Two developments lie behind the 2021 Legislature’s passage of acts relating to land use laws in Hawaiʻi:
- A state Supreme Court ruling that interpreted the applicability of the statute of limitations for grievances filed over a Land Use Commission decision; and
- The process of using condominium property regimes to circumvent county subdivision laws governing the state Agricultural District.
The first of these – the Supreme Court ruling – grew out of the much-disputed, much litigated – and still moribund – Villages of ʻAina Leʻa development in the Big Island district of South Kohala, lying between the town of Waikoloa to the east and the Mauna Lani resort to the west.
As stated in the findings section of House Bill 357 (Act 16), “the explicit creation of a statute of limitations applicable to regulatory takings actions against the state is warranted in light of the Hawaiʻi Supreme Court’s decision in DW Aina Leʻa Development, LLC, v. State of Hawaiʻi Land Use Commission, et al….Setting this limitation by statute will bring certainty and predictability to the time within which a plaintiff shall file this type of claim against the state or be barred from pursuing the claim.”
For all the years of trouble that the lack of an explicit time limit caused in the ʻAina Leʻa case, the legislative solution is startlingly brief. Just one sentence is added to the HRS Chapter 657 addressing time limits for filing claims against the state alleging a regulatory taking. “All actions for a regulatory taking against the state, including a claim brought under Article I, Section 20, of the State Constitution, shall be commenced within two years after the cause of action accrued, and not after.”
Attorney General Claire Connors and deputy AG David Day submitted testimony supporting the change. While noting that monetary claims against the state are subject to a two-year statute of limitations, the state Supreme Court, in the ʻAina Leʻa ruling, found that a six-year statute of limitations for regulatory taking claims was supported by a six-year “catch-all” statute of limitations in the state Constitution.
“Frequently, it is not immediately obvious to the government that a regulation may have serious adverse effects upon private property owners,” they testified. “Hawaiʻi has unique legal structures for land-use and permitting, including Conservation District permitting, Coastal Zone Management, shoreline setbacks, historic preservation laws, the Water Code, and a robust trust doctrine, all of which are intended to protect the ʻaina and its resources and natural beauty. Because regulations within these legal structures could potentially limit the development of property, the state could be subject to a variety of regulatory-taking claims.”
They went on to say that the proposed legislation would help the state address the COVID-19 pandemic. “Laws and regulations that limit business activity or that limit the rights of landlords for the benefit of public health could potentially be subject to suit. Because Hawaiʻi case law on regulatory-taking claims is very limited, the likelihood of the state being found liable for a regulatory-taking claim is difficult to predict, given the myriad different factual situations. This in turn makes the state’s potential financial exposure very high.”
As the bill made its way through the legislative hearing process, the executive departments of Transportation and Land and Natural Resources added their support in testimony. No testimony in opposition was submitted.
(For background on the long history of ʻAina Leʻa litigation, see write-ups in past issues of Environment Hawaiʻi, including, most recently our January 2021 article, “High Court Favors ʻAina Leʻa on Question of Statute of Limitations.”)
The background to passage of House Bill 247 (Act 77) can be found in a report submitted to the Legislature by the Office of Planning in advance of the start of the 2021 legislative session. That report, developed in response to a previous legislative request (Act 278 of the 2019 Legislature), looked into subdivisions and condominium property regimes (CPRs) on land in the state Agricultural District on the island of Oʻahu.
As noted in the report, development of an agricultural subdivision in conformity with the ordinances of the City and County of Honolulu can be expensive, requiring roads and other infrastructure. To get around this, owners of agricultural land have devised several alternative ownership structures. A state agency, the Department of Commerce and Consumer Affairs, gives approval to CPRs, with the county having no opportunity to review them and little ability to enforce laws restricting uses on Ag lands. “Buyers mistakenly believe they have bought a conforming subdivided lot and can build a farm dwelling,” the report states. “There is no prior city review and disclosure of the adequacy of infrastructure and utility systems and environmental constraints.”
To address this, the OP report recommended the Legislature require the DCCA to obtain county review of all agricultural CPRs to determine “availability of supportive infrastructure, the potential impact on governmental resources, and other requirements of county ordinances and rules.”
Additionally, state law had allowed buildings in the state Ag District to be exempt from county building codes. This, the report notes, made it virtually impossible for county inspectors “to investigate allegations of violations and misuse of unpermitted agricultural buildings and structures which are sometimes illegally transformed into residential uses.” In response to early findings of the OP, the Legislature in 2020 passed a measure (Act 60) that grants county agencies the right to enter property to investigate allegations of violations of state and county land use laws. Another bill introduced in 2020 that would have banned residential use of agricultural outbuildings was not passed, owing to the foreshortened session – the result of the COVID-19 pandemic.
The OP report noted that legal vehicles to get around the county rules and ordinances concerning subdivisions on agricultural land have proliferated. These include establishment of LLCs and cooperatives that sell shares allowing owners to occupy portions of larger ag lots. Since these were not called out as part of the charge of the OP in developing the report, the OP made no recommendations as to how these might be addressed.
Act 77 includes the language of the bill from 2020, making it illegal to occupy any agricultural outbuildings erected on leased ag land and giving counties authority to enforce this. It also requires county review of any agricultural CPR proposal involving more than five units as to the adequacy of infrastructure, impact on government resources, “sensitive environmental resources, and any other requirements pursuant to county ordinances and rules.” The new law took effect July 1.
Providing supportive testimony for the bill were the state Real Estate Commission, the Office of Planning, the chairperson of the Board of Agriculture, the Honolulu Department of Planning and Permitting, Ulupono Initiative, the Hawaiʻi Cattlemen’s Council, the Hawaiʻi Farm Bureau, and the Kauaʻi Kunana Dairy.
A petition, organized through Change.org, was submitted to the Legislature in opposition. Among the 370 signatories to the petition were people from Australia to Argentina, Missouri to Miami, Austria, Netherlands, and Denmark. Among other things, the petition alleges that the legislation would eliminate affordable housing, create an “unfunded mandate” for the counties, damage local economies, and was based on an incorrect understanding of the CPR process.
Several other individuals submitted testimony, about half in support and half opposed.
— Patricia Tummons