Can the State Land Use Commission Downzone Property that a Developer does not Develop in a Timely Manner?

The short answer is yes--but it depends.

In DW Aina Le‘a Development, LLC v. Bridge Aina Le‘a, LLC, the Hawaii Supreme Court considered whether the State Land Use Commission properly downzoned 1,060 acres of land slated for a residential project. 

Background.  In 1989, 1,060 acres of land on the Island of Hawaii was reclassified from agricultural to urban to allow for the development of a residential community.  The reclassification was made subject to numerous conditions, including a condition that at least 60 percent of the residential units be affordable.  The Commission granted requests to amend the affordable housing condition for the Aina Le'a project.  (Note: During this period of the Commission's history, it was not uncommon for the Commission to require a 60 percent affordable set-aside for residential developments.  Anecdotally, the Commission reduced the affordable housing requirements for these projects to a more economically feasible set-aside, upon request.)

By 2005, the condition required the landowner, Bridge Aina Le‘a, LLC (Bridge), to set aside 20 percent of the units as affordable.  Because of Bridge's perceived failure to comply with certain conditions, in December 2008, the Commission issued an order to show cause (OSC) why the land should not revert to its former agricultural land use classification.  Soon thereafter, Bridge informed the Commission that it intended to assign its interest in the land to DW Aina Le‘a Development, LLC (DW) through an installment sale. DW subsequently invested more than $20 million in developing the site.  Nevertheless, after proceedings over the course of several years, the Commission issued an order reverting the land to the agricultural use district.

Conceptual Plan
Source: http://www.ainaleaasia.com/our-current-project.html

Boundary Amendment Process and Enforcement.  Under HRS § 205-2, there are four major land use districts in which all lands in the state are placed: urban, rural, agricultural, and conservation.  The counties may further zone lands in the state urban district.  Counties have limited authority to zone in the other districts, except for conservation, where the state regulates exclusively.

Since 95 percent of lands in the state are in the conservation or agricultural district, landowners frequently desire a land use district boundary amendment to allow residential, commercial, and other uses.  HRS § 205-4 generally sets forth the procedures the Commission must follow in amending a district boundary.   The Commission is required to find by a clear preponderance of the evidence that the reclassification is reasonable, not violative of HRS § 205-2 (district classification standards), and consistent with the policies of HRS § 205-16 (compliance with the Hawaii state plan) and HRS § 205-17 (decision-making criteria).

HRS § 205-4(g) gives the Commission broad authority to impose conditions on boundary amendment petitions.  While the Commission can determine whether a condition it imposes is being violated, in general, enforcement of these conditions are left to the counties under HRS § 205-12.  However, a 1990 legislative amendment to HRS § 205-4(g) empowered the Commission "to void a boundary amendment, after giving the landowner the opportunity for a hearing, if the landowner failed to substantially commence use of the land in accordance with its representations."  In other words, under certain circumstances, the Commission may revert or downzone a property to its former state land use boundary classification (e.g., as in this case, from urban back to agricultural).

Holding.  The Court set-forth the following principles for the Commission when it considers reverting a boundary designation to its former classification:

• First, the Commission must issue an Order to Show Cause, which is set-forth in the Commission's rules at HAR § 15-15-93.
• Second, the Commission must determine "whether the petitioner has substantially commenced use of the land in accordance with its representations." 
• Finally, if the answer to the above question is yes, the Commission is required to follow the procedures set forth in HRS § 205-4.  If no, the Commission may revert the land without following the procedures set forth in HRS § 205-4.

Applying the aforementioned principles to the facts of this case, the Court held that the circuit court correctly concluded that the Commission erred in reverting the property to agricultural use without complying with the requirements of HRS § 205-4, because by the time the Commission reverted the property, DW and Bridge had substantially commenced use of the land in accordance with their representations.

The Court reasoned that although there is no definition for "substantially commenced" in the statutes, the intent of the legislature was to "deter speculators who obtained favorable land-use rulings and then sat on the land for speculative purposes."  The Court relied on the circuit court's analysis of this finding, noting that the petitioner had, among other things, continued to actively proceed with preparation of plans and studies, including building plans and studies for the environmental impact statement.  In addition, sixteen townhouses were completed on the property.

Other Holdings.  Although the Court did agree with the circuit court on the substantive portion of the case, it disagreed on three other items worth noting.

First, specific documents that were not before the Commission should have been struck from the record on appeal.  HRS § 91-14 specifically confines an agency appeal to the administrative record.

Second, the Commission did not violate DW and Bridge's constitutional rights to due process and equal protection.  Both Bridge and DW had notice and a meaningful opportunity to be heard before the Commission reverted the property. And, given the circumstances, the Commission's conduct was not “arbitrary and unreasonable.”

Third, Bridge’s and DW’s equal protection rights were not violated because the record does not establish that the LUC lacked a rational basis for its decisions.

