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Marconi Point Project Connected to DPP Bribery Scandal
By Selected News Articles @ 6:14 PM :: 2812 Views :: Honolulu County, Ethics, Development, Land Use

Marconi Point 'agricultural warehouses'.  Photo Credit: Peter Fowler/Endure Films

City Seeks to Dismiss Marconi Claims, Supports Move to Depose Bribery Convicts

by Teresa Dawson, Environment Hawaii, April, 2024

On April 1, the City & County of Honolulu filed in federal court a motion to dismiss claims by the Marconi Point Condominiums’ developer that the Department of Planning and Permitting improperly decided several years ago that a Special Management Area permit was required for farm dwelling and agricultural warehouse construction.

At the same time, the city has agreed with a recent motion by the developer’s Marconi-related companies to remotely depose architect William Wong and former DPP building plan examiner Kanani Padeken, both of whom are in federal prison for bribery.

The companies, all owned by Jeremiah Henderson, III, claim that the DPP had repeatedly assured them that an SMA permit was not needed for proposed farm dwellings on the property. They also noted that the department issued building permits allowing for the exterior construction of eight large agricultural warehouses topped with solar photovoltaic panels without calling for an SMA permit.

They allege that when the DPP finally decided that an SMA permit was needed before further development could occur, the decision coincided with a rift Makai Ranch (one of Henderson’s companies) had with Wong over an expensive study Wong said would need to be done before a farm dwelling permit sought by one of the unit owners could be approved. Makai Ranch, which developed the CPR, had hired Wong to facilitate the farm dwelling permit’s approval.

Given that Wong and Padaken were years later convicted of federal bribery charges regarding the processing of DPP permits, Henderson’s companies claim that corruption was at the root of the DPP’s change in position regarding SMA requirements.

The city has countered that the alleged assurances from DPP were not the broad go-ahead the companies made them out to be and that the department has always retained the authority to require an SMA permit if it determines that the possible environmental and ecological effects of the proposed development are significant.

The complaint claimed that the DPP had improperly required an SMA permit before applications for certain building permits and associated roadway and agricultural subdivision applications could be processed.

The court denied the city’s initial motion to dismiss the case with regard to Makai Ranch’s agricultural subdivision application, but granted it with regard to the building permits and roadway subdivision application. However, the court allowed the companies to amend their complaint to bolster their arguments regarding the latter two subjects.

Motion to Dismiss

The city’s recent motion to dismiss argues that the companies’ amended complaint still fails to make their case regarding the permits for the farm dwellings and agricultural structures.

“Defendants initially determined to seek dismissal of Plaintiffs’ roadway subdivision claims. Defendants are not conceding the issue, but chose to not seek dismissal of those claims based upon discussions at [a pre-filing] conference [held in January],” the motion states.

The city also chose not to seek dismissal of the claims regarding the agricultural subdivision, but stated that it was not waiving its right to seek dismissal of both subdivision claims at a later date.

With regard to the eight large agricultural warehouses that have been built, the city conceded that in September 2015, the DPP determined that two warehouses and associated PV systems would be SMA-exempt, and then later approved building permits for eight warehouses. The companies applied for a permit for the interior of one of the warehouses that included the building of bathrooms.

However, the city’s motion continues, “Makai Ranch now seeks to build multiple luxury farm dwellings and be given pre-application approval for ‘interior’ permits for its eight finished agricultural warehouses. Under the previous version of Hawaiʻi Revised Statutes Chapter 205A (the state’s Coastal Zone Management law), a single farm dwelling, by itself may not be considered a ‘development’. Interior work to warehouses may also, by itself, not be considered a ‘development’. However, Plaintiffs’ combined aspirations demonstrate that there are plans which would have ‘a cumulative impact, or a significant environmental or ecological effect’ and therefore the plans are a ‘development’ for purposes of HRS Chapter 205A. Thus, DPP has told Makai Ranch that it will need an SMA permit if Makai Ranch still intends to develop the Property.”

The companies’ claim that DPP is “equitably estopped” from denying interior permits for the agricultural warehouses because DPP allowed them to build the exteriors. To this, the city argues that the companies “have not even bothered to apply for seven of the eight interior permits, thus their alleged injury cannot be ripe because there has been no injury.”

The city goes on to point out that under the state’s Coastal Zone Management Act, the DPP must require an SMA permit for development within the SMA, and that development includes “[p]lacement or erection of any solid material or any gaseous, liquid, solid or thermal waste. . . [c]onstruction, reconstruction, demolition, or alteration of the size of any structure.”

“Thus, DPP has always retained the right to require an SMA Permit for the ‘interior’ permits for the agricultural warehouses. This is especially true because Plaintiffs are planning on building restrooms in the warehouses. Restrooms would necessitate waste water, which is of obvious concern in the SMA. (Empty buildings that have no restrooms would not.) DPP cannot be equitably estopped from requiring an SMA Permit where the nature of the structure would change based upon its interior, even if the exterior structure was allowed without an SMA permit,” the city states.

To the companies’ claims that the DPP was treating development at Marconi Point Condominiums differently from other agricultural CPRs, the city points out that the examples the companies provided in its amended complaint are projects that “are (1) differently zoned; (2) miles away; (3) different in scope; and (4) not threatening the Laysan Albatross’s habitats, a ‘near threatened’ species.” It adds that none of the comparable projects (Waialee condominiums, Kahena Wai estates, and Kealia Farms) have historic buildings on their sites (such as the Marconi Wireless Telegraph Station) or are partially zoned preservation (which the Marconi property is).

“This list is non-exhaustive but demonstrates there are key differences between the Property and the proposed comparators. 

“Additionally, this list also demonstrates that there is a rational basis for the disparate treatment, if there even is disparate treatment,” the city states.

