Waikoloa Highlands Tax Department Complaint Requiring Federal Investigation

Tax Department Request for Review of “Waikoloa Highlands Inc.” Conveyance by Plumeria Waikoloa LLC “Consortium” (a.k.a., Paul J. Sulla, Jr.; JMS Enterprises)


I) Validity of Underlying Transaction

According to the County of Hawaii (CoH) Real Property Tax Office, web site, on 6.1.17, Parcel Number (3) 6800 2057 0000 (11.7 acres) sold for $55,000. (CoH Property Tax, (1)).

Per the Land Use Commission (LUC) transcript, the 11.7 acre property sold for $10 not $55,000. This nominal selling price was agreed to by seller, in exchange for buyer’s agreement that 80 affordable housing units would be developed on the property, for the benefit of low income families.

The seller was Waikoloa Highlands Inc (WHI). The buyer was Plumeria Waikoloa LLC, member Paul J. Sulla Jr. (Sulla),( LUC A06-767, Exhibit 65 (2)).

The 11.7 acre parcel was subdivided out from WHI’s adjacent parcel of 731 acres, and conveyed to Sulla’s non -profit, in order to satisfy the Affordable Housing provisions of Ch 11. Art 1, HAWAI‘I COUNTY CODE 11-5 (a)(5). In furtherance of this requirement, the deed as executed from WHI to Sulla, contained the requisite “non-profit” provision. (Ibid (2)).

According to LUC testimony, subsequent to WHI’s conveyance of the deed, but prior to the deed’s recordation, Sulla’s non-profit status was unlawfully altered from a non-profit to a for profit company, (LUC Hearing Transcript, 11.28.18, pg.85, (3))

This unlawful alteration resulted in:

1) the deed being adjudicated illegal and void;
2) WHI not receiving its bargained for consideration;
3) Up to 80 low income families being denied affordable housing;
4) a $1,499,990 windfall gain to Sulla. (Ibid. (1));

The alteration from non-profit to profit also resulted in the conversion of UXO Federal military funds for private gain. On 6.22.17, Mayor Kim initiated an urgent request to the US Army to clear the 11.7 acre property of “unexploded ordnance” for the benefit of low income families. (Mayor Kim’s Request to U.S. Army (4)).

The Army complied, but Sulla’s subsequent sale (11 months later) of the 11.7 acres to a for profit commercial developer (Pua Melia LLC) negated any public benefit conferred.

Nevertheless, per the LUC, Pua Melia is now under no obligation to build affordable housing. This result, if upheld, would be both inequitable and patently erroneous.

Given the property has been cleared of munitions at great public cost (which has substantially increased the property’s value) would it not be more equitable if the property were conveyed to an Affordable Housing Trust for the benefit of low income families?

Would it also not be equitable (if the facts are as stated) that Mr. Sulla be compelled to disgorge his $1,499,990 profit plus all other damages (according to proof) in favor of WHI and the US Army.

Also, if the property was placed in a Affordable Housing Trust, Pua Melia would be entitled to damages, but only to the extent Pua Melia was a good faith purchaser and not in league with the perpetrator(s). (Ibid (3) pg.111)).

II) Improper Payment of Conveyance Tax

To date, even though the LUC ruled the transaction between Sulla and WHI an ultra vires act and in violation of law, Sulla’s recordation of the void and invalid deed of sale on 1.29.18 and underpayment of conveyance tax of $82.50 has stood unchallenged by any lawful authority. (Ibid 3, pg 98 ), LUC 11.25.18 pg 47 (5)).

According to Sulla’s statement under oath, Sulla justified $55,000 as the fair market value at the time of sale by:

“taking the tax office assessed value for the entire 731 acres and allocating 11/731 of that amount for the approximately 11 acres subdivided from the 731 acres.” (Sulla Affidavit (6))

This methodology resulted in under-reporting the fair market value of the property, since the 11.7 acre parcel, (unlike the majority of the other 720 acres) fronts a highly trafficked roadway, directly opposite Waikoloa Village.

As evidence, $55,000 was not the fair market value:

1) $55,000 was $1,445,000 below the property’s selling price, 11 months prior to its subsequent sale for $1,500,000.

The record shows no improvements were made to the property, nor were any encumbrances or liens satisfied, that would have offset Sulla’s gain.

2) The reported value of $55,000 was $866,900 below than the property’s 2018 assessed value which was $921,900 (Ibid(1)).

III) Relief Requested

Therefore, we now request, based on the above facts (all contained in the public record), that:

1) the Hawaii Tax Authority review the above reference sale on 6.1.17 and conveyance tax paid by Sulla of $82.50, in order to determine if it was in accordance with the lawful amount owed;

2) this matter be referred to the appropriate State and/or Federal agencies to address the property’s unlawful change in status from a non-profit, to a for profit;

3) this matter be referred to the appropriate State and/or Federal agencies to determine who should be the lawful recipient(s) of the benefits conferred upon Mr. Sulla, Plumeria Waikoloa LLC) and Pua Melia LLC out of the public treasury.

(1) CoH Property Tax

(2) State of Hawaii LUC, A06- 767 Waikoloa Mauka LLC:
https://luc.hawaii.gov/completed-dockets/decision-and-orders-for-boundary-amendments/completed-dba-hawaii-county/completed-dba-hawaii-county-2000s/completed-dba-hawaii-county-2006-to-2009/a06-767-waikoloa-mauka-llc/ Exhibit 65: https://luc.hawaii.gov/wp-content/uploads/2018/12/A06-767-WHI-Exhibit-65.pdf

(3) LUC Hearing Transcript 11.28.18 ( see page 85):

(4) Mayor’s Kim’s 6.22.17 letter to J.C. King the Director of Munitions and Chemical Matters on behalf of Plumeria Waikoloa (Sulla)

(5) LUC Hearing Transcript 10.25.18, Office of Corporate Counsel findings:

(6)  WHI Supplemental Position Statement, Exhibit 23, Sulla Affidavit 10.10.18:


General Information LUC Docket A06-767: