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HomeMy WebLinkAbout2007-02-02 TKOOB PLANNING COMMISSION COUNTY OF HAWAI‘I HEARING TRANSCRIPT FEBRUARY 2, 2007 RICHARD KOOB (SPECIAL PERMIT A regularly advertised hearing on the application of NO. 1186) was called to order at 11:20 a.m.in the County of Hawaii, Aupuni Center Conference Room, 101 Pauahi Street, Hilo, Hawaii with Chairman William R. Graham presiding. William R. GrahamKimo Alameda PRESENT: ABSENT & EXCUSED: C. Fred Galdones Andrew Iwashita Alvin Rho Jeffrey McCall QdmdlRhq`btr` Rodney Watanabe Ivan Torigoe, Deputy Corporation Counsel Christopher J. Yuen, Planning Director Phyllis Fujimoto, Staff Planner Jeff Darrow, Staff Planner And 4 people from the public in attendance. SPECIAL PERMIT NO. 1186 ( RICHARD KOOB) Determination by the Planning Commission as to whether the financing and marketing plan to investors for “retreat homes” is consistent with the Special Permit granted by the Planning Commission. Special Permit No. 1186 allowed the establishment of a 13-unit Kalani Kai arts, agriculture and wellness education retreat and related facilities on approximately 14.94 acres of land situated with the State Land Use Agricultural District. The property is located adjacent to and west of the existing Kalani Honua Facility, mauka of the Kalapana-Kapoho Road (Route 137), Kamaili and Keekee, Puna, Hawaii, TMK: 1-2-9:29. GRAHAM: Our next item is New Business, and it relates to Special Permit 1186, Applicant Richard Koob. And the action in this case is more of an informal discussion by the Planning Commission and the Planning Director and the applicant relating to the financing and marketing plan which is associated with the Special Permit previously granted by the Planning Commission, Special Permit No. 1186. Jeff, could you give us a little more description of what’s in play here? DARROW: Sure. Thank you, Mr. Chairman. Just for location purposes, if I can direct your attention to the location map. The area of this discussion on the application is actually within the district of Puna. More specifically, we’re looking in the Kalapana area. This area identified as smaller lots is Kalapana Sea View Estates. This road that we’re looking at that runs in an east-west direction is the Kalapana-Kapoho Beach Road. The applicant Richard Koob EXHIBIT C 1 owns a property identified with the blue dot, which is the area of the application of Kalani Kai. And then just east of this location is also the establishment of Kalani Honua; and that’s on the property just to the east. The Planning Director is requesting that the Planning Commission make a determination as to whether the financing and marketing plan to investors for retreat homes is consistent with Special Permit 1186. Special Permit 1186 and Special Management Area Use Permit 427 were approved by the Planning Commission on November 15, 2002. This was to allow the establishment of a 13-unit Kalani Kai arts, agricultural and wellness education retreat and related facilities on approximately 14.94 acres. Looking at the site plan that we have within our files, this is the actual plot plan of the property identifying the Kalani Kai project. Just next to it on the east side is the Kalani Honua Project. Identified in a purple area is the 14.94 acres which includes the 13 proposed hale units. The applicant had submitted a request to be able to change the hale or retreat hale original configuration, which was a two-story configuration with the first story having four rooms. Two of these rooms would be for guests, one room would be a faculty member and another room would be for a staff. The applicant requested to be able to change that configuration to what’s called a retreat cluster where there would be a main hale area one to three stories in height with four detached rooms, each having a bathroom with no kitchen. This is more clearly defined under Exhibit 3 in our background; and there’s a page that is identified as Kalani Kai Retreat Lodge Plans; and it shows the difference between the two requested designs. The Planning Director agreed to the concept and felt that it did not differ too greatly from the original approved request, being that the amount of rooms would remain the same as well as no kitchen facilities. The Planning Director is concerned that the current marketing and sale plan for Kalani Kai where individual investors construct the units separately and have individual rights to the units is very different from the project concept presented to the Planning Commission. If I could ask the Director to further expound. GRAHAM: Thank you, Jeff. Mr. Yuen? YUEN: Yeah, just to follow-up on what Jeff was saying and to give a little further background, quite some time ago essentially the same group started Kalani Honua. Kalani Honua, which also has a special permit, was perhaps the first retreat type of overnight lodging in the State Land Use Agricultural District. And over the years it has a program that we’re basically familiar with where you have transient vacation accommodations for people mostly attending some kind of educational or cultural or arts program, although that’s not specifically required by the terms of the permit, nor by Kalani Kai’s permit. So then we had a Special Permit application for Kalani Kai, adjacent property, originally for 20 buildings which were in a three-visitor room, one staff room, faculty room format. We, the Planning Department has a limit on lodges in the State Land Use Ag District by special permit to 40 units. That’s consistent with the definition of lodge in the Zoning Code, which creates a limit EXHIBIT C 2 on how big a facility you can make in the State Land Use Ag District. I think most people are aware there have been a lot of concerns over what is the scale of what you can do in the Ag District under a special permit versus going through the rezoning route, either through the State Land Use Commission or the County zoning route. So the Planning Commission, with the Planning Department favorably recommending it, approved a concept which involved 13 hales, each hale would have three rooms for guests and one faculty staff room, which we agreed not to count against the 40-person limit. And at least from the Department’s point of view, what was being approved was a project that was still geared toward short-term guests seeking retreat lodging, and that the faculty staff rooms would be occupied by individuals who were teaching a particular course, or staff for a particular course. Then it later came to our attention that Kalani Kai was promoting this and selling memberships in a way that, well, then they proposed a change in the design of the units, which as Jeff described we agreed to where there’s a main hale and then four cottages, one of them still being the faculty staff cottage. So you still had 39 units plus 13 faculty staff units, but in detached structures. We considered, although different from what was presented to the Commission, we thought that was essentially consistent with the Commission. What caused the problem and what we’re here to discuss today is that Kalani Kai has been circulating an investment prospectus to people to buy into Kalani Kai. And it’s a little bit complicated, but the gist of it is that as an investor you put in a certain amount of money to construct one of these, you can construct one unit, you can construct a full cluster, meaning three guest units and one faculty staff unit, there are different options. But you construct a cluster and you have the exclusive right to one of the units, which is an issue for us, and you can also have the units rented out. Now there are two issues that we see in what’s being presented. One is that we see a project that is being promoted to investors as a long-term residential opportunity, more like a retreat residential opportunity within the Kalani Kai Project, rather than what we feel was presented to the Commission and the Department as a visitor-oriented facility.So we did not have a special permit for a group of people to establish more homes than are allowed by zoning and State Land Use Law. We did not do that; and that’s not the special permit that we established. And the first promotional material actually referred to retreat home ownership specifically as what you were getting; and I think the term home ownership has been removed. But it still involves the right to own a unit and reside in it full time, as far as we can tell, long-term. The second issue has to do with the form of ownership and the fact that the promotional materials appear to give somebody exclusive right to an area of land. And to explain why this is a problem, we have to go back and talk a little bit about subdivision law and the law of the ownership of the land. And let’s talk about things