The July 30th fire that swept through the weedy fields abutting Paia left a dystopian spread of detritus in its wake. With brush cover gone, dozens of gutted, burned cars have been exposed and left to molder. It’s certainly not the most welcoming approach to Maui’s tiny North Shore community, often named as one of the best small beach towns in the country.
The blaze got me thinking about the property’s California owner, Sam Hirbod, whose EC Paia company purchased the 339 acres encompassing the burn mass in December 2016 from Alexander & Baldwin. The A&B sale generated lots of headlines, not only for the size of the purchase and its location, but for the price: a paltry $9.9 million, or $29,000 an acre.
Located across the street from the Paia Youth & Cultural Center, the parcel runs along the Hana Highway from the west boundary of Baldwin Beach to the Paia Bypass Road, up the bypass to Baldwin Avenue and then to the old sugar mill.
Not much has changed cosmetically on the property during in the last six years (well, until the fire and more on that later), but that doesn’t mean there hasn’t been action. In this case, I’m referring to legal action involving Paia businessman Michael Baskin and Hirbod, a wealthy Northern California developer and owner of Eagle Canyon Capital (EC Paia’s parent company), about breach of contract and misrepresentation issues related to that sale.
Baskin first filed a lawsuit against Hirbod’s EC Paia in May, 2020. It was formally resolved by a U.S. District Court of Hawaii magistrate judge earlier this year–and not in Baskin’s favor. EC Paia countersued and lost in court as well. Additional appellate filings in the case are ongoing.
I reviewed the pleadings, court orders, and transcripts from the three-day trial held in November, 2021, and have based this report on their contents. The story they tell could be a three-act farce if it wasn’t factual. It’s a cautionary Maui real estate tale for buyers and sellers alike.
Paving paradise
It was July, 2016, and Michael Baskin had parking on his mind. Baskin owned the Paia Inn and other storefront properties along the Hana Highway in Paia, but what he lacked was a place to put all the cars visiting those businesses. As he surveyed his environment, his eyes fell on the empty fields outside Paia. They’d been idled earlier that year when A&B announced plans to terminate its HC&S sugarcane operations. The raw land gave Baskin an idea.
He called A&B Land Assets Director Randy Endo with a suggestion: How about leasing him a small piece of land near the Paia bypass where Baskin could put up a parking lot? Endo offered an incredible counterproposal: Why not just buy the whole 339-acre parcel for $9.9 million? Baskin liked that idea even better and entered into a preliminary agreement with A&B, plunking down a $300,000 deposit.
Partner Search
But as Baskin testified in court, he ran into “financing” problems in his attempts to obtain a mortgage on the property. As the December, 2016 purchase deadline loomed, he realized he needed investors to help with the buy. Working with a team of Maui private planners, he created an “investment letter” outlining the property’s possibilities to show to interested parties. Baskin didn’t troll the real estate waters very long before nibbles emerged. There was a Colorado businessman, the Oahu-based Kobayashi Group, and the owner of Hana Ranch. However, Baskin testified, interest from the Kobayashi family and the Hana Ranch owner was brief, ending after one or two meetings. Then, in late November, two weeks before the A&B closing date, Sam Hirbod came on the scene.
Hirbod was the former president and CEO of Pacific Convenience & Fuels, which at its height operated almost 600 gas stations and convenience stores across six Western states. He sold that business in 2015 and was on the lookout for new opportunities. He was introduced to Baskin by local Realtor Dano Sayles.
During their early phone conversations, according to his court testimony, Hirbod told Baskin that he had done more than $600 million in real estate transactions and development, and that he was in negotiations to purchase a professional basketball team (which didn’t happen). His current plate of projects ranged from $50-$250 million, he told Baskin.
Hirbod visited his home in Wailea three to four times a year. He told Baskin he was very familiar with Paia; Mama’s Fish House restaurant in nearby Kuau was a regular stop on his visits.
18 months to money
In these conversations and in documents, Baskin painted a development masterpiece for Hirbod. The 339-acre lot contained various potential components: there was agricultural land that could be divided into 21 “agricultural-residential lots” (with a minimum size of two acres) for “ultra-luxury” homes, as well as another area that could be rezoned for “urban growth,” as outlined in the Maui Island Plan. As part of this Paia town expansion, Baskin told Hirbod, the “business country town” rezoned land could hold 275 residential units and 140 commercial units.
