Two recent judicial rulings have sent the Land Use Commission back to court. The first, a ruling on May 2 by 3rd Circuit Judge Wendy DeWeese, overturned a Hawaiʻi County law, supported by the LUC, that banned short-term vacation rentals on lots in the state Agricultural District if the lots were not in existence prior to June 4, 1976. The second is a May 23 decision by the Intermediate Court of Appeals that determined the LUC does not have the ability to block the issuance of special permits for overnight campgrounds on Agricultural land rated high for productivity.
On June 8, the members of the LUC unanimously voted to authorize the state Department of Attorney General to appeal the decisions.
Farm Dwellings On Ag Land
In 2019, to address the uncontrolled growth of vacation rental properties, Hawaiʻi County enacted a law that, among other things, severely limited the ability of owners of houses on land in the state Agricultural District to rent them out as vacation homes. In short, unless a house was on an Agricultural lot of record in 1976, when state law limited houses on Agricultural land to only those dwellings directly connected with active farming or ranching, it would not qualify for permitting as a short-term vacation rental (STVR).
Chapter 205, the state’s land use law, defines a farm dwelling as a single-family house that is either “located on and used in connection with a farm” or a house “where agricultural activity provides income to the family occupying the dwelling.” The county ordinance relied on this when deciding to place the limit on the use of such houses as STVRs.
Almost immediately, the ordinance was challenged by a group of more than 20 property owners. This group, called the Rosehill petitioners, after the lead complainant, Linda Rosehill, argued that nothing in state law blocks farm dwellings from being rented, whether for short terms or long.
The houses owned by most of the Rosehill petitioners have no apparent connection with farming or ranching. Almost all are owned by out-of-state, even out-of-country residents. One advertises itself to potential vacationers as the only Frank Lloyd Wright-designed house in the islands. Another boasts of a 100-bottle wine cooler, tennis court, and pool.
The Rosehill petitioners first asked the county Board of Appeals to rule on the county Planning Department’s denial of their applications for STVR permits. But then both the county and the Rosehill complainants agreed to take the dispute to the Land Use Commission, asking it for a declaratory ruling on the issue.
This was not the first time the LUC weighed in on the question of “farm dwellings” on Agricultural land. In 1994, the commission determined that a multi-unit development on 10 acres of state land above Kona – the so-called Crazy Horse Ranch complex – was not permissible.
At no point does the Rosehill petition make any mention of agricultural activity. Instead, the petition focuses on the fact that the statute does not set forth a minimum period for rental.
In the spring of 2020, the LUC conducted hearings on the Rosehill petition and a separate petition by the county. On August 13, 2020, the commission denied the Rosehill petition. In its 32-page-long decision, the LUC takes note of the petitioners’ point that Chapter 205 sets no minimum rental period for farm dwellings. But, the LUC states, petitioners “did not present to the commission a specific factual situation on which the commission could issue the declaratory order they requested… Whether the occupants are renters farming the land or whether there is agricultural activity providing income to the renters, or whether the renters are instead vacationers or tourists who are not engaged in and do not derive income from farming on the premises are some of the ‘specific factual situations’ which must be presented in the record.”
On the other hand, the LUC found that there was nothing in the county ordinance that conflicted with state law.
The Circuit Court Ruling
The Rosehill petitioners then appealed to the 3rd Circuit Court. On May 2, Judge DeWeese issued her decision, reversing the LUC’s declaratory order. DeWeese accused the LUC of abusing its discretion in denying the Rosehill Petition as speculative, while not applying the same standard to the county petition. Also, she rejected the LUC’s finding that the Rosehill petition was speculative.
This court “interprets short-term vacation rentals’ to refer specifically to the statutory definition set forth by the county in the ordinance and not to an ordinary definition of a vacation rental or vacation use,” she continued. “[A] dwelling may simultaneously meet the definition of a ‘farm dwelling’ pursuant to HRS Chapter 205 and the county’s definition of ‘short-term vacation rental,’” she wrote. And inasmuch as state law does not regulate the period for which a farm dwelling may be rented, DeWeese entered her final judgment in favor of the Rosehill petitioners.
The Vote to Appeal
On June 8, when the Land Use Commission met to decide whether to appeal DeWeese’s ruling, none of the Rosehill petitioners or their attorneys made an appearance. Several community members did testify in support of the county’s ordinance and the LUC’s declaratory ruling upholding it.
