A state agency established to support diversified farming in Hawaii is being accused of wrecking one prospective venture to grow produce on former pineapple fields in Wahiawa.

An affiliate of local produce distribution firm Aloha Products recently sued the state Agribusiness Development Corp. for alleged mistreatment over a planned 160-acre farm on land that the agency owns. At issue is the provision for irrigation water.

Ohana Best LLC, led by Aloha Products principal Hwa Young Chung, filed the complaint last month in state Circuit Court, calling ADC a “rogue” agency led by a former head of the state Department of Agriculture.

Chung claims she lost $1.5 million in the effort to establish Ohana Best Farms.

“It’s crazy,” said Michael Jay Green, a Honolulu attorney representing Chung. “All she wanted to do is farm.”

James Nakatani, ADC’s executive director, said he hasn’t read the lawsuit and that it wouldn’t be prudent to comment on Chung’s allegations because litigation is pending. But he called the action puzzling given that ADC is working with several farmers who are making productive use of roughly 1,000 acres of former Del Monte pineapple fields where Ohana Best was approved for its farm.

The agency acquired 1,200 acres of former Del Monte fields in 2012 through a $13 million state-financed purchase from the Galbraith Estate, which had leased the land to Del Monte until the pineapple plantation shut down in 2004.

When the land purchase was announced in late 2012, Nakatani said new crops could be in the ground by mid-2013.

But diversified farming on the site was severely limited at the time because of water. Irrigation from one existing well and rainfall was enough for pineapple, which needs relatively little water, but it would take several years to provide enough water to most of the site for diversified crops.

Chung claims in her lawsuit that ADC misled her about this.

According to the complaint, Chung formed Ohana Best in 2013 to establish a farm on part of the former Galbraith site. Her plan was to grow high-value crops to replace produce that Aloha Products imported for customers, according to Joe Blanco, a real estate developer and former state technology advisor hired by Chung as a consultant.

In early 2014, ADC’s board voted to approve issuing Ohana Best a license for 160 acres, and the company was allowed to begin preparing the land for planting even though a license agreement hadn’t been signed.

The lawsuit claims that Ohana Best bought equipment, hired engineers, cleared the land, built a base yard, established roads, did soil testing and planted test crops among other work to establish the farm at a cost of about $1.5 million. However, the complaint said, ADC misled Ohana Best about when irrigation water would be available.

Chung claims that Nakatani’s public claim in late 2012 that land should be ready for planting within six months was outlandish, false and misleading. Her lawsuit also contends that Nakatani in 2013 didn’t disclose that only enough water was available to irrigate crops on about 500 acres, and that since mid-2014 ADC repeatedly said water would be available to Ohana Best “shortly.”

“If Chung had been told the truth, she would not have gone forward with the work,” the complaint said.

At the time, ADC was seeking money from Hawaii lawmakers to expand the water supply.

The Legislature set aside $750,000 in 2012 for irrigation planning and design work, yet ADC also unsuccessfully sought $8 million more in each of the next three years.

“At this present time, the Galbraith land does not have an irrigation system compatible with today’s diversified agricultural farming operations,” ADC said in written testimony on a bill in 2013.

In 2016, a state budget was passed with $13 million to pay for two reservoirs, pumps and other infrastructure to supply most of the former Galbraith site with water. Nakatani said water is now available to farms covering 1,000 acres.

Chung, however, had other issues with ADC and never obtained a written license agreement for her farm.

In the lawsuit, Chung faults ADC for not providing her with a land lease instead of a license. Long-term leases can help secure farm financing, but ADC issues licenses to farmers approved to use the agency’s land.

Chung contends that she needed a lease, and that the agency’s licensing practice is arbitrary because ADC has no administrative rules prohibiting leases.

Chung’s complaint also claims that Nakatani favored another tenant on the former Galbraith lands, Kalena Farms and Sugarland Growers Inc. operator Larry Jefts.

Jefts harvested his first crop of watermelons and bell peppers on about 250 acres in 2016. Chung’s lawsuit said Jefts is a competitor, and that Nakatani had a conflict of interest and favored Jefts because Nakatani had once been a paid consultant for Jefts.

The lawsuit said Nakatani falsely told ADC’s board in late 2015 that there were issues with unauthorized work Ohana Best was doing on the 160-acre site.

After July 2016, ADC ceased dealing with Ohana Best, and the agency blocked access to the 160 acres in early 2017, the complaint said.

Green said he attempted to negotiate a resolution to the situation, but that Chung is suing because no agreement could be reached.

Ohana Best isn’t the only farm to have difficulties with ADC over farming former Galbraith land.

Some immigrant farmers approved for licenses haven’t been allowed to start farming because they didn’t satisfy requirements such as registering to do business in the state, obtaining a state general tax licence number and producing soil and water conservation plans. Earlier this year, ADC’s board rescinded license approvals from 2016 for two farmers over this issue, according to ADC board meeting minutes.

Nakatani said ADC has four plots available that could be awarded next month to small farmers who applied for licenses.

To show what ADC has accomplished on the former Galbraith land, the agency posted on its website a 20-minute video shot from a drone in September showing 1,000 acres in various stages of being farmed.

“We’re starting to make good progress there,” Nakatani said.

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