The Kahala Hotel & Resort didn’t get everything it wanted, but it did get the Board of Land and Natural Resources to condone — albeit conditionally — what many consider to be commercial uses under a permit that had long been restricted to recreational and maintenance uses.
On November 9, the Land Board unanimously approved a new revocable permit to the hotel that allows the setting of clamshell loungers and cabanas — which cost $100 and $200 a day to rent — and various other types of beach-related equipment on a state parcel fronting the sandy beach, so long as the City & County of Honolulu also allows it.
A month earlier, city Department of Planning and Permitting acting director Kathy Sokugawa informed the hotel that the items, which had been there for years, were within the Special Management Area (SMA) and considered development under the city code. Concerned members of the public had pressed the city to weigh in on the matter, which had been raised during the hotel’s efforts months earlier to obtain the Land Board permit.
“Without a SMA permit, [the items] are not allowed under applicable City and State laws,” Sokugawa wrote, adding that if they weren’t removed by November 1, her department would issue a notice of violation. The cabanas, which sat on large concrete pavers along the beach, would require a shoreline setback variance, an environmental assessment, and a building permit, she added.
The hotel acquiesced. Its month-to-month permit from the Land Board requires compliance with all applicable laws, and appealing to the board for a new one while at loggerheads with the city would be problematic.
The result: “They cleared it. It looked beautiful yesterday. It looked peaceful. Everybody was coexisting,” Land Board member Keone Downing said at the board’s meeting.
“Most of us in the community are quite pleased with the current condition of the property. What we see today is what we’ve been trying to push the hotel to do, [create] an open, unencumbered area … free of cabanas, free of the restaurant,” testified James Nicolay, a member of the public who opposed the terms of the proposed new permit.
Whether the parcel stays clear remains to be seen. Jennifer Lim, one of the attorneys representing the hotel’s parent company, Resorttrust Hawai‘i, told the board that she is working on getting clarification on the city’s requirements to determine what can be put back.
“The city has been well aware of what’s been going on on the property for decades … It’s never been an issue,” she said of the activities conducted there in the past, such as weddings, restaurant service, and cabana and lounger rentals. “There are a handful of people who have been in touch with the city and been putting pressure on the city to take some action,” she said. Some of those same people have also appealed to the Land Board.
Given the city’s October letter, Lim said the cabanas would not likely return, at least not with the concrete pavers beneath them.
Land Board member Chris Yuen noted that getting city approval of a SMA minor permit for the other structures would be relatively simple, but if the city held to its position that a shoreline setback variance and environmental assessment would be required for the cabanas, that was “kind of a big deal.”
Lim agreed. “To go through the agony for a shoreline setback variance would be pretty foolish [for a revocable permit]. … Ultimately, it’s a business decision. A variance is a pretty big ask,” she said.
Even so, she asked the Land Board to include cabanas in the list of the 40 types of items that would be allowed on the parcel under the new permit.
Board members were open to the idea, but wanted to make sure that the configuration of the equipment and furniture didn’t discourage public access. The rows of clamshell loungers, for example would have to include two 20-foot-wide gaps to allow the public to maneuver throughout the parcel.
“You gotta keep the beach side open. If we allow clamshells right at the beach, you’re already telling the public you can’t sit there. We’ve got to give them a place to sit,” Downing added, before offering to help the hotel set things up.
The board considered granting the hotel’s request to expand its Seaside Grill seating onto the parcel during peak visitor periods, but ultimately passed on the idea because Downing said it might impede lateral access. Board member Yuen also said he thought it was hard to argue that restaurant seating was a recreational use.
The board struggled with how to set rent for the new permit. The DLNR’s Land Division said an appraisal would be done, but Downing asked how that would work when commercial uses aren’t allowed without city approval.
While Land Division administrator Russell Tsuji seemed to think the market value of the property — which is considered “reclaimed land” — would be valued at somewhere around 50 percent of the value of the hotel’s property, Yuen argued that an appraiser should consider how important it is for the hotel to control the site.