The plan would easily pass through the county, Baskin told Hirbod. There would be no public hearings, just an “administrative process.” The land would cost $30 million to develop in its entirety and would potentially be worth upwards of $100 million. “Within 18 months it would start generating tens of millions of dollars,” Hirbod testified Baskin told him.
Hirbod said Baskin “represented [that] his relationship with the county and the community lent itself for him to expedite the project and that’s why he was able to get it to the point it was at.”
The California businessman was definitely intrigued. “I’ve always considered myself a legacy developer,” Hirbod said he told Baskin. “My desire and my aspiration for the project is that it would bring value to the community for decades to come.”
Hirbod made plans to visit the island.
Due diligence not a concern
Hirbod arrived in Maui in early December to meet Baskin and tour the property. With the December 16 purchase date looming, Hirbod knew that the turnaround time on the deal was tight. He told Baskin that he had lawyers at his disposal who could make it happen. Due diligence on the development aspects of the deal didn’t seem to concern him.
Although the appraisal report Hirbod saw stated that the proposed zoning change from agricultural to “business country town” represented “significant risk,” Hirbod testified that he wasn’t worried. “I usually don’t give much weight to an appraisal’s disclaimers with regard to development because it’s not their job to assess the development risk.”
“The investment letter said the project is essentially preapproved,” Hirbod testified. “On many occasions Mr. Baskin alluded to that.”
Hirbod added, “We had two weeks to close a deal. [For due diligence] I relied on the sponsor, in this case, Mr. Baskin.”
Deal “shopping”
In the days after their meeting, Hirbod’s main concern was closing the deal by December 16.
After that date, A&B would be free to accept offers from other buyers. Baskin was motivated as well. If the deal didn’t close, he’d be out $300,000 plus the $65,000 he’d spent developing the concept.
Hirbod’s team offered a joint venture deal with a 70/30 split (Baskin would get the 30% share). But the offer languished, Hirbod testified. “It was a very, very frustrating period. We knew we were being shopped [to other interested parties]. And he kept retrading the deal with us.” Hirbod testified that, to him, the whole process “was beginning to feel like a Ponzi scheme.”
Hirbod said that Baskin told him, “Those guys are offering me more. I think if you want this deal you need to consider going to 60/40, 55/45. You need to give me more money in it. I’ve done a lot of work. This project is ready to produce cash. It’s an income in 18 months.”
Media bombshell
On December 11th, just days before the purchase deadline, the Maui News published a front page story which significantly impacted negotiations. Headlined, “Paia Inn Developer Still in Hot Water over Fines, Permits, Parking,” the story detailed Baskin’s numerous run-ins with Maui County. Baskin had been fined $500,000 in July, 2015 for various building and permit violations. It was, the story said, the largest amount ever levied by the Maui Planning Department. In addition, he had missed the deadline for paying $190,000 of those fines. The story outlined the Planning Department’s investigation, launched in 2013, which revealed that Baskin had violated short-term rental requirements, zoning and building code laws, and had failed to provide proper parking for his newly opened café at the Paia Inn.
A neighbor said her life had been made “miserable” by the short-term rentals that now surrounded her home. The story also quoted Baskin, who pushed back hard on the allegations. He called the Planning Dept.’s process “difficult.” He said that the county had been “very arbitrary and capricious” on whom it chose to fine. “We have seen firsthand how there is not a level playing field,” he alleged.
Deal change
The report instantly extinguished interest by the Colorado investor, whose son-in-law wrote an email to Baskin about the story. It was read during the trial. “We cannot proceed with you as a partner in any capacity,’ the email said. “I am writing this in direct response to your criticism of the county in this morning’s Maui News. This will be a high-profile development in a very challenging environment and we will not risk our reputation nor our capital by associating with someone who has a personal vendetta with the very people from whom we must garner support.”
Baskin quickly reached out to Hirbod to close the joint venture deal, only to find that it had evaporated as well. “When we saw the article, we immediately ceased negotiating on the joint venture,” Hirbod testified. “It was such a scathing article, we said we could not be partners with such an individual. We terminated negotiations that morning. Mr. Baskin called me several times during the day. I didn’t take his call. He sent me an email as well saying, ‘It’s blown out of proportion.’