Ain't No Sunshine When You're Not Giving the Public a Meaningful Opportunity to Participate -- Technically

Petitioners, who are residents of Maui, filed Kanahele v. Maui County Council based on the Maui County Council’s passage of two bills related to the development of a residential community on 670 acres of land located in Wailea, Maui (Wailea 670 project).

Source: Honua‘ula Current Master Plan, www.honuaula.com.

The proposed Wailea 670 project includes a golf course, single- and multi­family residences, recreation and open spaces, and village mixed-use sub-districts. Honua'ula is the owner and developer of the land in question. The Council, on the recommendation of its Land Use Committee, passed two land use related bills in connection with the Wailea 670 project.

Petitioners filed suit in the circuit court challenging the bills’ passage, arguing that the Council and Committee failed to satisfy the requirements of the State open meetings law, HRS chapter 92, Hawaii’s Sunshine Law.  The circuit court, and subsequently the intermediate court of appeals (ICA), ultimately ruled against Petitioners. Petitioners then appealed to the Hawaii Supreme Court, whose decision is discussed below.

Petitioners’ first challenge arises from the Committee’s meeting that had been initially noticed for October 18, 2007.  It was reconvened and then continued successively in the same manner on October 23, 25, 29, November 1, 5, 7, 8, 13, 16, 19, and 20. Thus, the October 18 meeting was continued and reconvened twelve times until the final meeting on November 20.

Petitioners’ second challenge arises from the actions of several council members who offered several amendments to the proposed bills.  There were a total of 14 memoranda sent between councilmembers in February 2008. Petitioners claim that no public testimony or notice was given regarding these Council amendments.

First, the Hawaii Supreme Court addressed “whether the ICA erred in holding that the recessing and reconvening of the October 18, 2007 [Committee] meeting and the February 8, 2008 [Council] meeting comported with the notice and public oral testimony requirements of the Sunshine Law.” The Court held that the Committee and Council did not violate the Sunshine Law by continuing and reconvening the October 18, 2007 meeting and February 8, 2008 meeting beyond a single continuance. The Sunshine Law does not require the Committee and Council “to post a new agenda and to accept oral testimony at each meeting beyond the first continuance.”

Second, the Court considered “whether the Sunshine Law permits board members to circulate written memoranda among all other members, in which board members [i.e., councilmembers] present proposed actions, include justifications for the proposals, and seek ‘favorable consideration’ of the proposals.” The Court held that “the challenged memoranda do not fall within any of the ‘permitted interactions’ listed in HRS § 92-­2.5,” because “the memoranda were distributed among all of the members of the [Council] rather than among only two members of the board.” In addition, the memoranda violated the Sunshine Law, because it asked members for vote commitments. The memoranda were not simply “informational.”

In summary, the Court held as follows:

1. The Council and Committee did not violate the Sunshine Law by reconvening the October 18, 2007 and February 8, 2008 meetings beyond a single continuance without posting a new agenda and without accepting public oral testimony at every reconvened meeting.
2. The Council violated the Sunshine Law by distributing written memoranda among its members outside of a duly noticed meeting, through which the members impermissibly sought a commitment to vote. However, it does not violate final passage of the bills. Petitioners’ claim relates to violations related to the first reading of the bills, which was not a final action for purposes of Sunshine Law appeals.

Intermediate Court of Appeals Creates Public Trust Evaluation Criteria for All Boards and Commissions

[CASE UPDATE: Hawaii Supreme Court Provides Clearer Guidance on Public Trust Doctrine and Water]

In Kauai Springs v. Planning Commission of the County of Kauai, Hawaii's Intermediate Court of Appeals ("ICA") addressed the question of whether "the Planning Commission had public trust obligations to review Kauai Springs' use of water," and "whether the Planning Commission applied the proper standards and criteria in reviewing the application for the permits."

Kauai Springs is a water bottling company.  They sought various land use permits to continue their water bottling operation within property zoned for agricultural uses.  These permits were evaluated and approved by the Kauai Planning Commission.  Generally, under its rules and permitting criteria, the Commission is charged with evaluating land use proposals based on consistency with existing zoning, allowed uses, and conditions that mitigate impacts from uses not permitted within the agricultural zone.

Based primarily on Article XI, section 1 of the Hawaii Constitution, the ICA determined that the Commission's duties extend to public trust resources, in this case, water.  Therefore, even though the Commission's decision-making criteria does not include evaluation of impacts to water uses, the Commission must evaluate those impacts.  Compare, for example, the Commission on Water Resource Management, which is specifically tasked with evaluating impacts and use of surface and ground water.