that you clearly can’t do. Okay, if you own say a one-acre lot in Paradise Park that is zoned Ag-1a, you cannot go out and sell somebody the back half of your lot, say a half acre from your lot and say that is yours, now you own it, and give them a deed to it. That’s called a subdivision. If you sell somebody a piece of ground that’s not recognized already as a lot, that’s called a subdivision. So in the case of the example I just gave you, you could apply to the Planning Department for subdivision but you couldn’t get it because it would be contrary to the zoning. All right? So the purpose of a lot of zoning, for example, is to zone to a smaller lot size so that you can subdivide. So that’s clearly one thing that you can’t do, you can’t sell somebody a half of your lot. You can’t also sell them, if you EXHIBIT C 3 happen to have two houses on your property, it doesn’t make a difference, you can’t sell them the house. Yes, you have a question? SIRACUSA: Yes, could I, just a bit of clarification. GRAHAM: Commissioner Siracusa, go ahead. SIRACUSA: Thank you. Could you sell someone a half interest in that one acre and then decide between the two of you that they can use that back half and you would use the front half without it being, you know -? I’m wondering if there’s a way to get around. People are always looking for loopholes, you know. YUEN: Technically you can sell somebody a half interest in your property, then you become tenants in common. Legally you have the right to use the full property. Informally, you can agree. It’s not legally enforceable though. I mean if you tried to enforce the agreement then that becomes an issue with the subdivision law. Okay? So you cannot have a legally enforceable interest in the property that you sell. So the next thing -. SIRACUSA: Even if you did a private contract between the two parties? YUEN: This would not be enforceable. SIRACUSA: It would not be enforceable, okay. YUEN: Right. So the next thing is, if you recall we, ten people will try to do condominiums and they would say this is not a subdivision, this is a condominium. The condominium looks awfully like a subdivision, but there was a legal argument that it wasn’t a subdivision. In the end the County passed an ordinance that essentially calls, and the issue here, a lot of Commissioners weren’t here when we passed this ordinance with the County. But the issue here was, just to take the example in Paradise Park, say, and it would go hand in hand with the fact that you could put more than one house on a lot, say somebody had gotten an ohana permit and had built two houses on a lot in Paradise Park, then they would create a condominium and sell one house as a one condominium unit, and the other house as the other condominium unit. This got to be a big issue in the agricultural areas. Because, to just take an example, you have areas that are zoned Ag-20 acres, so you’re a 20-acre minimum lot size. So you would have a 20-acre lot that would then be condominiumized into several different interests. It’s creating a virtual subdivision and really creating a loophole in the Subdivision Law; and then you have no ability to control density in the land, Agricultural District any more. So this is actually becoming a predominant way of dividing up land in the Agricultural District, rather than through subdivision, particularly for these two or three unit issues. So that’s an example of the way that people try to get around condominiums. So just to bring this back to this discussion, the concern here is they appear to be selling an exclusive interest in a unit which occupies a piece of ground. And we do not understand how you can do that without it being a subdivision or some other kind of land interest that is being violated here by, that they’re basically violating subdivision law by trying to sell an interest in a EXHIBIT C 4 piece of property that, you know, the unit has to occupy a piece of ground. Where we’re going, we want to have a discussion and actually give a, we’ve had discussions with Kalani Kai in the office. You’ve seen the letters that we’ve sent. We thought that it would be useful to have a discussion with the Commission. We’re not asking for, I think that the formal action of the Department would take, if we go to a more formal level there are a couple of different things that can happen. One is the Department could issue an actual citation that this does not comply with the special permit. They have the opportunity to contest the citation before the Board of Appeals, and ultimately in court. The other, they could petition the Department for a Declaratory Ruling that what they are doing is in compliance with the terms of the special permit. That would be a decision that the Director would make; and the Declaratory Ruling is appealable by them to court. Another possibility is that the applicant can come forward with an amendment to the special permit that lays out more, to our point of view, more accurately what they’re actually trying to do with the property; and let the Commission decide whether a special permit should be issued for that. GRAHAM: Thank you, Mr. Yuen. I know a lot of us probably stirred up a lot of things in our heads of interest in regards to what you just said and all.But as much as possible I’d like to probably get the applicants involved in the discussion to help hold things down for us before we ask too many questions. Anybody have anything else on this matter at this moment before I bring up the applicant? Could you folks come forward now, please. Could I swear the four of you in here. If you would please raise your right hand. And I’ll ask you, do you swear or affirm to tell the truth on this matter before the Planning Commission today? PARTIES: I do. GRAHAM: Thank you. Before you all speak, we’d appreciate it if you would begin your presentation with your name and address. And I think the first thing I’d like to ask is if the nature of how we’re doing this here today with this sort of an informal discussion of the issue, if that’s acceptable and okay for us to proceed this way before we just continue? STRAUSS: Yes. NOMURA: Microphone. STRAUSS: I’m sorry. GRAHAM: And give you name and address, please. STRAUSS: I’m Steven Strauss. I’m an attorney along with my associate, Christopher Schlueter, both of 165 Keawe Street, 201 here in Hilo. And I represent the applicant, Richard Koob, who’s sitting to my left; and he can provide you his address. And Mr. Squassoni, Paul Squassoni, is here to present information in the form of testimony, if you will, about his perspective as a potential member of the company that’s set up to establish the 13 units. EXHIBIT C 5 KOOB: Yes, I’m Richard Koob and my address is 12-6860 Kalapana-Kapoho Beach Road, which is the site of Kalani Honua. SQUASSONI: And I’m Paul Squassoni and I also, I was living in Puna Beach Palisades and I am now also at 12-6860 Kalapana-Kapoho Road at Kalani Honua. GRAHAM: Thank you. And, Mr. Strauss, on my first question about whether it’s okay with you that we proceed the way we’re doing right now or you have any suggestions that are different? STRAUSS: My understanding is that this agenda item is treated essentially as an informational or fact-gathering, opinion-gathering, position-gathering meeting. And that it is not, although it’s framed in the agenda as a determination, our position is that if it goes beyond the clarification that’s sought by the Director into a decision-making function that we would have an opportunity if we requested to seek a contested case to have it treated as a potentially adversarial proceeding. But for purposes of today, my understanding is that this is for clarification purposes, an opportunity for the Commissioners to ask questions for us to try to respond, for the Director to present the Department’s position. And we’re content with it being treated that way. GRAHAM: Thank you very much. Does that sound all right with you, Mr. Yuen? YUEN: Yeah, that’s correct. I think in thinking about this further, we would not be asking the Commission to take a vote on this matter today. We would bring it back to the Commission for a specific action, example, revocation of the permit, if we wanted the Commission to take an action; and then they could then put it into a more formal contested case hearing mode if they wanted to. If there is a specific action, we would bring it to the Commission with that specific type of action requested for the Commission to vote on; and we are not doing that today. GRAHAM: Is that all right with the Commissioners that we proceed in this way? WATANABE: Yes. GRAHAM: Thank you. Go ahead, Mr. Strauss. STRAUSS: What I would like to point out first is that with respect to the special permit the proposed development plan for Kalani Kai, and the