WKORVN-N information

Looks like the hold up on Westin's N-N project is not financing but permitting per this article in the Maui News http://mauinews.com/page/content.detail/id/525759.html?nav=10

cymar, ... Permitting is only the dodge; an anti-timeshare attitude is the real reason.

From your link. Rapacz is the SVO attorney:

"There is no question that a property owner has to have a community plan designation that allows urban development in order to get urban zoning (in this case, hotel).

Furthermore, to subdivide, the owner has to comply with all the various levels of land regulation.

But those laws shouldn't make any practical difference for the new Kaanapali Ocean Resort project, said Rapacz, because the developer has no intention to build on any land labeled open space in the community plan. The project plans to use the property's open space for a shoreline setback, a drainage swale and a buffer area along Honoapiilani Highway.

In other words, everything SVO is proposing to do on land designated "hotel" in the community plan is consistent with that designation, and everything it is planning to do in the area designated "open space" is consistent with that designation." ... eom

"All the while, the meter will be running on SVO's sunk costs, which the appeal says already have reached $100 million."

Well, that explains the over-the-top MFs.

LisaRex said:

"All the while, the meter will be running on SVO's sunk costs, which the appeal says already have reached $100 million."

Well, that explains the over-the-top MFs.

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SVO would have been better off if they spent another $1 million or so in appropriate "entertainment" costs

Are you guys talking about the WKORV-Sewer Treatment Plant location? I'm just dying to buy there!

This is right up my alley…land use and land development.

It’s clear to me that Maui officials just don’t get it….development in the current economy is needed.

Troopers said:

It’s clear to me that Maui officials just don’t get it….development in the current economy is needed.

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I don't know. There's a fine line between developing and ruining what makes your place so special by over-developing.

In any event, I just wish that they'd deny the permit altogether vs. the passive-aggressive tactic of issuing the permit, then taxing the development to death.

LisaRex said:

I don't know. There's a fine line between developing and ruining what makes your place so special by over-developing.

In any event, I just wish that they'd deny the permit altogether vs. the passive-aggressive tactic of issuing the permit, then taxing the development to death.

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It's all a matter of perspective. Depends on when you crossed the bridge. Last one over wants it raised, now that they are there.

Personally, I think the fine line was crossed about 40 years ago.

Fredm said:

It's all a matter of perspective. Depends on when you crossed the bridge. Last one over wants it raised, now that they are there.

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It's not a matter of ME wanting the gate closed, because I don't get a vote, but rather the Zoning Board. Given that Hawaii is in a world of hurts right now, you'd think they'd welcome new development. But they aren't. So what is their motive? I, personally, think that they are concerned about over-development. If you think Maui was spoiled 40 years ago, imagine how residents feel every time a new hotel gets built.

Once again, if that's how they feel, I'd much rather they deny the permit altogether, then to approve it and then try to topple it via taxation.

LisaRex, ... You post: "Once again, if that's how they feel, I'd much rather they deny the permit altogether, then to approve it and then try to topple it via taxation."

From the Maui Times article: "WAILUKU - Ordinarily, once a developer gets a special management area permit, the rest of the path to construction is routine. But SVO Pacific Inc., the developer of the Westin Kaanapali Ocean Resort and Westin Kaanapali Ocean Resort North at North Beach, has had its SMA permit since March 2008 for a nearly identical third resort next to the other two, but it has not been able to get building permits.

To be precise, it cannot get any more building permits, although it has gotten some to do $20 million worth of site and foundation work."

There are different types of permits involved. The SMA permit and initial building permits allowed Starwood to spend $20M for site and foundation work. It's the remaining building permits to build the structures that have not been approved.

The failure to issue the last building permits is how the Maui authorities are trying to topple the 3rd development.

However, that doesn't rule out the Maui authorities raising assessments/taxes on WRORV and WVORV-N to exert pressure on Starwood to stop the building construction permits fight. It would be a pretty hardball (and very illegal) tactic to raise all the assessments/taxes as retribution for Starwood pursuing the building permits. Starwood still has unsold units at WKORV and WKORV-N, but most of them probably have been sold off by now to individual owners.

