WAILUA, Kauai — The death throes for Kauai’s former Coco Palms Resort, which began when the hotel was devastated by Hurricane Iniki in 1992 and have continued ever since, may approach a climax this week.

The hotel was heavily damaged in Iniki but was never repaired and has loomed like a ghost along Kuhio Highway for more than 25 years, with various rebuilding schemes falling apart one after another.

Last year, Private Capital Group, a Utah-based mortgage servicing company filed a foreclosure action against the Honolulu developers who have claimed to be working to save the property.

The foreclosure comes before a Kauai judge Tuesday, possibly for a final decision on whether the mortgage servicer has status to pursue the foreclosure, which could put the iconic property on the auction block sometime next year.

Coco Palms Resort was damaged in Hurricane Iniki in 1992 and has never been rebuilt. Allan Parachini/Civil Beat/2020

Meanwhile, Ron Agor, the longtime project architect who said he came out of retirement seven years ago to try to save Coco Palms, warned over the weekend that a very different kind of clock may be ticking at the property, too.

Damage to the concrete shell frames of the former hotel’s main buildings has become so severe, said Agor, that there may soon be no alternative to demolition.

“Something has to be done within the next four, five or six months,” Agor said in a phone interview. “Otherwise, the structures are going to have to come down.”

The concrete frames are deteriorating so rapidly that rusted rebar has been exposed on critical columns, Agor said, signaling that their basic structural integrity has been compromised.

Meanwhile, Circuit Court Judge Randal Valenciano has set a hearing Tuesday on whether the foreclosure will continue and a commissioner will be appointed to auction off Coco Palms. But to get there, said Agor and Keith Kiuchi, a Honolulu attorney who represents a company that once loaned money to Coco Palms, Valenciano will first have to decide that the foreclosure passes legal muster in terms of who filed it.

The foreclosure auction would be months away, said Kiuchi and Scott Batterman, a Honolulu lawyer who represents Private Capital Group.

Just getting to the auction date, Kiuchi and Batterman said, could easily take longer than the six months Agor thinks the structures have before weather and climate damage them irreversibly.

Failed Efforts In The Past

Agor said that he has worked with three or four would-be redevelopers. Each time, he said, the proposals have gone nowhere.

A would-be buyer wanted to turn Coco Palms into housing, but that would have required starting the county permitting process all over again. That deal also fell through.

Several efforts to rebuild the resort have fallen through in the past. Allan Parachini/Civil Beat/2020

Agor, however, said he believes yet another potential buyer may have emerged and a deal may be close to being made final.

Although Coco Palms Hui, the closely held development firm that still nominally owns Coco Palms has said repeatedly in the past that potential sales were in the offing only for the alleged deals to fail, Agor said that the timing could actually be ripe now.

“Right now, money is so cheap,” he said. “In the past, the way it penciled out, it was right on the borderline and the investors would have to wait too long to recover their money.”

He said that, though the COVID-19 pandemic and collapse of the U.S. financial system might seem to make pouring investment money into any hotel counterintuitive, it could turn out that the tourist economy recovers enough by the time any construction was completed in two or three years.

Agor said newly developed construction technologies could still save Coco Palms if utilized in time. Some of the structural columns, he said, might have to be replaced and concrete reinforcing walls might have to be constructed. Once that process was complete, the existing structures could be wrapped in a polymer reinforcing material.

Coco Palms Hui has been led by Chad Waters and Tyler Greene, Honolulu developers with a history of unfinished projects and a litigation trail left in their wake. Greene was dropped from the foreclosure but Waters remains, said Kiuchi and Porter DeVries, the Honolulu lawyer who represents Waters.

One indication that actually redeveloping Coco Palms could still somehow occur is that Chicago-based Hyatt Hotels Corp., which in 2014 announced it had entered into a management contract with Coco Palms Hui, said it still considers the deal alive.

In a statement, the company said: “Hyatt has a management agreement with the current developer of Coco Palms, and we hope to see the project move forward. The hotel holds a prominent place in the history of hospitality on the Hawaiian Islands.”

Mysterious Financing

“There’s no question” Coco Palms will move further into foreclosure, Kiuchi said, but the matter may ultimately turn on a narrow point of law.

Private Capital Group, according to court documents, is not actually the entity that loaned the $22 million Waters and Greene paid for Coco Palms in 2016. Rather, court filings show, the firm is a mortgage servicer — a type of firm that collects payments and provides other services on behalf of lenders.

 

Coco Palms Resort ruins can be seen from Kuhio Highway. The concrete frame is in danger of losing its structural integrity. Allan Parachini/Civil Beat/2020

The lenders, according to court records, are five mysterious LLCs registered in Delaware, Utah and Nevada. Kiuchi contended that foreclosures can only be filed by actual lenders, not mortgage servicers. He said that if Valenciano moves the foreclosure forward on Tuesday, an appeal might be filed.

A problem, though, Kiuchi said, is that any appeal could eat up another three years, during which the foreclosure auction would occur and the matter could be further tied up in litigation.

None of this makes sense to Larry Rivera, 88, a musician who worked his way up at Coco Palms, starting as a busboy. He lives nearby and still performs weddings on the unkempt grounds of the hotel — evoking the famous wedding scene in Elvis Presley’s film “Blue Hawaii.”

“That place is like the heart of Kauai,” he said. “I’m broken up.”

The last wedding he performed at Coco Palms, he said, was in November. In April, an Illinois couple celebrated their 20th wedding anniversary.

“I hope there’s a way they can stop that foreclosure,” he said wistfully. “If it’s bought in foreclosure by someone else, will I still be able to have my weddings there? Only God knows.”

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