permit was issued originally in Mr. Koob’s name, the proposed plan does not change the density, it does not change the use, or the proposed use of the hales, or the land from the special permit, and it doesn’t add or change any impacts of the proposed development. What we’re really talking about here is, I guess, protection of the public as investors; and I’ll get to that in a minute. I think that’s not really at issue. And it has to do with the form of ownership of a cooperative way of enjoying property. I must disagree with Mr. Yuen’s characterization that people are owning a piece of land under this plan. The land is owned by a company. People acquire a membership interest in the company EXHIBIT C 6 which is not a divisible land interest. You don’t get a 1/3 or 1/30 undivided interest in the property. You become part of the company that owns the property in an undivided whole. What a person who does become a member obtains is a right to use, an exclusive right to use, a portion of the constructed improvements on the property for purposes consistent with the special permit. Your right as a member allows you to sell your membership interest only first back to the company from which you obtained it; and it does not provide a market for you to develop an interest in land that can then be freely transferable. We make it very clear that you’re not acquiring land apart from your membership in the company. And another thing I wanted to point out in Mr. Yuen’s presentation is that this is not a solicitation in the sense that we are soliciting members of the public. In order to be qualified to become a member of Kalani Kai, LLC, the person that is interested has to take on a lot of burdens. They have to become a teacher or a faculty member of the retreat, that they have to provide services, they have to meet with all the special permits. It is not that they get an opportunity to own a piece of land and then rent out three of the units for whatever purposes they want. They become part of this community. And that’s why it has got some unique features, because it is a collective community, if you will, for mutual support, for all those things that we outlined in the special permit for arts, for education, for wellness. So the person who comes in and invests money to build a structure is building it to provide for the community as a whole and the purpose as a whole; and they take on those burdens. When I say that it’s only available to qualified investors, in order to comply with securities regulations the determination was made early on that the only people that can qualify to become members of this company are those that have a prior affiliation with Kalani Honua, that are members and/or supporters of the nonprofit, and that there’s no public dissemination of this information. It’s a secure part of the website that you can only get to if you’ve already got a prior existing relationship with Kalani Honua. And the other discriminating factor that was required is that any person that intends to invest must be qualified. To invest as a member of the company, become part of this company, must be qualified. Qualification means they have to have it vetted either by their own attorney or their own financial planning professional. So there is not exposure to someone who doesn’t know what they’re getting into. The disclosure documents required for us to offer this in a nonpublic way are quite thick, quite detailed. I prepared the bulk of them myself, and it repeats over and over again you should not expect any market return on your investment. And we’ve provided those all to the Planning Director. This is part of the community that exists and an expansion of the community to provide through private financing and private contract, if you will, the contributions that are necessary to actually build the special permit residences. Each of them are still dedicated to the same purposes that were identified in the special permit -- no additional units, no additional people, and the primary purposes is to provide lodging. The Planning Department’s concerns I think have a lot to do with the unusual nature of this proposal, but I don’t see it as the Planning Department’s purview to try and protect individuals who are otherwise qualified and otherwise protected by their own investment advice. And we expect some attorneys to say don’t invest in this, you know, there are too many burdens, there’s no market for it. And we have had discussions with some attorneys that are taking that position; EXHIBIT C 7 and those are not people that we’re interested in dealing with.My understanding is that there are approximately 300 interested people that have prior relationships with Kalani Honua that would like an opportunity to become part of the company, to live there, part or full time, to provide lodging for guests of Kalani Honua, to take a maintenance and caretaker and stewardship role in this community to teach educational, wellness and cultural activities that perpetuate the goals of Kalani Honua. Mr. Koob, correct me if I’m wrong, but that’s as I understand the number. Mr. Squassoni is here because he is somebody that has put his money down; and his perspective I think will tell a lot as to what someone who puts their money down expects both in terms of benefits and burdens. And I think that I would suggest that it would be a good time to hear from him; and then I can try and answer any more questions that may arise; or we can continue with this discussion, if that’s okay with you, Mr. Chairman. GRAHAM: Yes, certainly, that’s okay. SQUASSONI: Thank you. I was smiling as you were discussing the fact that lawyers would disagree on whether or not it’s a good investment. I spoke to two, one of whom is a friend of long-standing who is very conservative and she wouldn’t even talk to me about it. She recommended someone else who thought it was a very, very cool idea. This is not an investment in property. I mean that’s very clear. I mean, you know, I read the documents. I am investing in Kalani because I believe in Kalani. The community not only offers a very rich communal experience but thousands of people come through there every year. I mean I’m a certified massage therapist. I am a yoga instructor. I am a project manager and a facilitator. And I had been, as I was winding up a computer career in Washington, D. C. I was looking for some place to be able to use all my skills in a community. And when I visited Kalani and found out about Kalani Kai, I thought this was perfect. I would dearly hope that at some point in the future if I ended my relationship with Kalani Kai I might get my money back, but that’s not the point to this. I would happily loose part of my investment or all of my investment for what I’m getting back over the years in terms of relating with people. I don’t know how much more I can say. You know, it’s very clear, and we make it very clear. When I talk to people about Kalani Kai, I make it very clear that this is not like buying a piece of land and building a house and then being able to sell it later, that this is becoming part of a community, and this is healthy to make this part of the community more stable, more sustainable, and it is about stewardship. It is about living on a piece of 94 acres and keeping part of it jungle, of preserving the native plants, of having orchards and having fruit orchards and stewardship. That’s what people come to Hawaii for, is to become a part of what is here, not just to plunk down in someone’s space. GRAHAM: Thank you. STRAUSS: I wanted to follow-up on one point Mr. Squassoni made, and that has to do with the burdens that are being taken on and committed to. It’s not just that he is a massage therapist and yoga teacher but as part of this arrangement, as part of his commitment, as part of his membership, he uses those skills for the benefit of the people that are visiting Kalani Honua. Mr. Yuen, you know, expressed concern that people are buying a piece of land or buying a piece of property. I represent an owner of the Pacific Building downtown, that’s where Bear’s Coffee is, he’s from India. The Catholoic Church owns that land. He has no interest in the land by EXHIBIT C 8 virtue of owning those sticks, that masonry, that glass. He has a lease. Mr. Squassoni gets no interest in the land underneath his unit, that portion of which he would construct and have the right to occupy. His interest is an undivided interest in the company that owns the entire parcel of land, Kalani Kai LLC. So the concern that we have that we’re creating a subdivision or we’re creating a condominium it doesn’t fly because this is not land ownership. This is entering into a relationship with other people in a company, investing in a piece of property that’s undivided and obtaining