Hawai'i Court Holds that Consideration of Severance Damages in Honolulu Rail Case Should be Left to the Jury

On December 29, 2023, the Hawai’i Supreme Court ("HSCT") issued an opinion in the City and County of Honolulu v. Victoria Ward.

The case concerns the amount of just compensation the Honolulu Authority for Rapid Transportation (“HART”) must pay for approximately two acres worth of easements on property previously owned by Victoria Ward, Limited (“Victoria Ward”), a Howard Hughes company. That property is located in Victoria Ward’s multi-billion dollar Ward Village development in the Kaka’ako neighborhood of O’ahu. HART obtained the easements to construct portions of its fixed rail system and a proposed Kaka’ako Station to be located at Halekauwila Street and Ward Avenue. 

Source: HART, Station 20 Kaka‘ako, Kūkuluae‘o

The dispute centers around a disagreement over the value of just compensation, which the City owes landowners when condemning all or a portion of their property for public uses under the state (Article I, sec. 20) and federal (5th Amendment) constitutions. HART estimated Victoria Ward’s total just compensation at $13.67 million. Victoria Ward seeks just compensation from HART for the takings comprised of (1) the fair market value of easements on Victoria Ward’s property, plus (2) between $65 million and over $100 million for alleged severance damages.  

Victoria Ward’s theory of the case focuses on severance damages. Severance damages compensate property owners for devaluing non-taken portions of the property. Victoria Ward is seeking damages for lost development opportunities because it claims it was forced to modify, redesign, and/or relocate other building plans in a manner that resulted in less efficient, less valuable, and less profitable projects relative to what the development could have been worth absent rail and the associated takings.

The questions before the HSCT on interlocutory appeals involved several summary judgment motions granted in whole and in part by the circuit court. The key holdings of the HSCT are:

•  “. . . by entering into the Master Plan Permit and Development Agreement [with the Hawai’i Community Development Authority], Victoria Ward is obligated to address and incorporate rail. But it is the province of the jury to determine the contours of this obligation and to calculate the amount of severance damages, if any, to which Victoria Ward is entitled.”
• “. . . there is a genuine dispute of material fact as to whether Victoria Ward adequately reserved the right to collect severance damages in exchange for the benefits arising from the Master Plan Permit and the accommodations of rail. Thus, Victoria Ward is not precluded as a matter of law from seeking severance damages under an estoppel by acceptance theory.”
• “. . . the circuit court properly exercised its discretion to pause the accrual of statutory interest for the duration of the appeals.”

The HSCT was critical of the circuit court’s granting of summary judgment motions where there were genuine issues of material fact that should be decided by the jury, for example:

• “[S]eeking severance damages involves disputed questions of fact and should be presented to a jury,”. . . “it is the province of the jury to determine the contours of this obligation and to calculate the amount of severance damages, if any, to which Victoria Ward is entitled.”
• “[B]oth parties present substantial evidence in support of their positions, and determination of the disputed question of whether Ordinance 07-001 and the LPA ‘established’ the rail route must be presented to a jury.” The City Council adopted Ordinance 07-001, which sets the locally preferred alternative, or LPA, for the “Honolulu High-Capacity Transit Corridor Project . . . a fixed guideway system between Kapolei and the University of Hawaii at Manoa, starting at or near the intersection of Kapolei Parkway and Kalaeloa Boulevard.”
• “[A] jury should have the opportunity to ascertain the parties’ understanding of the Master Plan Permit” to determine compensable development expectations.
• The HSCT agreed with Victoria Ward that “[t]his is a classic battle of the experts for the jury to consider.”

Read more at https://www.courts.state.hi.us/wp-content/uploads/2023/12/SCAP-22-0000335.pdf.

No Permit for You! -- How Denying a Permit Could be a Taking

On June 25, 2013, the Supreme Court of the United States (SCOTUS) overturned a Florida Supreme Court decision in, Koontz v. St. Johns River Water Management District.  The majority opinion (Alito, Roberts, Scalia, Kennedy, and Thomas) held that the St. Johns River Water Management District's (District) demand for property from a land-use permit applicant must satisfy the requirements of Nollan and Dolan (1) even when the government denies the permit and (2) even when its demand is for money.