Finally, the city argues that even if the companies’s building permit claims were sufficiently supported, they must still be dismissed because the complaint does not include “an indispensable party,” William Wong.

In ruling last December on the city’s initial motion to dismiss, the court dismissed the companies’ argument that it must construe as true the allegations that the DPP’s approval process was “marred by Wong’s corrupt pay-to-play scheme,” the city states.

Should the court now consider that argument as a reason to deny the city’s new motion, the city argued that the companies’ amended complaint must also be dismissed for failing to include Wong as a defendant.

“Plaintiffs’ claims that there was some corruption which led to their inability to receive building permits in 2016, is wholly reliant upon Wong. Plaintiffs essentially claim that their failure to pay Wong resulted in their permits being cancelled. If that is the case, then Plaintiffs’ claims are against Wong, not the Defendants. Thus, Wong is an indispensable party,” the city states.

Fishing Expedition?

On May 31, U.S. District Judge Jill A. Otake will hold a hearing on the city’s motion to dismiss. Opposition briefs are due on April 16. The city’s reply is due on April 30.

If and when Wong and Padeken will be deposed remains to be seen. On April 5, Judge Otake granted the companies’ motion to depose them via remote means. In the meantime, the companies have filed, but not yet served as of press time, several subpoenas to community groups and others who have either been involved in trying to get greater government enforcement of activities at Marconi Point, or are involved in habitat management.

On March 21, attorneys representing the companies filed subpoenas seeking information from Peter Lenhart, the attorney representing two condo unit owners who are being sued in state court by two of Henderson’s Marconi-related companies; the North Shore Community Land Trust and its director, Doug Cole; the Conservation Council for Hawaiʻi, the Center for Biological Diversity, and the Aloha Marconi Alliance.

The land trust manages a native habitat restoration area adjacent to the condominium property, and the other groups have recently voiced their concerns to government officials, the press and on social media over damages to environmental and cultural areas within the condominium property.

The subpoenas seek a very broad range of documents and information regarding development at Marconi Point, including everything sent to city, state, and federal agencies; internal documents; and correspondence among the community and non-profit groups.

In explaining the reasoning behind the subpoenas, attorney Ross Uehara-Tilton, who filed them with the court, provided some background: “Makai Ranch spent time and money planning the project, all with the understanding that it was SMA-exempt. A lot of the initial infrastructure work, such as paving the roads and installation of some of the water and electrical infrastructure went as expected, and all without any SMA permit. Makai Ranch even successfully applied for a farm dwelling permit on one of the units as a test, to confirm that a farm dwelling could be constructed in the project without an SMA permit. The permit was approved and Makai Ranch could have constructed the farm dwelling, but it withdrew the application after receiving approval because it never intended to build the farm dwelling. Makai Ranch just wanted to confirm it was possible to construct a farm dwelling so that it could tell potential buyers that construction was possible.”

He continued, “We think DPP only started treating the project as requiring an SMA permit after Makai Ranch refused to give in to Wong’s extortion scheme [regarding a new archaeological inventory survey]. We know Wong wrote at least one letter to DPP to cancel the permit, but we think his interference went beyond this single permit. We think he induced DPP to come up with a way to halt the project, because DPP had never before required a site development plan or an SMA permit until after the falling out with Wong.”

With regard to those subpoenas, he wrote, “We understand that there are concerned community members, including the ‘Mālama Marconi Coalition.’  [The Coalition is also known as the Aloha Marconi Alliance. See the related story in this issue.] We are trying to determine whether these individuals started raising issues with the project around or before the falling out with Wong. We are actually expecting that we won’t find anything in response to the subpoenas, because we don’t think there was such fierce community concern until much more recently. If community members were raising issues with DPP back then, then it seems possible that DPP could have based its decisions on community concerns, and not on Wong’s corrupt influence. But if there wasn’t any communication around that time, then it starts to look more like Wong was the cause of the DPP’s change in position. As far as we know, CBD and the Mālama Marconi Coalition only started raising issues after the recent clearing activities (which were not performed with Makai Ranch’s knowledge or direction), and/or the albatross death [that occurred in December].”

It’s unclear why information from the Aloha Marconi Alliance/Mālama Marconi Coalition  would be sought at all, since the group did not even exist until a few months ago.

Although many of the documents sought from the intended subpoena recipients can or should be able to be obtained via document requests to government agencies, Uehara-Tilton notes, “We have submitted numerous requests to DPP in the past. The DPP has provided some information, but has also withheld documents because of the ‘corruption investigation.’ We think there are documents out there that may prove the connection between Wong and the SMA issue, or otherwise shed further light on the corruption within DPP, which DPP does not want to turn over. This is one of the claims in the lawsuit—that DPP violated [state Uniform Information Practices Act] by improperly withholding documents. We are trying to understand the full extent of the corruption.

“Now that there is a lawsuit we are expecting DPP to turn over all of these documents soon, but we haven’t received anything yet. DPP may continue to fight to prevent disclosure.”

He added that it is not only important to obtain information from Wong, “but it is also important for us to obtain the information from the city itself to prove that the city had information that it was unlawfully withholding.”

With regard to the city’s assertion that Wong is an indispensable party to the case, Uehara-Tilton believes the argument is “just the city’s attempt to throw a wrench in the case. Given that Wong is in jail, if he were a party to the lawsuit, that would cause a lot of delay for us. He would have to attend hearings, and the court would likely require the plaintiffs to pay the costs associated with this, meaning the additional time and expense of transporting him to and from the courthouse, providing federal marshals, etc. … If Judge Otake decides that Wong is a necessary party, then all it means is we’ll have to amend our complaint again to name him as a Defendant. It doesn’t mean the case gets kicked out.”

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