some of the divisible, legally divisible benefits that go with that property, and dividing them up in a way that is fair, that Mr. Squassoni thinks it’s fair, and in a way that promotes the special permit. All the same functions, all the same uses, all the same purposes of the special permit are being met here. It’s just that instead of Mr. Koob owning all these units, a company owns these units; and people are part of the company, and they fund the development of that, those structures. Did you have -? KOOB: Yes, I guess, one clarification. I know, when Jeff made his initial presentation he said that, as is stated here, that there are four rooms, each hale or in which case the clusters as we got approved as an alternative, have, there will be four rooms and as proposed the number of guest rooms include a staff room in each hale, you know, with the off, I’m sorry, where am I, each hale unit would accommodate two guests, a faculty and a staff member. So I think there’s this sort of confusion by us, Chris’s belief that there’s one room that’s for staff or faculty; but, in fact, I think the consideration that Sidney Fuke was making was that a faculty person was also often a guest. And we have, so three of the rooms are for, and it goes on to say, in other words, “So as proposed the number of guest rooms, including the staff room in each unit, would be considered as three rooms.” That’s because there’s two guests and a faculty person, and then there’s another room for a staff person. So we consider two of those rooms to be for a long-term kind of resident people that are really helping steward Kalani and involved in the programs, the fact, the person who’s in the faculty room and the person who’s in the staff room. And those are the rooms that we’re saying this is what’s available for people to, you know, have an interest in. Because what we’re doing is building more responsible community, more responsible stewardship, by people actually having those sticks, and owning them and having some attachment to the whole organization. It means that we can have, what we all want is more permanent residents here who can really add to the community, people who have the qualifications that Paul has, people who like him become committed in organizations like Imua Puna Makai, like Kalani ended up hosting the elections this year because we’re involved and we want to be involved in the community. And the big factor of this too is instead of dividing these 94 acres into Ag-3 lots that they could have been divided into sensibly because it’s Ag-3, we’re not putting our energy into that.That would be, for me, a complete destruction or unnecessary destruction of the land. By going with the special permit, we’re able to contain this within 15 acres so that we preserve all that property around, that it can be used for agriculture and preserve forest purposes. It’s just a whole other way of looking at land development. I began my career in New York in Urban Planning Committee, a New York private nonprofit organization; and I started working with planners way back then. I’ve worked in the State as the arts coordinator for this island for the State Foundation on Culture and the Arts; and I’ve taught at both university campuses. I feel that we’ve had so much contact and so much support in making this happen, in making it happen in a unique way that serves the public. So I really urge your support to allow this to happen and allow us to have more responsible stewardship. EXHIBIT C 9 GRAHAM: Thank you. Yes, go ahead, sir. SQUASSONI: Yes, only because it wasn’t mentioned earlier, and some of this is buried in some of those documents, so that it was clear to anybody who’s investing, that the company that we’re talking about actually is owned 40 percent by Kalani Honua which is a non-profit company. So at no level is there any sort of private ownership. Even the company that owns the land is owned 40 percent by the Kalani Honua Retreat Non-profit, as is the current retreat. So I just wanted to make sure that was clearly understood. Thank you. KOOB: And that’s done just to keep all organizations moving forward, all the property that’s there, down those two properties moving forward in an educational purpose. GRAHAM: All right, thank you. Would you folks be ready for some questions from the Commissioners now? STRAUSS: Sure. GRAHAM: All right, Commissioner Siracusa. SIRACUSA: I have a series of questions. For one thing I’m sort of confused about the relationship between Kalani Honua Inc., Kalani Kai, and Richard Koob. In some places in all these documentation it says that Kalani Honua is the manager, and other places it says that Richard Koob is the manager. Now I know that Richard Koob is the president of Kalani Honua, but he’s also the president of Kalani Kai. So this raises some questions as to, I mean, Richard, are you the be all and end all here? KOOB: Could I answer? SIRACUSA: It sure looks that way. KOOB: Can I answer? SIRACUSA: And it also says the initial members, Kalani Honua Inc. is who is listed as the initial member having put in an initial capital contribution of $250 plus the TMK that we’re looking at here; but no where does it says what the value of that TMK is. So this is my first series of questions, but I have more questions. But if I say too many you’ll forget what I asked. GRAHAM: Ms. Siracusa, also, we have about 10 minutes before we’re going to take a break, so maybe if we just finished that one and let a couple of other people get some in. Then we’ll come back and deal with more of that after we do our lunch. Thank you. KOOB: Well, anyway, in starting Kalani I kind of broke my family into, you know, for purchasing the initial property, the 19 acres; and then in the mid-nineties we purchased the 94 acres. And we did that because we really felt that the 94 acres was important to preserve because it’s surrounded by State land, and we knew that the company in New York was EXHIBIT C 10 interested in subdividing it, and we thought there could be better land use. And as this whole project is all about actually relieving my family from this change of stewardship, is about these family members that are, I have six siblings. And I’ve a sibling in Hawaii and a sibling in New York who are very involved in this project and are very supportive, but others that aren’t. And I think it’s really important that people that are really supportive of what Kalani and this educational purpose is about be invested in the ownership. I don’t want it all to be on me and rest on me; and it’s not really on me. I mean there’s a board for Kalani Honua Inc. It’s a nonprofit and we have a board of directors. But I’m just saying I’ve been involved a lot in the stewardship of this and making it happen. And the whole goal of this is actually to involve more people like Paul and give them a stewardship so that it becomes more of a community effort and becomes more important to the, I think, sustainability of the organization and the community. SIRACUSA: So when it says that if somebody wants to opt out they have, the first right of purchase is the manager. Does that mean you personally or does that mean Kalani Honua? STRAUSS: Kalani Honua LLC is -. NOMURA: Microphone please. STRAUSS: I’m sorry. SIRACUSA: Okay, there are places where it’s confusing where you switch back and forth between calling Richard the manager and calling Kalani Honua the manager. STRAUSS: Right. Kalani Honua Inc. the nonprofit corporation is the manager and the 40 percent member of Kalani Kai LLC, not Richard. What’s the value of the 14.94 acres or that portion? KOOB: You mean like an appraised value, or what do you mean the value? STRAUSS: Well, she asked the value. KOOB: I would say, the properties were both just recently appraised. And I think it’s about a million value for the 94 acres; and so 15 acres of that would probably be valued at about 1/6 of that or so. STRAUSS: And so what happens is when, that property is owned by the family or has been owned by the family limited partnership that Mr. Koob spoke about. So a good portion of the money that’s being contributed by people like Mr. Squassoni goes to retire the debt on that company land to make it free and clearly owned by the company. So it’s essentially that the land is purchased through Richard, donated to Kalani Honua Inc. as part of this transaction. GRAHAM: Mr. Strauss, also, because we are recording this even though we’re kind of informal, I’d like to just not be passing the microphone and all because she is going to want to record who said what and all, and it’s not so simple for her. Okay, so -. EXHIBIT C 11 STRAUSS: I’m sorry, and I’ll make sure that I identify myself if I start to speak. GRAHAM: Fine, thanks. Rene’, do you have a follow-up on that? SIRACUSA: Yes, I do. Steve, you said