The minority opinion (Kagan, Ginsburg, Breyer, and Sotomayor) agreed with the majority opinion as to the first point.  However, the minority disagreed as to the second point: monetary exactions are a taking.  In their opinion, "the government may impose ordinary financial obligations without triggering the Takings Clause’s protections."  The minority goes on to sketch an outline for evaluating the merits of the case based on the requirements of Nollan and Dolan; however, the majority left that to the Florida courts on remand.

As with most SCOTUS decisions, time will tell how this decision affects real life situations.  But at least one thing seems clear, landowners may seek judicial remedy for takings sooner rather than waiting for the issuance of a permit.  Despite the worries of some government regulators, this decision should not change how it regulates land use.  In any land use entitlement proceeding, if government does its homework and provides a reasoned Nollan/Dolan analysis, there should not be a need to resort to judicial intervention.

Although SCOTUS did not get to the merits of the case (i.e., whether the District did indeed effect a taking), the facts do not appear to be favorable to the District.  Koontz decided to develop the 3.7-acre northern section of his property.  His proposal included raising the elevation of the northernmost section of his land to make it suitable for a building, grading the land from the southern edge of the building site, and installing a dry-bed pond for retaining and gradually releasing stormwater runoff from the building and its parking lot. To mitigate the environmental effects of his proposal, Koontz offered to foreclose any possible future development of the approximately 11-acre southern section of his land by deeding to the government a conservation easement on that portion of his property.

The District proposed two alternate conditions:

1. That Koontz reduces the size of his development to 1 acre and deed a conservation easement on the remaining 13.9 acres to the government to mitigate environmental effects of his proposal.  In addition, Koontz would be required to install a costly subsurface stormwater management system and install retaining walls; or
2. Build as originally planned on 3.7 acres, deed the remainder of his property as conservation easement to the government, and pay to replace culverts on one parcel or fill in ditches on another.  These improvements were offsite and not owned by Koontz.

It is difficult to imagine how the District's proposed exactions did not go beyond what is roughly proportional to the impacts caused by Koontz's proposal.

ICA Holds that Denial of SMA Permit Assessment is Ripe for Takings Claim without First Pursuing Plan Amendment

In Leone v. County of Maui, 128 Haw. 183 (2012), cert. denied, Appellants purchased property at Palauea Beach in Makena, Maui.

Palauea Beach Facing South

The 1998 Kihei-Makena Community Plan (Community Plan) assigned the beach lots a "park" land use designation, which does not permit the construction of single-family residences.  The Palauea Beach lots are also located in a "special management area" (SMA) under the Hawaii Coastal Zone Management Act (CZMA).  See HRS § 205A-22. Consequently, prior to building Appellants' desired single-family residences, they first needed to seek a Community Plan amendment from "park" to "residential."

A Community Plan amendment is a legislative process that involves review of the proposal by the County Planning Commission and adoption by the County Council. However, the County Planning Commission refused to accept the requisite environmental assessment, which the court found was part of a “deliberate strategy to preserve the status quo.”

Appellants nevertheless filed SMA assessment applications with the County Planning Department. Predictably, the Director rejected Appellants' applications, because the proposed use was inconsistent with the properties' "park" designation in the Community Plan. Appellants then filed inverse condemnation claims under article I, § 20 of the Hawaii Constitution and the Fifth and Fourteenth Amendments to the United States Constitution, alleging that Maui County had engaged in regulatory takings by depriving their properties of any economically viable use.

The Circuit Court dismissed all claims in both cases for lack of subject matter jurisdiction on ripeness grounds. It concluded that the claims were unripe for adjudication, because Appellants failed to exhaust administrative remedies, namely: (1) appealing the Director's decision to the Planning Commission; (2) waiving assessment procedure and submitting an SMA permit application; and (3) seeking an amendment to the Community Plan to change the properties' designation from "park" to "residential."

