What Does "Waikiki" Mean? - Variances, Safety Valves, And A "Hawaiian Sense Of Place"

by Robert Thomas, InverseCondemnation, November 4, 2015

"Waikiki" means a lot of things to a lot of people. With its wall-to-wall high rises, it could be Las Vegas-by-the-Sea. Or the site of the most famous beach in Hawaii, if not the world. A place where impossibly tony shops and kitsch exist side-by-side. Where the "Hawaiian" bric-a-brac is imported from the Philippines and China, and the beach sand is reputed to be Australian. A place to go, and a place to escape from.

But whatever Waikiki might be, one thing is certain: it no longer has just two hotels as it once did, nor is it a sleepy agricultural backwater. It is the economic engine that drives Hawaii's tourist economy, and the visitor destination, where one-third of our tourists end up. Even with these contradictions -- or perhaps because of them -- the ordinance which controls development within the Waikiki Special District requires consideration of a "Hawaiian sense of place," even though it doesn't expressly define what that might mean. 

In Surfrider v. Zoning Board of Appeals, No. SCAP-13-0005781 (Sep. 23, 2015), the Hawaii Supreme Court didn't decide what Waikiki is, but unmistakably held what it is not: it isn't a 26-story beachside hotel that doesn't conform to the Waikiki Special District's height and setback requirements. The court unanimously rejected a variance from those limitations, holding that the City's Department of Permitting and Planning should not have allowed an existing 8-story hotel to be redeveloped so that "about 74.3 percent of the [new] building [would] encroach[] on the Coastal Height Setback," a height limit measured from the "certified shoreline" (roughly the seaward edge of the beach). 

A variance allows a local zoning authority to permit a requested use or design that is otherwise prohibited. They've been described as "safety valves" to relieve hardship on a property owner that might be caused by strict application of zoning restrictions. A general rule, after all, cannot account for all circumstances and there may be instances where applying the rule to a particular parcel would create hardship. Variances are also safety valves for government, since they are a "takings avoidance" mechanism which allow development in lieu of a takings judgment when denial of permission to build would be a taking.

Honolulu's variance standard will look familiar to you dirt lawyers out there, since it is modeled on the classic three-part test of Otto v. Steinhilber, 24 N.E.2d 851 (N.Y. 1939):

• "the applicant would be deprived of the reasonable use of such land or building if the provisions of the zoning code were strictly applicable"
• the request 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 
• if approved, the request "will not alter the essential character of the neighborhood nor be contrary to the intent and purpose of the zoning ordinance"

Hon. Rev. Charter § 6-1517. Note that this is not a mere ordinance, but is a product of the city charter, which gives it slightly more stature.

The Planning Department granted the variance and concluded that the hotel owner satisfied the three-part test: building the taller hotel was necessary for the operator to maintain economic viability; unique circumstances compelled the request because the hotel owner already possessed a development permit that approved of the project, and the hotel would have been within the height envelope if the city had gone ahead and extended the beach like it said it intended to; and Waikiki is already a concrete canyon and another tall building wouldn't alter the neighborhood's essential character. The Zoning Board of Appeals and the circuit court affirmed, over the objections of environmental organizations. They appealed to the Intermediate Court of Appeals.

The Supreme Court took the case away from the ICA and transferred the appeal. And when that happens, you pretty much know what that means: bad news for the hotel owner.

And sure enough, that's what it was. The lengthy majority opinion (76 pages) by Justice Pollack really benchslapped the heck out of the Department on each of the three variance standards. It would have been sufficient to reverse if the four-justice majority had found the hotel owner had not met any one part of the three-part test, but the majority made it a point to hammer on all three. A court wanting to rule on the narrowest grounds could have determined that the owner would not be deprived of reasonable use in the absence of a variance and stopped at that. Indeed, that was the focus of the two-page concurring opinion by Chief Justice Recktenwald, which argued that because the hotel failed the reasonable use prong, "I would not reach the second or third variance requirements[.]" In other words, he's suggesting a majority of the majority opinion is dicta.

But what dicta it is! Land use lawyers -- particularly Hawaii land use lawyers -- should read every word on this opinion because it is the new definitive work on what a variance is and how to prove it. Those of us who had been following the case cannot be all that surprised by the result, since the application really pushed the variance envelope, and the outcome (variance wrongly issued) is squarely within the narrow view of these things: they are not supposed to be "hip pocket" exemptions which the Planning Department hands out whenever a proposal for development doesn't comply with the zoning ordinance. And over the years, that's how they were frequently viewed in our experience. The "no sweat, just get a variance" school of entitlements.

