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Home My WebLink AboutCOM 0106.051 2004-2006 Barbara Scott Pagc 1 of 4 Robello, Alfred From: scot2000 (scot2000@earthlink.net] Sent: Tuesday, May 31, 20051:17 AM ~ ,j _i, I~I''~ ~j r To: counciltestimony@co.hawaii.hi.us Subject: Pualani Makai Project i Aloha, and thank you for the opportunity to send testimony via email. The emailed document includes links, which takes up a lot less space than attachements. I hope it is more convenient. We rely on you to hold developers to an accountable standard and hope that the housing prospect will not veil the other discrepancies that exist for this application. Sincerely Barbara Scott Barbara Scott 75-5782 Lopeka Place Kailua-Kona, III 96740 (808)327-1277 May 31, 2005 [Iawai'i County Council Committee on Planning Re: Rills 29 and 30, Suffolk Investments, LLC (14.87 acres) Bills 31 and 32, Pua'a Development, LI,C (14.973 acres) aka Pualani Makai Project Subject: Added access to limited access highway Floodway Development Water Commitment Discrepancy Pua'a Development, LLC Ownership Interest Suffolk Invesunents, LLC Ownership Interest Dear Chairman IIoffmvi Co-Chair Pilago Council Members: It is regrettable that it is necessary to oppose this project, but the project area is in the wrong place at the wrong time by an undisclosed applicant. Queen Ka'ahu_m_anu Highway Access Floodway Development The wrong place is anywhere along the currently "at capacity" Queen Kaahumanu limited access highway and anywhere within the Waiaha Floodway. The wrong time is before infrastructure has caught up with currently approved development. It is regrettable because North Kona needs housing and school inti-astructure, but not in the Waiaha Floodway (perish the thought). "I'he risks posed by the flood hazard are unsuitable for~~~.~~_---- Comm. 4~ase~ G Ref. To: Ref. Date~~~---- 5/31 /2005 Barbara Scott Page 2 of 4 development. The fact that other development has occurred in floodways should not set aprecedent-it was ill advised. Water Commitment niscrepancy There is some confusion about exactly how many water commitments are available for the Pualani Makai Project. In recent meetings, Mr. Fuke stated that S l0 water units are available: however, in the March 23, 2004 Water Board Meeting, Westpro Development, Inc. received only 368 water units for the project area. Through the Kealakekua Source Agreement Pualani Estates, Inc., the Water Board approved the water unit reassignment to Weslpro Development, Inc. and nothing has occurred to create more available water units for TMK (3)7-5-017:001 or TMK (3)7-5-017:019. I'hc action was approved at the March 23, 2004 Water Board Meeting. DWS records do not indicate any additional units provided for the project area, but that is also another matter related to regional infrastructure. As a matter of due diligence, please review the specifics related to the number of water units available for the Pualani Makai Project. North Kona is under a Water Conservation Notice, and the May 17, 2004 advisory stands regarding water quality in the Nurth Kuna legal Notice. DWS continues to grant additional water commitments as our well infrastructure cannot adequately meet current demand. As of the first of the year, North Kona outstanding water commitments totaled 10,078 units. When you recall that each unit represents 600 gallons of potable water per day, the number becomes a formidable 6,046,800 gallons per day in water use beyond what is currently distributed. The North Kona water system cannot support any additional development before current wells are operational and additional wells are developed. Pua'a Devclo~m_c_nt, LLC It is necessary to call to your attention the questionable business structure of the Pualani Makai Project. I have reviewed the Planning Commission Meeting transcript and attended the Public IIearing. I have heard the same assurances as everyone else that the two Limited Liability Companies arc separate 5/31 /2005 Barbara Scott Pagc 3 of 4 and distinct entities, with Brian Cook as the principal of Pua'a Development, LLC and Andrew McCabe as the principal of Suffolk Investments, LLC. It appears that someone was misinformed and/or missed relevant public information. It was a red flag to see two business entities on contiguous parcels, acquired from the same land developer at the same time, and collaborating on the same project. While under the control of land developer Westpro, the project area acquired water commitments and a parcel