Appellants timely filed notices of appeal to Hawaii’s Intermediate Court of Appeals (ICA). Upon review, the ICA opined the following:

• Appellants are not required to appeal the Director's decision that their assessment application could not be processed because "[t]he proposed Single-Family dwelling is inconsistent with the Community Plan." The Director's decision satisfied the finality requirement for ripeness by setting forth a definitive position regarding how Maui County will apply the regulations at issue to the particular land in question.
• Appellants are not required to seek a change in the applicable law, i.e., the Community Plan, in order to satisfy the ripeness requirement for their takings claims. Citing Williamson Cnty. Reg'l Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172, 186 (1985), the ICA reasoned that the taking was ripe in this case, because the Director reached a final decision regarding the application of the SMA regulation to the property at issue. Unlike in Williamson, the Appellants did not have a variance process to pursue.  The Court did not agree with the County's argument that an amendment to a Community Plan is like the variance process in Williamson.  In Williamson, the court held that the takings claims were unripe, because the respondent failed to seek available variances, and thus the decision was not final

In conclusion, the ICA held that the Circuit Court erred in its determination that it lacked subject matter jurisdiction, because Appellants' claims were not ripe for adjudication. The ICA vacated the Circuit Court's order and remanded the case for for further proceedings.

SCOTUS Hears Oral Arguments in Florida Shoreline Case

In October, Hawaii Land Use Law previewed Stop the Beach Renourishment Inc. v. Florida Department of Environmental Protection, wherein the US Supreme Court will consider placing constitutional limits on Florida’s authority to restore storm-eroded beaches along the ocean or lakeshores, when such action modifies private property boundary lines.  The case was heard today and audio of the oral arguments will be posted on the Oyez website.

This case is similar to Maunalua Beach Ohana v. Hawaii, which was recenlty heard by Hawaii's Intermediate Court of Appeals as discussed in Oral Argument in Shoreline Ownership Case Posted.  In Maunalua, similar to Stop the Beach Renourishment, littoral landowners challenge state laws which take away their common law right to gain land by accretion.  Among other things, both cases are based on regulatory takings for the state's failure to compensate property owners for taking private property through regulation.

For more on shoreline issue, see Shoreline.

Oral Argument in Shoreline Ownership Case Posted

In On Appeal, Hawaii Land Use Law previewed Maunalua Beach Ohana v. Hawaii where a shoreline property owner challenged Act 73 (2003).

Act 73 changed ownership rights of littoral property owners to adjacent, accreted land by providing that (1) owners of oceanfront lands could no longer register or quiet title to accreted lands unless the accretion restored previously eroded land, (2) only the State could register or quiet title to land accreted along the ocean, and (3) accreted lands not otherwise awarded would be "public lands."  The Plaintiff, landowners, filed an inverse condemnation lawsuit challenging the state's regulatory taking of private property without compensation under the 5th Amendment of the U.S. Constitution.

In Hawaii, any property that is below the certified shoreline is public lands.  The certified shoreline is determined by the state, which considers the "upper reaches of the wash of the waves, other than storm and seismic waves, at high tide during the season of the year in which the highest wash of the waves occurs, usually evidenced by the edge of vegetation growth, or the upper limit of debris left by the wash of the waves."  See HRS § 205A-1, Diamond v. State, Board of Land and Natural Resources, 112 Haw. 161 (2006).  Consequently, as shore area is added to a property through accretion, the shoreline moves toward the ocean creating additional land above the shoreline.  Prior to Act 73, a littoral property owner could claim this land if it could show, among other things, that the adjoining land formed by accretion was permanent.

The circuit court granted Plaintiffs' motion for partial summary judgment on Plaintiffs' claim for injunctive relief to bar enforcement of Act 73 "unless and until the State of Hawai`i acknowledges that it must provide just compensation to the class members and undertakes to do so in conjunction with these proceedings."  The State appealed.  The Intermediate Court of Appeals heard argument on November 10, 2009, which is posted here.  An opinion from the ICA should be published soon.

For more on shoreline issues, see Shoreline.

New Blawg: California Eminent Domain Report

California law firm, Nossaman LLP, recently announced the launch of its California Eminent Domain Report blog. Nossaman describes its blog as featuring "original content focusing on industry news, events, and policy impacting eminent domain and valuation issues throughout California."

Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection, et al.

The US Supreme Court will consider putting constitutional limits on Florida’s authority to restore storm-eroded beaches along the ocean or lakeshores, when such action modifies private property boundary lines in Stop the Beach Renourishment v. Florida (08-1151).

The Court granted certiorari on June 15, 2009, with the following questions presented:

The Florida Supreme Court invoked “nonexistent rules of state substantive law" to reverse 100 years of uniform holdings that littoral rights are constitutionally protected. In doing so, did the Florida Court's decision cause a ''judicial taking" proscribed by the Fifth and Fourteenth Amendments to the United States Constitution?

