Residents in a section of Hawaii Kai are trying to get the city to take over their private road after the development companies dissolved and left them to cover almost $40,000 in delinquent property taxes. 

It’s been a long and complicated process. For 12 years, Hawaii Kai resident David Gierlach has been working to get the city to accept legal responsibility for maintaining Miloiki Place and most of Miloiki Road, situated below Kamiloiki Ridge. 

As it stands, costly road repairs would be the responsibility of residents. Gierlach is pleading with his neighbors to instead each chip in $425 now to take care of leftover property taxes and get the road under city control, rather than face more expensive repairs in the future. 

Approximately half a mile of Miloiki Road along with Miloiki Place was paved in in the early 1990s. But it is considered a private road that must be maintained by the residents, a common phenomenon in Hawaii where the road was built by a private developer and never transferred to state or county ownership.

The road has cracks and potholes now, said Gierlach. The city recently performed minor repair work, but he wants a more robust, long-term arrangement.

Gierlach presides over the Kamilo Heights Community Association, which he calls a “limited-purpose” homeowners association with a single goal — to convey the roads and adjoining sidewalks to the city.

Conveying the road to the city would mean ensuring that it is up to government standards in every possible way, including bringing sidewalks into compliance with the Americans with Disabilities Act.

Earlier this year, after making sure light poles and trees were brought up to city standards, he thought the streets were ready to go.

“That’s when these tax liens came up,” said Gierlach. “Apparently the developers had not paid on them back from the mid-90s. So with interest and penalties, they’re up to close to $40,000.”

Conveying Private Roads To The City

Honolulu Managing Director Mike Formby said the process for the city to take on maintenance responsibilities is complicated and doesn’t always work out.

“If a community says they want to have their street, and street lighting, and water, and sewers taken over – there’s a whole process of dedication, and it’s a legal process,” said Formby.

Sometimes regulations change so much over time that it would cost too much for either side to bring the roads up to city standards, and the area remains private. 

One example was a road in Maili where residents realized that a broken streetlight was their responsibility to fix, said Formby. Hawaii News Now reported that it would’ve cost residents $18,000. 

But full conveyance is not likely to happen in that scenario, Formby said. City officials who inspected the area determined that the sidewalk was an ADA liability because it would cost millions of dollars to bring it in to compliance if the city were to take it over and could bring risk of lawsuits and fines.

Formby said his team is working on a compromise in which the city would take over just the streetlight system.

In the case of Miloiki Street, the city is prepared to take over everything except for the drainage system once the property taxes are paid, Formby said.

Drainage systems ordinarily go underneath city-owned roads. But the drainage system along Miloiki Street cuts through residents’ yards, said Formby. “They don’t meet city standards,” he said.

He noted the issue should’ve been dealt with long ago after the development was completed.

“If they do it in the proper way, when the developer is through and is starting to sell the homes, they’ve already worked with the city to turn it over to the city. And usually at the time, whatever is found to be noncompliant they fix,” Formby said.

But that didn’t happen with Miloiki Street and Miloiki Place. 

Developers Chanuta Development Co., Joshin U.S.A. Co., and Chandler Holdings Inc., didn’t pay their property taxes for the roads and now no longer exist. Public records confirm that all three of those companies were either “involuntarily dissolved” or canceled about 20 years ago. 

‘A Very Unusual Situation‘

The delinquent property tax payments add up to about $38,000. 

It’s unclear how the debt went unresolved for so long, especially considering the city’s reliance on property taxes. Almost $1.7 billion in property taxes are expected to come in during fiscal year 2024, making up half of the city’s operating budget.

Delinquent property tax is generally between 1% and 2% of total owed payments, said Department of Budget and Fiscal Services director Andrew Kawano.

Typically, he explained, somebody who doesn’t pay property taxes would be targeted for city-led foreclosure, a process that generally takes about three years. But property taxes for Miloiki Road and Miloiki Place haven’t been paid for about 30 years, and the city still has not initiated foreclosure. 

“It’s a very unusual situation,” said Kawano. 

Kawano is unsure what happened. After contacting his department’s treasury division, he said the developers had for years promised that they would pay their property taxes so the city could take over the road.

Stuck With The Bill

“But the developer never made good,” he said. “And that’s why the situation had dragged on for so many years.”

Residents are now left with the bill. A neighboring HOA further down Miloiki Street is helping cover some of the cost, bringing the payment down to $425 per household. But while Hawaii Kai is one of Oahu’s wealthier areas, Gierlach said that the payment is still a burden. 

“A lot of the folks who live there are original owners,” said Gierlach. “Many people do not have incomes that could afford a million dollar house today.”

It has been difficult for Gierlach to collect money.

On Nov. 9, he sent a letter to his approximately 65 neighboring households asking for payment. Only about 10 complied.

He followed up with a new letter on Nov. 20, this time including some frequently asked questions like “Why wasn’t this paid earlier?” and “What’s left after this is paid?” About 15 more households chipped in.

“Nobody wants to pay it,” said resident Sharon Williams, one of the holdouts. Households had to pay $495 each to take care of fixing trees in 2019, she said, and it feels to her like it’s just one new expense after another. 

In the new letter, Gierlach explained next steps, saying that this time, it really is the end of a 12-year effort that he has led.

“My hope is we can get this conveyance completed this year. But, if we don’t satisfy the tax lien we cannot move forward. If enough folks decline to pay we will either have to assess those who do pay more or we walk away from this effort – 20 feet before the finish line. I hope we can finish what we started.”