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Monday, January 14, 2008
Red Hot Lava Menaces Old-boy Scam
By Andrew Walden @ 6:23 PM :: 7232 Views :: Hawaii County , Development

by Andrew Walden

Red hot lava threatening Puna’s Royal Gardens subdivision opens yet another chapter in a long-running saga. A hui of elected officials and state and county engineers in 1961 bought the 1,807 acre site from the Bishop Estate (Kamehameha Schools) for $200,000 after easily obtaining preliminary approval to subdivide from the Hawaii County Planning Commission.

Democrat Gov. George Ariyoshi, then a state Senator, was at the center of the Royal Gardens hui and at the center of the early 1960s subdivision boom on the Big Island. George Cooper and Gavan Daws, authors of the landmark 1985 book “Land and Power in Hawaii,” demonstrate how Big Island subdividers modeled their plans on earlier scams to sell swampland in Florida.

“A (Royal Gardens) brochure described the development as being ‘directly adjacent to Hawaii Volcano National Park with its spectacular attractions.’ Another way of putting this would be to say that Royal Gardens was only 12 miles to the east-southeast of an active volcano ….

“In 1960 a lava flow covered much of Kapoho, destroying the village of that name. In 1977 an eruption nearly destroyed the village of Kalapana, about three miles northeast along the coast from Royal Gardens. Then in 1983, 1984, and 1985, a total of seven lava flows entered Royal Gardens, destroying altogether 22 homes, or about one in three of all residences so far built in the subdivision ….

“With this in mind, it is ironic to note that among those who invested in Royal Gardens in the 1960s were several people connected directly or indirectly, then or later, with government response to natural disasters such as volcanic eruptions.

“Investor Arthur Ishimoto was in 1983 state director of civil defense. Engineering consultant Yoshio Inaba had approved Royal Gardens’ creation as county engineer. As county engineer he also had some responsibility for Big Island civil defense plans and operations. One of Royal Gardens’ lawyers, George Ariyoshi, was the state’s chief executive when the volcano erupted (in 1983). The son of two other investors, the Matayoshis, was the Big Island’s chief executive in 1983.”

Other limited partners included judges, senators and representatives, Hawaii county supervisors (council members), a future Hawaii county mayor, and state and county engineering personnel.

Cooper and Daws explain: “Norman Inaba, who brought Milolii Beach Lots Subdivision and Royal Gardens into existence, was among the biggest of Hawaii County’s developers. In 1964 the Hawaii Star-Bulletin described him as ‘the Big Island’s most diversified if not the biggest subdivider with nine developments around the island covering some 7,000 acres.’”

By the end of the boom in the mid-1970s about 80,000 lots had been created on an island with a population of about 80,000. Twelve percent of lot buyers were Big Island residents. This meant that about 25 percent of Big Island families had an investment in the success of the schemes. Another 35 percent were Oahu residents. These local residents were voters who expected to profit from their purchases. They became a political base for the developers and politicians. This was typical of other developments including Kihei, Maui and Salt Lake Oahu. Elected officials named in development-related corruption scandals often went on to higher office while those who questioned this type of speculative development often lost out.

The first speculative development was Hawaiian Acres -- 12,000 acres subdivided into about 4,000 lots in 1958. The lots sold quickly, inspiring more subdivisions to be formed. On a single day in 1962, just before some changes in the state’s land use law would take effect, the Hawaii County Planning Commission approved 42 new subdivisions totaling 3,500 lots.

In December 1966, the Hawaii County Board of Supervisors passed an ordinance requiring paved roads and water lines. This did not end subdivision but rather forced the elected speculators to extract more profit in order to pay for the improvements. The result was developments such as Kona Highlands. Meanwhile sales in substandard subdivisions continued as developers still held many lots.

As many as 60 percent of the Big Island’s subdivisions fall within the U.S. Geological Survey’s “high risk” (Zone 2) and “highest risk” (Zone 1) areas. Volcanic activity along the east rift zone of Kilauea has been frequent since 1955 and constant since 1983. In 1969 a hui of developers attempted to subdivide 6,000 acres of Kapoho. As described by Cooper and Daws, “(Their) planning consultant wrote that the project’s ‘major tourist attractions include…the 1960 lava cone and surrounding lava field providing visitors with an opportunity to experience the awesome forces of nature.’” Although the county Planning Commission supported the application, the state Land Use Commission turned it down.

About 49 percent of Hawaii is today owned by state or federal government. Another 47 percent is owned by large trusts such as Kamehameha Schools or Parker Ranch. That leaves 4 percent for the public. This stands in sharp contrast to the other 49 states. For instance in New Mexico, slightly over 40 percent of land is owned by state and federal government. But the top 40 private New Mexico landowners together own only about 8% of the state. In eastern states, the percentage of land in governmental hands is often below 10 percent and private ownership is even more diversified.

Cooper and Daws quote a 1958 editorial from the Hilo Tribune Herald: “This newspaper goes along with the optimists, confident that the eager buying of land, much of it sight unseen, means that the Big Island is finally coming into its own, and that we are on the threshold of development that has kept Oahu singing with prosperity…Here on the Big Island we don’t much care what brings them in as long as they come and as long as they buy ….”

Some look back on this era with disdain. But they are fooling themselves. Today politicians extract far more from the schemes by staying away from active volcanoes and letting professionals do the developing. After the Hokulia decision was announced in March, 2006, West Hawaii Today editor Reed Flickinger opined: "Hokulia has raised the bar in what can and should be offered to the community by developers. It also serves as a significant benchmark for government officials who are too easily cowed by developers claiming an inability to provide benefits or mitigate impacts because the project would then be ‘no longer profitable’. There now exists proof to the fallacy of that allegation by so many developers."

Today more money than ever is being extracted from developers. Hawaii’s economy remains based on land development rather than the development of the educational and economic potential of individuals. And 10,000 residents left for the mainland last year even in the midst of an economic boom.

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