Is the Florida Supreme Court's approval of a legislative scheme that eliminates constitutional littoral rights and replaces them with statutory rights a violation of the due process clauses of the Fifth and Fourteenth Amendments to the United States Constitution?

Is the Florida Supreme Court's approval of a legislative scheme that allows an executive agency to unilaterally modify a private landowner's property boundary without a judicial hearing or the payment of just compensation a violation of the due process clauses of the Fifth and Fourteenth Amendments to the United States Constitution?

The opinion issued by the Florida Supreme Court, which is the subject of the appeal, is an excellent primer for littoral property rights, some of which may apply to Hawaii.

Other related documents and pleadings are posted courtesy of SCOTUS Wiki.

Public Use Asserted in Condemnation May Meet Initial Judicial Muster but Courts Must Also Consider Pretext Defense

On Christmas Eve, the Hawaii Supreme Court (“HSCT”) issued an opinion in County of Hawaii v. C&J Coupe Family Limited Partnership, Haw. S. Ct. No. 28822, Dec. 24, 2008 involving a condemnation action related to the infamous Hokulia subdivision by 1250 Oceanside Partners.

Background. 

This case involves two condemnation actions related to the Hokulia project. The project is located on a 1550-acre parcel extending from the ocean toward the Mamalahoa Highway on the Island of Hawaii. See LUC Petition No. A06-769 1250 Oceanside Partners for a complete project description and maps.

C&J Coupe Family Limited Partnership’s (“Coupe Family”) property is contiguous to the southern border of Hokulia. In order to build the project, the property needed to be rezoned. The Hawaii County Council rezoned the land and as a condition of rezoning, Oceanside agreed to construct a Bypass so that the project could be accessed from Mamalahoa Highway.

The agreement between the County and Oceanside was that Oceanside was responsible for acquiring the property necessary for the Bypass and for the cost of constructing the Bypass, the County would use its eminent domain power in connection with the construction of the Bypass, and once built, the County would assume all responsibility and costs for operation, maintenance, repair, or reconstruction of the Bypass.

Condemnation 1: After negotiations for acquisition of a portion of the Coupe Family property failed, Oceanside sent a letter to the County requesting that it exercise its power of eminent domain on May 23, 2000. On July 26, 2000, the Council adopted a resolution finding it necessary for the County to initiate eminent domain proceedings against the Coupe Family land to acquire the right-of-way for the Bypass. Condemnation 1 sought only 2.9 acres of Appellant's property—the final subdivision approval indicated that 3.348 acres of Appellant's property would be needed for the Bypass. The ultimate result of Condemnation 1 was a court order which stated that "[t]he Condemnation is invalid. Judgment is hereby ordered to be entered in favor of [the Coupe Family] and against [the County] . . . ."

Condemnation 2: During the pendency of Condemnation 1, the County initiated procedures to condemn the Coupe Family’s property, on January 23, 2003. The Council adopted another resolution, this time for approximately 3.348 acres of the Coupe Family’s land and for the state purpose of providing “a regional benefit for the public purpose and use which will benefit the County.” Condemnation 2 was granted in favor of the County.

Questions on Appeal. 

On appeal, the Coupe Family brought the following questions:

1. May [the County] forever avoid its obligation under [HRS] § 101-27 to pay damages for discontinued or failed takings by instituting serial condemnation actions?
   
2. Is an eminent domain action abated—and the circuit court deprived of subject matter jurisdiction—when the court is already considering another, earlier-filed eminent domain action, instituted by the same plaintiff, in the same court, against the same defendants, for the same relief?
   
3. Does a circuit court have any duty under the [United States] and Hawaii Constitutions to examine the record to determine whether the government's proffered public purpose supporting a taking is a pretext hiding a predominantly private benefit, or may it simply take the government's word?
   

Holdings.

