County, builder must return to arbitration


By ERIN MILLER

Stephens Media

Hawaii County will have to go back into arbitration over a Waikoloa workforce housing project contract, the state Supreme Court ruled Wednesday.

The ruling doesn’t affect the county’s ability to continue developing the project, Deputy Corporation Counsel Laureen Martin said Thursday.

“It’s not going to set back the workforce housing at all,” Martin said.

The state’s Intermediate Court of Appeals last fall ruled most of Hawaii County’s claims against UniDev, which had contracted with the county in 2005 to build the affordable housing development, and UniDev’s counterclaims against the county were not subject to arbitration. The state Supreme Court said the appellate court was incorrect and remanded the case to the lower court.

“It was disappointing,” Martin said, referring to the high court’s ruling. “I am a bit surprised they found all the claims were subject to arbitration.”

That’s because UniDev’s lawyers had argued there was no contract, and claims cannot be subject to arbitration without a contract, she said.

Arbitration will determine which parties’ claims for monetary damages will be rewarded. She said some of the county’s claims are for items which courts allow triple damages, which could result in tens of millions awarded to the county if it prevails in arbitration. That’s not a likely award, though, she said, adding a more likely award would give the county about $6 million, at the high end.

UniDev is making claims of $3.4 million against the county, she said.

Paul Alston said his client is glad to be able to take its case in front of an abritrator, which was always where the the company expected to be able to finish the lawsuit.

“We have a counterclaim against the county for several million dollars,” Alston said. “We expect to prevail on that.”

Hawaii County attorneys sued UniDev in 2009, alleging fraud, intentional misrepresentations and negligence in UniDev’s inability to proceed with the project. Hawaii County is seeking an unspecified amount of damages. UniDev is seeking $7.2 million in restitution and damages for breach of contract, intentional interference with contract and fraudulent transfer.

Hawaii County selected UniDev for the $40 million public-private affordable housing partnership in 2005. The initial plan for Kamakoa was for rental and for-sale units, with one- and two-bedroom units offered at 20 percent below area market rates. Small, bungalow-style homes would be for sale for people earning less than 120 percent of the average median income, and single-family homes were also supposed to be sold.

County officials last fall said they expected the first Big Island residents to move into homes this summer. The first phase will have 91 homes, 68 one- and two-story houses and 23 bungalows. The price on the houses will range from $235,000 to $350,000, down from the project’s original concept and designs that set prices from $385,000 to $495,000.

The county first sought proposals to build 1,000 affordable houses in Waikoloa in 2004. UniDev, when it was awarded the contract, said the first home would be finished in 2008. Full build out is slated to include 1,200 rental and fee-simple homes on 268 acres.

Email Erin Miller at emiller@westhawaiitoday.com.

 

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