consolidation and resubdivision action that resulted in creating parcels of just under I S acres, by 5,662.8 square feet for Suffolk and by 1,176 square feet for Pua'a, thereby avoiding the LUC review requirement for the development applications. I~he parcel size has become a common tactic for LUC avoidance and not that surprising over the last few years. Nevertheless, assurances from their consultant did not assuage the commonality of the three business entities activities. Another common tactic is the abundance of Limited Liability Companies created by developers for their projects. Combined with changes to parcel numbers on TMK maps (frequently not current), there is an unavoidable climate for confusion. Pua'a Development. I,LC is a Hawaii registered Manager-Managed limited liability Company organized in 2001 under the sole management of James K. Schuler of Schuler Homes, Inc Pualani Estates Subdivision owner (66.78 acre purchase from Pualani Estates, Inc. in 2001 for TMK (3)7-5- 017:029 and consolidated with TMK (3)7-5-017:028 The registered agent for Pua'a Development, LLC is Dennis Lombardi. James K. Schuler, who has nationwide and offshore real estate assets listed in the millions to billions (according to SEC filings), is the Pua'a Development, LLC principal. The Brian Cook association with Pua'a Development, LLC. is not as the principal, although he may be a consultant, facilitator, or investor. Suffolk Investments, LLC Additional development business practices include using the Tenancy Tn Common (T1C) instrument; and the recently IRS approved 1031 Exchange, where a qualified intermediary will set up a separate entity to handle the Exchange. The entity, called an Exchange Accommodation Titleholder (GAT) by the IRS, will be the titleholder of the property. "fhe developer's lender will then make their loan to the GAT entity, which is usually an LLC. The developer can acquire a loan in the form of a first mortgage or deed of trust to the EAT. A cash-flow advantage is available with this tactic, and provides the means for a developer to proceed with other projects while waiting to flip the Exchange property. Suffolk Imcsnncnts. I,LC is aMember-Managed Ilawaii registered limited liability company. "the Company Member-Manager is Shamrock holdings Group, LI,C and the Registered Agent is Ron Lunsford. Following the obvious path of filed business information leads to a conclusion that Suffolk Investments, LI,C is a business entity set up as an Exchange Accommodation "Titleholder. Shamrock I loldings Group, LLC is aMember-Managed Colorado registered limited liability company. The Registered Agent and Initial Member, listed in the Colorado Articles of Organization, is Daniel E. McCabe. Ron Lunsford, the Suffolk Registered Agent, is the Regional Manager of the 103 ] Exchange Department at Hawaii Escrow & Title, Inc., located in Honolulu more about Mr. Lunsford in a moment. Investment Ixchange Group. I LC (IX(.) is aMember-Managed Colorado registered limited liability company. The Registered Agent and Initial Member, listed in the Colorado Articles of 5/31 /2005 Barbara Scott Pagc 4 of 4 Organization, is Daniel E. McCabe. Additional information is available regarding IXG, including the company's Internet site message introducing its services as "a nation-wide qualified intermediary specializing in all types of 1031 tax deferred exchanges, including complex reverse, construction, and personal property exchanges." The IXG staff list is oCinterest to the Pualani Makai Project. The list includes Colorado consultant Daniel McCabe, Esq., IXG's specialist in 1031 and Reverse Exchanges, and President of Investment Exchange Group. Andrew McCabe is also a Colorado based IXG consultant and has a background in mortgage marketing and lending. In Hawaii, Ron Lunsford currently serves as a regional manager and 1031 consultant for Investment Exchange Group with offices in Honolulu. Mr. Fuke has identified Drew McCabe as the Suffolk principal, and the Hawaii business registration records identify Ron Lunsford as the Suffolk registered agent. Conclusion_ The Pualani Makai Project principals have not actually come forward. I hope it is possible for Council Members to defer proceeding with the application process until the applicants provide verifiable information. Of course, I personally prefer that nothing is ever build in the floodway and that North Kona development is delayed altogether until the infrastructure can at least meet current needs. Respectfully, Barbara Scott 5/31 /2005