First, the issue of whether the Coupe Family is entitled to statutory damages under HRS § 101-27 turns upon whether the property in question "was finally taken" under that statute. I previewed this issue in Should the Government Pay a Landowner for Its Failed Attempt to Condemn a Landowner's Property?  Under the statute, finally taken means that a condemnation is either "abandoned", "discontinued," or "the property concerned [was] not finally taken for public use[.]” Based on its reading of HRS § 101-27, the HSCT held that “the property concerned [was] not finally taken for public use" in Condemnation 1, because the circuit court ordered that the Condemnation was invalid. That the property was eventually condemned after the County prevailed in Condemnation 2 was of no import to the HSCT—the court looked at Condemnation 1 and Condemnation 2 as separate actions for purposes of HRS § 101-27. This question was remanded to the circuit court for a calculation of damages in Condemnation 1.

Second, abatement is "[t]he suspension or defeat of a pending action for a reason unrelated to the merits of the claim[.]" In this case, Condemnation 2 was started while Condemnation 1 was still being considered by the circuit court. The HSCT held that the Coupe Family’s contention that abatement necessarily implicates a court's subject matter jurisdiction over a case is not correct; rather, “abatement is a remedy for a variety of defects, including lack of subject matter jurisdiction.” After reviewing case law from several jurisdictions, the HSCT held that “the pendency of Condemnation 1 did not deprive the court of subject matter jurisdiction over Condemnation 2[.]”

Third, constitution (U.S. and Hawaii) requires that eminent domain powers can only be used for a “public use.” The Coupe Family argued that "that the asserted public use was a pretext . . . to hide the predominantly private benefit of the [Bypass] to Oceanside[.]" The HSCT noted that the Supreme Court's decision in Kelo v. City of New London, Conn., 545 U.S. 469 (2005) is consistent with prior state decisions which “allows courts to look behind an eminent domain plaintiff's asserted public purpose under certain circumstances.” Furthermore, HSCT cited Kelo for the premise that just because a public purpose may exist on its face, the government may not “condemn private property for the sole purpose of transferring title to a different private owner.” This would be a proper use of eminent domain powers on the pretext of improperly transferring private property for another’s private benefit. In this case, the HSCT held that on its face, the Bypass condemnation resolution asserted a public purpose; however, the circuit court must expressly consider the question of whether the County’s asserted public purpose underlying Condemnation 2 was pretextual.

Penn Central Analysis Applies to 12-inch Pipe Upgrade Ordinance; Takings Did Not Apply where Landowner Agreed to Improvments

Tapps Brewing Inc v. City of Sumner, No. 07-35231, (9th Cir. 2008).

This case involves an issue of first impression for the 9th Circuit regarding which 5th Amendment takings analysis should apply to a land use ordinance, Penn Central or Nollan/Dolan?

Facts.  At issue before the court were two different upgrades, which the court considered separately:  Ordinance 1603 requiring that all new developments include a minimum of 12-inch storm pipe, and the City’s request that the McClungs install a 24-inch pipe.  In 1995, Daniel and Andrea McClung (the “McClungs”) sought to develop property they owned in the City of Sumner (the “City”), Washington, and learned that their underground storm drain pipe did not meet the City’s requirement for new developments to include pipes at least 12 inches in diameter.  The City Engineer offered to waive certain fees in exchange for the McClungs installing a 24-inch instead of 12-inch pipe.  The McClungs revised their development plans accordingly, which was then approved.  Despite voicing no objection to the 24-inch pipe installation, the McClungs assert that the City’s request effected an illegal taking of their property.

Question Presented.  The question before the 9th Circuit was as follows:

[W]hether a legislative, generally applicable development condition that does not require the owner to relinquish rights in the real property, as opposed to an adjudicative land-use exaction, should be reviewed pursuant to the ad hoc standards of Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978), or the nexus and proportionality standards of Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994).

Holding.  Regarding Ordinance 1603, “the facts of this case involve neither an individual, adjudicative decision, nor the requirement that the McClungs relinquish rights in their real property”; therefore, “the Penn Central analysis applies to the 12-inch pipe requirement.”  As for the installation of the 24-inch pipe, “the McClungs voluntarily contracted with the City to install the 24-inch pipe and thus the installation of that pipe was not a “taking” by the City.”  The court did not consider the City’s request in the taking’s context, because “the McClungs impliedly contracted to install a 24-inch pipe.”