The ICA developed the following public trust criteria:

. . . the Planning Commission's decision should be initially grounded in the framework of the statutes and regulatory provisions that authorize the Planning Commission to act in this instance; in addition, the Planning Commission should make appropriate assessments and require reasonable measures to protect the water resources at issue in this case; and, because Kauai Springs seeks to use the water for economic gain, this case requires that the Planning Commission give the permit application a higher level of scrutiny and, although Kauai Springs' use of the water is not illegal or improper per se, Kauai Springs carries the burden to justify the use of the water in light of the purposes protected by the public trust.

(Emphasis in original.)

This new judicially created criteria ostensibly applies to all boards and commissions making land use decisions, such as the Board of Land and Natural Resources, all four county planning commissions, and the Land Use Commission.

The responsibility for compliance and implementation will fall on project proponents and public decision-makers that review and process land use permits and entitlements.

Haw. Appellate Court finds Private Right of Action to Enforce Zoning Violation

In Pavsek v. Sandvold, the Hawaii Intermediate Court of Appeals (ICA) considered the following question: "whether Hawaii Revised Statutes (HRS) § 46-4(a) (Supp. 2011) creates a private right of action that authorizes a 'directly affected' private real estate owner to seek judicial enforcement of the LUO [the City and County of Honolulu's Land Use Ordinance], without first bringing his or her claim before the administrative agency charged with enforcing the LUO."

The Plaintiffs are owner-occupants of a residence on Papailoa Road. Papailoa Road runs parallel to the beach and is near two tourist attractions, Laniakea Beach, known for the presence of sea turtles, and the beach that served as the set of the ABC television show "Lost." Defendants own residences on Papailoa Road.

View Larger Map

In their complaint filed with the First Circuit Court, the Plaintiffs alleged that Defendants operated a bed and breakfast home or a transient vacation unit without a non­-conforming use certificate, pursuant to LUO §§ 21­-4.110-1, 21-4.110-2. The Circuit Court dismissed Plaintiffs' complaint with prejudice.

On appeal to the ICA, Plaintiffs argued that the Circuit Court erred in dismissing their complaint, because they have a private right of action under HRS § 46-4(a) to file suit to enjoin Defendants' alleged violation of the LUO. The ICA agreed with Plaintiffs, but also held that the "enforcement action is subject to the doctrine of primary jurisdiction[.]" Consequently, the Circuit Court cannot dismiss the complaint with prejudice, instead the Circuit Court must either (1) retain jurisdiction and stay the proceedings, or (2) if the parties would not be unfairly disadvantaged, dismiss the case without prejudice. Either action allows the Plaintiffs to first bring their claim before the administrative agency charged with enforcing the LUO. In this case, the Plaintiffs must (1) petition the director of the Department of Planning and Permitting for a declaratory ruling as to the application of the LUO to the alleged violation, and (2) if the director's decision is adverse to the Plaintiffs, they must appeal to the Zoning Board of Appeals, before the Circuit Court can consider their complaint.

The ICA recognized the similarity between the concepts of primary jurisdiction and exhaustion of administrative remedies, and offered the following guidance from the Hawaii Supreme Court:

Courts have "developed two principal doctrines to enable the question of timing of requests for judicial intervention in the administrative process to be answered: (1) primary jurisdiction; and (2) exhaustion of administrative remedies." B. Schwartz, Administrative Law § 8.23, at 485 (2d ed. 1984). "Both are essentially doctrines of comity between courts and agencies." Id. (footnote omitted).

"'Primary jurisdiction' applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body." United States v. Western Pac. R.R., 352 U.S. 59, 63-64, 77 S.Ct. 161, 164-65, 1 L.Ed.2d 126 (1956). When this happens, "the judicial process is suspended pending referral of such issues to the administrative body for its views." Id. at 64, 77 S.Ct. at 165 (citation omitted). In effect, "the courts are divested of whatever original jurisdiction they would otherwise possess." B. Schwartz, supra, § 8.24, at 488 (emphasis omitted). And "even a seemingly contrary statutory provision will yield to the overriding policy promoted by the doctrine." Id.

"Exhaustion," on the other hand, comes into play "where a claim is cognizable in the first instance by an administrative agency alone; judicial interference is withheld until the administrative process has run its course." United States v. Western Pac. R.R., 352 U.S. at 63, 77 S.Ct. at 164. "The exhaustion principle asks simply that the avenues of relief nearest and simplest should be pursued first." Moore v. City of East Cleveland, 431 U.S. 494, 524, 97 S.Ct. 1932, 1948, 52 L.Ed.2d 531 (1977) (Burger, C.J., dissenting). "Judicial review of agency action will not be available unless the party affected has taken advantage of all the corrective procedures provided for in the administrative process." B. Schwartz, supra, § 8.30, at 502.

See Kona Old Hawaiian Trails Group v. Lyman, 69 Haw. 81, 734 P.2d 161 (1987).

No More "Haberdasheries" in the Maui County Zoning Code

Maui County planning director, Jeff Hunt, is embarking on an ambitious plan to streamline Maui County's Zoning Code, which is codified at MCC Chapter 19.

