Kona Development on Fast Track Runs into Roadblock from Queen's Trust

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“The Queen Lili`uokalani Trust filed a petition to intervene in these proceedings, originally intending to be a friendly intervenor,” attorney Ben Kudo told the state Land Use Commission at its first hearing, October 7, on a proposal to reclassify some 272 acres of land near Kailua-Kona, Hawai`i, into the Urban District. “However, during the course of the proceedings, more information came to light as far as this project is concerned… As a result of this information, we reluctantly but out of necessity had to change our position to that of opposing this particular petition.”

With that, the Queen Lili`uokalani Trust threw down the gauntlet, challenging one of the state’s most ambitious projects for affordable housing in recent years: Kamakana Villages near Kailua-Kona. If approved, the development, largely surrounded by land owned by the trust, would consist of some 2,350 residential units (slightly more than half of them affordable to families earning up to 140 percent of the county median income) and 197,000 square feet of commercial space. Because at least half of the planned units are planned to be within reach of families earning 140 percent of the county median income, it is seeking expedited approval under Section 201H, Hawai`i Revised Statutes, which puts affordable housing projects on a fast track and imposes on the commission a deadline of 45 days (November 5) within which to reject the proposal or approve with conditions. If neither action is taken, the project is deemed approved as described in the application.

Kudo briefly recapped the history of the trust’s involvement with the project. In 1989 the Queen Lili`uokalani Trust negotiated a deal with the state of Hawai`i to sell this parcel to the state, he said. The lands were sold to facilitate an affordable housing project, he continued, but “the original project contemplated … was very different from the project you have before you.” It was to be 60 percent affordable, have no commercial development, include a regional sports complex, and a third of the land was to be used as a West Hawai`i campus for the University of Hawai`i.

At the LUC’s second hearing on the project, commission chair Vladimir Devens deferred a decision on Kudo’s request for a declaratory ruling that the reclassification proposal was legally defective (by virtue of not having given adequate public notice of the action and calling into question the developer’s title to the land), clearing the way for consideration of the project being proposed by the Hawai`i Housing Finance and Development Corporation and a LLC subsidiary of the giant Forest City Enterprises, Inc.

At 1:14 p.m. that afternoon, barely two hours after the deferral, the trust filed a complaint in 1st Circuit Court in Honolulu against the LUC, HHFDC, and Forest City Hawai`i Kona, LLC.

“Friendly” was about the last word one would use in describing the day and a half of hearings that followed.

A Slowdown on Traffic

Under 201H, developers are allowed not only an expedited hearing, but also are able to ask agencies to exempt them from many of the burdens imposed on developers of market-rate projects. While Forest City is not seeking exemption from state requirements, it is asking the county for relief from more than four dozen requirements, having to do with such things as setbacks, street widths, permit fees, and the like. (At first, nearly 100 such exemptions were requested; as of late October, the number had been pared back to the low 50s. At press time, the county and developer were still in negotiations.)

As for state demands, the developer has committed to working out with the Department of Transportation an agreement to mitigate, by construction of intersection improvements, traffic impacts that are expected to result from the project. What those impacts would be, exactly, was the subject of much of the most heated exchanges in the two days of LUC hearings that followed the deferral on the Queen Lili`uokalani Trust’s request for a declaratory order.

Randall Okaneku, retained by Forest City to analyze traffic impacts, was grilled by Kudo, who pointed out discrepancies between Okaneku’s raw data (trip numbers obtained in traffic surveys earlier this year) and the figures used in tables showing existing levels of service. Okaneku explained that, on the basis of his two decades of experience in studying Kona traffic, he was able to determine which figures needed adjusting to fit into his models. “My position is data is data,” Okaneku said. “It can’t be touched…. But for model purposes, I may adjust certain movements.”

Forest City attorney Steve Lim claimed his client was being ambushed, with Kudo springing on the witness a line of questioning that should have been raised in response to written testimony submitted weeks earlier. Kudo shot back that he and the traffic expert retained by Queen Lili`uokalani Trust had been going through Okaneku’s traffic impact analysis report as quickly and diligently as they could.

Devens, commission chair, asked Kudo how many intersections he had identified as problematic. “We estimate 100 to 150 intersections,” Kudo replied.

At that point, Kudo was ordered to share his notes with the petitioner and give Okaneku an opportunity to prepare a response by the next day. When Okaneku again testified, he acknowledged errors and typos. But, he concluded, “the discrepancies represent typos or subsequent refinements in traffic signal timing. However, the discrepancies with the proposed project do not result in any worse case than [level of service] ‘D.’ Therefore, they do not affect my findings.” (Only in the event that the projected level of service falls below D will developers have to provide mitigation.)

The traffic impact analysis report (TIAR) prepared by the developer needs to be accepted by the state Department of Transportation. Ed Sniffen, chief of the Highways Division of the DOT, said that although there were some concerns with Okaneku’s TIAR, “we will work with the petitioner …. until the (TIAR) is a document I can make a decision on. We’re not going to let it go until we have that comfort.”

The County of Hawai`i is also concerned with traffic impacts on county roads, according to its planning director, Bobby Jean Leithead-Todd. In her testimony, she noted that under a section of the county code, “if you come in with double the amount of affordable housing required … which is 20 percent… there isn’t a specific requirement you have to mitigate regional impacts.” Still, she went on to say, the county’s director of public works “feels this doesn’t mean you can’t ask for some of that mitigation. So we’re looking at that and will have a recommendation both to the applicant and the County Council.”

