The founder of a downtown co-living space that became a squalid nightmare for residents is being removed as the property’s manager, marking the final days for the leading figure in a monthslong drama at the building one former resident dubbed a “hell hole.”

The only question now is who will replace Honolulu developer Chad Waters.

Hawaiʻi Circuit Court Judge Shirley Kawamura gave Waters until Feb. 26 to pick a successor to manage the squalid property, which for months has had no electricity, air-conditioning, working elevators and, as of this month, running water. 

The decision came as 1136 Union Mall’s former owner and mortgage lender, Tomoya Tsuruhara, is attempting to foreclose on the building. Tsuruhara alleges Waters, partner Scott Bingo and Union Mall Develoment Group haven’t made required mortgage payments since taking out a $5.2 million loan from him to buy the building in April 2024.

Waters’ camp argues that Tsuruhara failed to disclose a material property defect that has frustrated their attempts to refinance the mortgage and pay Tsuruhara back.

With that fight pending, Tsuruhara’s lawyers asked the judge to appoint another manager to replace Waters to prevent the property from deteriorating further. Waters argued he had done a good job managing the building. Tsuruhara’s lawyers called the situation “a textbook example of circumstances warranting the appointment of a receiver.”

“Defendants fail to cite any legal authority opposing the requested relief or present contrary facts rebutting the ongoing waste,” Tsuruhara’s lawyer, Christopher St. Sure, argued. “Instead, the only support offered is the assertion that Defendants have been trying, albeit unsuccessfully, to clean up the mess they created.”

The judge’s ruling for Tsuruhara means the question now isn’t whether or when Waters will be replaced, but who will replace him. That was supposed to be decided on Thursday, in what Kawamura said should have been a simple matter. But, as other lawyers and judges have seen, things are rarely simple with Waters.

Tsuruhara’s lawyers have nominated two people to replace Waters: Peter Lenhart, a lawyer and accountant, and Donald Garwood, a real estate broker and property manager. Waters’ lawyer, James DiPasquale, told the judge he had no problem with either of those but said he hadn’t been able to get in touch with Waters to sign off.

Kawamura ordered Waters or another Union Mall Development Group representative to appear at the hearing later this month at which she’ll decide Waters’ replacement.

Building Descended Into Chaos On Waters’ Watch

The decision to remove Waters closes the curtain on the developer’s leading role in the “hell hole” saga. Soon after taking over the building, Waters skipped the regulatory process needed to convert the office building to residential use and instead simply leased out offices for people to use as homes scattered among debris-filled spaces undergoing demolition. 

Conditions deteriorated as renters came to grips with the unpleasant reality of living in an unkempt building without proper kitchens and bathrooms. Some said that wasn’t what they had signed up for, especially when the building lost air conditioning, elevator service and electricity. Meanwhile, with residential tenants moving in and the building descending into disarray, commercial tenants began leaving, and Waters faced mounting notices of violations from the Honolulu Department of Planning and Permitting.

As the building descended into chaos marked by violence and nearly daily police calls, neighbors complained about the increasingly bizarre scene in the heart of Honolulu’s central business district, next to beacons of respectability like the posh new AC Hotel Honolulu, the U.S. Bankruptcy Court and the headquarters of Hawaiian Telcom.

Judge Won’t Let Waters’ Lawyer Quit

Thursday’s hearing also marked a blow to Waters’ lawyer. DiPasquale has been trying to sever ties with Waters since late December, when he first asked Kawamura for permission to withdraw as the developer’s lawyer, citing “circumstances that have resulted in a material breakdown of the attorney client relationship.”

“The breakdown is such that continued representation would be inconsistent with counsel’s ethical obligations and would materially impair counsel’s ability to effectively represent the client,” DiPasquale wrote in a motion to Kawamura.

Hawaiʻi Rules of Professional Conduct require lawyers to have good reason for terminating representation, and, DiPasquale wrote, “Those conditions are present here.”

“The issues prompting withdrawal are not isolated or technical in nature,” DiPasquale added, “but instead reflect a fundamental deterioration of the working relationship necessary for effective advocacy.”

Kawamura initially denied DiPasquale’s request on procedural grounds but was scheduled to make a decision on Thursday, after the receiver was chosen. But with that selection delayed, Kawamura told DiPasquale that he’s still on the hook.

DiPasquale declined to comment after the hearing except to reiterate what he told the judge: “Communication,” he said, “is difficult.”

Civil Beat’s reporting on economic inequality is supported by the Hawaiʻi Community Foundation as part of its work to build equity for all through the CHANGE Framework; and by the Cooke Foundation.