LUC Finds Kihei Mega Mall, Apartments Violate Conditions of 1995 Order

posted in: March 2013 | 0

It was a decision none of the Land Use Commissioners was eager to make.

A long silence greeted commission chair Kyle Chock when he asked for a motion on a request by Maui Tomorrow Foundation, Inc., South Maui Citizens for Responsible Growth, and Kihei resident Daniel Kanahele that developers of the proposed Kihei “giganta mall” and a 250-unit workforce housing project be required to show why their lands in the Urban District should not revert to the Agricultural District.

The groups and Kanahele alleged that Pi`ilani Promenade North, LLC, Pi`ilani Promenade South, LLC, and Honua`ula Partners, LLC, violated conditions of the LUC’s 1995 Decision and Order (D&O) granting a petition by Ka`ono`ulu Ranch to amend the district boundary around its 88-acre parcel in Kihei to accommodate a proposed 123-lot light industrial park.

Several years after the D&O was issued, the ranch sold the land to Maui Industrial Partners (MIP). MIP then sold most of the land to the Pi`ilani Promenade companies, which are subsidiaries of California’s Eclipse Development Group, and to Honua`ula Partners, which is developing a residential subdivision known as Honua`ula (originally known as Wailea 670) on adjacent land.

On a small portion of the former ranch property, Honua`ula Partners plans to build 250 workforce housing units — a condition of the county zoning approval for its residential development. The Pi`ilani Promenade companies plan to develop two shopping centers encompassing a total of 700,000 square feet of retail space.

The public became aware of the drastic change in plans only early last year, around when the Pi`ilani Promenade companies received grading permits from the county and began advertising retail space.

On February 7, after hearing heartfelt testimony in support of the project from several members of the public, including unemployed construction workers desperate for jobs, the LUC voted 6-3 on a motion that it find the companies had violated three conditions of the D&O regarding compliance with representations made to the LUC, the construction of a frontage road, and annual reporting requirements.

What the LUC will do next remains to be seen. It will likely schedule a hearing to decide whether or not to revert the land to the Agricultural District or whether the 1995 D&O should be amended. Honua`ula Partners has already indicated that it plans to seek an amendment to the D&O no later than July 31.

During oral arguments, attorneys for Pi`ilani Promenade and Honua`ula argued that the LUC had been made aware during the 1994 contested case hearing that the property could potentially be used for commercial and residential uses.

Jonathan Steiner, attorney for the Pi`ilani companies, argued that the original development plan and a market feasibility study submitted to the commission included commercial uses. What’s more, the LUC received testimony from the petitioner’s representatives that the market would ultimately determine how the property would be used, he said.

He added that there had never been an emphasis on light industrial uses.

With regard to condition No. 5 of the D&O, which required the construction of a frontage road, Steiner said the state Department of Transportation has testified that one is not necessary and that it would not approve one.

“It’s not going to happen. Therefore, condition 5 hasn’t been violated,” Steiner argued.

Honua`ula attorney Joel Kam argued that it is not the LUC’s job to approve specific projects. It only approves the land use classification.

“Since the commission doesn’t approve specific projects, it makes perfect sense that [the D&O’s condition No. 15] doesn’t require projects to be substantially the same. It only needs to be in substantial compliance with the representations made,” he said, adding that the commission must “look beyond merely the description of the proposed use. It must look at the totality of evidence, testimony, exhibits …”

During the original contested case, the ranch’s market feasibility study included a list of all possible uses in the light industrial zone.

Any prohibition on apartment or retail use must be based on the conditions of the order with “ascertainable certainty,” he continued. That is something that even the county planner testified that he cannot do, Kam said.

“If planning experts can’t say with certainty what condition 15 prohibits, how is Honua`ula and Pi`ilani supposed to figure it out by themselves?” he asked.

Maui County corporation counsel Michael Hopper agreed. He noted that the original marketing study noted that M1 (light industrial) zoning — which allows both retail and apartment uses — would be best for the land. He added that the Maui Mall in Kahului, the Queen Ka`ahumanu Center, and the Lahaina Gateway were all built in light industrial zones and apartments are routinely located in light industrial areas.

