Thank you. CARR SMITH: Okay. So, Mark, you wanted to amend the motion to make it so that they could come back when they are ready and not December. Did I understand that right? 33 EXHIBIT E VAN PERNIS: That's correct. But there has been a second on the motion. I think the matter of the answer on the electrical charging stations was included in Max's motion, but not stated. CARR SMITH: It wasn't in the motion specifically, no, but the applicants know that that's a concern and they voiced in their testimony that they would be looking into all those issues that we've raised. Right? VAN PERNIS: I withdraw my motion to the later date mentioned in the motion to defer. CARR SMITH: Okay, the mo-we have a motion on the table that Max made, and Mike seconded it. You made a suggestion for an amendment, but that's, it's not a motion, right? Okay? Any other discussion about the motion that's on the table? So, Barbara, you commented that you wanted the mitigation to be looked at, so I think Max clarified that, and you would like it sooner than later. Perry, did you have any input? (No audible response) Faye, do you have any input? (No audible response) Okay. All right, so we have a motion on the table. ANDREWS: Okay, I'm going to take a call of the votes. CARR SMITH: Thank you. ANDREWS: Commissioner Newberg? NEWBERG: Aye. ANDREWS: Commissioner Vitousek? VITOUSEK: Aye. ANDREWS: Commissioner Van Pernis? VAN PERNIS: Aye. ANDREWS: Commissioner Yates? YATES: Aye. ANDREWS: Commissioner DeFranco? DEFRANCO: Aye. ANDREWS: Chair Carr Smith? CARR SMITH: Aye. ANDREWS: I'm sorry, I should have said prior to that, Vice Chair Kealoha? 34 EXHIBIT E KEALOHA: Aye. ANDREWS: Thank you. Motion passes, seven-zero. CARR SMITH: Very good. So we will defer this, and we'll hope to get more information when we see you back in December, Sid and Evan and Kim. FUKE: Thank you very much: K. YOSHIMOTO: Thank you so much, Madam Chair - - - OUE: Thank you so much. CARR SMITH: Thank you, folks. Take care. The hearing was adjourned at 4:03 p.m. Respectfully submitted, Noriko Sauer, Secretary Leeward Planning Commission 35 EXHIBIT E