In an open letter to the community, Hunt lists the various streamlining efforts his department has accomplished, including creating additional EIS exemptions, SMA blanket exemptions for certain small projects, and a dual permitting system that prevents over-the-counter permits from being tied up with more complex permits. A more recent part of this effort is revising Maui's Zoning Code, which has been the subject of ire from the development community for decades.  Some describe the code as being draconian and outdated.

In pushing these streamlining measures through, the first step is review, public hearings, and recommendations by the planning commissions (Maui, Molokai, and Lanai). Hunt's June 11, 2009 letter to the Commissions outlines some of those recommended changes. Changes in the June 11, 2009 proposal primarily focuses on adding provisions to the residential district to allow renewable energy systems, home based businesses, and lot coverage requirements.

The Maui Planning Commission recently heard several streamling proposals at its December 8, 2009 meeting. Hunt presented several proposed bills that would update and simplify the County’s business district. According to the agenda, "the updates provide for improved useability, adding mixed uses to commercial districts, and including transient vacation rental, small scale energy facilities, and residential uses." In particular, the proposed bills will amend the Country Town Business Districts, B-1 Neighborhood District, B-2 Community Business District, B-3 Central Business District, and B-R Commercial District.

Once through the Planning Commissions, these measures must be considered by the Council's Planning Committee, be open to public hearings, and finally voted on in Council.

City Allows More Religious Facilities in Industrial District through Zoning Amendment

Bill 61, which eases the way for more religious facilities in industrial zoned districts on Oahu, was recently signed into law on October 30, 2009.

The Bill amends the Land Use Ordinance by removing the 1,000-foot separation requirement for meeting facilities in the I-1 Limited Industrial District. The bill primarily addresses the City Council's intent to allow more religious facilities in the industrial zone. However, the 1,000-foot restriction remains in place in areas zoned I-2, for heavy industrial uses.

The bill also removes a three month waiting period for proposed religious facilities.

Hawaii Supreme Court Ruling Closes Kaimana Beach Surf School

In January 2009, I wrote about Hans Hedemann Surf School, which is located on the ground floor in a space called “Shop #7” of the New Otani Kaimana Beach Hotel. See Mitigation Allows Surf School to Continue as Nonconforming Use.

Certain groups, including Save Diamond Head Waters, LLC (collectively, "SDHW"), challenged the use of Shop #7 for the Surf School. In 2004, the Director of planning for the City determined that the school operates in compliance with the regulations of the zoning ordinance for nonconformities, subject to certain conditions. SDHW appealed the Director's decision to the zoning board of appeals, which affirmed the Director's Ruling. SDHW appealed to the circuit court, which vacated the ZBA's decision "insofar as it allows the operation of a commercial surf school at [the Hotel]." The Surf School appealed to the ICA. The ICA reversed the circuit court's judgement, concluding that the Director had discretion to grant the impact-ameliorating conditions and did not abuse his discretion in finding that the Surf School's use of Shop # 7 constituted a valid change in nonconforming use of Shop # 7, because the "ruling was reasonably based on the evidence before the Director and constituted a reasonable application of the applicable zoning ordinance and the [planning department's] previous interpretation of that ordinance."

In 2009, the Hawaii Supreme Court accepted SDHW's Application for Writ of Certiorari. The Hawaii Supreme Court (1) vacated the ICA's Opinion and (2) affirmed the circuit court's amended final judgment on the grounds that the Director's mixed finding of fact and conclusion of law that the Surf School use of the Shop #7 was a permissible change in nonconforming use was clearly erroneous as it is not supported in the record. See Save Diamond Head Waters, LLC v. Hans Hedemann Surf Inc., S.Ct. No. 27804, July 13, 2009. With this ruling, the Surf School is effectively shut down.

The question before the Court, was "whether the Surf School's use of Shop # 7 of the Hotel's premises was a permissible change in nonconforming use (from hotel to office) under the LUO." In reaching it's holding, the Court opined the following:

The Director erred when he compared the Surf School's impact to that of "an accessory use of the hotel," because the Director could only weigh the Surf School's impact against a legally established prior nonconforming use. Here, the Surf School's use of Shop # 7 cannot be compared to "an accessory use of the Hotel" because the Surf School did not meet its burden to prove that there was a legally established prior nonconforming accessory use of Shop # 7. In other words, the Surf School did not establish (1) that there was a valid accessory use of Shop # 7 by the Hotel before the 1969 Comprehensive Zoning Code changed the Hotel's zoning from Hotel and Apartment District "L" to A-4 Apartment District; or (2) there was a valid accessory use of Shop # 7 before the LUO changed the Hotel's zoning from A-4 Apartment District to its current A-2 Medium Density Apartment District designation.

This decision does not create new law for determining nonconforming uses under the City's land use ordinance. Instead, the case merely provides that the record did not support the Director's conclusion.