Jurisdiction.  Aside from the ruling on the merits of the case, the court also had something interesting to say about its jurisdiction to hear the case.  The court found jurisdiction to hear this 5th Amendment case not on the standard articulated in Williamson, but on so called “prudential” grounds, which it described as follows:

We need not determine the exact contours of when takings claim ripeness is merely prudential and not jurisdictional.  In this case, we easily conclude that the facts presented raise only prudential concerns. The McClungs installed the storm pipe over ten years ago, resulting in a clearly defined and concrete dispute. See Thomas, 220 F.3d at 1139 (stating that Article III ripeness requires the court to analyze whether the “alleged injury is too ‘imaginary’ or ‘speculative’ to support jurisdiction”). Because this case raises only prudential ripeness concerns, we have discretion to assume ripeness is met and proceed with the merits of the McClungs’ takings claim. Accordingly, we do not resolve whether this claim is ripe under the standards articulated in Williamson, and instead assume without deciding that the takings claim is ripe in order to address the merits of the appeal.

Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985), held that takings claims are not ripe for federal court adjudication until a state fails “to provide adequate compensation for the taking.”

Should the Government Pay a Landowner for Its Failed Attempt to Condemn a Landowner's Property?

The Hawaii Supreme Court recently heard oral arguments in Hawaii County v. Richards, Haw. Sct. Doc. No. 28822.

Appealing from the Third Circuit Court (Civil No. 00-1-181K), Richards contends that the Circuit Court erred in failing to award him statutory damages after the County attempted, but failed, to condemn Richards' private property.

HRS § 101-27, provides as follows, inter alia:

Defendant allowed damages upon abandonment or dismissal of proceedings. Whenever any proceedings instituted under this part are abandoned or discontinued before reaching a final judgment, or if, for any cause, the property concerned is not finally taken for public use, a defendant who would have been entitled to compensation or damages had the property been finally taken, shall be entitled, in such proceedings, to recover from the plaintiff all such damage as may have been sustained by the defendant by reason of the bringing of the proceedings and the possession by the plaintiff of the property concerned if the possession has been awarded including the defendant's costs of court, a reasonable amount to cover attorney's fees paid by the defendant in connection therewith, and other reasonable expenses; and the possession of the property concerned shall be restored to the defendant entitled thereto. . . .

(Second emphasis added.)

The County attempted to condemn Richards' property twice. The County's first attempt to condemn the property failed, because it was found not to have a "public purpose" as required by the takings clauses of the state (Haw. Const. art. I, § 20) and federal (US Const. amend. 5) constitutions. However, the County's second attempt to condemn Richards' property succeeded.

Richards argues that the phrase "finally taken" under HRS § 101-27 speaks to a single condemnation action; therefore, he is owed damages, costs, and fees under HRS § 101-27 from the County's first failed attempt. The County contends that HRS § 101-27 applies to all subsequent attempts to condemn the same property; therefore, since it succeeded on its second try, HRS § 101-27 should not apply to its first failed attempt.

Oral arguments were heard by the Hawaii Supreme Court on Thursday, October 16, 2008 - 9:00 A.M.

Significant Rulings in Federal District Court Challenge to Maui's Residential Workforce Housing Policy

On July 3, 2008, the U.S. District court issued an order ("Order") in the Kamaole Pointe, LLP v. County of Maui case, where the Plaintiffs (Kamaole Pointe, et al.) are challenging the constitutionality of the Maui’s Residential Workforce Housing Policy ("Ordinance").

For you non-lawyers out there, the U.S. District Court is a Federal trial court. The Court’s Order in this case is regarding the parties’ motions for summary judgment offered prior to trial. In summary judgment motions, parties attempt to get the other party’s case, or portions of their case, dismissed based on the law and evidence in the record. In legalese: A court will grant summary judgment when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

In short, the outcome of the Order is that some claims remain for trial and some were dismissed. In particular, the Court will not hear Plaintiffs’ unconstitutional conditions claim. The Court reasoned as follows:

. . . (1) despite its reliance on the allegedly distinct doctrine of unconstitutional conditions, Plaintiffs’ Motion is appropriately construed as a facial takings claim; (2) generally, Williamson County’s ripeness requirements apply to facial takings claims; (3) the Ninth Circuit previously recognized the “substantially advances” test as the only means of mounting a facial takings challenge free from Williamson County’s state compensation requirement; (4) the Supreme Court abrogated “substantially advances” as a takings test in Lingle; (5) the Nollan/Dolan standard has not been extended by the Supreme Court or the Ninth Circuit to apply outside of the facial takings claims realm; and, (6) as a result, to the extent that Plaintiffs raise a facial taking claim here, whether based on the federal or State Constitution, Plaintiffs must first seek compensation via State court.