that this prospectus is not going out to the general public, it’s being offered to specific people who are members of Kalani Honua who have had a history with Kalani, who have been affiliated in some way or another in a positive productive way. But Kalani Honua Inc is a nonprofit; and the laws governing nonprofits are that members and especially board members are not supposed to gain personal fiduciary benefits by virtue of their membership. Now I know that this year, this past year, the IRS came up with some very new tight rules to close up a lot of loopholes in the rules governing nonprofits. And I’m having some problem knowing what some of those are, you know, like about how much of your income has to go towards your exempt purpose, for example, and how much staff and management and trustees can expect to take as renumeration for their work. I’m having some trouble with this. Mr. Koob’s, you know, personal, he’s getting paid from Kalani Honua Inc., he’s going to be getting paid from the LLC. People who are members of the nonprofit are going to be receiving fiduciary benefits. And I would feel a lot more comfortable if the IRS reviewed your whole proposal and came back and said to us this is okay, you’re not violating any terms of your nonprofit status. Because my concern is that if we approve something like this and it turns out that it’s not 100 percent, you know, legal according to the new regulations, I don’t want to be considered to be abetting by approving your proposal. GRAHAM: Thank you. STRAUSS: Yeah, I understand. I think in the first instance, this is Steven Strauss, I think in the first instance that that’s way outside your jurisdiction as a Planning Commission. Secondly, we have accountants and we’ve had three attorneys involved in this. The third, the impression that Mr. Koob will attain some benefit from Kalani Kai LLC is incorrect. There is no benefit that he obtains. There is no fiduciary responsibility to a nonprofit that’s compromised here. There’s no salaries being generated by the LLC which is a land-holding company and a land-owning company. It is not generating revenue. In fact, it will probably, the goal is to break even if it can break even. The revenues that are generated from the Kalani Kai LLC operations, if there are any, would go to the individual members of the company which includes the nonprofit. This is the nonprofit that has the potential to gain revenue in a legitimate funding way. It is not that any individuals are gaining revenue and, certainly, not as wearing two hats in this case. SIRACUSA: One -. GRAHAM: Thank you, Mr. Strauss. Rene’, could you hold on a minute? SIRACUSA: Just one final -. GRAHAM: Well, we’re going to have to break in less than five minutes. SIRACUSA: Okay. Just one very quick -. EXHIBIT C 12 GRAHAM: Commissioner Watanabe, you wanted to just pop in with something? SIRACUSA: Can I just finish that thought though? WATANABE: Well, it kind of goes to that. And I tend to agree, although I may not agree with this project in particular, but, you know, we should focus our discussions on land planning, land use issues, as opposed to whether it’s legal or it’s a nonprofit issue or, you know, what about this contract, because I see some other contradictions. But there’s enough here to discuss, without even getting into the nitty gritty of their material, what pertains to the Planning Commission, which has nothing to do with any of their advertising material. And I think more specifically one of the gentleman did indicate that the goal is to provide more permanent residents that will provide stewardship for the land. Is that correct? KOOB: Yes. WATANABE: That’s a correct statement? KOOB: Yes. WATANABE: So they are permanent residents, right, in your mind? KOOB: Yes. WATANABE: And therein to me lies a big distinction when we’re approving a special permit in an agricultural zone that is not intended for residential purposes and we’re introducing permanent residents and, I guess, it’s 39 plus 13 so it’s 40,what is that, 52 -. STRAUSS: I’m sorry, this is Steve Strauss. Mr. Watanabe, it’s not 39 permanent residents. The only permanent residents are the faculty members. So that’s 13, which is a position that’s already provided for in the special permit. We had to have faculty. We had to permanently have faculty and staff. GRAHAM: Commissioner Watanabe, you had a follow-up? WATANABE: Yes. When you made that statement earlier, the permanent residents, there was no distinction between an investor, staff, etc., okay? In my opinion, when your material says that you have the right to enjoy this specific unit, etc. and you’re also describing as permanent residents, we’re getting into a residential development in an ag area based on a special use permit, so that you can preserve much of the other area for land stewardship. The concept might be okay, but I don’t think that it coincides with the use permit. STRAUSS: I understand that you have to break -. GRAHAM: You’d like to respond before the break? EXHIBIT C 13 STRAUSS: And I’ll make a final comment, yes. It’s very clear both in the special permit and in the materials that except for the one person serving as faculty and in some cases potentially another staff, but except for that one person the other 39 positions, the other 39 rooms that Mr. Yuen talked about, are for transient guest accommodations and staff. That’s it. There’s no additional permanent residents that can be brought it. It’s required that they be transients under the special permit, and it’s still required under the form of construction of these units we’ve outlined here. GRAHAM: Thank you, Mr. Strauss. How about we take a break right now and maybe come back at 1:30. Thank you. RECESSED The Chair called a recess at 12:27 p.m. RECONVENED The meeting reconvened at 1:53 p.m. GRAHAM: Will the Planning Commission come back to order. And we’ll proceed with our discussion in conversation of the special permit of Kalani Kai. In order to get a good feeling for the Commission I’d kind of like to ask the other members who haven’t spoken yet to know what they’ve got so far or -. Did you have anything, Mr. Strauss, you wanted to say first or -? STRAUSS: Perhaps I can try and clarify some statements that we made previously, and that might help the process along. We were thinking at lunch how best to try to characterize it so that our thinking and Mr. Koob’s thinking as the process is developed really is consistent with how it’s presented. And we started from where we had before the special permit. What we have is 94 acres zoned Ag-3a with the potential of -. That’s what it shows here. Right? YUEN: You know, you still have 94 acres zoned Ag-3a -. STRAUSS: Right. YUEN: And the special permit occupies for Kalani Kai takes, I think, 15 acres out of that. STRAUSS: That’s correct. YUEN: So, you know, this whole question of the alternative development scenario I’m irritated by the -, I’m sorry to interrupt, but I’m irritated because it is not something that is eliminated by the special permit. STRAUSS: Well, that might be an appropriate amendment to the permit, to give up those development rights. YUEN: And, go ahead. EXHIBIT C 14 STRAUSS: Anyway, this is where the thinking started, that rather than develop this consistent with the zoning that existed was to do something that complimented the existing Kalani Honua. And if we’re looking at density issues, what legally the owners would be entitled to in terms of density and the number of people who would permanently be there is far in excess of what is permitted under the special permit and what they’re seeking to do with the property. Under the special permit of these structures that would be built, a maximum of 13, at least two rooms are required for transient accommodations, what we call guests here, and one room is faculty or guest, which again has a maximum 39 for 13 units within the 40 maximum of the lodge. The staff room, “S”, which will presumably be occupied by somebody like Mr. Squassoni, not the entire structure but one room, he’s not obtaining exclusive rights to the entire structure, he’s obtaining rights to occupy one room, is dedicated under the special permit for non-guest housing. The proposal that we put forward is the same use, non-guest housing, one room of each potential hale, a total of 13 maximum permanent residents. And if you think in terms of residency as occupancy, it is a room that’s permanently dedicated not for use by guests. That’s what the special permit requires. A room of at least one of the four cannot be used by guests because then you exceed the lodge. That’s contemplated under the special permit and required by the special permit. So when we’re saying that we’re having one person there all the time, not as a guest, it’s exactly what the special permit