Furthermore, the county never placed any limitations on retail use of the Kihei property, so “it would be improper [for the LUC] to add such a condition when neither the county commission nor the council imposed one,” he said.

To state deputy attorney general Bryan Yee, who represents the Office of Planning, the representations made by the ranch to the LUC regarding the proposed number of lots, their size, and traffic impacts, among other things, “are of fundamental importance.”

The proposal to build a 123-lot industrial park was the essential fact that the commission used to evaluate the impact of the project, he said. “Petitioners cannot avoid the requirement to substantially comply with representations by characterizing the proposed use as conceptual,” Yee said. He point out that the commission’s rules require petitioners to represent what the proposed use will be.

“The description of hypothetical uses [laid out in the market feasibility study] is not a substitute for the proposed impacts in the proposed petition area. There is a big difference what can be done and what the petitioner represented … would be done,” he said.

“At no time did petitioner analyze impacts of all uses allowed [under M1 zoning],” he continued. If the current petitioners are arguing that mere knowledge that apartment uses are allowed in the light industrial district is sufficient, then the original petition was in violation for failing to analyze all impacts of the project, Yee argued.

“The OP and LUC extend a great amount of resources analyzing impacts based on the proposed use. One cannot trivialize representations,” he said.

Regarding the argument that the D&O’s condition No. 5 had not been violated because the DOT now believes a frontage road is no longer appropriate, Yee said the road is still a requirement of the redistricting and suggested that the landowners should have sought an amendment from the LUC.

Yee also argued that the ranch had excluded residential uses in its original proposal. Had residential use been proposed, the state Department of Education would have asked for a condition to address any impacts, he said. The original traffic impact report and market study also did not look at impacts of residential use, and neither did the LUC, Yee said.

“The non-compliance lies in no substantive light industrial use,” Yee concluded. “Retailers like Home Depot do many things. They are retail in nature, but not part of the light industrial subdivision as proposed in 1994.”

Yee said he wasn’t going to quibble over what percentage of light industrial use versus retail/apartment use would be appropriate. “A reasonable commissioner would believe that at least 50 percent of the project would be light industrial,” he said.

Tom Pierce, attorney for the intervenors in this case, argued that Pi`ilani Promenande North and South and Honua`ula have been “taking a risk that this would work out in their favor.”

The traffic impacts of the new developments are likely to be five times greater than what was expected from the light industrial park, he argued.

Under questioning by commissioner Ronald Heller, developer’s consultant and former LUC member Charles Jencks admitted that the internal roads planned for the development would not be turned over to the county, as is required by the 1995 D&O.

Commissioner Chad MacDonald asked Jencks whether he thought the revised development plans, finalized in 2005, should have been brought to the LUC for a cursory review. Revised site maps were never included in any annual reports.

Jencks replied that based on the property’s zoning and the D&O conditions, he felt the projects were “approvable” because the plan follows the existing large lot subdivision.

The majority of the commission disagreed.

MacDonald made a motion to find that Pi`ilani and Honua`ula violated conditions No. 5 and 15 of the D&O. Commissioner Nicholas Teves seconded the motion with an amendment that condition No. 17, regarding annual reports, had also been violated.

Before voting on the motion, Heller explained that the LUC needs to look at impacts of a project from a variety of perspectives before it decides to amend a district boundary. “We have to do that based on some understanding of what the project is. If it could be anything from an apartment complex to a shopping mall, we can’t analyze impacts in a meaningful way,” he said.

“If anything [allowed] in the zoning is fair game, our job will not only be harder, but it will lead to denials,” added commissioner Lance Inouye. “As I stated several months ago, I want this project to move forward, but we have to take steps.”

When it came time to vote, only Chock and commissioners Thomas Contrades and Sheldon Biga opposed the motion.

Teresa Dawson

Volume 23, Number 9 — March 2013