Guest Post: HAWSCT Oral Arguments In Koa Ridge - Is The State Prohibited From Rezoning "Potential" Important Ag Land?

by Robert Thomas, InverseCondemnation, June 1, 2015

Last week, the Hawaii Supreme Court heard oral arguments in Sierra Club v. Castle and Cooke Homes Hawaii, Inc., No. SCAP-13-0000765, a case involving a challenge by the usual suspects to a State Land Use  Commission "boundary amendment" (aka state "rezoning" to those of you not familiar with Hawaii's top-heavy state land use planning scheme).

According to the Judiciary web site summary of the case, here are the issues:

In this case, Appellants Sierra Club and Senator Clayton Hee appeal from the Decision and Order of the Circuit Court of the First Circuit, which denied and dismissed their appeal from the Land Use Commission's Findings of Fact, Conclusions of Law, and Decision and Order, which approved Appellee Castle & Cooke's Petition for District Boundary Amendment. The Land Use Commission reclassified approximately 769 acres of Castle & Cooke’s land from the state agricultural land use district to the state urban land use district. The land is slated for development of Castle & Cooke’s Koa Ridge Makai and Waiawa projects.

Appellants argue that the reclassification violated Article XI, Section 3 of the Hawai`i State Constitution, which provides the following:

The State shall conserve and protect agricultural lands, promote diversified agriculture, increase agricultural self-sufficiency and assure the availability of agriculturally suitable lands. The legislature shall provide standards and criteria to accomplish the foregoing.

Lands identified by the State as important agricultural lands needed to fulfill the purposes above shall not be reclassified by the State or rezoned by its political subdivisions without meeting the standards and criteria established by the legislature and approved by a two-thirds vote of the body responsible for the reclassification or rezoning action.

Appellants also argue that the reclassification violated Act 183, HRS § 205-41 through -52, which are the statutory provisions implementing Article XI, Section 3's mandate, and which govern land use on important agricultural lands. They contend that, until the City and County of Honolulu's Department of Planning and Permitting has submitted its designation of important agricultural lands on Oahu to the Land Use Commission, the Land Use Commission should not reclassify land that could potentially qualify as important agricultural lands.

Lastly, Appellants argue that the reclassification violated Hawai`i Administrative Rules § 15-15-77, focusing specifically upon subsection (6), which requires the Land Use Commission to consider whether taking land in “intensive agricultural use for two years prior to the date of a filing of a petition [for a district boundary amendment] or lands with a high capacity for intensive agricultural use” out of the agricultural district “[w]ill not substantially impair actual or potential agricultural production in the vicinity of the subject property or in the county of State; or . . . [i]s reasonably necessary for urban growth. . . .”

The oral argument recording is here, if you'd like to listen: LINK

Our colleague Paul Schwind, who has guest posted before on important cases, kindly attended the arguments, and has the following report:

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Hawaii Supreme Court Oral Argument on Land Use Commission's Koa Ridge Approval

by Paul J. Schwind*

When we last visited this case on February 27, 2013, Circuit Court Judge Rhonda Nishimura had orally ruled from the bench affirming the Land Use Commission’s (LUC’s) order granting a district boundary amendment effecting the reclassification of land from the “agricultural” district to the “urban” district for Castle & Cooke Homes' proposed Koa Ridge development. The court’s written decision and order and final judgment were filed on April 11, 2013, and were promptly appealed by Appellants Sierra Club Hawaii Chapter and [now former] Senator Clayton Hee.

After having originally been filed in the Intermediate Court of Appeals, the appeal was transferred to the Hawaii Supreme Court and is now designated The Sierra Club et al. v. Castle & Cooke Homes Hawaii Inc. et al., No. SCAP-13-0000765 (Haw. Dec. 31, 2013).

The Supreme Court heard oral argument on May 21, 2015. Sitting in on this case were Supreme Court Chief Justice Mark E. Recktenwald, Associate Justices Paula A. Nakayama, Sabrina S. McKenna, and Richard W. Pollack, with Circuit Court Judge R. Mark Browning assigned in place of Justice Simeon R. Acoba, recused [and since retired].

Appellants’ Arguments

Eric A. Seitz, Esq., began by arguing for Appellants Sierra Club and Senator Hee that the subject property of the reclassification should not be “paved over,” because it is some of the island of Oahu’s best important agricultural land (IAL). While there are many other locations suitable for housing, no evidence was presented to the LUC that alternative areas of comparable quality are available for agricultural use. He acknowledged that in 2003 the Court held that the constitutional mandate to enact standards and criteria for the designation of IAL is not self-executing; see Article XI, Section 3 of the Hawaii State Constitution, supra; see also Save Sunset Beach Coalition v. City and County of Honolulu, 102 Haw. 465, ___, 78 P.3d 1, 12 (2003) (until legislative standards and criteria are adopted, the constitutional section is legally inoperative and does not act as a barrier to reclassification). But standards and criteria both for identification and for reclassification and rezoning of IAL have since been enacted by the Hawaii Legislature in 2005; see Haw. Rev. Stat. §§205-44, 205-50. Accordingly, Mr. Seitz argued that the statutory mandate in those statutes extends to the LUC, but the LUC ignored the mandate.