requires us to have. This is not some benefit, some way of bringing in permanent residents to occupy all of these rooms. We can’t do it. The permit prevents us from doing it; and we don’t want to do it. The whole purpose is to fund the ability to maximize the guest accommodations that are necessary to support the continued operations of Kalani Honua, for people to participate in the programs that are offered that is the gravamen of the special permit, the educational wellness, cultural opportunities, and to provide more rooms for guests. That’s why I want to make sure that I clarified that. This is not a way to flood this property with permanent residents. It’s not permitted, it’s not allowed. GRAHAM: Commissioner Rho, you had a comment, question? RHO: Maybe you can stay there and -. This says guest housing. And what’s on the side of that? What are those figures? STRAUSS: Here? RHO: Yes. STRAUSS: Oh, this shows -. NOMURA: Microphone. STRAUSS: I’m sorry, this is just a G, a G, and an F, G to correspond to what’s here, guest, guest and what the County with the special permit says, it is a faculty room that can be served as guest housing as well. EXHIBIT C 15 RHO: So, actually that was my first question for you, which was I wanted to be clear as to how many guest rooms there are in a hale or a unit, which is a maximum of three -? STRAUSS: Yes. RHO: One of which can be used for dual purposes, is that what you’re describing? STRAUSS: The permit contemplates its use as either a guest accommodation or a faculty accommodation, assuming that there’s some -. RHO: So, in effect out of the three guest rooms, one can be used as a faculty room? STRAUSS: That’s correct, as faculty housing. RHO: Then you talked about 13, right, 13 units or 13 rooms? STRAUSS: It’s 13 units, 13 hales, 13 units. RHO: Right. So each hale has a staff room of one? STRAUSS: That’s right. RHO: With a guest and faculty room of one and a guest, guest room of 1, well 2, right? STRAUSS: That’s correct. Four occupied rooms. RHO: Right. So then you folks talked, or you have talked about, or somebody has talked about 13, the number 13. So how do you get number 13? STRAUSS: The 13 is what’s permitted under the special permit, 13 of the, let’s use the word complex. RHO: So the 13 doesn’t refer to the staff rooms that can be, well, I’ll use the word, sold? STRAUSS: A maximum of 13 staff persons can occupy portions of the hales. RHO: The project? STAUSS: Exactly. RHO: Okay. So on page, and actually there’s no page number, but I’m not even sure, it’s a document that outlines yes or no for government regulations. Is the company, is it EXHIBIT C 16 subject to material regulations, company history, and organization, and milestones -? Are you familiar with that document? STRAUSS: Yes. RHO: Well, on the next page following milestones, it says use of proceeds; and then it’s number 29, show how the company intends to use proceeds of this offering. And then right below that it says if a minimum [13 retreat homes] are sold, then the company realizes “x” amount of dollars. STRAUSS: That’s correct. RHO: So my understanding at this point, and you please clarify if I’m wrong, the 13 retreat homes mean the 13 of those G hale, G, F, and S, yes? That’s 13? STRAUSS: That’s correct, 13. RHO: And the expectation is that you would have one person occupying the staff room who purchased the unit? STRAUSS: Who actually built, who financed the construction of the unit but did not purchase this unit. Their membership interest is a membership in the company that owns all of this. RHO: Right. But they do not have, well, okay, so I want to be a member, I qualified to be a member, I saw an attorney, he advised me, I’m fully capable, I’m not mentally incapacitated. So I plunk down “x” amount of dollars to build that unit, one of 13. STRAUSS: Yes. RHO: Okay, so what does that actually entitle me to if I would like to stay there for a period of six months out of the year? I want to stay there for six month and the other half of the year I want to have the management company or person rent it out? STRAUSS: That allows you the exclusive occupancy of the staff room. But if you are not there, there has to be staff present. RHO: Right. STRAUSS: So that allows the company to put staff in the room. RHO: Okay. STRAUSS: That’s it. The other rooms are for the use of Kalani Honua, Inc. EXHIBIT C 17 RHO: Okay, I got it. So now I’m married and I have two children. I cannot stay there? STRAUSS: You wouldn’t be a qualified investor for purposes of being a, you wouldn’t be a qualified staff member because you would require more than this room for occupancy. RHO: But I could be a staff member? STRAUSS: You could be a staff member. RHO: Right. And I could stay there overnight as long as my wife and children were not accompanying me on to the site and living there basically for five nights out of the week? STRAUSS: As long as you’re functioning as staff. But staff tends to be more longer term kind of relationships with Kalani Honua. Faculty may be a little shorter, as Mr. Yuen says it may be to teach a course. Staff are people that actually are intimately involved with the running of the whole project. RHO: Okay. So somewhere in all these pages, I’m sure that I read that the person or the member could purchased two bedrooms or two, well, in my view I can’t quote you because I don’t know what page I saw it on, but basically as a member paying to purchase I could purchase two rooms. Is that not true? STRAUSS: I have to check with Mr. Koob. KOOB: Yeah, we’re talking about these people supporting the construction of the entire cluster, the entire four cottages, but they only have one room; and it’s clarified in there in which to actually live as a qualifying staff or faculty person. In other words, a person may pay for the construction of two units which helps the nonprofit achieve the construction of these units, but the management of that second one and the management of the one that they’re not in when they’re functioning as staff or faculty is done by the nonprofit for its retreat purposes, for its educational purposes. RHO: Well, I just want to toss this out to you that I didn’t get that impression when I read this thing. And I, you know, I read it pretty much thoroughly, but I didn’t get that impression. I got the impression that I would have control over, except when I wasn’t there, I would have control over two of the rooms. Okay, so moving on down that stretch though, if you look at the second paragraph under No. 29, it says “If a maximum [20 total retreat homes plus farm dwellings] are sold,” and then it talks about how much it would bring in. So I don’t understand 20 retreat homes plus farm dwellings. Can you explain that. STRAUSS: The special permit only provides for 13. There are, as I recall, 2 that are in existence on the other part of the 94 acres, not in existence but permitted. EXHIBIT C 18 KOOB: One farm dwelling and then an approved second farm dwelling. STRAUSS: There was plan or talk of potentially coming back to the Planning Commission through the Planning Department to seek additional structures if it was needed to provide additional guest houses. But that’s not under this special permit and that’s not being offered now. RHO: Well, okay. So then I guess my last comment or question is the material that we have it seems like it conflicts at various points. Because if the plan changed or something else is happening with whatever is given to us, which makes it confusing, that’s number one, this thing is not blacked out. It’s number 26 and, you know, it reads like I just read it. STRAUSS: Right. RHO: So I guess my suggestion is that somebody needs to go through this stuff and black it out; and that’s not applicable anymore because you guys or somebody made a change. Cause I’m reading this thing at face value. STRAUSS: I understand. There aren’t 20 units. But if there became 20 units through a later seeking of additional entitlements, that would have to be issued through the Planning Commission for an additional or an amendment to the special permit. The problem is this, if you were a qualified investor and you thought the project was only limited to 13, now you’ve got a potential problem if say there’s now 20. So the disclosure that was made is they may seek as many as 20, but there’s only 13 that are planned, and there’s only 13 that are permitted. But it is to prevent someone from later on as a qualified investor say, hey, I expected there’d only be 13 and I don’t like the increased density now that you’ve applied for it. And the intent was to provide them that there may be as many as 20 applied for in the future. That’s it. RHO: Okay, so my last comment or question, actually it’s a question, where in the document, and you don’t have to do that right now, but