The reason for Queen Lili`uokalani Trust’s concern with traffic impacts is more than academic. The trust has begun planning to develop some of its surrounding lands. If the Forest City project does not fully mitigate its traffic impacts, the trust may be burdened with having to pick up some of the slack.

Kudo put it this way to the commission: “If we have to pay for mitigation measures that aren’t paid for by petitioner, whether through exemption to county or state DOT, or anybody else, that impacts the trust.” And anything that impacts the trust will impact its beneficiaries – the socially disadvantaged.

But Kudo was not allowed to show the commissioners a video of the services that the trust provides to the community. When he attempted to do so, tempers flared. “I object,” Lim said. “We’ve been stonewalled all the way through this… They tell us they have a problem, but they don’t tell us what it is. They’ve not played nice. We’re trying to do the right thing, without hurting the trust. I think it’s becoming increasingly clear to us that this is less an exercise in impacts on the trust resulting from the LUC decision than it is a competitive issue for them.”

“Is he making an argument?” Kudo asked.

“I’m making a record,” Lim replied, mentioning the complaint filed the previous afternoon in 1st Circuit Court. “They said they needed to go through the administrative process [before filing suit]. We’re trying to play nice, but we’re faced with the trust that acts like it’s fighting for its life. That’s why we’re a little hardball now.”

Kudo defended the lawsuit. “We did everything we said we were going to do. When the motion [for a declaratory ruling] was rejected, we went to court…. We don’t have the time we have in a normal proceeding. The trust is spending a lot of money doing this because we do feel it is a threat. This isn’t some idle thing. … When we see something that’s a threat to our viability we will take action to protect it, even if some people think we’re playing dirty.”

Superferry Redux?

The complaint raises the same issues as the request for a declaratory order from the LUC, and the relief sought is the same – a declaratory ruling. In addition, the trust asks the court to issue a temporary restraining order preventing the commission from any further deliberations on the petition until the court issues a preliminary injunction. “This situation is analogous to what occurred in the PASH case, where the improper failure to let in an intervenor at the beginning of the proceedings led to years of litigation, or the Superferry situation, where the failure of the state initially to follow required EIS exemption procedures again led to years of litigation and the eventual loss of the entire Superferry project,” the TRO request states. “Queen Lili`uokalani Trust’s position is that HHFDC and the LUC should be required to do it correctly from the beginning, thus avoiding this case becoming another PASH or Superferry.”

At the October 27 hearing, Judge Rhonda Nishimura denied the TRO without prejudice. “Judicial intervention is premature” at this point, she told the packed courtroom.

* * *
Closing Arguments in O`oma Petition


To judge from the crowded ballroom at the Marriott Waikoloa, you’d never have guessed that the petition to redistrict Conservation District land at O`oma, just south of the Keahole airport, was in its last stages. When the LUC met to hear closing arguments from the petitioner, O`oma Beachside Village, as to why its request for redistricting request should be granted for a development of single-family and multi-family houses and commercial development, two dozen witnesses signed up to testify.

With the commission’s meeting coinciding with a school holiday, several of those testifying were youngsters – all of them opposed.

During oral arguments, only a few areas of dispute between the parties to the petition emerged. Most of the major bones of contention – mitigation of airport noise, control of runoff, traffic – had been worked out among the petitioners and intervenors some time ago.

Arguing for O`oma was attorney Jennifer Benck. “This is a kind of project unlike anything you’ll see… Compact development, designed for the primary resident market. That means people like those in this room right now will be welcome to live there. It’s not a luxury resort, not time shares, not a fancy hotel… It’s not another sprawling development, where people have to travel for miles to get to work… I challenge you to find a residential development anywhere else along the coast, with 20 percent affordable housing on site. On site!”

Bryan Yee, deputy attorney general representing the Office of Planning, said that while noise might be a concern, “as long as the developer is willing to take the risk that there is a … market, and to waive the right to seek damages from the state if the noise increases… then OP has no objection.”

Two areas of contention were pointed out by Yee. While the OP desires to have enforceable energy conservation standards (such as those of LEED) imposed, O`oma wants something less rigid. Also, the state’s Natural Energy Laboratory of Hawai`i Authority (NELHA) wants to be able to put injection wells on its property adjoining the project – something that would make it more difficult for O`oma to develop wells for use in its planned reverse osmosis plant.

Benck proposed that NELHA and O`oma “split the difference…. Where NELHA wants a one-quarter mile buffer so that it may, at some undetermined point in the future install injection wells along its property boundary, we just don’t think that’s fair and we can’t agree to it. A one-quarter mile buffer is necessary around our feed source [for the RO wells]. We’ve proposed … to split the difference… It’s unfair that all the burden should fall on us.”

As to the energy standards, Benck said, “the condition we proposed is consistent with those imposed by this commission in prior [decisions and orders]. This project is going to be green. It’s going to be conservation-minded out of necessity, whether it’s through LEED compliance, solar energy – there’s a million different ways we can pursue to make this project energy efficient. LEED is not the only standard to use. If the state wants that, then the Legislature should decide.”

The commission will make a final decision on the project in the next few weeks.


Patricia Tummons


Volume 21, Number 5 — November 2010


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