Lincoln Ashida: Hawaii County Sues UniDev

Lincoln Ashida
From the desk of Hawaii County Corporate Council Lincoln Ashida:

In September of 2004, the County issued a request for proposal for the Waikoloa Employee Housing Project, seeking an experienced developer to plan, design and construct 1,000 affordable homes for people employed in businesses in our South Kohala district (primarily hotel and other visitor industry employees).  The homes were to be built on County-owned land in Waikoloa Village.  The successful bidder UniDev responded to the County’s request stating “UniDev brings complete financing capabilities to each of its projects through its financing relationships with Citigroup and Fannie Mae.  This allows the company to provide pre-development, construction and operating funds secured by the land and the future development.  The project sponsor (County) is required only to commit the land and the approvals and entitlements necessary to permit construction of the project to proceed.”

In 2005, UniDev made this further representation:  “This entire transaction can be structured such that the County, in its sole discretion, will have no continuing obligations or liabilities;…UniDev will provide, through our financing partners, 100% of the financing for this project; UniDev’s financing arrangements for this project will be non-recourse to the County…”

Based on the above and other similar representations made by UniDev, the County awarded UniDev the project.  Despite their promises and legal commitment to obtain financing, UniDev failed to do so, requiring the County to allocate approximately $40 million in taxpayer money to pay for the infrastructure in order to further this much needed project for our island residents.

This past Monday the County on behalf of our taxpayers sued UniDev in Third Circuit Court.  One of the charges is for “false claims” under Hawai‘i State law.  UniDev submitted claims for payment to the County, knowing they were false or fraudulent.  The County also sued UniDev alleging intentional misrepresentation, negligent misrepresentations and fraudulent inducement based on their claim they could obtain the necessary financing.  The County alleges UniDev knew it could not obtain this financing yet made these representations to the County in order to induce the County to award this project to them.

In our lawsuit, the County seeks an order from the Court directing UniDev to pay civil penalties three times the amount of damages, special and general damages, punitive damages, and the County’s attorney fees and costs.

Although the County is very disturbed our residents who need affordable housing on the West side of our island will not be able to enjoy home ownership as promised by UniDev, the County looks forward to having all of the facts and evidence that substantiate the County’s claims in its lawsuit brought into the public domain.  As the County’s Office of Housing and Community Development moves forward to build these homes, the Corporation Counsel anxiously awaits the opportunity to have UniDev held legally accountable for its actions and to reimburse our taxpayers accordingly.

As ever, if you have any comments or questions on the above or any matter, please feel free to email our office at Lashida@co.hawaii.hi.us, or call me at (808) 961-8304, extension 118.  This message was posted on July 1, 2009, at 1:00 p.m.

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