Kalani Oceanside Retreat in lower Puna, which has remained closed following the eruption of Kilauea volcano last May, is for sale — and at least one creditor is crying foul.
Molly Masaoka, who owns Yoga Centered Studio and Boutique in Hilo, said she hasn’t been returned an $18,000 deposit she and a partner had plunked down for rental space at the 19-acre retreat, also known as Kalani Honua. Masaoka added she knows of others facing the same predicament.
“We’ve been doing teacher training down there for about six years, two or three times a year,” Masaoka said Wednesday. “We brought in probably a million, two million dollars for them over the past five or six years, you know. We put down a deposit to reserve (space) for future teacher training. … When the lava started, they sent out this email that was, like, ‘Oh, we’re closed indefinitely because of the lava.’ … No talk of, like, refunding anyone’s money.
“This is just our story, but there are probably, like, 20 or 25 other people who are in the same exact position for retreats scheduled throughout the year.”
The agriculturally zoned 19-acre parcel with conference center, kitchen, dining lanai, office and gift-crafts shop, three staff rooms, a pool and other amenities is listed online for sale for $2 million on the personal website of Richard Koob, Kalani’s founder. The contact is Elizabeth Koob, a Yonkers, N.Y.-based lawyer and Koob’s sister. The Tribune-Herald was unable to find any listings by local real estate companies for the property.
The county’s Real Property Tax Office website lists the owner of the property as Kalani Honua Inc., a domestic nonprofit organization. The state Department of Commerce and Consumer Affairs website lists Tonya Ozone as president of Kalani Honua Inc., with Rebecca Marshall as secretary, Craig Torchia as treasurer, and Lynda Saffery, Tam Hunt, Larry Reitzer, Janet Elizabeth Taylor and Randy Franklin Niklason as directors.
“The nonprofit owns it, but we have a mortgage to (the Koobs),” Ozone said. “We haven’t paid the mortgage in a year because we haven’t had the funds. They’re not wanting to foreclose because that’s a long, involved process for them. We don’t want to do bankruptcy because we want to satisfy all of the debts we owe. So we are actively pursuing the sale of the property.”
The last sales transaction listed on the county’s property tax website for the property is a $10 warranty deed with a sale date of May 21, 2009, and a recording date of Nov. 19, 2010. The seller is Koob Hawaii Enterprise LP, a domestic limited partnership with Kalani Kai Eco Village Inc. as the only partner listed. Kalani Kai Eco Village is a domestic for-profit corporation. Its listed officers are: Elizabeth L. Koob, president and director; Stephen J. Koob, vice president; Mary Jane Koob, treasurer and director; Richard T. Koob, secretary and director; and Daniel J. Koob, director.
Ozone said the actual mortgage note is for $1.6 million over 30 years. She said the $10 is “for a lease, which I have never understood, nor has anyone ever explained it to my satisfaction.” A Realtor consulted by the Tribune-Herald said a warranty deed for $10 “and other considerations” is a common practice.
According to Ozone, there have been “several inquiries” on the property, which has a total market value of $2,375,800, according to the county’s property tax website.
Ozone acknowledged Kalani’s creditors include Masaoka and others who paid deposits for use of facilities for future retreats.
“Molly’s one of probably, gosh, a hundred people or so that we owe money to. We owe close to $200,000 to retreats,” she said. “Our intent is to pay that money. But until we get the funds, we’re not able to do that.”
Asked why retreat deposits weren’t put into a trust account of the type property managers use to keep tenant deposits and rent payments separate from operating capital, Ozone replied, “That’s a good question.”
“Kalani Honua has been in business for 43 years. The way the business model was set up — which we were in the process of fixing — we would take deposits for future retreats, so we would always be running six months behind in some payments. When the lava came, it shut the business down, and we’ve never been able to recover. We’ve been closed almost a year due to the lava. We had no reserve funds, whatsoever,” she said.
“… It’s difficult to fix something that’s been perpetuated for 40 years. So we’ve never had, like, a buildup of cash. When I became the board chair in 2017, for the first time we actually got a line of credit — very small, but Kalani had never even had that to operate with.”
Ozone cited another, more recent, economic impediment to Kalani’s bottom line as a contributing cause of the closure.
“We had also been operating 30 percent behind budget from projections, due in part to Airbnbs in the area. That had started to impact our business and we hadn’t really adjusted for that, either. So we were already behind our projected budget.”
In addition, Kalani had been ordered to convert its cesspools to a septic tank system and had sought a state grant of $228,600 from the legislature in January last year for that purpose.
State court records indicate the only lawsuit filed against Kalani was by Hawaii Employers’ Mutual Insurance Co. Inc. On Nov. 19, Hilo District Judge Bruce Larson awarded HEMIC $6,441 plus $155 in court costs.
Over the years, Kalani has been host to retreats and events including — in addition to yoga — ecstatic dance, massage and massage classes, nutrition and wellness training, concerts, music workshops and retreats, movies and the like.
“Kalani Honua strives to provide a learning environment promoting a better understanding of Hawaiian culture and the natural environment,” a paragraph in the septic tank grant request states. “As Hawaii’s largest retreat center, Kalani Honua has provided opportunities for personal growth and transformation via nature, culture, and wellness for over 40 years.”
Masaoka said she hasn’t sued because of the money it would take to do so. She also expressed doubt about lava being the reason for the resort’s closure.
“It wasn’t about lava, because access wasn’t cut off to Kalani,” she said.
Ozone said while physical access to the property on Highway 137 wasn’t cut off, the lava emergency declaration by Mayor Harry Kim essentially shut down operations.
“And as long as the emergency was in effect, there were no overnight stays permitted. So until he undeclared the emergency … we weren’t legally allowed to operate,” she said.
“We would love nothing better to see Kalani reopened under a new nonprofit. Whether the buyers choose to do that, I don’t know. But our intent is to sell it so we don’t have to go into foreclosure or bankruptcy and so we can satisfy all our debts,” Ozone continued. “The retreats, like Molly and all the other people, are our first priority. We want to make sure they get their funds back because they’ve been doing retreats at Kalani for many, many years. They put their trust in us, and we want to respect that and appreciate that. These folks are just small businesses, and they can’t afford that financial hit, either.”
As for Masaoka, she remains dubious and lays blame on the nonprofit’s board of directors.
“They took hundreds of thousands of dollars from people and kept the money,” she said. “There’s a disconnect between the reality of the situation and what’s being portrayed in the community. It’s unfortunate. I love Kalani. I love the staff. Nothing against the staff — I know most of them did their absolute best.”
Email John Burnett at jburnett@hawaiitribune-herald.com.