Work to finish the Mamalahoa bypass should begin in fall 2013.
“It’s a go,” Mayor Billy Kenoi said Monday afternoon.
Kenoi said the county reached an agreement in principle with the final landowner along the proposed southern corridor of the bypass road, which will run from Halekii Street to Napoopoo Junction in South Kona, extending from the road Hokulia developers built several years ago. The county will begin improvements on the northern end of the road within two weeks, Kenoi said.
“We had to get past what transpired for the better part of a decade” to proceed with the project, he added, referring to years of litigation between landowners, the county, Hokulia and 1250 Oceanside developers, as well as more recent lawsuits against an insurance company.
The county won $12.5 million in cash and $20 million in land as collateral for another $20 million owed by 1250 Oceanside’s bond insurer, American Motorist Insurance Co., in a lawsuit that was settled late last year. Kenoi said the county will be able either to leverage the cash settlement for federal matching funds or issue a general obligation bond for the remainder of the construction costs.
Hawaii County officials have planned for a Mamalahoa bypass in South Kona going back to the late 1970s. When 1250 Oceanside Partners went through the rezoning and subdivision process in 1994, county officials required the developer to build the bypass between Keauhou and Captain Cook. That requirement was finalized in a 1998 development agreement. One landowner along the route, the Coupe family, then indicated to Oceanside they were unwilling to sell the land. The Coupe’s attorneys successfully argued in 2007 that a 2000 eminent domain procedure was improperly done, because the development agreement between 1250 Oceanside and the county illegally delegated the county’s right to take property by eminent domain. But 3rd Circuit Court Judge Ronald Ibarra upheld a 2005 condemnation by the county.
Kenoi said county officials have been in contact with U.S. Sen. Daniel K. Inouye’s office about getting federal funds, but said using federal money would mean bringing the entire road, including the already built northern portion, to federal standards, and going through the Section 106 consultation process. He said the county may just pursue issuing bonds, which it has the capacity to do, to get the construction funds.
The road now runs from Alii Drive in Keauhou to Halekii Street in Kealakekua. The remaining portion of the road, to Napoopoo Junction, is estimated to cost $27 million to complete.
“We’ll finalize the financing within the next few months,” Kenoi said.
If 1250 Oceanside, which is in receivership, is unable to make good on the $20 million promissory note, the county takes possession of a large tract of land from the defunct development. Kenoi said it would be the county’s largest open space purchase, and could be used for a huge shoreline park, or be sold to reimburse the county for paying to build the road.
The county is proceeding with the initial road design, with an understanding from landowners that some changes may be needed as the construction process begins, he added. The intersection with Napoopoo Junction will be signalized, he said. After years of litigation and negotiations, Kenoi said the landowners along the route were suffering from “litigation fatigue” and seemed to be ready to move toward a resolution.
The agreement was not intentionally timed to coincide with the upcoming mayoral election, Kenoi said.
“We never stopped working because of an election season,” he said. “We’re trying to get done what our residents want done.”
Lloyd’s Banking Group and Hokulia lot owners negotiated an agreement to let the lot owners take over the golf course, clubhouse and other amenities, former CEO John DeFries told West Hawaii Today earlier this year. To help offset costs, the bank also agreed to give the landowners additional property. The bank is trying to sell the remaining property, and has talked to two or three investment groups, he said.