MAUI LAND & PINEAPPLE CO INC Commitments Disclosure

9.	COMMITMENTS AND CONTINGENCIES

 

DOH Order

 

On December 31, 2018, the State of Hawai‘i Department of Health (“DOH”) issued a Notice and Finding of Violation and Order (“Order”) for alleged wastewater effluent violations related to our Upcountry Maui wastewater treatment facility. The facility was built in the 1960’s to serve approximately 200 single-family homes developed for workers in our former agricultural operations. The facility is made up of two 1.5-acre wastewater stabilization ponds and surrounding disposal leach fields. The Order includes, among other requirements, payment of a $230,000 administrative penalty and development of improvements to the current wastewater treatment plant, which become final and binding unless a hearing is requested to contest the alleged violations and penalties.

 

The DOH agreed to defer the Order while we implement an approved corrective action plan to address the facility’s wastewater effluent issues. The construction of additional leach fields and installations of a surface aerator, sludge removal system, and natural pond cover using water plants were completed. Test results from wastewater monitoring indicate effluent concentration amounts within allowable ranges. A feasibility study was prepared and submitted identifying various technical solutions that could be implemented to resolve the Order. We submitted a plan and proposed solution to resolve the Order. The plan included the installation of an additional pond that will be lined and installed with aerators. One of the existing ponds will be lined and renovated as necessary and the other pond will be taken offline and used as a backup pond if needed. The Company continues to make progress with the DOH and was, as of the date of this Annual Report, awaiting approval of submitted engineering and design drawings from the State of Hawai‘i.

 

We have accrued approximately $23,000 related to the administrative penalty as of December 31, 2025. We are currently unable to estimate the remaining amount, or range of amounts, of any probable liability, if any, related to the Order. Accordingly, no additional provision has been made in the accompanying financial statements.

 

Maui County Water Filtration Settlement

 

Pursuant to a 1999 settlement agreement with the County of Maui, the Company and several chemical manufacturers agreed to pay for 90% of capital costs to install filtration systems in any future water wells if the presence of a nematicide, commonly known as DBCP, exceeds specified levels, and for the ongoing maintenance and operating cost for filtration systems on existing and future wells. The Company paid approximately $23,000 for the reimbursement of filtration and maintenance costs during each of the years ended December 31, 2025 and 2024. At the time of filing this Annual Report, the Company is not aware of any plans by the County of Maui to install other filtration systems or to drill any water wells in areas affected by agricultural chemicals. Accordingly, no reserve for costs relating to any future wells has been recorded because the Company cannot reasonably estimate the possible amount, or range of amounts, in any, of any probable liability.

 

Honokohau Stream Irrigation Water Dispute

 

On August 18, 2025, TY Management Corporation, which owns two golf courses (The Kapalua Plantation Golf Course and the Kapalua Bay Golf Course), the Plantation Estates Lot Owners Association (“PELOA”), the Association of Apartment Owners of the Coconut Grove on Kapalua, and the Association of Apartment Owners of the Ride at Kapalua (three owner associations located within the Kapalua Resort Association (“KRA”)), and Hui Momona Farms LLC, a Hawaii-based company that is a member of PELOA (collectively, the “Plaintiffs”), filed a complaint against the Company in the Circuit Court of the Second Circuit, State of Hawaii. The complaint alleged the Company failed to provide irrigation water from Honokohau Stream due to an alleged failure to maintain the ditch system that transports water from the stream. The complaint seeks declaratory and injunctive relief and unspecified monetary damages. The Company's insurance carrier accepted the claim and tendered defense on behalf of the Company.

 

In September 2025, the Company responded to the complaint and asserted counterclaims, including claims based on, alleged violations by Plaintiffs of irrigation-use restrictions intended to protect public trust purposes and fire protection for the entire Kapalua community as well as claims relating to alleged defamatory statements. At the time of filing this Annual Report, Company cannot reasonably estimate the possible loss or range of loss, or recovery from the counterclaim, if any, associated with this matter. The Company intends to defend against the claims and to prosecute its counterclaims.

 

Since 2019, the availability of divertible water from Honokohau Stream has been reduced under Hawai’i state law. In addition, the stream has experienced record low flows associated with historic drought conditions impacting the island of Maui. At its September 2025 meeting, the Commission on Water Resource Management, the state agency responsible for administering the state water code, reported that rainfall contributes to runoff and baseflow to streams, and that for the period between September 2024 and August 2025, annual rainfall in Honokohau Valley was 46% of normal. As a result of reduced rainfall and Hawaii state law public trust uses, including drinking water and traditional practices, there has been less water available for private commercial irrigation

 

KRA Annexations 

 

In 2024 and 2025, the Company, as the developer of Kapalua and member of the KRA, annexed certain lands into Kapalua in accordance with procedures set forth in the KRA’s governing declaration. KRA's records reflect the annexed lands are part of Kapalua.

 

On September 25, 2025, TY Management Corporation and derivatively on behalf of KRA, filed a lawsuit in the Circuit Court of the Second Circuit, State of Hawai‘i, against certain directors of KRA and the Company as declarant of KRA, alleging that the annexations and related voting rights are invalid. As a result of the disputes regarding the annexations and related voting rights, KRA’s annual meeting had not been held as of the date of this Annual Report, as required to be held by Hawaii statutes.

 

On October 10, 2025, the Company, as a member of KRA and developer of Kapalua, petitioned the Second Circuit Court, State of Hawai‘i, to set the annual meeting.

 

At the time of filing this Annual Report, the financial impact to the Company, if any, cannot be determined or estimated. KRA is responsible for the defense of the directors named in the claim. The Company will intend to defend against claims.

 

In addition, from time to time, the Company is a party various legal proceedings, disputes, and other claims arising in the ordinary course of business. The Company believes the resolution of these other matters, in the aggregate, is not likely to have a material adverse effect on the Company’s consolidated financial position or operations.