Hirbod called Baskin back. “I said, ‘Michael, you told me last week that these were two infractions with regards to something that was already ‘grandfathered’ in. That’s not what this is.”
Instead, Hirbod put a different offer on the table: He’d take the deal out of Baskin’s hands altogether. EC Paia would pay Baskin $4 million, plus his original $300,000 deposit with A&B, and his development costs of $65,000. In return, Baskin would assign his purchase rights to EC Paia, which would proceed as sole owner. As part of the proposed agreement–and once development plans were completed–Baskin would also receive one commercial lot and one residential lot from the property. A secondary agreement involved a 70-year lease for a 160-stall parking lot.
Baskin took the deal, which closed December 15, a day before the purchase deadline.
Planning purgatory
After buying the parcel, Hirbod quickly learned that there were significant permitting and zoning hurdles to developing the 339-acre parcel. The 18-month development timeline was sheer fantasy. EC Paia’s planning consultant Rory Frampton testified that, depending on how the land was rezoned, the entire process could take up to 12 years.
Meanwhile, Baskin pestered Hirbod and EC Paia to give him his parking lot (and the other lots) and was ignored.
Finally, in May, 2020, Baskin went to court. He sued EC Paia on 10 claims. However, as U.S. District Court magistrate judge Wes Reber Porter repeatedly ruled in favor of EC Paia’s motions, the claims ultimately shrunk to one: breach of contract. Baskin’s contention was that EC Paia wasn’t developing the parcel at all, thus preventing him from getting his lots and the parking lot.
EC Paia countersued Baskin for fraud, alleging, among other things, that Baskin said “he had friends in the Maui Planning Department who would walk the plans through and just stamp the permits and entitlements needed.”
The trial
When the trial started in Honolulu on November 16, 2021, the main issue was: Did EC Paia breach its land agreement with Michael Baskin by not giving him his residential and commercial lots?
Although Baskin and his attorney repeatedly tried to raise the parking lot issue at trial, Judge Porter said it was a separate agreement and not a factor in the breach of contract complaint. Baskin’s most coveted piece of the EC Paia development deal remained firmly out of legal reach.
“In exchange for signing over the contract I was going to get two lots and that I was going to get a parking lot that I would be able to use for 70 years,” Baskin testified. “And I was going to get cooperation on their part to assist me with any permits that might be necessary.” Baskin said he believed EC Paia had no development plans for the parcel at all, contending that it was simply “banking” it for a bigger payday when it sold the property down the road.
Hirbod testified that there currently were no plans for the parcel area devoted to urban growth expansion other than “some concepts.” He said EC Paia was still trying to figure out how best to approach the parcel’s development.
Although there had been some preliminary subdivision approvals, EC Paia needed to comply with 27 conditions from multiple government entities: the Department of Water Supply, the Federal Emergency Management Agency, the State Historic Preservation Division and the Fire Department, to name but a few.
Witnesses detailed the efforts of Hirbod’s consultants to try to figure out how to subdivide the land to avoid triggering public hearings over the development. One way was to slice off the piece of land covered by Special Management Area requirements (which require public input) and give it to the County of Maui. EC Paia representatives met with then-mayor Alan Arakawa, who didn’t want the land, since there were greenway plans underway on the Baldwin Beach side of Hana Highway using land donated by A&B.
The current parcel plan, as of the 2021 trial, was to do a “large lot subdivision” and proceed from there. No plans were underway in November, 2021 for any of the lots, Hirbod testified, adding, “I sure wish there was.”
At present, the large lot subdivision has not yet been established.
The judge rules
The verdict didn’t go Baskin’s way.
Judge Porter found in favor of EC Paia, writing that Baskin had failed to establish any “breach to the Land Agreement” because the desired residential and commercial lots he was promised “did not exist when Plaintiff brought this action and do not exist as of trial.”
Porter rejected the parking lot issue in a footnote, stating that Baskin “had no claims arising from the Parking Lot Agreement.”He based his ruling on the fact that the Land Agreement did not include interim deadlines or progress requirements. Porter said he believed that EC Paia “generally” had taken steps towards developing the property.