Two owners of houses in the state Agricultural District offered testimony in opposition. Justin Cleveland of San Jose, California, owns a 3200-square-foot house on a little more than an acre of Agricultural land high above Kailua Bay. He stated that he and his family might be there about a quarter of the year. The remainder of the time, he said, it is rented out to “people usually from the mainland.”
Commissioner Gary Okuda asked him, “Are you aware right now, as you sit here today, that in fact there is a legal requirement that if you are occupying or using agricultural land, it has to be used for agricultural purposes?”
Cleveland said he was not aware of that, but that the bylaws of the gated community his house is a part of allow short-term rentals. “That was one of the reasons we purchased” the land,” he said. “There was no discussion of, we had to have a farm, or anything like that.”
Pressed by Okuda, Cleveland said that when he applied for a short-term rental permit, “I brought it to their attention that they basically allowed us to break the law by approving the dwelling we built. … They basically said, ‘we kinda look the other way on Ag land and we approved your permit.’ I am aware the property we have is probably not in line with the Agricultural land use building permit structure, but the county allowed us to build it that way.”
While Cleveland agreed with Okuda that, “breaking the law is not a great thing to do,” he added: “My other big thing is, if you do buy a property you should not be told what you have to do with the property… I have several houses and I am able to rent those properties as I feel in other locations without any issues.”
Cleveland told the LUC that the people who rented his house “are very good renters. … We’ve never had any problems with the renters. They are very respectful of the community, of the property, and the area.”
News reports earlier this year tell a slightly different story. On April 24, the Hawaii Tribune-Herald published an article by reporter Nancy Cook Lauer stating that the Cleveland property had been the subject of multiple complaints from neighbors.
One neighbor described it as “a great big party house,” Lauer reported, adding that Airbnb advertised it for as much as $1,200 a night. “Neighbors say the four-bedroom, four-and-a-half bath home has hosted as many as 40 people during its parties,” the article stated.
A physician, David Hefer, who owns a house in Captain Cook, also testified against the LUC’s position, going so far as to take the commission to task for having failed to complete a five-year boundary review since 1992.
The commissioners were too polite to point out that it is not the task of the LUC to undertake the boundary review – which, in any case, was most recently completed last year. However, chair Jonathan Scheuer did suggest that Hefer take a look at the updated versions of Chapter 205.
Following an executive session, a motion to appeal was discussed. At the close of discussion, Scheuer offered a short statement:
“We are at a point in Hawaiʻi where the biggest question for me that is before us is, do we run Hawaiʻi for outside capital, for visitors, and for other outside interests? Or do we run Hawaiʻi for ourselves and those of us who live here and for the islands themselves?
“When we look at who is benefiting and who is losing in this transaction, it is unambiguous. The decision that was made by the LUC not only upholds the black-letter law involved but the greater idea that perhaps Hawaiʻi should actually be run for the benefit of those who live here and for the islands themselves.”
The motion to appeal passed unanimously.
Camping on Ag Land
Seven years ago, the Maui County Planning Department was asked to approve a special permit to allow for overnight camping on about eight acres of land in the state Agricultural District near Lahaina. The land made up a portion of a larger, 22-acre parcel owned by Kauaula Land Company, LLC, which had leased it to the Hoʻomoana Foundation, a non-profit that was planning to provide temporary housing in tents to homeless people as well as commercial campers. Twenty-six pods for tents were proposed to be placed on the site, with a population of up to 80 campers a night, with homeless campers staying two to three months.
Immediately mauka of the proposed campsite lies the Puʻunoa subdivision, a gated community of upscale homes, also on land in the state Agricultural District. The Puʻunoa Homeowners Association opposed the campground and asked the Land Use Commission for a declaratory order. Specifically, the association asked the LUC whether the proposed use would require a boundary amendment – removing the land from the Agricultural District – instead of the special permit the foundation was seeking from the county.
Chapter 205 specifically bars “overnight camps” on Agricultural land with a B (high) productivity rating, the association noted in its petition to the LUC. In addition, it pointed out that Maui County itself restricted occupancy of tents as temporary living quarters to no more than six consecutive nights in any 30-day period.
Both Maui County and the state Office of Planning, however, argued that state law gave counties broad discretion to determine reasonable and unusual uses of Agricultural land.
After a hearing in February 2016, the LUC issued a declaratory order, finding that the proposed campground could not be allowed under a special permit and a district boundary amendment would be required.