“If a private owner owned this piece of property and a hotel owner was going to develop next to it, [and] there was some deed restriction you couldn’t build anything, but you had to let the public go across it, I think the hotel would pay a lot of money to buy it. … That’s a high-end way of looking at the value,” Yuen said.
Downing, however, had done his own estimation of the revenue the hotel has generated from its use of the property and came up with a proposed rent of $6,300 a month or three percent of gross receipts, whichever is greater. He said he included the percentage rent option to force the hotel to disclose how much they’re making off the property. “I only want to charge what’s fair,” he said.
Because the city has taken the position that no commercial uses are allowed without its approval, the board decided that the new rent, as proposed by Downing, would only kick in if and when the hotel received permission from the city to conduct commercial activities on the parcel. Until then, the hotel would continue to pay its previous rent of $1,244 a month.
Contested Case Denial Clears Way For New Permit
Before the board voted on the Kahala permit, it had to dispense with the matter of a contested case hearing request made in September by David Kimo Frankel. Frankel testified at a board meeting that month that hotel staff had tried to prevent him from traversing the permit area during a wedding that was taking place last year.
In his petition for a contested case, Frankel argued that the new permit proposed by the DLNR’s Land Division — or even the renewal of the old one — would adversely affect his recreational, aesthetic and environmental interests.
At the board’s November 9 meeting, Land Division administrator Russell Tsuji reported that the Department of the Attorney General found that Frankel had no constitutionally protected property interest in the permit and, therefore, the contested case request should be denied.
Tsuji added that Frankel had ample opportunity to testify before the board on the matter and granting a contested case hearing would be burdensome on the department. What’s more, it would likely extend beyond the permit term of one year.
“We’ve all been through Mauna Kea. That was a very expensive process,” Tsuji told the board, referring to the months long contested case hearing over the development of the Thirty Meter Telescope on the mountain.
In written testimony, Frankel excoriated the rationale being used to reject his request. He argued that the state’s land use law is, indeed, an environmental law and that the Land Board must comply with state laws relating to the Special Management Area and environmental reviews.
Frankel pointed out that the Land Division’s report to the board ignored the Honolulu Department of Planning and Permitting’s October 9 letter, “which determined that the hotel’s uses of the revocable permit parcel violated [Hawai‘i Revised Statutes] chapter 205A — and that a proposed use requires the preparation of an environmental assessment or environmental impact statement pursuant to HRS chapter 343.”
In any case, Frankel wrote, “The property right protected by the constitution is shaped by these laws.” He added that the Land Board’s rules don’t require him to identify the specific legal basis for a contested case hearing.
The Hawai’i Supreme Court’s October 30 decision in the TMT case re-affirmed the principal that “any balancing between public and private purposes must begin with a presumption in favor of public use, access and enjoyment,” Frankel wrote.
“Given the BLNR’s trust duties, the BLNR requires much more information — which a contested case would provide (as outlined in my October 2 analysis) — before it can authorize this use of public land,” he wrote.
With regard to the administrative burden a contested case hearing would have on the department, Frankel argued that the Land Division was exaggerating the potential effect.
“I have served as an attorney in several BLNR contested case hearings…. None of the hearings that I have been involved in have lasted five days. The comparison to the Mauna Kea hearing is absurd. …
“[P]lease consider the burden BLNR will face if a contested case hearing is denied and I sue on the merits. … Would it be less of a burden for the BLNR to face a trial (as it did in the Pohakuloa litigation) on issues such as its compliance with its public trust duties?” Frankel asked.
While some Land Board members supported the idea of granting a contested case hearing, they were not in the majority. The board voted 4-3 to deny Frankel’s request.
— Teresa Dawson
For Further Reading
- “New & Noteworthy: Kahala Update,” November 2018;
- “Contested Case Request Halts Attempt to Condone Commercial Use at Kahala,” and “Sen. Thielen: Use of Kahala Land Needs an Environmental Review,” October 2018;
- “Board Talk: Kahala Hotel’s Beach Use, Helicopters on Kaua‘i,” September 2018;
- “Kahala Hotel Beach Weddings Not Sanctioned by DLNR Permit,” July 2017.
Leave a Reply