It is no surprise that Lex Smith, a well-connected attorney, has been a key player in the contentious efforts to develop the rustic Kahuku Village on the North Shore into a multi-million dollar real estate development.

After all, Smith has been working for years on behalf of Continental Pacific, a Florida-based developer, to build luxury oceanfront lots on the property.

That project fell apart when the company balked at doing an environmental impact study required by the city. Since then, Continental Pacific has shifted toward parceling off the land to sell it to individual buyers.

The surprise came in mid-September when Honolulu City Councilman Ernie Martin revealed that Smith had purchased three of the properties, as well as the plantation homes that sat on them, for himself.

When Martin told residents at a North Shore neighborhood board meeting about Smith’s real estate investment there were audible gasps in the room and astonishment that a lawyer for the seller had become a buyer.

Contacted by Civil Beat, Smith was forthright. “I bought them because I thought it was a good deal.”

A look at the local real estate market suggests that he is probably right. Smith, who has no plans to move to Kahuku Village and who hasn’t yet decided what he will do with the properties, said he purchased all three for a total of $600,000. Similar individual lots have have been on the market for more than $400,000 each.

When Civil Beat asked Smith for a response to concerns from a tenant at one of the properties he purchases, the attorney replied that he was cutting the phone conversation short and hung up. (He then followed up by e-mailing correspondence between his realtor and the tenant, and a scan of the new deed to the property.)

The purchase stunned members of the tight-knit community of about 70 families who live in the former sugar mill plantation community that was once owned by the James Campbell Estate.

‘Sicker Than Sick’

Perhaps no one was more intensely affected than Glen Maghanoy when he discovered that Smith had bought his home and lot, as well as those of two of his neighbors.

Maghanoy said he felt “sicker than sick.”

“To have someone from the outside to come in and just take it like that,” Maghanoy said, noting that he received a letter in the mail telling him to start sending his rent checks to Emmanuel Chen, Smith’s realtor.

The sale may have dashed Maghanoy’s hopes, similar to those of other residents of the village off Kamehameha Highway, to one day own his home.

The leasehold community had in recent years seemed to be on the brink of home ownership. When Continental Pacific bought the property from the Campbell Estate in 2006, the company promised to work to keep the families in their homes as it developed their surroundings.

Glen Maghanoy at Kahuku Village

In fact, Continental Pacific had offered all of the tenants a chance to buy their lots for $150,000, a price well below market value, late last year. If they didn’t take the offer their lots would be put on the market for a higher price. Some of the tenants took the deal — and they now say they are happy that they did. Others couldn’t afford it.

About 30 of them, including Maghanoy and his two neighbors, held out, arguing that they were getting a raw deal.

Originally Continental Pacific said it would offer the lots to residents for just $75,000. But the price doubled after the developer concluded that it wouldn’t be able to build the luxury oceanfront homes on the property.

Tony Locricchio, an attorney for a number of the tenants, says that the $150,000 sales price was a smokescreen. When he added up all of the required infrastructure costs for the properties, the tenants would have ended up paying nearly half a million dollars.

Many residents have long accused Continental Pacific of trying to push as many residents off the property as possible so that it could better capitalize on the prime coastal real estate, despite the company’s protests to the contrary.

But that’s hardly the only reason that Smith’s purchase isn’t sitting well.

Shortly before Continental Pacific issued the $150,000 price to tenants, Smith sent out eviction notices on behalf of the developer to 16 residents, including Maghanoy.

The notices didn’t include any explanation and Smith said he wouldn’t comment on the evictions at the time. Residents of 25 other lots were told that they had to move their homes out of a floodplain at their own expense. Few could afford to do so, so they interpreted that as tantamount to an eviction notice.

The company has recently reversed course and said that the tenants who live on the floodplain can stay in the homes as month-to-month tenants until 2040, or until they die — whichever comes first.

City Council and Mayor Split on Kahuku

Councilman Martin, who represents the North Shore district, has fought to keep the generations-old Kahuku community intact. In April of last year, the Honolulu City Council unanimously passed a resolution, introduced by Martin, that called on the city to buy the land, and it even set aside millions of dollars in funding. The idea was to ensure that low- and moderate-income residents with deep connections to Kahuku Village are allowed to remain in their homes.

But Mayor Kirk Caldwell has not acted on the resolution and instead has taken other steps to help residents keep their homes.

Smith was the campaign committee chairman for Caldwell’s 2012 mayoral campaign, although the mayor has sharply rebutted assertions by residents that his relationship to Smith influences his decisions.

Mayoral spokesman Jesse Broder Van Dyke told Civil Beat that intervening in the Kahuku property dispute is much more complicated than simply purchasing the property with the funds set aside by the city council.

He explained that the funds appropriated by Martin and the council require the administration to seek bids from developers to use the funds to develop affordable housing in perpetuity. The amount that was allocated, he said, is insufficient for the task, given that a lack of infrastructure, including sewer lines and roads, would require a huge investment on the part of a developer — far more than the $5.6 million that the City Council set aside.

“Simply put, the funds appropriated by Chair Martin in the . . . budget came from a funding source that was too restrictive to be of any use for private development at the amount provided,” the mayoral spokesman noted in an email.

It is not clear whether the mayor’s office and Councilman Martin see eye to eye on this. At the recent neighborhood board meeting Martin said that he had made an offer to Continental Pacific through the company’s attorney — Smith — to buy properties in Kahuku via a nonprofit organization. Martin said at the meeting that he never received a response to his offer.

But Broder Van Dyke said that the municipal appropriation, which was for the fiscal year 2013 that ended in June, couldn’t have been used in such a way.

Martin didn’t return calls for comment for this story.

Broder Van Dyke said that it was the mayor who stepped in to protect residents living in the floodplain who were in danger of being evicted. “We designated the houses as plantation homes,” he wrote. “This meant that the private owner could not evict the tenants except under restricted conditions.”

Broder Van Dyke also said that the administration recently met with the community to listen to their concerns and that it’s reviewing possible solutions.

Councilwoman Ann Kobyashi told Civil Beat that she is upset that the city hasn’t done more to help the people of Kahuku Village.

“I really feel for these people,” she said. “They are in limbo. They don’t know where they will live out the last years of their lives.”




Councilman Martin discusses Lex Smith’s purchase of the properties about 9 minutes into the video:

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