Delinquent $1.5 million tax bill lost in paper trail

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Taxpayers, include “concerned citizen” in your prayers tonight. He just added $1,529,506.94 to Maui County’s strained treasury.

Every week, the county Real Property Tax Division updates its Internet posting of the 25 biggest delinquent taxpayers. According to Tax Division administrator Scott Teruya, the list doesn’t change often. But it did last week, and an anonymous resident called The Maui News to wonder if Kaheawa Wind Power LLC, which held the top spot, was “out of money.”

No, but the company didn’t know it was behind on its taxes until a reporter called.

Kent Smith, president of Makana Nui Associates, which is a partner with First Wind in the farm, said telephone calls and e-mails were flying among company officials Wednesday and Thursday to figure out what happened.

Here, according to Smith and Teruya, is how the tax bill got overlooked for three years:

Kaheawa pays all expenses through a state lease, but when the farm went into operation in 2007, the state didn’t send the lease and permit papers to the county.

“We knew there was a wind farm there,” said Teruya, but there was no paperwork to process.

Kaheawa wasn’t getting bills, so it wasn’t aware it was delinquent.

Earlier this year, a county tax staffer looked into it more closely, decided taxes were due and sent a bill to the last-known address of the listed owner, UPC Wind in Newton, Mass.

However, between 2007 and now, UPC’s interest was renamed First Wind and the offices were moved to Boston.

The bill eventually was returned as undeliverable.

“The state and the county never assessed us and never forwarded any bills,” said Smith. “They didn’t find any way of contacting the local wind company.”

But Teruya said: “It’s not our place to go find anyone.”

It took about a day for Kaheawa to reconstruct what had happened, and Smith called Teruya on Thursday to assure him that First Wind’s chief financial officer, Michael Alvarez, was preparing to wire the money by Tuesday.

“One hundred percent,” said Smith by telephone Thursday from a golfing holiday in California.

It could be the harbinger of a big flow of tax revenue for the county. Kaheawa has 20 turbines, and the turbines account for much of the assessed value.

Kaheawa wants to expand by 14 units; Sempra is working on a wind farm of similar size in Ulupalakua; and Castle & Cooke and First Wind are projecting hundreds of turbines on Lanai and/or Molokai.

As of Thursday, Kaheawa still held first place in the list of top 25 delinquents, but Teruya was not concerned. “It seems like their intent is to pay. . . .

“It’s good that people are looking at the list,” he said.

Unemployment benefits stopped for 6,000 in June

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Unemployment benefits ended for an estimated 6,000 Hawaii workers last month.

The money dried up when Congress decided against extending an emergency unemployment insurance program.

The state Department of Labor and Industrial Relations says an additional 2,150 island workers are expected to lose their benefits each month the program isn’t funded.

Economists say the loss of unemployment checks for thousands of Hawaii workers will be felt by island businesses.

The U.S. House voted last month to approve extending the emergency benefits.

Republicans in the U.S. Senate are holding up the measure, saying the spending will put too much strain on the federal deficit.

(Maui News)

What Island has most Forclosures?

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Hawaii foreclosure rate just shy of top 10

HONOLULU – The foreclosure listing service RealtyTrac Inc. reports Hawaii had the 12th highest foreclosure rate in the first half of 2010.

The islands had 6,482 filings, meaning one in every 79 households received a foreclosure notice.

By county, Honolulu had the most filings, 342, but the lowest rate at one filing for every 986 households. Kauai had one filing per 505 households with a total of 59; Maui had one filing per 245 households with a total of 270; and the Big Island had one filing per 242 households with a total of 329.

RealtyTrac said Thursday that nationwide nearly 528,000 homes were taken over by lenders in the first six months of the year, a rate that is on track to eclipse the more than 900,000 homes repossessed in 2009.

Maui News

Paul Brewbaker; Economy is going to get better, even if it doesnt feel like it…

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“Maui Housing: Out of the Abyss?” Paul Brewbaker spoke on Friday about the economy and Hawaii housing. Have we dug ourself into a deep enough hole? How high can it bounce? Those are some questions he spoke about as well as the following information;

If Maui real estate prices haven’t already hit rock bottom, they’re not going to get much lower, economist Paul Brewbaker said Friday.

He told the Realtors Association of Maui that his take-home message was that people shouldn’t wait too long to buy if they’re hoping to find bargains.

“It’s not worth looking for that last five dollars,” he said.

Several weeks ago, Brewbaker told another Maui audience that the recession was over, even in Hawaii.

On Friday, he spent much of his hour in front of 120 real estate professionals at the King Kamehameha Golf Club defending that pronouncement, trying to explain why the hard times are past, even if they don’t feel like it.

Sure, it is a jobless recovery, he said.

When a dip in the business cycle ends, “the last thing you do is hire somebody. First, you work your employees to death. Then you realize your buddy is going to steal them and pay them more.”

That’s when employers start hiring again, he said.

Brewbaker noted that the unemployment rate on Oahu, 5.5 percent, is about what has been considered “full employment” on the Mainland. The Neighbor Islands are lagging, but Brewbaker tried to explain that snapshots of statistics have to be interpreted in a longer time frame.

One Realtor worried about a large oversupply of housing for sale: about 3,000 listings today at the Realtors Association’s Multiple Listing Service, and probably another 1,500 in various forms of foreclosure and distress that are going to be piled on top of that.

But Brewbaker said that wasn’t so bad.