Maui County Council Proposes Anti-Mixed Use Zoning Bills

The Maui County Council recently proposed two bills that would remove mixed use zoning from the hotel and industrial districts.

According to Wikipedia, "[t]hroughout most of human history, the majority of human settlements developed as mixed-use environments. [...] This historical mixed-used pattern of development declined during industrialisation in favor of large-scale separation of manufacturing and residences in single-function buildings." The idea of mixed use zoning has come full circle. Today, mixed use planning has made a comeback in the form of smart growth. For example, the American Planning Association has developed various smart growth model zoning codes with the aim of "encourag[ing] a mix of uses, the preservation of open spaces and environmentally sensitive areas, a range of housing types and transportation options, and predictable development review processes."

The Maui bills depart from the current smart growth trend. The first bill eliminates residential and apartment uses in hotel districts. The second bill eliminates business and apartment uses in the industrial district.

The Maui Planning Commission must make a recommendation to Council before Council may act on the proposed bill. Resolution No. 09-21 containing a Draft Bill to Amend Section 19.14.020 of the Maui County Code relating to eliminating the stacking of Residential and Apartment uses in the Hotel District will be heard by the Maui County Planning Commission on June 23, 2009. See agenda.

Is Hawaii Losing Open Space and Agricutural Lands at a Critical Rate?

Section 6 of the 2007 State of Hawaii Data Book has records for the amount of lands classified in the four state land use classifications from 1969 to 2006.

In 1969, there was a total of 4,111,500 acres of land in the state of Hawaii, which was divided among the four state land use districts as follows: Urban, 140,163; Conservation, 2,009,087; Agricultural, 1,955,875; and Rural, 6,375. In 2006, there was a total of 4,112,388 acres of land in the state of Hawaii, which was divided among the four state land use districts as follows: Urban, 197,663; Conservation, 1,973,631; Agricultural, 1,930,224; and Rural, 10,870.

From 1969 to 2006, the change of land in each land use classification was as follows: Urban, increase of 41%; Conservation, decrease of 2%; Agricultural, decrease of 1%; and Rural, increase of 71%. However, the percentage of land classified in each category remained relatively stable as a percentage of the total land mass of the state between 1969 and 2006, as illustrated in the following pie charts (note that Rural shows 0% because it is less than 1%):




The numbers clearly illustrate that the state's land use regulatory system under HRS chapter 205 has kept over 95% of Hawaii's land mass in the Agricultural and Conservation districts since 1969, which has the effect of constraining urban development, preserving open space and recreation areas, and retaining large swatches of agricultural land. That's what the numbers would tell us anyway.

Maui County to Overhaul Department of Planning Fees

The County of Maui, Department of Planning, Current Division is seeking proposals from consultants to prepare a fee study and cost recovery plan for the department. The plan should address how the department can recover department operation costs for planning and community development through a revised fee structure. Current fees are posted here.

The Current Planning Division reviews and analyzes current planning projects including bed and breakfast permits, conditional permits (including transient vacation rentals), changes in zoning, community plan amendments, historic district and demolition permits, country town business design review, and state and county special use permits.

The complete request for proposal ("RFP") is posted at http://www.co.maui.hi.us/bids.asp?bidID=130.

Highlights of Maui’s New Bed and Breakfast Ordinance

Maui’s Mayor signed into law Ordinance 3611 (2009), which amends chapter 19.64 of the Maui County Code (“MCC”) and other parts of Title 19 related to bed and breakfast (“B&B”) homes. (Note: The new law has not been codified as of this posting.)

Here are some of the more significant changes:

• The definition of B&B has changed from an accommodation provided for guests for a period of less than 30 days, to a period less than 180 days.
• No more than two detached single-family dwellings can be used for B&B operations per lot.
• In addition to residential and business districts, B&Bs are now a permitted use in hotel, rural, and agricultural districts.
• The permit shall be in the name of the “owner-proprietor, who shall be a natural person and the owner of the real property . . . [n]o bed and breakfast home permit shall be held by a corporation, partnership, limited liability company, or similar entity.”
• No more than six bedrooms may be used as a B&B in a home on Lanai and Maui—no more than three on Molokai.
• Guests are limited to two adults and two minors per room.
• B&Bs “shall make breakfast available to onsite guests.” (Note: “Shall” implies that providing breakfast is mandatory.)
• In Hana, Lanai, and Molokai, B&Bs must have a one square foot sign that identifies the B&B permit number. On Molokai, the proprietor’s phone number must also be included.
  Parking must be off-street.
• Housing policies must be posted and include quiet hours from 9:00 p.m. to 8:00 a.m.; amplified sound permeating the boundaries of the lot are prohibited; and vehicles cannot be parked on the street overnight.
• B&B caps are as follows: Hana, 48; Kihei-Makena, 100; Makawao-Pukalani-Kula, 40; Paia-Haiku, 88; Wailuku-Kahului, 36; and West Maui, 88.
• Mitigation may be imposed by the director or the planning commission related to impacts created by B&B.
• A project notice sign shall be posted along the front of the property five days prior to submission of application and removed no less than five days after final decision on the permit application.
• For B&Bs that are one to six bedrooms, permits are approved by the director of planning. Public hearing and commission approval is required when 30 percent of homeowners with 500 feet of the B&B complain; if a variance is granted from B&B requirements; for more than three bedrooms in Hana; and for all B&Bs on Molokai and Lanai.
• Initial permits are valid for a maximum of three years. Subsequent permits are valid for a maximum of five years on Maui and Lanai and for one year on Molokai.
• An annual report is required for permits lasting longer than two years.
• Owner-proprietors do not qualify for a homeowner’s exemption.

