HAWSCT: Land Use Comm'n Can't Rescind A Re-zoning Via Truncated Procedures

by Robert Thomas, InverseCondemnation, November 26, 2014

The Hawaii Supreme Court has issued a lengthy opinion in a case we've been following, DW Aina Lea Development, LLC v. Bridge Aina Lea, LLC, No. SCAP-13-0000091 (Nov. 25, 2014).

The litigation is a series of two lawsuits that originated in state court in the Third Circuit (Big Island), one an original jurisdiction civil rights lawsuit, the other an administrative appeal, the latter being the case in which the Supreme Court just ruled.

The essence of the plaintiff's allegations is that the State Land Use Commission wrongfully amended the land use boundaries from "urban" back to to "agriculture." Many years earlier, the LUC had amended the boundary to urban on the condition that the owner provide a certain number of affordable units by 2006. In 2008, the developer had not fully done so and the LUC ordered it to show cause why the land classification should not revert to agricultural. The developer asserted it was well underway, even if it had not satisfied the conditions entirely. 

In the administrative appeal, the state court smacked the LUC pretty hard, and issued issued an order vacating the LUC's reclassification. The court concluded the LUC exceeded its statutory authority, and violated the developers' due process, fifth amendment, and equal protection rights. That's the ruling now on appeal in the Hawaii Supreme Court. More background on the case here. The State removed the civil rights lawsuit to U.S. District Court in Honolulu and promptly moved to dismiss. The District Court agreed, and after the case was argued in the Ninth Circuit, that court held off on a ruling, pending the outcome of the Hawaii Supreme Court case.

Well, the Supreme Court has now ruled. We haven't had a chance to digest all 78 pages of the unanimous opinion (we'll do so in a later post), but here's the summary, straight from the opinion itself:

This appeal turns on whether the Land Use Commission (the LUC) properly reverted land to its former land use classification pursuant to Hawaii Revised Statutes § 205-4(g) (2001 & Supp. 2007). We hold that the LUC erred in reverting the land without complying with the requirements of HRS § 205-4 because the land owners had substantially commenced use of the land in accordance with the representations they had made to the Commission.

. . .

We hold that the LUC erred in reverting the property without complying with the requirements of HRS § 205-4 that are generally applicable when land use boundaries are changed. See infra at 64-65. Once the LUC issues an OSC, the procedures it must follow before reverting land depend upon whether the petitioner has substantially commenced use of the land. Once use of the land has substantially commenced, the LUC is bound by the requirements of HRS § 205-4. Here, by the time the LUC reverted the property to the agricultural land use district, Bridge and DW had substantially commenced use of the land in accordance with their representations. Specifically, they had constructed sixteen 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. Although Bridge and DW had substantially commenced use of the land, the LUC failed to comply with the requirements of HRS § 205-4. The circuit court therefore correctly concluded that the LUC erred in reverting the property.

. . .

The circuit court also erred in concluding that Bridge’s and DW’s procedural and substantive due process rights and equal protection rights were violated. With respect to procedural due process, both Bridge and DW had notice of the OSC and that the LUC might revert the property. They also each had a meaningful opportunity to be heard on the proposed reversion. With regard to substantive due process, the LUC’s reversion was not “clearly arbitrary and unreasonable,” given the project’s long history, the various representations made to the LUC, and the petitioners’ failure to meet deadlines. 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.

Slip op. at 1, 4-6. So, a win for the developer on the reclassification, but not on its constitutional claims.

More to come once we review the entire opinion.

FULL TEXT: DW Aina Lea Development, LLC v. Bridge Aina Lea, LLC, No. SCAP-13-0000091 (Haw. Nov. 25, 2014)

---30---