Porter also ruled against EC Paia’s fraud counterclaim because the sales agreement contained waivers that invalidated such a claim.
Baskin’s only win was getting the court fees he was ordered to pay to EC Paia reduced by about half.
The matter has now moved to the U.S. District Court of Appeals on a series of administrative legal issues. A mediation conference was held this week.
Aftermath
There is a parking lot of sorts on those 339 acres at present, through probably not what Baskin envisioned. Instead of luxury homes, shops and a 160-stall parking lot, there’s a scene out of “Mad Max”: skeletal car husks, tent encampments, rubbish, and scorched earth.
Removing them will first require a police investigation of each vehicle to determine ownership. After that is concluded, it will cost EC Paia about $1,000 per vehicle to have them removed.
Hirbod got a good lesson in why it pays to do more due diligence than to simply read a marketing plan. Since 2016, Hirbod has sold his Wailea home and EC Paia pays around $44,000 a year in taxes on the parcel. Still, at current Maui land prices, Hirbod’s $9.9 million investment will likely provide a payday at some point, even if the only outcome is a sale.
Baskin still doesn’t have a parking lot, but he’s $4 million richer.
Of all involved, Paia seems to be getting the short end of the stick, for now.
Great article! A rare, detailed look on the “inside”. Keep up the excellent reporting!
Great article Deborah, you always find the details we public rarely get to hear. What we really need with that land is a bypass road, just like Lahaina!
Land owner should be REQUIRED by County of Maui to clean out all the burned out cars; get rid of homeless encampment; and berm and /or fence access so will not be overrun with homeless again! What a disgusting scene and visual cancer upon Pa’ia Town!
Mahalo for the excellent account of details! Great example of how foreign & greedy developers create a menace to our Community, our ʻĀina & our people. Land owners need to be held financially accountable for cleaning up this eye sore & Mr. Baskins assets seized to cover County imposed fees, fines & legal financial obligations.
Aloha,
I am writing in response to your recent article regarding California developer EC Paia’s lack of stewardship of the 339 acres in Paia.
I love Paia and I am genuinely committed to making it a better place for our residents.
I moved to Paia 45 years ago as a kid with my parents. My family and I are deeply rooted into the community and employ many local people and will continue to do so.
I was very disappointed to read your article. The article doesn’t tell the full or even accurate story. We entered into an agreement with A&B in good faith to bring value to the town to provide one of the most needed and essential items which is Parking. Those of us who actually live in Paia know that Parking has become crucial to the success of the residents, the merchants and visitors. I was on the Paia Main Street Board for 8 years as the vice-chair and at nearly every meeting the community asked what are we were doing for parking? I finally found a solution. We could’ve had parking for the last five years had EC Paia cooperated with us instead of blocking us.
Our town has suddenly become ridden with crime and vagrants and homeless people walking into the stores scaring everyone including our own Keiki. We are troubled by this.
The Maui News incorrectly reported our story by stating that we paid the highest fine in the history of Maui County. This was false then and it is false now. It was NOT a fine. It was a settlement, and it clearly states that we did no wrongdoing. This massive and unnecessary payment was to avoid litigation for permitting matters that dated back to the 1920s— long before any of us were born or before Hawai’i even became a state. Unfortunately, we live with a very anti-aloha planning department regime where a neighbor can make a complaint and that will allow the county to issue SMA fines of $100,000 each if they want to and the department leadership engages in vendettas as described in a recent audit of the department. Because a few unscrupulous neighbors got together and worked with a corrupt county I felt we had no choice but to pay a settlement in order to continue to operate our family run business. There is a recent audit of the zoning and enforcement division which calls out how blatantly corrupt the heads of planning department officials are. We hope that with a new Mayor this will all get resolved.
It is true that because of the problems that were being posted in the Maui News and the difficulties we were having with the County we were unable to get our bank to agree to finance the acquisition. This County interference in our acquisition unfortunately lead to us having to find a financial partner at the very last minute without us being able to do proper due diligence on them, that’s why we’re having the difficulties we are having now. What EC Paia promised us turned out to be a sham. Furthermore, they just successfully worked with the Planning Department to evade SMA review of their plans.