The department of planning has a new B&B application posted on their Web site.

For more on B&Bs see this blawg’s Bed and Breakfasts archive.

Mitigation Allows Surf School to Continue as Nonconforming Use

Save Diamond Head Waters, LLC v. Hans Hedemann Surf, Inc., ICA No. 27804, December 19, 2008, is a recent Hawaii zoning case involving nonconforming uses. The underlying points of law in this case are that nonconforming uses can be changed, but they cannot be expanded.  Also, an accessory use must be secondary to the allowed primary use.  The Surf School in this case was allowed to continue, because it was not an accessory use but a changed nonconforming use.

Hans Hedemann Surf, Inc. (“Hedemann”), operates Hans Hedemann Surf School (“Surf School”). The Surf School is located on the ground floor in a space called “Shop #7” of the New Otani Kaimana Beach Hotel.

The Hotel was constructed in 1950 and expanded in 1962. When built, zoning at the site allowed “commercial uses other than businesses that primarily served the tenants and occupants of the buildings in which they were located, known as ‘accessory uses’” Current zoning at the site is “A-2 Medium Density Apartment District designation. Hotel and accessory uses are not permitted in A-2 districts. However, because hotel use was acceptable at the time of the Hotel's construction and the Hotel has continued to be used as a hotel, hotel use survives as a nonconforming use.”

Neighbors protested the Surf School’s operation at the Hotel and sought a declaratory order from the Director of the Department of Planning and Permitting. The Director ruled in favor of the Surf School as follows:

. . . [t]he Hotel itself is a nonconforming use and although "accessory" commercial businesses are allowed within the Hotel, the operation of the Surf School was not an accessory use, because it did not draw its students/customers primarily from the Hotel. The Director also ruled that the Surf School's operation did not represent an expansion of the nonconforming use as there had been no physical expansion of the existing structure, no extension of operating hours insofar as the Hotel operated on a 24-hour basis, no evidence of an increase of "visitor units" within the Hotel or any other increase in density or intensity of use on the site. The Director concluded that the Surf School was more properly characterized as a change of use rather than an expansion of the nonconforming use and that the activities conducted on-site --assembly and registration of, and distribution of surfboards to students, as opposed to actual instruction -- was an "office" use. The ZBA agreed with the Director on these matters.  (Emphasis added.)

The neighbors appealed to the first circuit court, which reversed the Director’s decision. The Surf School appealed to the intermediate court of appeals (“ICA”), which reversed the first circuit and upheld the Director’s decision.

The question before the ICA was “whether the Director, in response to [the neighbors’] petition for a declaratory ruling, acted beyond his authority to issue that ruling when it set the permissible limits of a lessee's use of its leased space under the [Land Use Ordinance].” 

In affirming the Director’s decision, the ICA approved that the Director “set the standard for the impact of a surfing class as ‘no greater than if it operated as an accessory use of the hotel’ and focused on determining ‘the level of activity or intensity of use which results in greater adverse effects.’” The Director’s decision was not an abuse of discretion, because his “ruling was reasonably based on the evidence before [him] and constituted a reasonable application of the applicable zoning ordinance and the DPP's previous interpretation of that ordinance.”

New Transient Vacation Rental Regulations for Kauai County

Kauai County Ordinance 864, which was signed into law on March 7, 2008, provides new regulations for transient vacation rentals (“TVR”) in Kauai County. In summary, the Ordinance regulates two types of TVRs: Single-Family and Multi-Family.

