The Land Use Commission did not follow state law when it reverted land under a South Kohala development from urban to agriculture, the Hawaii Supreme Court said Tuesday.
The court affirmed a 2011 3rd Circuit Court ruling that the state commission overstepped its bounds when it took action that stopped work on the Aina Lea development. But the high court disagreed that the action violated the developers’ constitutional rights.
The lower court had said the commission’s order to show cause was improper because it was initially filed in late 2008, put on hold in early 2009 and brought back in late 2010. Such orders to show cause must be completed within one year, under state law.
“The circuit court correctly concluded that the LUC erred in reverting the property to agricultural use without complying with the requirements of HRS § 205-4 because, by the time the LUC reverted the property, (developers) DW and Bridge (Aina Lea) had substantially commenced use of the land in accordance with their representations,” said the 78-page opinion written for the Supreme Court by Chief Justice Mark Recktenwald.
DW Aina Lea and Bridge Aina Lea sued the commission after the quasi-judicial board reprimanded DW Aina Lea for failing to complete 385 affordable townhouse units — 20 percent of the total units — by November 2010. The commission had imposed that and other conditions on Bridge Aina Lea, the previous owner.
“We are glad the Supreme Court recognized that the commission’s action was unlawful and we’re thankful the five-year cloud that was placed on the property has finally been lifted,” Bridge Aina Lea attorney Bruce Voss said Wednesday.
The Supreme Court disagreed with Circuit Court Judge Elizabeth Strance, however, that the LUC violated the developer’s constitutional rights to due process and equal protection when it reverted the land.
“With respect to Bridge’s and DW’s equal protection arguments, the record does not establish that the LUC’s imposition of a condition and subsequent reversion of the property constituted a violation of the petitioners’ equal protection rights,” the opinion said in overturning Strance’s rulings on the constitutional issues.
That opinion will have implications in federal court, where both sides are battling a regulatory takings case that could determine the developer’s just compensation for loss of use of the land during the delay.
The federal case has been on hold until the state Supreme Court rendered an opinion.
Deputy Attorney General William Wynhoff, representing the LUC, argued in Circuit Court that commissioners wanted to see certificates of occupancy issued for the units to be considered complete. He referred comments on the Supreme Court opinion to LUC Executive Officer Daniel Orodenker, who couldn’t be reached by press time Wednesday.
The property, mauka of Queen Kaahumanu Highway near Mauna Lani Resort, had changed hands several times over the past 25 years since the commission initially granted the land use classification change from agriculture to urban.
In 1989, the land, about 1,000 acres, 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. As the land changed hands, the LUC granted requests to amend the affordable housing condition.
The Supreme Court opinion noted that, prior to the LUC reversion, developers had constructed 16 townhouses on the property, commenced construction of numerous other townhouses and graded the site for additional townhouses and roads. At that point, more than $20 million had been spent on the project.
