Honolulu Rail And The Use Of Eminent Domain

by Robert Thomas, InverseCondemnation, June 20, 2014

Here are two recent reports on the progress of the Honolulu rail project that should be read in-tandem:

• Property acquisition for rail falls far behind (Star-Advertiser, June 15, 2014)
• City might seize land in Honolulu for rail line (Star-Advertiser, June 20, 2014)

Both stories are partially behind a paywall, but here's the relevant bits. The first story reports that HART, the city agency created to build and operate the rail is in "another race against time," this time to acquire the private property it needs to build the rail's easternmost stretch through Honolulu's urban core (the tough part, in other words). According to HART, acquisition of access is "our single highest priority." Which sounds like a big bite: HART Director "Grabauskas and HART staff say they're aiming to do some 18 months of work negotiating those properties in only six months' time. They intend to purchase approximately 146 full or partial properties in the heart of Honolulu by Dec. 15 to keep construction on track in 2015." Wow. But "'[w]e do not want to go through eminent domain if at all possible,' Grabauskas said last week."

However, in the second story, published today, the picture became more clear how HART could work through all these deals without using eminent domain. Short story: it likely can't, at least in part. The paper reports that "[a]cquiring properties in Honolulu to build Oahu's rail transit system could involve 'judicious' use of eminent domain." Ah, now we get it. We interpret this to mean that any negotiations will take place under the looming threat of eminent domain, and if the owner and HART cannot reach an agreement, then a condemnation complaint will likely be forthcoming lickety split. And, the lack of a final judgment in an eminent domain case likely will not slow down HART, as it could get immediate possession of the land (the "access" noted in the quotes above), even if the court has not made a final ruling on the amount of just compensation and damages owned to the property owner. More:

• Honolulu Rail Project Awarded $250 Million (Hawaii Reporter, June 20, 2014)
• Honolulu rail agency may spend another $5M for help with property acquisitions (Pacific Business News, June 18, 2014)
• Sitting in the train's parth: Landowners seek best deals (PBN, Apr. 4, 2014) ("Thomas said it is his job to make sure that his clients receive the most amount of money possible for their properties. But determining that full value can be tricky. Any property with an estimated value of at least $500,000 must undergo at least one appraisal, with two reviews. HART does not have its own appraisers — it hired Honolulu-based John Child & Co. And, of course, property owners can hire their own appraisers to assess the value of their properties.")
• Will Honolulu's rail transit system just be called 'The Train'? (PBN, June 18, 2014)
• Honolulu rail board report says CEO Grabauskas on the right track (PBN, June 19, 2014)

Since we're talking rail and eminent domain, we thought we would re-post an oldie but goodie, our responses to some of the myths we've heard surrounding the issue:

• Myth #1: HART will offer a "premium" to owners whose property it wants, because it needs those properties quickly. Wrong on two counts. First, the agency does not need to offer a premium since Hawaii law has a procedure by which a condemnor can take immediate possession of property it wants, "ex parte" (without notice to the landowner). Second, HART will only offer what it believes to be the amount legally required to be paid for "just compensation" and damage, not a penny more. Indeed, HART will claim it is fulfilling its obligation to the rest of the taxpayers when it offers you nothing more than its own valuation.

• Myth #2: The compensation offered and paid will include attorney's fees and costs. No, the Hawaii Supreme Court has held that the "just compensation" and damages required by the Hawaii Constitution to be offered and paid to property owners whose land is taken does not include attorney's fees and costs the landowner incurs if the property is taken. State v. Davis, 53 Haw. 582, 587, 499 P.2d 663, 687-88 (1972). In that case, the court held:

  We hold in accordance with the overwhelming weight of authority that attorneys' fees and expenses, including expert witness' fees, are not embraced within the meaning of ‘just compensation’ for purposes of article I, section 18 of the Hawaii Constitution [currently article I, section 20].

  Myth #3: I can use the deposit to pay my attorneys to fight the city's taking of my property. You can, but you've just "abandoned all defenses...except the sufficiency of the compensation or damage award."  So if you take the money HART deposits when it grabs your property, you can't object to the fact that the city is taking your property, just the amount you will receive as compensation and damages.

• Myth #4: I can count on the city treating me fairly and making a reasonable offer.  Good luck with that one. Read this summary by law professor and eminent domain expert Gideon Kanner and see if you still think that this is true.

• Myth #5: A property owner whose land is taken for the rail project can expect high valuation since the rail project will raise the value of properties near transit stations. Questionable. The city will no doubt claim the "scope of the project" rule requires a lower value. The rule says that increases or decreases in value after the scope of the project is known in the market can't be used to determine value of the property taken.

• Myth #6: I just appealed the city valuation of my property for property tax purposes saying it overvalued my home, but my claims of lower valuation can't be used against me in eminent domain. Oh yes they can. State law provides:

  The valuation claimed by the taxpayer in any appeal regarding the assessment of real property tax shall be admissible in evidence as an admission of the fair market value of the real property as of the date of assessment irrespective of the fact that the assessed value from which the taxpayer appealed is adjusted to one hundred per cent fair market value...

In the words of Joe Friday, "your words can and will be used against you in a court of law."

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