Multi-Family TVRs

• Allowed in Hotels in the Resort Districts and Commercial Districts; and Resort Districts and Residential Districts within the visitor destination area (“VDA”)
• TVR’s existing prior to September 22, 1982 not located in the VDA, may continue as allowed uses under Sec. 8-17.2, which presently (a) allows “time shares” in Hotels in the Resort or Commercial Districts, (b) allows time shares in the Resort RR-10 and RR-20 Districts and multi-family R-10 and R-20 Residential Districts in the VDA, and (c) prohibits time shares in the R-1, R-2, R-4 and R-6 Residential Districts
• No additional multi-family TVRs will be allowed outside VDA after September 22, 1982

Single-Family TVRs

• New single-family TVRs are prohibited in all areas not designated VDA
• Nonconforming Single-Family TVRs, that were lawful before the effective date of Ordinance 864, must apply for and receive a Nonconforming Use Certificate (“NCUC”)
• NCUCs will not be issued for Single-Family TVRs unless built prior to June 4, 1976, or if a special permit was received under HRS § 205.6
• NCUC annual renewal fee is $150.00

All TVRs

• New TVRs and exiting lawful TVRs must register with Director of Finance within 180 days of effective date of Ordinance 864

What Came First: The Zoning or the State Land Use Designation?

In the heyday of zoning and state land use districting in Hawaii, the state land use commission (“LUC”) designated most of east Maui as state agriculture in August of 1964. A few months later, the County of Maui zoned much of that property for residential uses.

Flash-forward 40 years or so, a landowner wants to build a residential project on the above property. Neighbors grumble (for the usual anti-development reasons) and the County administration notices that the residential zoning is inconsistent with the state land use designation; therefore, the County administration’s position was that the zoning is void. Under HRS § 205-5, County zoning must be compatible with the state agricultural district—residential uses are generally not compatible.

The County’s conclusion was undeterred by the fact that after the inconsistent zoning designation, the landowner sought and was granted a state district boundary amendment to the state urban district in 2005. In other words, the property was technically consistent with County residential zoning since 2005.

The County’s argument, which failed under the scrutiny of Second Circuit Court Judge Joel August, was that the zoning was void ab initio since the initial zoning was inconsistent. Judge August’s order in favor of the landowner ruled, inter alia, that zoning is a legislative act that cannot be undone by the County’s administration.

Humorously, one councilmember’s response in the face of a 40-year plus ongoing problem was: Why didn’t anyone let the Council know so that it could implement a legislative fix? Well, maybe they can fix it now, since many more landowners in east Maui suffer the same problem.

Source: Harry Eagar, One Pukalani zoning lawsuit settled — or maybe it’s not, May 6, 2008, available at www.mauinews.com/page/content.detail/id/503438.html.

City and County Considers Higher Capacity Wind Machines in Agricultural Zone

Item 2 for action on the Honolulu City Council's April 22 Agenda is consideration of Bill 28 (2008).

Council proposes to amend Section 21-5.700, Revised Ordinances of Honolulu, to increase the capacity of wind machines allowed in the agricultural and country zoning districts, from a rated capacity of no more than 100 kilowatts to a rated capacity of 500 kilowatts. Wind machines with a rated capacity of more than 500 kilowatts will require a conditional use permit (minor).

To be consistent with Hawaii's land use policies, the underlying state designation of agriculturally zoned land must also be agriculture. Uses that are not permitted in the state designation requires a state special use permit. However, the state agricultural district allows wind energy facilities under Section 205-4.5(14) as follows:

Wind energy facilities, including the appurtenances associated with the production and transmission of wind generated energy; provided that the wind energy facilities and appurtenances are compatible with agriculture uses and cause minimal adverse impact on agricultural land[.]

“Waiver” vs. “Variance”: What is the difference?

Under the City and County of Honolulu’s Land Use Ordinance (“LUO”), a landowner can avail himself of a waiver or variance permit. Both entitlements provide a dispensation from existing limitations under the LUO, but the waiver process is very different from the variance process.

Waiver.

A waiver is a “minor” permit. Under LUO Sec. 21-2.130, the director of the Department of Planning and Permitting grants waivers after notice to adjacent property owners, and usually without a hearing unless one is requested by neighboring property owners upon a finding of “sufficient cause.” The director may grant a waiver from the strict application of the development or design standards of the LUO for a limited number of uses enumerated in the LUO. Two examples are (i) proposals for the creation of lots designated for landscaping purposes which do not meet minimum lot area or dimensions, and (ii) proposals to retrofit improvements when required by federal mandates like the Americans with Disabilities Act.

Variance.

The director hears and determines petitions for varying the application of the zoning code to a specific parcel of land. The director may grant a variance, under the Charter Section 6-1517, if the director finds that application of the LUO will cause an “unnecessary hardship” to the landowner. At a duly noticed public hearing, based on evidence presented by the applicant, the applicant must show the following:

(1) the applicant would be deprived of the reasonable use of such land or building if the provisions of the zoning code were strictly applicable; (2) the request of the applicant is due to unique circumstances and not the general conditions in the neighborhood, so that the reasonableness of the neighborhood zoning is not drawn into question; and (3) the request, if approved, will not alter the essential character of the neighborhood nor be contrary to the intent and purpose of the zoning ordinance.

(Emphasis added.)