The backlog of foreclosures is more attributable to Maui’s distance from the bankers and brokers who are doing the paperwork to work out the problems than to any real increase in distress.

“I can’t tell you how many people have told me about sales on the courthouse steps being postponed,” he said.

On the Mainland, where the technocrats are, things are just moving faster, he said.

A couple of years ago, Maui’s proportion of housing in distress ranked it among the five best states. The proportion hasn’t changed much, but now Maui ranks in the middle of the pack. But that’s just because more of the Mainland’s problems have been disposed of.

The uptick in housing prices in California foretells an uptick here, since, as Brewbaker puts it, “Maui is the western edge of Orange County.”

Brewbaker also noted very little new housing is being built, creating additional pressure on supply that will drive prices up.

Building permits are running about 400 a year, only a fifth of past experience. For several decades, he said, the proportion of housing starts compared with the increase in population has been falling steadily, mostly due to government regulations.

Maui County’s snail’s pace in keeping up with demand for infrastructure is only further suppressing the development of new housing, he said.

“The Department of Water Supply looks more like the Department of Water non-Supply,” he said.

Put it all together, and it looks as if the fall in prices – around 30 percent on average since 2007 – probably is about over, he said.

Brewbaker acknowledged that agents are going to feel resistance from clients, who might still be wary.

The Federal Reserve has said it intends to keep interest rates very low. Brewbaker does not consider worries about a “double-dip” recession compelling.

Although the current recession was bigger than any of the previous six recessions – although at only about 3 percent contraction nationally, not even one-fifth as bad as the Great Depression – when graphed, it takes its place in the up and down curve of a business cycle.

It isn’t a double dip – that is, a new episode of the recession that ended in 2009 – that should concern people, Brewbaker said, but the occurrence of the next regular recession “in 2019 or whenever.”

He did note some oddities of the current Maui real estate situation. Prices of single-family houses and condominiums have converged, while they used to be further apart, the way they still are on Kauai.

Although, he said that there might be some structural changes (there was an explosion of condo building at the destination resorts, which aspired to more luxury), he expects the price gap to re-emerge.

He titled his talk “Housing after the Recovery,” and it was expected to be posted at the Realtors Association website, www.ramaui.com, by today.

(Maui News ; Karen Leach; RAM website)

(Maui News ; Karen Leach; RAM website)

(Maui News ; Karen Leach; RAM website)

MAKENA Lenders Win- New Plan for Homes and Maui County Growth!

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WAILUKU – Wells Fargo Bank, trustee of the mortgage lending trust group that foreclosed on the Makena Resort last year, fended off two additional bidders Tuesday and prevailed – with a $95 million bid – to purchase the 1,800-acre property and the Makena Beach & Golf Resort.

The action occurred in 2nd Circuit Judge Shackley Raffetto’s courtroom, with the judge confirming the sale during the completion of a foreclosure auction that started on the Wailuku courthouse steps in May. Raffetto agreed to reopen bidding to allow two additional bidders to participate.

Miles Furutani, who was the receiver in the foreclosure, said now that the ownership is settled, “a lot of good things are going to happen in the near future.”

The ownership of the property will move from court receivership to a “new owner designated by the bidder,” according to a news release from the lender group. The new owner was not identified.

Furutani said the new owners will be able to command investment capital to expand the resort, which opened as the Maui Prince Hotel in 1986.

Former owners Morgan Stanley and local partners Everett Dowling and Trinity Investments had big plans for Makena before the national real estate market cratered. They paid about $570 million in 2007 to acquire the resort, hotel and golf courses from Seibu Group, which had its own financial problems in Japan. Then they invested at least another $100 million in plans and projects before their investment group failed to keep up the payments on a $192.5 million first mortgage last year.

Among the plans then was to replace the 310-room Maui Prince Hotel. During the receivership, the hotel has been managed by Benchmark as the Makena Beach & Golf Resort.

In May, at a brief auction on the courthouse steps, Wells Fargo, acting as agent for the creditors, bid $55 million, using its credits as tender. Only one other bidder, who did not identify himself, made a bid. By that time, the junior lenders had already been wiped out.

In Hawaii, foreclosure auctions have to be submitted to the court for confirmation. If the property is desirable, that is usually where the real action occurs, and that is what happened Tuesday.

The purchase includes the resort’s golf courses and county authorizations for up to 1,100 residences. The authorizations come along with obligations to build up to 400 units of affordable housing and many other conditions.

During the foreclosure period, which lasted about 10 months, the creditors authorized considerable expenditures to keep the hotel operating and to expand the resort. A Makena Ranch guided horseback ride was one, as well as reopening a restaurant and other improvements.

Furutani said the employees had been magnificent during the period of uncertainty. “The employee family has been the biggest asset,” he said.

Willie Kennison, Maui director of the International Warehouse and Longshore Union, which represents the employees, said the auction sale was a step in the right direction.

“We feel very positive about this outcome,” he said. “We have talked to representatives of new ownership, and we know they are really committed to Makena and to Maui. That is good news for employees and good news for our island guests.”

Furutani said the resort’s hotel occupancy is double what it was a year ago.

“The resort is in better condition, and morale is high since we were able to rehire most of the employees who had been let go when the prior owner went into default on its debts,” he said.

He acknowledged that the economy is still down but predicted that the infusion of capital to remake the resort will “also be for the benefit of Maui County.”

* Harry Eagar can be reached at heagar@mauinews.com.