The Surfrider decision rights that ship and puts the focus of the variance analysis where it should be, on the safety valves -- the applicant's and government's -- and not on whether the nonconforming project would be a worthy endeavor if those pesky zoning restrictions weren't getting in the way. We have our views about whether those restrictions are the right way to go, but such things are not the concern of Planning Departments or Zoning Boards of Appeals, whose duties are limited to applying the laws, not reviewing their wisdom or validity. And those type of debates don't help much when you are grinding through an application or administrative appeal. 

Some thoughts about the case and the majority's analysis:

• It's going to be tough when the variance is viewed by the Planning Department as not excessive because -- instead of measuring the height setback from the current certified shoreline as the ordinance requires -- the setback is viewed "in context" of where the shoreline might have been if only the State had lived up to its obligations under a 1965 agreement that required it to use its "best efforts" to maintain and expand the beach. And if grandma had wheels, she'd be a streetcar.
• So the present shoreline, not future hypothetical shoreline is the watchword, and we're not at all surprised this argument was met with thinly veiled incredulity by the court: ""[T]he governing conditions for the variance approval must be based on valid criteria, not a hypothetical shoreline envisioned by an unexecuted private contract with no legal effect on the certified shoreline or the Coastal Height Setback." Slip op. at 49. 
• After Surfrider, applicants can't argue that without a variance they would be deprived of "a" reasonable use (the use permitted by a variance), and must show that there's essentially no reasonable use of their property without a variance. There's no question that the hotel which the owner proposed was economically viable. But that's not germane according to the court, because it would essentially allow bootstrapping: the issue is whether there are any reasonable uses in the absence of a variance, not whether denial of the use proposed would result in economic hardship.  
• Thus, applicants may need to prove a negative: that any use allowed under the existing restrictions (including repair and renovation of existing nonconforming structures) will not be not economically viable. And they will need to submit "financial data" (see slip op. at 35-36 & n.25) to prove this.
• As the majority put it, "the mere fact that [the hotel owner] cannot build the specific building design it desires is not sufficient to support a finding that [it] would be deprived of the reasonable use of its land or building. Slip op. at 39.
• And what about that "Hawaiian sense of place" mentioned in this post's title? That goes to the third variance standard, the character of the neighborhood. The hotel argued the Waikiki neighborhood is a "densely developed, urbanized area, filled with large hotels, condominiums, and mixed-use projects which push (and in many cases exceed) the limits of permitted heights, densities, and other zoning and building regulations." Slip op. at 10-11. In other words, Waikiki is already imperfect, so what's one more?
• While that may be true (see the intro to this post), it went over with the court about as well as you might expect. The Waikiki Special District was created "in response 'to the rapid development of the 1960s and 1970s, and the changes produced by that development[.]'" Slip op. at 63. So yes, Waikiki is built up, but the very fact that there is a Special District means it is "evident" the city council didn't think it was too late. Besides "[t]he principle that existing nonconformity should not serve as the basis for additional nonconformity is itself reflected in the L[and] U[se] O[rdinance]." Slip op. at 65. The court concluded that evidence of other nonconformities is "incompetent" (i.e., perhaps not admissible?) to proving up entitlement to a variance. Slip op. at 66. 
• The court did not define "Hawaiian sense of place," and acknowledged that it is a vague guideline ("A Hawaiian sense of place is not just a particular architectural style which echoes our historical past, but is also a reflection of attitudes, experiences, place, spaces and symbols which we have embraced as reminders of and contributors to a uniquely Hawaiian experience."). Slip op. at 68 (quoting the Waikiki Special District Design Guidebook at 5). 
• But whatever a Hawaiian sense of place it, it definitely is not a building that exceeds the Coastal Height Setback to the degree the variance allowed. The court focused on the height setback as the most effective tool to mitigate the concrete canyon effect, and thus preserve the Hawaiian sense of place, whatever that might be, because it protects open space and beach access. That's pretty "Hawaiian" to the court. Slip op. at 69 ("Thus, among the restrictions put in place by the WSD, the Coastal Height Setback uniquely affects the preservation of Waikiki’s Hawaiian sense of place."). And nothing says Waikiki like beach, according to the court. We suppose the same link could me made between the beach and the other requirements applicable to the Waikiki Special District, too.

The final thing we have to add on this case is that the Hawaii Supreme Court's approach to variances is consistent with what has always been our understanding of the law, if not the way it has always been applied. Courts reviewing takings claims for ripeness take note: a variance is not simply another chance to get what you want, so a property owner should not be required to seek one in order to get the government off the takings hook.

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PDF: Surfrider Foundation v. Zoning Bd. of Appeals, No. SCAP-13-0005781 (Haw. Sep. 23, 2015)