Taxes are made up of two elements: the rate and the assessment. The $14 per $1K rate is not new. The increased assessments seem to be new. Maui says it assesses property using the cost and market approaches. Those 2 approaches can yield wildly differing values for property.

Moreover, the market value approach to value for taxation includes the income capitalization method -a method usually applied to hotels and other commercial structures. If Maui has abandoned comparable sales and resales of timeshare property and is using a (net) income capitalization approach and pre-2009 occupany rates, rental prices and net income per room to generate per room hotel dollar values and then applying those per room hotel dollar values to timeshares (as some people have indicated), no wonder the timeshare assessments went up!

However, with the large amounts of money at risk, I doubt anyone involved wants to level with the owners about what's actually going on in Maui. ... eom

Jarta, once the final map and project has been approved is it legal to deny permits?

I thought not.

Fred, it doesn't matter if it's legal or not...believe me. It's more common than you think. As you know, I work with numerous developers and municpalities in the Bay Area. It's all too common.

Bottom line...it's about politics.

FredM, ... " once the final map and project has been approved is it legal to deny permits? I thought not."

I guess we will find out.

The Maui building permit department is hanging it's hat on the fact that there are 2 SMA permit approvals. One is for "hotel" use. The other is for "hotel and open space" use.

It is not exactly clear which came first. However, it is logical to assume that after the "hotel" SMA permit was issued, Maui requested (maybe even strongly requested, lol!) that Starwood guarantee that certain "open space" along the beach or elsewhere would be preserved. Starwood agreed and the second SMA permit was issued without a formal cancellation of the first SMA permit. (I can't fathom why that cancellation would be necessary if the mere hotel SMA permit came first and the hotel and open space permit came 2nd.)

The Maui officials denied the final construction permits and are arguing that the 2 SMA permits make it unclear what is going to be built. Starwood's position is that the hotel and open space SMA permit controls, that nothing requested by the permits will be built in the designated open space and the situation is so clear that all that needs to be done is issue the building construction permits.

Maui has countered that it asked Starwood to formally seek a cancellation of the hotel (only) SMA permit - which apparently has not been done - and now Maui is claiming that only an amendment to the zoning ordinance to clarify what happens when a 2 SMA permits have been issued can clear up the "confusion."

Maui's position sounds like BS to me.

It sounds like Maui wants further concessions (or no development at all) and is grasping at straws to get what it wants. I just hope that Starwood timeshare interests are not being valued at market value using an income approach to value suited to hotels (perhaps because the SMA permits use the term "hotel") while the property at Marriott and other timeshare resorts is being valued on blended sale and resale prices.

I, like you, thought that a permit like an SMA permit would clear the way for all the permits - if the requested permits did not violate the current or latest plan approved. I'm a little perplexed. We will just have to see how this big stakes squabble plays out. But, I'm sure nobody will talk much while negotiations (hopefully) take place. ... eom

Troopers said:

Bottom line...it's about politics.

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Yeah, it's disgusting.

This past summer I struck up a conversation with some local ladies at the Kapalua trails. They were friendly, but had a pretty dim view of developments like WKORV. They said it was getting to be "a ghetto" where WKORV is, with so many units on such a small space. They did not feel that there was much benefit to the local population from the timeshare units since users contributed less to the local economy than hotels in terms of paying for outside goods and services and in paying taxes (hotel occupants pay something like a 16% tax on their room rate). Timeshare owners, from their point of view, just stress resources without paying their fair share for them.

I am not agreeing with them but I did not want to start a big discussion on an otherwise beautiful hike, so I chose not to pursue the matter with them. From my short talk, they were pretty convinced and there was not going to be much give and take regarding other points of view. It shows the feelings of the locals and thus the attitude of their elected officials.