Hoʻomana Foundation appealed. In March 2017, 2nd Circuit Judge Rhonda Loo vacated the LUC order, finding that a campground could be allowed if the county determined the use qualified for a special permit. No boundary amendment was required, she found, citing to a 1990 Hawaiʻi Supreme Court opinion, Mahaʻulepu v. Land Use Commission. That opinion found that the Land Use Commission could approve a special permit for a golf course on productive Agricultural land if it found that the golf course constituted an unusual and reasonable use – despite language in Chapter 205 stating that golf courses are not a permitted use on lands with a productivity rating of A or B. The case involved an appeal of a special permit granted by the Kauaʻi Planning Commission, and affirmed by the LUC, allowing a 210-acre golf course on land adjacent to the Hyatt Regency hotel.
The LUC and the homeowners association appealed to the Intermediate Court of Appeals. On March 23, it issued its opinion.
Permitted vs. Prohibited Uses
Reading through the opinion, it would seem as though the ICA was sympathetic to the position of the LUC and the homeowners.
The court noted that the Legislature did restrict Agricultural lands with a productivity rating of A and B to 23 identified permissible uses, while specifically listing golf courses and overnight camps as not included among those uses.
The arguments of the LUC and the homeowners’ association that the lower court erred in its position that overnight camping could be addressed by a special permit “are well taken,” the ICA stated, “as LUC’s decision appears to be supported by canons of statutory construction.” Allowing overnight camps by means of a special permit “when overnight camps were expressly excluded from a particular permitted use appears to render the express exclusion meaningless,” the ICA found, “and a statute cannot be interpreted so as to render it a nullity.”
Notwithstanding that, the ICA was “bound by legal precedent. Over thirty years ago, in 1990, the Hawaiʻi Supreme Court interpreted the same statute, HRS §205-4.5(a)(6), as applied to a golf course. In that appeal, the Supreme Court analyzed whether the provisions of HRS chapter 205 prohibit the county planning commission from issuing special use permits for golf courses on prime agricultural lands classified as Class A or B… The Supreme Court then held that HRS chapter 205 did indeed provide the authority for such permits.”
The ICA opinion continued: “The Supreme Court reasoned that, although golf courses are not permitted on Class A and B agricultural lands under HRS §205-4.5(a), subsection (b) ‘nonetheless allows those uses for which special permits may be obtained under §205-6.’ … The Supreme Court explained that ‘[s]ection 205-6 vests in the planning commissions the authority to issue special permits for uses that, while not otherwise permitted within agricultural districts, are nonetheless ‘unusual and reasonable uses that promote the effectiveness and objectives of Chapter 205.’”
Had the Legislature intended to absolutely ban golf courses from prime ag lands, the Supreme Court found in the Mahaʻulepu decision, “it would have done so unequivocally by prohibiting the issuance of permits for golf courses under the special permit provisions of HRS §205-4.5(b) or by employing clearly prohibitory language.”
In 2005, the Legislature amended the land use law by specifically prohibiting golf courses in the Agricultural District, other than those approved before July 1, 2005. The Legislature was silent on other uses excluded, including overnight camping.
“Thus,” the ICA opinion stated, “although the Legislature effectively abrogated Mahaulepu’s specific application to golf courses in 2005, it did not otherwise address Mahaʻulepu’s interpretation that HRS chapter 205 provides authority for issuing special permits allowing … excluded uses (drag strips, airports, drive-in theaters, country clubs, and overnight camps) on class A and B agricultural land. LUC is afforded deference in interpreting its own statute, but the Hawaiʻi Supreme Court is the final arbiter of Hawaiʻi statutes. … To the extent LUC’s decision is contrary to Mahaʻulepu, it was palpably erroneous.”
The ICA then remanded the matter to the LUC “for further proceedings consistent with this opinion.”
An Appeal
On June 8, executive officer Daniel Orodenker gave a short history of the litigation to commission members, many of whom were not on the commission when the declaratory ruling was issued.
“It is my belief that if you read the decision, the ICA was asking us to appeal further, because they didn’t like what was being said, they thought the matter was confused, and they made that clear,” Orodenker said.
After an executive session with the deputy attorneys general who were involved in the matter before the appellate court, the commission unanimously authorizing the attorney general to file a writ of certiorari to the state Supreme Court.
— Patricia Tummons
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