HOTEL HANA-MAUI FACES FORECLOSURE

Sources: Brian Perry at Maui News/KITV/Fox News

May 11, 1999
Unless owner Keola Hana Maui pays overdue taxes to Maui County, Hotel Hana-Maui, the biggest employer in East Maui, faces foreclosure at the end of this month. Keola Hana Maui has owed the county back taxes since 1997, and the amount owed, including interest and penalties, comes to nearly $500,000, according to Deputy Corporation Counsel Traci Fujita Villarosa.

Villarosa said county officials don't want to foreclose, but Keola Hana Maui defaulted on its scheduled payments last year and the county has little choice left in the matter. Keola Hana Maui has been given a May 31 deadline to pay in full. If not, the county's only option will be to file for foreclosure in 2nd Circuit Court.

That action would lead to the appointment of a commissioner to maintain and sell the property, Villarosa said.

County Managing Director Grant Chun said he had been told by Keola that it could raise the needed money by the end of the month. Two years ago, Keola came up with money at the last minute to avert foreclosure.

County Council Member J. Kalani English, who occupies the council's East Maui residency seat, alluded to Hana's economic problems as the Budget Committee deliberated on the county's fiscal year 1999-2000 spending plan. English said Hana is "imploding'' and "on the verge of social, cultural and economic collapse.'' He said Hana is facing the loss of its main industry, an 80 percent to 90 percent reduction in its work force and a mass shutdown of businesses. English said Hotel Hana-Maui employs from 130 to 160 people in a community with a work force of around 280. "We're at the edge of the abyss,'' he said.

The famed small hotel, started by Paul Fagan as a retreat for his San Francisco Bay Area friends, has had a difficult time making money in recent decades. Though the expenses of keeping up a five-star appearance are not much less than at a big resort, Hotel Hana-Maui had fewer than 50 rooms originally. Addition of the Sea Ranch Cottages brought that up to 93, but some of those are no longer in use.

English asked Budget Committee members to set aside $200,000 in economic and cultural grants for East Maui, saying the money could be used as leverage to get federal and other grant money. But, because of the county's tight budget, committee members agreed to appropriate only $90,000.

English said the hotel has been struggling for some time, and now about half its rooms are closed.

Maui Planning Commission Chairman Robert Carroll, a Hana resident, said the community has been aware that foreclosure has been a possibility for quite a while.

"If it closes up, it will be a real disaster for Hana,'' he said. "It's near closed already. A lot of damage has been done already.''

Carroll said the foreclosure might be a blessing in disguise because a new owner could get the operation back on track.

Harry Hasegawa, owner of famed Hasegawa General Store, said that if the hotel closes and fewer people have jobs and cash to spend, "it will hurt.'' He said the community's been in limbo for some time, not knowing what will happen with the hotel.

"I'm sure below the surface many people are troubled, especially hotel employees,'' he said. "For me, I guess the only thing I can do is wait and see and hope for the best.''