The Hawai`i Supreme Court will hear the appeal of a variance granted by the City and County of Honolulu to allow Kyo-ya Hotels & Resorts to build a high-rise wing of the Moana Surfrider hotel, a Waikiki icon.
The Surfrider Foundation, Hawai`i’s Thousand Friends, Ka Iwi Coalition, and KAHEA: The Hawaiian-Environmental Alliance are the appellants contesting the decision of the Honolulu Zoning Board of Appeal (ZBA) to uphold a variance awarded by the director of the county Department of Planning and Permitting. The variance would allow Kyo-ya to build a 26-story, 308-foot-high Diamond Head wing with 60 hotel units and about 80 condos on the site of an existing eight-story wing, even though beginning at the 16th floor, all of the new construction would encroach into the coastal and building-height setbacks established for the Waikiki Special District. If the setbacks were to be enforced, construction could only rise about 170 feet.
Kyo-ya claims that a 1965 agreement should override any more recent setback requirements. Under that agreement with the state, the hotel’s then-owners promised not to challenge a beach expansion project that the city anticipated would be undertaken by the Army Corps of Engineers. In return, the beach fronting the hotel would be extended some 180 feet seaward of where it existed in the early 1960s. (Since 1965, the beach has been built up several times, but never to the extent anticipated in the agreement. Most recently, in May 2012, the Department of Land and Natural Resources completed a project to widen the beach in front of the Surfrider Hotel by not quite 40 feet.)
The unfulfilled agreement, then, was one of the bases for the “hardship” exception to the setback rule that Kyo-ya cited when it sought the variance from DPP director David Tanoue in 2010. “Had the beach been constructed by the state, as contemplated by the 1965 beach agreement,” the company’s attorneys stated in a memorandum supporting the variance application, “it is likely that the beach fronting the Diamond Head Tower site would be approximately 180 feet wider than it is today… Had this occurred, we believe that almost no portion of the proposed Diamond Head Tower would encroach into the coastal height setback.” The “statutory test for locating the shoreline … is in many respects inappropriate and unfair in this particular instance,” they claimed.
Tanoue went along with the argument. One of the conditions he attached to the variance requires the new tower to comply with the coastal height setback of one foot height for one foot distance of setback from the shoreline contained in the Waikiki Special District rules. Ordinarily, that would mean that for each foot of setback from the certified shoreline, a building could rise a foot, so that a 300 foot building would need to be no closer than 300 feet from the shoreline. But in his conditions, Tanoue set as the “shoreline” a line 180 feet seaward of the existing concrete wall fronting the hotel. In other words, he went along with the fiction that the beach-widening project anticipated in that unfulfilled agreement had established the baseline for measuring a setback nearly half a century later. As a result, the planned new construction will actually encroach 74.3 percent into the setback area, were it to be calculated on the basis of the current certified shoreline.
In August 2012, the county’s Zoning Board of Appeals upheld Tanoue’s decision against a challenge from the groups now appealing to the Supreme Court. According to an article by Andrew Gomes in the Honolulu Star-Advertiser, the board “noted that its role is not to second-guess merits of a discretionary decision” by the DPP director.
In its objection to the opponents’ petition to transfer the case to the Supreme Court, attorneys for Kyo-ya raised the issue of their own appeal of a lower court’s ruling denying their motion to recover attorneys’ fees associated with their so-far successful defense of the ZBA’s decision.
“[E]ven if there was some basis for discretionary transfer [to the Supreme Court], the Court should decline to do so here,” wrote Lisa Woods Munger of Goodsill Anderson Quinn & Stifel, one of the attorneys working on the case. Apart from the burden of reviewing the record – which burden, she wrote, “the Legislature has made clear … should fall in the first instance to the ICA” – there was the further complication added by Kyo-ya’s appeal on the matter of attorneys’ fees. “That case is currently pending before the ICA,” she wrote, “and transfer of this case to the Supreme Court could create substantial procedural issues if, for instance, the ICA and Supreme Court were to reach different conclusions regarding the facts of this case.”
Should the Supreme Court decide to hear the case, she continued, “Kyo-ya intends to move to have the two cases consolidated.”
The dispute over attorneys’ fees signals just how nasty the dispute has become. After the Circuit Court found in favor of Kyo-ya, Kyo-ya sought attorneys’ fees from the non-profit groups opposed to the new construction. Among other things, Kyo-ya argued that the opponents’ claims were “predicated upon fabrication;” that the challenge to Circuit Court was based upon an “abuse of discretion standard” that the opponents themselves had waived; that the opponents had also waived their ability to claim that the DPP director was barred by ordinance from granting a variance – and that such a claim, in any case, was frivolous; and, finally, that the opponents “deceptively sought to litigate anew an ‘abuse of discretion’ allegedly committed by the Zoning Board and/or the director.”
Circuit Judge Rhonda Nishimura found that although the opponents “failed to meet their burden … to warrant a reversal,” that in itself does not suggest that the appeal was, in the words of a prior Supreme Court ruling concerning attorneys’ fees, “manifestly and palpably without merit, so as to indicate bad faith on the pleader’s part.” Nishimura did agree with Kyo-ya counsel that the opponent’s lawyer, Linda Paul, “had full and fair opportunity to present her appeal to the Zoning Board and voluntarily agreed to limit her appeal on the issue as to whether the director’s conclusion … was based on erroneous findings of material fact, not an abuse of discretion.” Still, Nishimura wrote, Kyo-ya’s contention that Paul had made “untrue and/or inaccurate statements” alone does not mean that the claims opponents made were so baseless as to warrant the award of attorneys’ fees to Kyo-ya.