A protracted legal dispute between the County of Hawaii and the developer previously selected to develop an affordable workforce housing project in Waikoloa will have to be settled in arbitration, the Hawaii Supreme Court ruled this week.

According to the Hawaii Tribune-Herald:

Hawaii County attorneys sued UniDev in 2009, alleging fraud, intentional misrepresentations and negligence in UniDev’s inability to proceed with the project. Hawaii County is seeking an unspecified amount of damages. UniDev is seeking $7.2 million in restitution and damages for breach of contract, intentional interference with contract and fraudulent transfer.

Hawaii County selected UniDev for the $40 million public-private affordable housing partnership in 2005. The initial plan for Kamakoa was for rental and for-sale units, with one- and two-bedroom units offered at 20 percent below area market rates. Small, bungalow-style homes would be for sale for people earning less than 120 percent of the average median income, and single-family homes were also supposed to be sold.

I’ve been watching the case because of the controversial background of Unidev’s local development efforts.

I wrote about some of this in a PBN story published in September 2006.

A former state official who sits on the board of St. Francis Medical Center in Liliha used his real estate expertise to help St. Francis start developing an assisted-living project, and also made money from the developer chosen to oversee the project.

The board member, Joe Blanco, was paid by the Mainland developer whom he introduced to St. Francis executives and represented as a go-between in negotiations, according to claims made in a civil suit filed earlier this year in First Circuit Court.

Blanco, a real estate broker and former state technology “czar” under the Cayetano administration, set up a partnership with his wife and three other influential Honolulu businesspeople for the purpose of getting contracts for the developer with St. Francis, the University of Hawaii, Hawaii County and other agencies.

Later in the story I described Blanco’s partnership:

Joining Blanco and Farias in the partnership, initially referred to informally as the “Group of Five,” were Blanco’s wife, Theresa, and lobbyists George A. “Red” Morris and John Radcliffe, principals of Capitol Consultants of Hawaii, one of the islands’ busiest lobbying firms. Radcliffe also serves as associate executive director of the University of Hawaii Professional Assembly, which represents faculty.

Unidev was supposed to pay the partnership for any projects they were able to land for Unidev, according to documents filed in court after a dispute between the partners resulted in a lawsuit.

I expanded on the story in a 2006 blog post (“Well-placed partners raise conflict of interest concerns“).

When Maryland-based developer Unidev LLC decided to enter the Hawaii housing market in mid-2004, they quickly teamed up with a local partnership pulled together by Joe Blanco, a realtor and developer who served as high tech “czar” and special assistant to the governor during the administration of Gov. Ben Cayetano.

Blanco approached several others “to engage in a business with him in helping Defendant Unidev further its business opportunities in the State of Hawaii,” according to a lawsuit filed by Blanco and co-plaintiffs after the partnership soured. In June 2004, though, the partners agreed to the deal “and thereby formed a de facto partnership”.

The partners, who initially expected to be Unidev’s exclusive representative in the islands, were Blanco, his wife, Theresa, businessman John Farias, Jr., and lobbyists Red Morris and John Radcliffe, principals in Capitol Consultants, one of the state’s leading lobbying firms.

Unidev is known as a developer of affordable workforce housing for universities and governments, and has done a number of projects on the mainland. This was their first foray into Hawaii.

Blanco and his partners were strategically placed to assist Unidev in landing its initial development deal. The St. Francis Healthcare System was seeking help with its planned Franciscan Vistas senior housing project in Ewa. Farias was the outgoing board chairman of St. Francis Medical Center in Liliha, the largest St. Francis affiliate, and a longtime St. Francis insider, while Blanco had just been appointed to the medical center board of directors.

Unidev was also very interested in landing University of Hawaii projects, from the West Oahu campus to dorms on various campuses. Blanco and Farias are both former members of the UH Board of Regents, where Blanco was a controversial pick for chairman while he was a special assistant to Cayetano. Radcliffe is the (now former) associate executive director and lobbyist for the UH Professional Assembly, the faculty union.

All this ties back to the rankings that found Radcliffe and Morris ranked number one and two among all individual contributors in the state to candidates during the 2011-2012 election cycle. What is all that clout used for?

Records show Radcliffe and Morris, through their firm, Capitol Consultants, were registered as lobbyists for Unidev during 2005, as well as members of Blanco’s partnership. At the same time, the UH Board of Regents was in the process of selecting a developer for the West Oahu campus.

Unidev was one of the four finalists that submitted proposals to the BOR. In August 2005, just days prior to the regents’ meeting where the selection was to be made, UHPA executive director J.N. Musto published a column in the Sunday Star-Bulletin praising Unidev’s proposal and appearing to throw the union’s support behind it.

There’s more, but you’ll have to click through to the blog post to read it all.

The subsequent dispute between Unidev and Hawaii County includes allegations of misrepresentation and fraud, always keywords that grab my attention.

This is one dispute that seems to deserve a closer look at the details….