Related to the facial and as-applied takings claims, the Court dismissed the Plaintiffs’ claims to the extent that Plaintiffs explicitly bring takings claims or claims that are in fact takings claims (as in the case of their unconstitutional conditions argument), as none of these claims are ripe. The claims are not ripe because, among other things, “Plaintiffs indisputably have not sought compensation in State court [which] proves immediately fatal to all their takings claims.” However, the Court ruled, because “these claims are subject to further development in State court, at which point they could conceivably be ripe," the Court dismissed these claims without prejudice.  Therefore, with regard to Plaintiffs' takings claims, the Plaintiffs must seek compensation in State court first, then the Federal court may hear its takings claim.

The Plaintiff’s equal protection and substantive due process claims are still viable. In the Court’s words, “there remain serious concerns about the constitutional viability of the Ordinance in light of the relevant due process and equal protection standards[.]”

The Equal Protection Clause of the 14th Amendment commands that no state shall deny to any person within its jurisdiction the equal protection of the laws. The Court found that “Plaintiffs’ equal protection claim is twofold and consists of: (1) a general argument that the Ordinance is arbitrary and irrational, and (2) a “class of one” argument that Plaintiffs were intentionally, and without rational basis, treated differently from others similarly situated during their appeal for a waiver.” For the first equal protection claim, the Plaintiff need only show that the Ordinance is “arbitrary and irrational.” For the second equal protection claim, the Plaintiffs must show that they were intentionally, and without rational basis, treated differently from others similarly situated during their appeal for a waiver.

The Substantive Due Process guarantee protects individuals against government power arbitrarily and oppressively exercised. The Court ruled that in this case, the proper standard of review for "a substantive due process challenge to legislation that neither utilizes a suspect classification nor draws distinctions implicating fundamental rights is reviewed pursuant to the 'arbitrary and irrational' standard."  Thus the Plaintiffs need to show that the Ordinance is "arbitrary and irrational," which is a lower standard than proposed by the County.

The case now moves forward in Federal Court, sans the takings claims.  If the Plaintiffs prevail on the equal protection and/or substantive due process claims, the takings claim may be moot.

Related articles include:  Maui's Workforce Affordable Housing Bill: Unconstitutional?, Update: Challenge to Maui Workforce Housing Ordinance, J. Ezra hears Motions for Summary Judgment from County of Maui and Kamaole Pointe et al., and The Rise and Fall, and Rise Again, of Due Process Challenges to Government Takings.

Update: Challenge to Maui Workforce Housing Ordinance, J. Ezra hears Motions for Summary Judgment from County of Maui and Kamaole Pointe et al.

This is an update of the ongoing case, Kamaole Pointe Development LP v. County of Maui, Case No. 1:2007cv00447, U.S. Dist. Ct. Haw., filed August 23, 2007, wherein the plaintiffs claim that Maui’s Workforce Housing Policy is unconstitutional on its face and therefore void. I previously discussed the complaint in Maui's Workforce Affordable Housing Bill: Unconstitutional?.

On June 2, 2008, J. Ezra at the US Federal District Court Hawaii heard oral argument from the parties on their respective motions for summary judgment. Although Kamaole’s claim appears to include equal protection, due process, and taking challenges, J. Ezra’s primary concern was ripeness of the 5th Amendment takings claim.

J. Ezra noted that Kamaole’s claim is essentially a takings claim; therefore, Kamaole needs to avail itself of state court jurisdiction before filing in federal court. Kamaole referred the court to the recent post-Lingle decision in Crown Point Development, Inc. v. City of Sun Valley, No. 06-35189 (9th Cir., Nov. 1, 2007). Crown Point reversed the U.S. 9th Circuit Court’s long held position, based on Armendariz v. Penman, 75 F.3d 1311 (9th Cir. 1996) (en banc), that the 5th Amendment’s Takings Clause subsumes or “preempts” substantive due process claims.

J. Ezra noted that the Maui ordinance might be “terrible” in its present form, but that his charge is to determine the constitutional issues.