Hawaii courts have held that “reasonable use” is not the use most desired by the property owner, but the inability to make any reasonable use of the land without the variance. The “unique circumstances” prong has to do with whether specific attributes of the particular parcel are present that justify the request for a variance; i.e., an owner's unusual plans for a parcel do not, in themselves, generate “unique circumstances.” See, Korean Buddhist Dae Won Sa Temple of Hawaii, Inc. v. Zoning Board of Appeals of City and County of Honolulu, 87 Haw. 217 (1998).

Practical Guide to Zoning and Land Use Law Resources

The following is a list of resources I cited during yesterday's presentation :

• Hawaii State Land Use Commission
• Hawaii County Code
• Revised Ordinances of Honolulu
• The Comprehensive Zoning Ordinance for the County of Kauai
• Maui County Code
• Office of Environmental Quality Control
• Hawaii Revised Statutes

Rules and procedures for the various county commissions are located at the respective county web site, with the exception of the County of Kauai. For Kauai, you must call the county and request a hard copy for a nominal fee.

Inclusionary Zoning: Advice from Experience

The October 2007 issue of the ICMA Management Perspective reports that more and more municipalities are adopting inclusionary zoning measures to “ensure that their communities have enough housing for entry-level teachers, police officers, and other essential workers living on moderate incomes.”

Inclusionary zoning is intended to reverse the trend where “middle-income and working-class residents who don’t already own a home have been priced out of the communities where they work.” The article observes that the “lack of workforce housing affects overall quality of life, as more residents spend more time commuting long distances to their jobs.” In tailoring effective inclusionary zoning measures, local governments must balance community needs for moderately priced homes while ensuring that requirements and regulations don’t take too big a toll on the bottom line for builders. This means incentives for landowners including density bonuses which allow them to build more units on less land.

The article makes three recommendations for a successful inclusionary zoning program: inclusionary zoning must be mandatory, inclusionary zoning should apply to a broad spectrum of workforce income levels, and any campaign to implement inclusionary zoning requires broad-based support.

The article can be found here. Thanks to the Municipal Research and Services Center of Washington for reporting on this article.

Maui County Council Proposes Moratorium on Timeshares

Another moratorium proposed by Councilmember Jo Anne Johnson, this time the subject is time shares. She has proposed several moratoriums in the past including one for development of agricultural land which I wrote about here and here.

At the Council’s March 7, 2008 meeting, the Council considered Communication No. 08-72, Councilmember Johnson, Transmitting a Proposed Resolution Entitled "Urging the Administration to Suspend the Issuance of Permits for Time Share Projects for One Year." The proposed moratorium is a resolution, so it needs one reading of full council and is not binding on the administration. The moratorium resolution was forwarded to the council’s Planning Committee for further consideration.

Time shares are regulated by state law under HRS Chapter 514E. A time share plan is defined as a plan or program in which the use, occupancy, or possession of one or more time share units circulates among various persons for less than a 60-day period in any year, for any occupant. In Maui County, time share plans are only allowed in (i) the hotel district or (ii) as a non-conforming use in other districts if in existence prior to the passage of MCC section 19.37.010.

Despite the simple zoning limitations for time shares, this particular use is a point controversy for the county, which views the flourishing of time shares as a vehicle for the movement of new residents to Maui. It perceives this in-migration as a threat to "Maui culture." In addition, time shares are often confused with bed and breakfasts or transient vacation rentals which I discussed here. These three very different uses are conflated during policy discussions concerning zoning regulation.

As with other moratoria proposed by Councilmember Johnson, this one will likely not pass council. Generally, moratoria are blunt legislative instruments that fail to address underlying issues or resolve any concerns in a meaningful, productive way.

NIMBY Group Stymies 700 Home Affordable Housing Project on Maui

The Wailea 670/Honua‘ula project, located in Wailea Maui, is planned for 700 market homes, 700 affordable homes, a golf course, and parks and open space. Committee Report No. 08-23, Feb. 8, 2008. The original application for this project was submitted in 2000 and was considered in dozens of public meetings by the Planning Commission and the Council. Id.

It would be one of the first developments to fulfill the county’s Residential Workforce Housing Policy, which requires landowners to sell or lease between 40% and 50% of new residential units to residents within the income-qualified groups established by the ordinance.

Two groups have opposed the project. An ad hoc Kihei NIMBY group and Maui Tomorrow, which is requesting that a supplemental environmental impact statement be prepared for Honua‘ula. According to the Maui News, the last environmental study for the project was approved in 1989. The supplemental environmental study challenge is a perennial issue in Hawaii environmental law, because HRS chapter 343, Hawaii's Environmental Impact Statement Law lacks guidance and the HAR chapter 11-200 lacks clarity on the issue of supplemental statements.

The Council's Land Use Committee recommended, among other things, approval of rezoning for the project as reported in Committee Report No. 08-39, March 7, 2008.