MAKENA - As Maui County Council Member Mike Victorino put it a day after news broke about the impending Makena Resort foreclosure, "it wasn't exactly a military secret, you know?"
Back in November, it was Victorino who resurrected the proposal for what was to be an 1,800-acre development with 1,100 luxury condos, apartments and homes, a new beach club and a rebuilt Maui Prince Hotel, as well as a host of other improvements that $800 million or so can buy.
In an effort to stimulate the island's economy, most of his colleagues on the Maui County Council agreed and rezoned the land for Everett Dowling and Morgan Stanley Real Estate's Makena Resort venture. But on Monday, Dowling Co. defaulted on a $192.5 million loan for the original purchase price of $575 million from Seibu Group in mid-2007, and the lead lender started foreclosure proceedings in 2nd Circuit Court.
"I think it's just reflective of the market conditions, and it's happening at all levels," said Bob Lightbourn, president of the Realtors Association of Maui. "But we will recover. . . . We will get through this."
But no one interviewed Wednesday, even those associated with the grass-roots group Save Makena, is really celebrating what could be the demise of Makena Resort. The lenders' attorneys have said they fully intend to seek out new investors; and Dowling said he is going to find a way to be part of that group.
"It all seemed like a house of cards; and it's the little people who have to suffer who didn't do anything," said Lucienne de Naie, vice chairwoman of the Hawaii Sierra Club, referring to the more than 500 employees who work at the 310-room hotel and two golf courses.
"I see this as an unfortunate occurrence of chasing bubbles in the world economy rather than sustainable solutions right here."
The employees' jobs are secure for now, but leadership from the workers' union and resort managers, Prince Resorts, said they don't know what the future holds.
The project's supporters had high hopes for the expansion. The Makena Resort was supposed to add 20 percent more employees to its current staff.
Charles Kauluwehi Maxwell Sr., who is Dowling's friend, said he was once a paid cultural consultant years ago on the project for its former owners. The most important issues, he said, are the jobs and that the future owner or owners respect the burial and archaeological sites in Makena.
De Naie and others said they see the pending foreclosure as an opportunity for a new investment group to come in and build a community with homes affordable to a wide spectrum of income groups and with some commercial areas to serve residents' needs.
"Hopefully, this process will be relatively painless," said South Maui state Rep. Joe Bertram III. "Just basically what I would like to see is a revised project, with more mixed-use development and different incomes living together."
Dowling had proposed using the latest in green technology for his endeavor but planned to build 400 affordable housing units somewhere else within the Kihei-Makena Community Plan area.
Years ago, county leaders included the South Maui area in plans for future growth. And the County Council's rezoning meetings last winter attracted hundreds of people for and against building in one of the last large undeveloped regions on the island. Council members permanently attached 44 development conditions to the land, such as requirements for improved infrastructure.
Maui County has had the worst foreclosure rate in the state, which ranks about in the middle of the nation for foreclosures. Honolulu and Maui real estate experts said they expect more big hotels and housing developments in Maui County to default on loans and mortgages.
Council Chairman Danny Mateo voted against the Makena Resort rezoning in December. Now, though, Mateo said the economy needs projects like this one.
"The financial markets are dismal at best," Victorino said. "We just caught up with what's happening around the world. But I still feel it's a very good project.
"I talked to Everett and believe he is committed to getting it back online again. And I am confident people like him will do what's right."
He said it would be easy for critics to say, "I told you so." But looking ahead is the real challenge, he said.
By CHRIS HAMILTON, Staff Writer
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