KAILUA-KONA — The owner and developer of a 50-unit residential community proposed across from Pahoehoe Beach Park on Alii Drive has withdrawn their application for a Special Management Area Use Permit — meaning the lot will likely be preserved for open space.

On Nov. 18, the planning department acknowledged property owner Gregory Valen’s request for the application to be withdrawn for the 8.8-acre Kulani View LLC development mauka of Laaloa or Magic Sands Beach.

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A contested case hearing for the permit — or SMA — was scheduled for Dec. 12.

That case was filed by The West Hawaii Surfing Association president Paula “Simmy” McMichael. The organization was representing Keawe KKK Alapai, who successfully conveyed his lineal connection to the land that Kulani View LLC intended to develop.

Valen, an Oahu resident who said he’s owned for 10 years the acreage upon which the development would be built, told commissioners at an August Leeward Planning Commission meeting that he didn’t plan to “make a lot of money on this. I’m just looking for the best use of the land to give back to the area.”

Of the 50 units that were to be constructed, 26 were intended to be affordable housing units with the rest going at market rate.

The project was being pursued via the state’s Chapter 201H process, which exempts certain developments from some zoning and development rules and laws if the majority of units are affordable to households with incomes at or below 140 percent of the area median income of $70,100.

“I’m not a developer and I thought this was a very clean deal,” Valen testified at the August meeting, “because this is not TMT, this is not a VRBO, this is not an Airbnb, this is for the residential people on this side of Hawaii Island.”

He noted further he’s invested about $300,000 of his own retirement funds into the project thus far.

After the August meeting Valen said, “we thought we’re doing good for the community with affordable housing.”

But the matter went to mediation where McMichael said John Johnson, the developer for the project, wanted to withdraw, however no agreement was reached and the contested case hearing was set for Dec. 12.

McMichael said she received a call from Valer on Nov. 16 stating they wanted to withdraw and work with the community.

“I was ecstatic,” McMichael said on Monday.

Johnson and Valen were unable to be reached as of press time. A letter to Johnson dated Nov. 18 from the Planning Department confirms the application withdrawal.

McMichael said the next step is to apply for a grant to purchase the land as open space.

Market value for the land is assessed at $600,900.

“Once we got to meet them and feel the warmth, they understand and feel for us,”said McMichael.

“The land is spiritual. The more you learn and get into these contested case hearings you start to realize what is there, what it is, and what will it be. All of Alii Drive is sacred,” she said.

McMichael said there are hundreds of burials on Alii Drive.

“How could they not find one on 8.8 acres?” she asked.

“I said to them I feel for them because they have money in it, but I can’t back off because the ancestors are there and they’re real,” she said.

The area of the Kulani View LLC’s proposed project is a little over half a mile south of a 14,450-square-foot lot where a developer had proposed a five-story condominium near the Banyans surf spot. McMichael was a petitioner in that matter.

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The developer behind that proposal agreed to take that plan off the table in July and is working toward making the parcel a public space.

“Our ancestors are happy,” said McMichael.