where in the document would I know, would tell me as a prospective member, qualified member, that I could not occupy one or two with my wife and two kids? KOOB: Can I answer that? STRAUSS: Sure. GRAHAM: That’s Mr. Koob, huh? KOOB: Yes, Mr. Koob, sorry. For one I noticed where it says here, for example, 1/3 cluster, this is in the materials given to you that we had copies of, equals two cottages with a private bath. So an option, 1/3 provides for 1 percent interest in the LLC, and the construction of two cottages, one of which may be used as an individual staff/faculty retreat space. So it’d be clarified for each of these options that only one cottage is usable as staff or faculty as approved by the special use permit. And then as far as somebody coming and being a staff or faculty EXHIBIT C 19 person with the spouse or children and they need additional space, then those people are able to occupy as guests, you know. Or if you come with your spouse and your spouse was not really a faculty person, then, I mean, she’d be as a guest at Kalani. We have a program for the guests and staff and faculty. RHO: So there’s no, nothing in the document, cause I thought I read that there could be up to two guests in a room. So you would have two in G, two in G, two in F and two in S. That’s not true? KOOB: Well, yes, that is true. Because I think we generally consider it, as in any retreat or anywhere, that people sometimes double occupy a room. We’re not saying that, you know, people can’t sleep together. GRAHAM: Okay, thank you. Commissioner Galdones, did you have any questions or thoughts to put forward at this time? GALDONES: Thank you, Mr. Chair. This is my opinion, how I view this situation that we have before us. What was presented to the Commissioners back in 2002 is not the same as what we are dealing with right now. It appears to me as an amendment of what was presented back in 2002. So my comfort level, and it is my opinion that that being the case an amendment to the special permit should be what the Commissioners should be dealing with. If it was the same, then I don’t think we would be here today. Some of the things that are being discussed I do not feel comfortable that it is considered to be what was presented under Special Permit 1186. I’d rather see this come before us an amended special use permit. GRAHAM: Thank you, Mr. Galdones. Well, I got, go ahead, Mr. Torigoe. TORIGOE: Thank you, Mr. Chair. I just wanted to encourage the Commissioners to remember that this is basically an informational meeting today and no decision is being asked of you. And so it’s good to give the Director and the parties a sense of what your concerns are, but I also want to remind you to just keep an open mind. You know, this is not a necessarily all the information that you are ever going to get on this. There may come a time when someone brings a request for an amendment before you or some other official action before you. But I just want to encourage you to keep an open mind on this at this point. And it’s okay for you to, you know, express your concerns on areas that you want to see flushed out; and hopefully the parties can respond to that. GRAHAM: Thank you, Mr. Torigoe. Mr. Strauss or Mr. Koob, I have been thinking how I might frame a question that I think would get to the heart of the issue or something. And what I was coming up with was like to ask you, suppose you took steps to conform with what would be clearly acceptable to Mr. Yuen, which to me sort of means any investor doesn’t get identified to any specific piece of the property. But maybe you see it a little bit different or maybe I’m not characterizing it right. So where I’m going is suppose you did take some steps on your side to conform to what would be acceptable to him, could you not arrive at what you’d like to arrive at anyway? Could you not come up with a project that would pretty much meet what you want to do? EXHIBIT C 20 STRAUSS: I think that’s possible. The discussions that we’ve had with the Planning Department over the past few months have been kind of like this, informational meetings and exchange of ideas, but, and certain concerns have been raised. When I was going to college I sold cars to pay for my education. And part of the technique involved in striking a deal is would you take somebody. Well, if I could do this would you take it today? You know, if we could do that, would you take it today? And we haven’t reached that point of clearly identifying what would satisfy the Planning Department, the Planning Director. We are aware of concerns; and some of them have to do I think with philosophical ideas on what constitutes land and property entitlements. But others have to do with making sure that the project is properly represented to potential investors and also that it meets the confines, the metes and bounds of the special permit. And so, yes, it may be very productive to do that and we’ll certainly try to do that. The agenda item identifies the determination by the Planning Commission as to whether the financing and marketing plan is consistent with the special permit, not what’s on the ground. I mean that was the concern that was identified to be raised, is the financing and marketing plan. And that’s relatively simple to reign in or revise. In fact, it’s possible that there need be no more marketing plan because of the number of people that are already interested in participating that we wouldn’t have to have any additional marketing out there. We wouldn’t have to have the areas on the protected part of the website or even discuss it with anyone else.It’s a matter of potentially just calling through the people that have already expressed interest in making sure they’re qualified. So, yes, I think it could potentially be done that way. But some of the concerns that I hear raised have to do with matters other than the marketing program, it had to do with how many permanent people may be here. And I think on some of that we’re sort of getting away from what the special permit provides for. The task that two other attorneys and I had in connection with this project was to come up with a way of financing a project consistent with the special permit, within the bounds of the special permit in terms of the number of structures that could be built, the ancillary structures that could be built, the number of guest rooms that needed to be dedicated to guest rooms, and the number of rooms that needed to be dedicated to staff. And we think that we accomplished all that; and so that these issues about other concerns, as legitimate as they may be, were not things that we contemplated at that time. Because it was designed and driven by the special permit itself, not a way to get around the special permit but to implement the special permit. GRAHAM: Yeah, I understand that. Somehow I don’t feel like you’re answering my question directly. But maybe that’s by choice, not by omission, huh? STRAUSS: Well, I’m sorry. I thought your question was do you think that if we were to address the concerns of the Planning Director could we resolve this. GRAHAM: No. My concern, my question was, I think one of the features of your financing and marketing plan is one which assigns a specific real estate piece, you know, maybe not metes and bounds but a particular hale which someone constructs or lives in or has rights to. And I’m saying I think that is the heart maybe of what’s problematic for the Planning Director. So if you were to omit that portion in your financing and marketing plan, in other words the gentleman doesn’t have assigned to him, one, he’s going to build or something, but he merely EXHIBIT C 21 invests in the overall entity, that it gets built out the same way. Is that a deal breaker and it doesn’t work, or what’s the problem with that is what I’m asking. STRAUSS: I’m sorry, I misunderstood your question. And I think that, I would think that the best person to answer that would probably be somebody who’s prepared to invest on whether that would be a deal breaker for him. I’m not sure he’s representative of everyone that may be interested in this. But if I could I would defer and see what Mr. Squassoni would say, cause I’d just be speculating. SQUASSONI: For me, no, it would not be a deal breaker. Because I’ve already made my commitment to helping to build this community. I think there’s a problem in trying to explain this to other people. I’ve been around long enough, I understand, I’m involved in the community. Most people if they want to invest money, they sort of want to know what they’re going to get for it. We have, this financing is constructed so that what you actually have is a portion of a corporation, of a company, with the right to live in a room, in a cottage. And as long as we can continue to say that, that’s fine. I never expected that one of them would be mine because that’s not the way this is built. When we talk about living here permanently we never intended that the person was going to like own this cottage and be able to take it away with them if they choose they wanted to move it somewhere else. I don’t know if that helps or not. I’m perfectly comfortable with however we structure it. But it is confusing, it is different, it’s a different animal. I would like to be able to tell people that they could, in fact, if they were going to invest here and become a permanent member of Kalani that they would be able to live permanently at Kalani. Does that answer your question? GRAHAM: Well, you’re certainly addressing it. That’s all I was asking for, so thank you. Okay. Commissioner Siracusa? SIRACUSA: Yes. So, for example, if you were living in one of the cottages, one of the hales, and then you had to go to the mainland for a while, for example, and meanwhile Richard puts somebody else in there, which he would be entitled to do, when you came back, you would not necessarily come back to that same hale, kicking out that other person. You might be assigned to another hale. Is that correct? SQUASSONI: It’s funny you should ask that question cause that’s exactly how staff housing works now. Once people are moved around, we don’t move them back out because someone else arrives. I don’t think we’ve really thought about that.Yeah, that’s a possibility. If that were the way to work it, I could live with that certainly, yes. SIRACUSA: I’m mentioning that scenario because then your membership would not be tied to a particular piece of square footage of land. SQUASSONI: No, no, the membership is not tied to a particular piece of land. SIRACUSA: And that was one of the concerns here. EXHIBIT C 22 SQUASSONI: Right, right. As a courtesy I would like to put someone back in the space that they love; but, no, it’s not tied, legally it’s not tied to that space, to the land or to the sticks, actually. GRAHAM: Thank you. Commissioner Watanabe, you had a question? I don’t think we need to go too much longer here today. Maybe you’re hearing and all, but -. WATANABE: No, I have a comment. You know, we have a letter here to Mr. Koob, I believe it’s from the Planning Director; and on page 2 of that it says “Therefore, the Planning Director is recommending that no more than 13 hale units with no individual kitchen facilities be approved.” And yet we’re talking about permanent residents. Throughout the material that we had, we were also talking about in various areas about each unit having a refrigerator, each unit having a kitchen unit; and I know, okay, you can say yes, no, whatever. I think what it all boils down to for me is you’ve got an occupancy issue. You know, to me, when you’re talking about a retreat and temporary residents and transient people, I’m not envisioning a community. But now all of a sudden you’ve got, what is that, 52 units. They said you can have as much as 2 people in each unit. That’s 104 people; and all those people have got to eat, they have waste. What are we going to do here? And you’re going to concentrate them there? And by their own admission they’re saying, you know, the plan is to come back and say we want to do more, ask for more. I think, I cannot see how anybody would have envisioned the retreat as having potentially 104 people in it, nearly permanently. You know, cause I could say I’m a student but I’m a lifetime student so, you know, I’m not faculty but I’m there 365 days a year. You know, I just, and they may actually intend to do this. But I think if we were to approve something like this then we’re opening up a can of worms for everybody else that’s going to come in and tweak it just a little bit with one or two different words; and then you’re stuck. GRAHAM: Okay, thanks for your thought. Mr. Koob, you have something to say? KOOB: I appreciate that concern; and I really think that it’s really important that we really be clear that we’re not trying to pull off a subdivision with permanent residents. And I think the way we proved that is by our history. We have been around since 1975. Kalani Honua has been operating since 1980 when we got our special use permit. And in that time there have been staff, there’s international staff, there are volunteers from all over, they come and go, they’re not permanent residents. We’ve had an Alu Like Program; and with that program we have wonderful permanent staff that are native people and other staff that live in the area, and some of whom live on premises. And even the staff of those who have lived on the premises have changed over time; but it’s great that they’ve been there for long periods. And we have faculty, we have yoga teachers that have come back for 30 years. We have repeating groups that keep coming back and they are there every year. I think we’ve demonstrated, and we’ve demonstrated in our reports to the IRS, to the Planning Department, that we are an educational facility, that we’re a transient guest facility, in terms of the students that come there, and that we’ve been doing this for, you know, all this time. And we’re not trying to do anything different. We’re actually just trying to have the support people that are essential to making a retreat center operate successfully, to have them have their places where they will be staying, which means as EXHIBIT C 23 approved by the special use permit that’s for two transient guest rooms, and also a faculty or guest room, and a staff room. And we need that kind of like support to be there. I think that’s all it’s about. We don’t want to create a community with permanent, it’s not about that. We really realize that our mission is to provide nature, culture and wellness programs to the community at large. People from all over the state come to Kalani. People from all over the world come to Kalani. And it’s really what we want it to be. We’re not trying to create a permanent subdivision. GRAHAM: Good. Thank you for your words. Anybody else here? Commissioner Rho? RHO: This is my last question. I guess I’m trying to get my head around this concept. But on the agreement to purchase membership interest, on the third page, its terms and disclosure, No. 1, and then it talks about in exchange for members payment of a purchase price of $200,000-$900,000 [depending on retreat size and location] member receives, etc. I guess when I read this initially what I did was I marked it up and I circled $900,000. And I said what does this look like? Because it’s, the way I understand it it’s a retreat, to construct the retreat home arranged by Kalani Honua. So if I’m the member, and I don’t have $900,000 to give you, but if I did have $900,000 and I was a qualified member, could my hale that I would build with your assistance or whoever be twice the size than what’s proposed whenever this thing was submitted? SQUASSONI: This is Paul. Absolutely not. RHO: Absolutely not. So can you describe to me what $200,000 would look like, what a hale looks like at $200,000 and what one looks at $900,000. GRAHAM: Mr. Squassoni, you’re going to respond to this then? SQUASSONI: Yes, I am. GRAHAM: Okay. Thank you. SQUASSONI: If $200,000 you would build two cottages. And $900,000 you would build an entire cluster. There is obviously a difference in construction costs between building, between putting in a membership that would provide for the building of two cottages and putting in a membership that would provide for the building of an entire cluster. That’s where the difference in cost is. You don’t get to build a mansion. This is an investment in the community and an investment in Kalani. It’s not, there’s no -. RHO: Therefore, one unit consists of G, G, F and S, and the hale, right? SQUASSONI: Yes. RHO: And that costs $900,000 if I wanted to build one unit? EXHIBIT C 24 SQUASSONI: That’s what we expect with the land and construction costs; and that also includes -. RHO: So, therefore -. SQUASSONI: Seminars, but you can only stay in one room. RHO: Yes. But I guess what happened though is that I only have $200,000, and that can only purchase one cottage is what you call it? SANSONE Well, that would allow you to build two. RHO: Two cottages. SQUASSONI: That would be of sufficient means to build two of the cottages, yes. RHO: Two of the cottages. Okay, thanks. GRAHAM: Thank you. Do we have any other questions? Maybe we’re about finished with our discussion. I think everybody learned a bit. We didn’t come to a conclusion. I think that was our intention, not to come to a conclusion. Thank you all very much for being here today. So I can close this agenda item then. STRAUSS: Thank you. The discussion ended at 2:35 p.m. Respectfully submitted, Sharon M. Nomura, East Hawaii Secretary . EXHIBIT C 25