His order will be available in 2-3 three weeks.

The Rise and Fall, and Rise Again, of Due Process Challenges to Government Takings

Robert Thomas at inversecondemnation.com posted a link to Property Rights in the Ninth Circuit, and Beyond, by J. David Breemer, et al.

The authors review the rise and fall of substantive due process claims for land use cases in the federal courts, concluding that recent 9th Circuit and U.S. Supreme court cases have restored the ". . . due process rights of property owners [providing] an independent cause of action against irrational and arbitrary land use regulations, thus putting property owners on equal footing with other plaintiff s in the federal courts when it comes to the Due Process Clause." See Crown Point Development, Inc. v. City of Sun Valley, No. 06-35189 (9th Cir., Nov. 1, 2007).

For a link to the article and additional commentary by Mr. Thomas, see his post New Article: Property Rights in the Ninth Circuit, And Beyond.

Maui's Workforce Affordable Housing Bill: Unconstitutional?

It finally happened, Maui's Workforce Affordable Housing Bill which requires as many as 50% of a project's units to be sold at below market prices is being challenged in federal court.

Issues to watch:

• Will the court dismiss the case for failure of claimant to exhaust administrative remedies?
• Will a facial takings challenge of the ordinance be successful in light of Lingle v. Chevron?
• Will a court finally call a spade a spade and hold that impact fees are the same as in-lieu fees under HRS sec. 46-141, et seq. ; therefore, affordable housing in-lieu fees are are prohibited by state law?
• If this ordinance is deemed unconstitutional, will similar measures in Hawaii County and Kauai County also be challenged?

Stay tuned.

Property Owners Breath a Sigh of Relief as Hawaii Mayor Veto's Affordable Housing Bill

On August 1, 2007, Mayor Harry Kim of the County of Hawaii vetoed Bill 156 and Bill 112 relating to affordable housing.

Bill 112 would have extended the County’s affordable housing policy to the subdivision process. Under the County’s current affordable housing policy, affordable housing requirements are triggered during rezoning. If the Bill passed, property owners who completed zoning years ago, prior to enactment of the affordable housing policy, would be required to comply during subdivision. The Bill included family subdivisions.

In a previous post, I discussed the problems with Bill 156, which extends the County's affordable housing policy to non-residential projects. Mayor Kim vetoed the Bill for reasons similar to what I discussed, namely a nexus study was not prepared to justify the imposition of affordable housing on non-residential projects. It is accepted constitutional law that for a government to avoid a takings challenge (i.e., the situation where a government must pay a property owner for taking his/her property) the government must show that the condition imposed mitigates an impact created by the proposed project. Bill 156 implies that all non-residential projects impact the demand for workforce or affordable housing without proof.

Council Chairman Pete Hoffmann is considering whether to override both vetoes when the council meets Aug. 15 in Kailua-Kona.

See, Jim Quirk, Kim vetos two housing bills in surprise move, Haw. Herald Tribune, Aug. 3, 2007, and Jim Quirk, Council looks to override Kim veto, Haw. Herald Tribune, Aug. 9, 2007.

County of Hawaii to Amend Affordable Housing Ordinance

The Hawaii County Council is considering a bill that would amend the County of Hawaii Affordable Housing Policy, which was adopted in 1998.

Bill 156, introduced by Councilmember Pete Hoffmann, would amend Chapter 11 so that affordable housing requirements are made applicable to “industrial enterprises generating more than one hundred employees on a full-time equivalent basis, whether new or an addition or reconstruction to existing facilities, and including one or more businesses at the same or adjacent sites.” As the Chapter 11 is presently written, affordable housing requirements for industrial sites are only triggered when an applicant seeks a “new rezoning.”

Bill 156 may run afoul of the law. First, a facial due process challenge to Chapter 11 might be successful, because the council has not shown that the legislation will substantially advance the legitimate governmental goal of providing affordable housing: no nexus study was prepared. Agins v. Tiburon; Lingle v. Chevron. Second, when Chapter 11 is applied, individual takings challenges may be successful, because Chapter 11 does not ensure (1) a “nexus” or link between the exaction and the provision of affordable housing for a particular project, or (2) whether the degree of the exaction demanded by the county bears the required relationship to the projected impact of a proposed development. Nollan; Dolan.