To be honest. I love my units on Maui, but I do see the quality of the area deteriorating as more and more people come in. It is not that I want the door shut after I got in, but perhaps it should have been shut long before I ever got there. Molokai has had that attitude for a long time, not allowing development on their island, even if it means a slower economy and not as much income for the locals.

The problem with the current situation is that they are trying to change the rules mid-stream. If they really didn't want the development they shouldn't have allowed it from the start. Now that Starwood has spent a lot of money on just the infrastructure work it is not OK to just withhold the permits.

emuyshondt said:

The problem with the current situation is that they are trying to change the rules mid-stream. If they really didn't want the development they shouldn't have allowed it from the start. Now that Starwood has spent a lot of money on just the infrastructure work it is not OK to just withhold the permits.

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I agree completely.

The locals you spoke with sound like they've definitely got their NIMBY viewpoint.

A sizable donation to Maui schools would do wonders to help ease the current hostility between Starwood and Maui County.

LisaRex said:

A sizable donation to Maui schools would do wonders to help ease the current hostility between Starwood and Maui County.

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Ah...politics.

Troopers said:

Ah...politics.

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Absolutely.

I have a BA in Political Science. My very first job out of college was as the City Clerk for a small municipality in Ohio. I learned very, very quickly that you either play the game or you get left behind.

Let me give an example. Whenever the City needed to purchase any item or service over $x (I forget the figure), by statute, it had to go out to bid. Our fleet's auto insurance (to cover police, fire, and city vehicles) was up for renewal, so I was told to gather the necessary information and place an advertisement in the local newspaper. I questioned whether I should place it in the city-wide paper, because the local paper had about 20 readers, but I was told that this was protocol.

Well, I thought that that was a pretty ineffective way to get competitive bids, so I made copies of the ad and let my fingers go walking through the yellow pages. I mailed out a dozen or so of the ads to local insurance agents to see if I could stimulate some interest. And I really thought I was doing a *good thing.*

So come bid day, in walked the local insurance agent, Lee, a man who I'd seen at all of the political fundraisers that I'd been forced to attend as part of my job. He handed me his bid packet so that I could time stamp it. And he looked at his watch, and said, "Let's get this baby rolling."

Well, I will never forget the look of confusion on his face when another gentleman walked in the office with a thick envelope. And then another. And then another. Three insurance agents. Three bidders. Three COMPETITORS. I didn't know at the time but this was the first time that Lee had ever had to actually compete with another insurance broker! And he wasn't very happy.

See, the party in power had held office for over 20 years and they'd learned lots of tricks of the trade, little ways to bend the rules to circumvent the spirit of the bidding process, if not the actual letter of the law, so that they could control who was awarded the bid. By selecting the local newspaper, they technically satisfied the legal requirement to advertise the bid. The fact that only 20 people read the local paper didn't bother them in the least. In fact, that was the whole idea! What was best for the taxpayers, the people they were elected to represent, didn't even enter their head. (Does all this sound familiar?)

That day 20 years ago, I personally saved the taxpayers $10,000. One of the three rogue agents who submitted a bid just happened to use the exact same underwriting company as Lee...and his bid was $10,000 less than Lee's. There was no excuse the Board could come up with in order to justify that price difference. Believe me, they tried. And so Lee lost the insurance contract for the first time in 20 years. (Do I hear weeping in the peanut gallery?)

Oh, and my reward for saving the taxpayers $10,000? A reprimand from my boss. He said that I'd overreached my authority by mailing out the ad to other agents and in the future I was to stick to protocol and not do anything stupid. "Well, not stupid." He said paternally, "But naive." I asked, "How is saving $10,000 naive?" He shook his head sadly and said, "Lee is one of our most generous contributors. Last year, he donated $5,000 to the Republican Club. Without money to campaign with, we can't win. If we don't win, then you're out of a job. Get it?"

Oh, yes, I got it.

What cracks me up is that Starwood, who obviously knows how to bend the rules to have their way with Owners, can't figure out how to crack the nut that is the Maui Zoning board.

It would make for some seriously good entertainment if it wasn't hitting me, personally, in the pocketbook.