On July 20, 3rd Circuit Judge Robert Kim heard arguments in the most recent litigation brought by ‘Aina Le‘a, Inc., intended to knock down hurdles that block its planned development of a mix of luxury and affordable housing, commercial space, and shops over more than 1,000 acres in the Big Island district of South Kohala.
The instant case was filed last March by Lulana Gardens, LLC, a subsidiary of ‘Aina Le‘a that claims to own the 38-acre parcel designated for 385 units of affordable housing. It is asking the court to overturn the Hawai‘i County Planning Department’s insistence that a decision by 3rd Circuit Judge Elizabeth Strance in 2013 that tossed out a 2010 environmental impact statement means that the developer must prepare a new one before it can move forward with further work on the site.
Michael Matsukawa, attorney for Lulana Gardens, argued that because construction on the townhouse blocks continued to go on for several years before the county issued a stop-work order, the county was in effect barred from requiring a new EIS.
“The most important thing,” Matsukawa told Kim, “is that the construction was allowed to continue.”
County deputy corporation counsel Sinclair Salas-Ferguson disputed that. The county had no idea that the developer was continuing to work on the afford- able housing project. Yes, the county had issued permits for the townhouses, he acknowledged, but the county still could withhold issuance of certificates of occupancy and other approvals needed before the units could be sold.
“The allegation is that from 2013 to 2017, when the county issued a stop-work order, … the county didn’t complain about the construction,” Salas-Ferguson said.
“The county [stop-work] letter said yes there are permits, but no valid EIS. … If a developer is doing something without the proper permissions and the county doesn’t catch it, that isn’t equivalent to the county giving the developer permission. … They constructed that on their own volition, and when the county found out about it, they issued the stop-work order….
“If somebody gets away with a violation of the law, that doesn’t mean they have a right to violate the law. … They don’t get the benefit. If they did work that wasn’t authorized, that’s on them. That’s in the county letter: ‘proceed at your own risk,’” he said.
At the conclusion of the hearing, Judge Kim denied ‘Aina Le‘a’s motion for partial summary judgment. Then he instructed both attorneys to prepare findings of fact and proposed conclusions of law with respect to most of the points raised in the county’s motion to dismiss the com- plaint. The briefs are due on August 20, with the attorneys having five additional days to reply.
Judge Kim did, however, deny one of the county’s arguments: that the case should be heard in environmental court.
Bridge Takes Appeal To U.S. Supreme Court
On July 15, Bridge ‘Aina Le‘a, LLC, the company that at one point owned all 3,000 acres where the Villages of ‘Aina Le‘a were first proposed back in the late 1980s, appealed to the U.S. Supreme Court a decision in 9th Circuit Court that rejected Bridge’s claims of taking against the state of Hawai‘i Land Use Commission.
Bridge agreed to sell its 1,000 or so acres of land that were the subject of the redistricting petition in 1989 to DW ‘Aina Le‘a (now ‘Aina Le‘a, Inc.) more than a decade ago. But when the LUC decided to revert the land to the state Agricultural District after finding that ‘Aina Le‘a and Bridge had failed to complete promised development of the affordable housing units, both Bridge and ‘Aina Le‘a sued the state.
Bridge ended up pursuing its claim for damages in federal court. The “takings” that Bridge alleged to have occurred as a result of the reversion were temporary, since the reversion was overturned in court and, in any case, ‘Aina Le‘a eventually paid Bridge handsomely for the Urban District land. A federal district court jury found that Bridge had indeed been damaged – to the tune of $1. Both the state and Bridge appealed. The 9th Circuit Court decided that even $1 in damages was too much.
Now Bridge, through attorneys Michael Berger of the national firm Manatt, Phelps & Phillips and Bruce Voss of the Honolulu firm of Bays Lung Rose & Holma, is asking the U.S. Supreme Court to take up the case. The petition for a writ of certiorari focuses on the appellate court’s findings under two takings theories: Penn Central and Lucas.
The 9th Circuit’s ruling “eliminates property owners’ ability to recover for temporary property takings under any theory, and that ruling conflicts with decisions of other courts, including this Court,” the petition states. “[D]oes this
Court need to clarify the rules for recovery for temporary regulatory takings?”
Second, “In light of the confusion in the lower courts as to the application of the Penn Central factors – to the point where it has become almost impossible for property owners to prevail on this theory – should this Court reexamine and explain how Penn Central analysis is supposed to be done – or dispensed with?”
Third, the petition suggests that the court may need to clarify the standards to determine whether temporary takings occur under either Penn Central or Lucas.
Finally, the petition seeks a review by the court of the ability of appellate courts to overturn jury decisions in takings cases. “In light of Penn Central’s clear direction that cases like this are to be determined ad hoc, on their individual facts, and this Court’s approval in City of Monterey v. Del Monte Dunes … that takings liability be decided by a jury, do appellate courts need to stay their hands (as mandated by the 7th Amendment’s Re-examination Clause) when – as here – reviewing jury findings of fact-based takings issues, particularly when the trial judge confirmed those findings?”
— Patricia Tummons