In response to questioning by Chief Justice Recktenwald, Mr. Seitz added that the mandate to the LUC is “implicit,” but it was “unconscionable and criminal” that the LUC ignored the statute, and also refused to allow testimony that the City Council “requires” this parcel to be considered for IAL designation, notwithstanding that it is included within the City’s urban growth boundary (see City Council Resolution 12-23 CD1, FD1 (Feb. 15, 2012) (the process of identifying and mapping IAL should also consider agriculturally productive lands within urban growth boundaries)). When pressed by Justice McKenna, Mr. Seitz admitted that the LUC does not have an explicit statutory mandate to preserve IAL before they are designated, but the LUC should nevertheless have “stayed its hand” in this case. He added that although the LUC’s own rules require specific findings in regard to the capacity of the property for intensive agricultural use (see Haw. Admin. Rule §15-15-77, supra), there is no evidence in the record of such findings.

The Chief Justice asked further whether it was essential that this particular site be reclassified to urban – what would best justify urban development on this property? He noted that Aloun Farms (the current tenant on the land) supported the reclassification – were satisfactory lands available for their relocation? Mr. Seitz responded that reclassification here is not supportable because other unused, unproductive lands could be put to urban use. He agreed that housing is needed, and this may be the best site for that purpose within a five- to ten-mile radius, but the LUC didn’t consider other sites for reclassification. He added that the need is even greater for protection of IAL dedicated to the production of local market agricultural products, citing again City Council Resolution 12-23 CD1, FD1. The alternative locations available to Aloun Farms may not be available, or have no history of productive agricultural use.  In response to additional questions from Justice Nakayama, Mr. Seitz said that the LUC seemed unwilling to balance the concerns of other parties in the case, and simply rubber-stamped the findings of fact drafted by the petitioner (Castle & Cooke). For example, there is no lack of farmers; in fact, he said, recent agricultural graduates are “clamoring” for land.

Appellees’ Arguments

Wyeth M. Matsubara, Esq., then argued for Appellee Castle & Cooke Homes that, as a creature of statute, the LUC must decide boundary amendment cases within one year. The proceedings to designate IAL are completely separate from that process. Appellants’ legal analysis is not supported by the record.  In response to questions from Judge Browning, Mr. Matsubara added that the LUC decision must be affirmed unless it is “clearly erroneous” based on the whole record (see Haw. Rev. Stat. §91-14). As an administrative agency, the LUC is limited to properly conducting its hearing procedure within the applicable statutory framework, rather than deciding policy issues not in the record. When Chief Justice Recktenwald commented that there was nothing in the record to show that the alternative lands offered to Aloun Farms were of equal productivity to the subject property, Mr. Matsubara answered that there are good lands in Kunia, and Aloun was offered 362 acres of Dole Company land there.

Justice Pollack then observed that the LUC conclusions of law in this case conform to Haw. Rev. Stat. §205-17 (land use commission decision-making criteria) but not to §205‑2 ([standards for] districting and classification of lands) and ch. 205, pt. 3 (§§205‑41 through 205-52) (important agricultural lands). Specifically, the policy stated in Haw. Rev. Stat. §205-41 (“compelling state interest in conserving the State's agricultural land resource base and assuring the long-term availability of agricultural lands for agricultural use”) goes beyond Haw. Const. art. XI, §3. He asked whether this statute then has no effect. Mr. Matsubara answered that Haw. Rev. Stat. §205-17 controls and was satisfied. Justice Pollack then referred to Haw. Rev. Stat. §205-52 (periodic review and amendment of important agricultural lands maps), to which Mr. Matsubara responded that the statute refers to lands already designated IAL, which hasn’t happened yet. The subject property is good agricultural land, but it currently has no official status as IAL. In response to Justice McKenna, he further stated that once reclassified to urban, land cannot be designated as IAL. The constitutional mandate applies within an IAL designation proceeding, but not in a district boundary amendment proceeding.  Justice Pollack countered that Haw. Rev. Stat. §205-17 requires that the LUC specifically consider the standards and criteria for reclassification or rezoning of important agricultural lands in §205‑50, and is not limited only to lands already designated as IAL.  (Note:  Haw. Rev. Stat. §205‑50(a) says “[a]ny land use district boundary amendment or change in zoning involving important agricultural lands identified pursuant to this chapter shall be subject to this section” (emphasis added). So it does appear that the Court must consider whether IAL have to be formally designated before the specific criterion in §205-17(4) is enforceable.)