Our plan was to bring parking, a farmers’ market, and some future homes on ag zoned property, affordable housing and a large open space for agriculture. The Maui Island plan does call out for approval for an expansion of the town. It’s written in the County’s Maui Island Plan. This area will become an important part of the future and unfortunately the business partners that I entered into an agreement with are mainland focused and don’t seem care about our town. We live here and do care. The article does not reflect the work that we are doing with the police and cleanup companies to attempt to address these matters. Those of you who know us, know that we are good residents of Paia, that will do the right thing.
The article also implies that we misinformed the other partners which of course is not true. We just proved in court there was no basis for EC‘s frivolous claim.
We disclosed all of the difficulties that we were having with the Planning Department and would never hide such matters. EC Paia is simply not telling the truth. They are also presently trying to subvert the process of including the community input by carving out the SMA area to avoid public review. Please be warned of these developer’s actions. .
We will continue to pursue this matter until our property rights are resolved. You will one day see a well-managed parking lot that will help all the town.
As for Sam Hirbod and EC Paia, they are basically an absentee landlord looking to extract as much money as possible with the minimal investment. You can see how the 339 acres are riddled with cars and homeless people and crime that’s because of their poor management of the property. I’m sorry to the rest of you who counted on me to do Something Great that we ended up partnering with them. That’s why we sued them for specific performance.
I would ask that the next time a story like this is run on the property that someone take the time to call me back to get both sides of the story. If you care about Paia I can be contacted at baskindesign@gmail.com
With Aloha,
Michael Baskin
When I first contacted Michael Baskin about him profiting off the sale of the 339 acres in 2017, he told me he had made no money on the deal. When I asked him for a comment on the story I just wrote, prior to publication, his response was full of defamatory statements about Sam Hirbod, and members of the Maui planning department. I relied exclusively on trial testimony in court pleadings for the story for precisely this reason.
@ Michael. I agree with your statement, “ As for Sam Hirbod and EC Paia, they are basically an absentee landlord looking to extract as much money as possible,” but let’s remember, who allowed it to happen and who made out with $4 mil and some change just to make a quick deal. Looks like you were the sell out and are responsible for this mess. Take some accountability. Your not my friend.
County of Maui needs a council resolution DEMANDING the current property owner clean out the burned out (38)cars,,plus homeless encampments…THEN berm/ fence/ secure access to prevent future problems.The resolution must carry a stiff daily fine for non compliance or nothing will happen! C’mon all you politicians who say you care…NO EXCUSES….STEP- UP- TO- THE-PLATE..take initiative, SHOW COMMUNITY YOU CARE WITH ACTION NOT JUST WORDS!!
If anyone reading this article actual thinks that Baskins would have made a parking lot available to anyone but himself and his businesses in Paia, is just as stupid as the County for dealing with Baskins for all these years. He’s a fraud and a con artist at best. He should be banned from Paia forever.
Was there an arson investigation which concluded that an unhoused person is culpable for the fire(s)? I never saw anything like that but there a many commenters here saying get “rid of the homeless” as if they are the property owner serving ejectment upon those occupying the unfenced parcels. Interesting.
Indeed! Well said Brian!
Baskins is a fraud and conartist to say it nicely.
Go away Baskins NO ONE wants you here on Maui.
Pingback: Paia Landowner: Parcel to Be Cleaned, Fenced and Patrolled
This is a tremendous opportunity to create a project, with full community input, to creat a mix of affordable housing, residential lots, commercial with residential housing on the 2nd floor, senior housing and a full county public parking lot. Let’s get it done whatever the new administration is elected , this could become a showcase of co-operation and inclusion. Great opportunity to solve our collective needs and issues.
Kudos to Lance for recognizing this as a time for the community to come together in the best interests of Paia. Those commenters above who contribute only name-calling, insults, and libelous statements about others, please stay away and let the positive people organize and do the work with aloha and enthusiasm for the great improvements we could make to Paia. Truly a great opportunity if everyone is working together for good.
The county is responsible for the lands along the mini-bypass. Enforce the existing laws, trespass , vagrancy, drug dealing, panhandling, alcoholism, physical treats, it’s all posted. This wouldn’t be happening in Wailea or Kapalua, why did the county choose Paia to Let things get out of hand? Maybe the hobo camp should move to old maui high, make a camp there with facilities and social/medical care.