Community petition to revoke permits is denied as Coco Palms rebuild continues

A community group aiming to stop the reconstruction of the derelict Coco Palms Resort was denied standing by the County of Kaua‘i’s planning commission last week, allowing ongoing demolition and construction plans to continue by the Utah-based developer.

The decision comes amid developer Reef Capital Partner’s announcement that they have reached key milestones in the demolition process and that construction crews are actively working to complete the once-renowned Coco Palms Resort as a 350-room hotel in 2026.

At its March 12 meeting, the County of Kauai Planning Commission, a seven-member board that decides land use permits, voted against a petition filed by Friends of Maha’ulepu, a non-profit group seeking to revoke Reef Capital’s zoning and variance permits.

Bridget Hammerquist, the president of Friends of Maha’ulepu, and eight other group members named in the petition alleged that the hotel would cause a variety of issues that would impose on their right to a clean and healthful environment, including crowds of visitors impacting their ability to enjoy gathering and cultural practices, an increase of runoff and rubbish by the Wailua shoreline, and limited sewage storage at the Wailua wastewater treatment plant. 

Additionally, the resort’s location, which fronts a major highway across the street from Wailua Beach, would increase traffic congestion, is prone to flooding, and poses safety hazards caused by potential tsunamis and sea level rise, they said.

Hammerquist and other testifiers also claimed the developer does not have valid permits for the site, as they were first issued to a previous developer in 2015 and not properly transferred when ownership changed. 

“They don’t qualify to develop this property … They’ve gotten permits illegally without complying with the  SMA (Special Management Area) requirements,” Hammerquist alleged.  

“We have a developer that hasn’t met conditions … Time for revocation is now,” she said in lengthy testimony.

Approximately 25 people provided in-person testimony in support of the petition and asked the planning commission to stop the project. 

Testifiers included Council Member Felicia Cowden, who is adamantly against the resort.

“As a council person who has responsibility for hazard mitigation, we don’t have any place to put people that would be having problems in this area,” she said, adding the resort would cause an increase in traffic and flooding in an area already threatened by road erosion and rising sea levels. “There are so many things working against this property.”

The concerns raised by community members were not new, as previous failed attempts to rebuild Coco Palms have been the subject of contentious debate between residents, developers and the county since its destruction by Hurricane Iniki in 1992. 

Reef Capital Partners, also known as RP 21 Coco Palms LLC, has been involved as a lender to previous developer Coco Palms Hui LLC  since 2015. The firm took over the property in 2019 after the previous developer defaulted on more than $11 million in financing on a $22 million mortgage.

Cowden called the resort a “distressed asset with a great history.”

Joell Edwards, a small business owner from Wainiha, asked the county to consider the business risk liabilities that come with approving a hotel on a site prone to flooding, drainage problems, and traffic incidents. 

“I cannot imagine why the county would want to be saddled with this for decades to come. And the only solution is to please, please revoke this permit now,” she said. 

Some others accused the county of approving the project to avoid lawsuits from Reef Capital.

Many noted the property is one of the most sacred historical and cultural sites in Hawai‘i. In the 19th century, it was home to Kaua‘i’s last queen, Deborah Kapule. It’s also the site of the island’s oldest coconut grove, ancient fishponds and burial sites.

Speaking at the meeting, Reef Capital’s attorney Mauna Kea Trask countered criticism made against the project and his client, stating that Reef Capital is the only entity with the financial resources to transform the site and preserve its cultural history.

Trask noted that the Coco Palms Resort is listed in the National Register of Historic Places, claiming the property is meant to be designated for the resort’s rebuild. 

“The government cannot revoke someone’s permits just because the community changes its mind. Or more specifically, a small portion of the community changes its mind. That’s the issue. These are property rights. They’re permits, they’re legally issued. They’re valid. You can’t take them away now,” he said.

Trask repeatedly emphasized his client’s commitment to the project, telling the commission they would see significant progress in the coming months.

“Everyone’s contesting the credibility of my client, my client’s moving forward,” said Trask, adding that they have spent millions of dollars to comply with county requirements within the past year.

After hours of discussion, a motion to grant the petitioner standing failed in a 3-4 vote. Board members Gerald Ako, Helen Cox, and Jerry Ornellas voted to grant the petitioner standing. Board Chair Donna Apisa, Francis DeGracia, Lori Otsuka, and Glenda Nogami Streufert voted against granting standing. 

DeGracia said he could hear the sentiment of the community and intent of the petitioning organization, but he didn’t feel there was clear standing according to the law.

Reading from a prepared statement, Apisa said that the petitioners have not suffered an injury traceable to the developer’s alleged failures to perform, and they have failed to show reasonable cause to believe that there is currently a failure to perform. 

“Petitioners allege injury to a hotel in general and complain of RP21 (Reef Capital) because they admittedly do not want a hotel at the current site, an issue that was decided by this commission in 2015,” she said. 

Apisa noted the decision would not prevent the commission from addressing the matter again in the future, and that the decision could be appealed in court. 

In an interview with Kaua‘i Now News following the decision, John Day, the chief financial officer of Reef Capital Partners, said he was “grateful that the planning commission made the right decision and confirmed that the permits are valid,” allowing the project to continue.

“Whether there will be other attempts to stop the project, I don’t know. But the reality is, is we have all the permits we need. We have all the approvals we need, and so the project is going to move forward.”

Day also said his team has spent “an enormous amount of time” addressing issues raised at the meeting, including flooding and traffic concerns.

Reef Capital has designed almost all buildings to be raised above flood level, and those that aren’t will be flood-proofed and able to withstand hurricanes. According to Day, buildings will be put up on nine-foot stilts to be above the base flood elevation.

“I obviously have no incentive to build a property that is going to be destroyed by a flood, right? Nobody works harder than I do to ensure that this property can handle any type of flood or any type of hurricane that’s reasonably foreseeable,” Day said.

Day also described plans to implement shuttles to transport people to the airport and tourist hotspots to reduce traffic congestion. Traffic would be further reduced by hiring local workers in the Kapa‘a area who currently need to commute to more distant hotels on the island.

“They’re anxious to come work for a local hotel instead. And frankly, drive less and reduce the traffic on the island as a result,” he said.

Day was adamant that the opposition to the hotel comes from a vocal minority of the community and doesn’t accurately portray the views of residents as a whole.

“There will always be a small minority that isn’t happy about the project. Now, I hope over time, we will prove to them that that maybe they’re mistaken, and that this was a project worth supporting,” he said. “But we get an overwhelming sense of support. Anytime we’re out talking to people in the community.”

However, Fern Holland, an activist and board member of I Ola Wailuanui, a nonprofit organization that opposes the new hotel in favor of a Native Hawaiian cultural center, is confident that there isn’t a silent majority of people supporting the hotel.

“The community at large doesn’t want a hotel there, and I’ve been talking to people about this for four years,” Holland said in a recent interview.

Holland and I Ola Wailuanui had supported the petition to revoke the permits and were disappointed in the decision made by the planning commission.

“We hope that government agencies step in to hold these developers accountable to the highest standards of best practice,” Holland said.