Chief Justice Recktenwald asked again why the subject property is “reasonably necessary” for urban use, that is, whether no other lands are available. Mr. Matsubara replied that the expert testimony on the record was that this was the only area so designated within the City’s Central Oahu Sustainable Community Plan. When asked by Judge Browning whether he objected to the policy in Haw. Const. art. XI, §3, Mr. Matsubara responded that the policy is satisfied here by shifting diversified agriculture (Aloun Farms) to other land.

Don S. Kitaoka, Esq., argued next for Appellee City and County of Honolulu, Department of Planning and Permitting. There is “a time and place for everything” in the land use process, he said, adding that his job is to preserve an orderly process at the City level. Specifically, the City is currently engaged in the process of identifying, mapping, and submitting to public review the proposed designation of IAL. This must be done because it is clear from Save Sunset Beach, supra, that Haw. Const. art. XI, §3 is not self-executing.  Justice McKenna asked, what would the process be to amend the Sustainable Community Plan to change the subject property from urban back to agriculture? Mr. Kitaoka answered that there is a periodic review of all such plans, and a review is going on now for the Central Oahu plan. The Koa Ridge site was placed within the urban growth boundary in the 2002 plan, and was vetted at that time. Justice Nakayama followed up by asking whether non-landowners can participate in the IAL designation process, to which Mr. Kitaoka responded affirmatively.

Finally, Bryan C. Yee, Esq., argued for Appellee Land Use Commission. He began by questioning whether Appellants should be allowed to bring new facts into the record on appeal.  He continued by stating that Haw. Rev. Stat. §205-44 sets the standards and criteria for the identification of important agricultural lands, not for their reclassification or rezoning. Justice Pollack asked again whether Haw. Rev. Stat. §205-17 should be followed. Mr. Yee answered that once IAL are identified, then Haw. Rev. Stat. §205‑50 applies (as linked through §205-17). But in this case, the lands of the subject property have not (at least not yet) been formally identified as IAL.

Chief Justice Recktenwald commented that the IAL designation process has been taking a long time; have we reached the point when Act 183 (2005) [Haw. Rev. Stat. ch. 205, pt. 3)] must be satisfied? Mr. Yee responded that the City has 60 months to submit its recommended IAL maps to the LUC, from the date of receipt of State funds for the identification process; but the State has never provided the anticipated funding (see Haw. Rev. Stat. §205‑47 and Note: Sess. L. Haw. Act 183 (2005) §7). So the delay is not fundamentally at the City level.  And there is a larger land use context for the IAL analysis. Haw. Rev. Stat. §205‑16 requires the LUC to conform to the provisions of the Hawaii State Plan (see generally Haw. Rev. Stat. ch. 226, and §226‑52(b)(2)(D)).  Although Appellants now argue that other statutory sections should apply, they did not previously challenge the LUC conclusions of law re Haw. Rev. Stat. §205-17. The purpose of Chapter 205 is not solely related to the preservation of agriculture, it is also to encourage development.

Appellants’ Rebuttal

In rebuttal, Mr. Seitz asked the Court to review his proposed findings of fact in the record on appeal, dated May 2, 2012; all his arguments are based on those proposed findings and testimony of his witnesses. Justice McKenna reminded him that he did not challenge the credibility of opposing witnesses at the Circuit Court level of appeal. That, Mr. Seitz responded, is because there was no contrary testimony in the record as to the value of the subject property as agricultural land. Haw. Rev. Stat. §205‑47(a) mandates County mapping of IAL, and does not bar consideration of urban land in that process.  Justice McKenna reminded Mr. Seitz that the statute specifically excepts from IAL mapping lands designated for urban use by the State or a County. Mr. Seitz then fell back on his earlier reliance on City Council Resolution 12-23 CD1, FD1, supra, which (he argued) asks the Department of Planning and Permitting to include the Koa Ridge site for consideration for IAL designation. He concluded by asserting that Save Sunset Beach, supra, urged the Legislature to implement Haw. Const. art. XI, §3 [which it has already done].  (Note:  the closest reference to “urging” in Save Sunset Beach seems to be a reference to the Legislature urging the LUC and County planning and zoning bodies to “comply fully with the intent of the State Constitution”, in the context of an earlier attempt to identify IAL by establishing the Land Evaluation and Site Assessment (LESA) Commission under Act 274 (1983); id. at 78 P.3d 12.)

This writer does not pretend to have a crystal ball, let alone a clear one, to divine the outcome of this case. However, it seems likely that it may be a split decision, based primarily on conformance to statutory provisions but with a nod toward policy choices, and based primarily on the record on appeal but with some acknowledgment of extrinsic facts and arguments.

Only time will tell.  Watch this space for further reportage.

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*voluntarily inactive member of the Hawaii Bar