Big Island resident Charles Flaherty has stated publicly that the state Board of Land and Natural Resources knowingly entered into a development agreement with Jacoby Development, Inc. that conflicts with a state law that governs developments of public land by private developers.
That law is Section 171-60 of Hawai`i Revised Statutes, “Development through private developer.” According to this section, the state may – with prior approval of the governor and authorization of the Legislature by concurrent resolution – lease public lands to a private developer or enter into a development agreement for development and subdivision of lands as a leasehold project for commercial, business, hotel and resort, or other uses.
The section requires that before leasing the land or entering into a development contract with a developer or developers, the Land Board must determine, among other things, the uses to which the lands shall be put, which “shall be in conformity with the applicable state, city and county, or county zoning and subdivision laws, ordinances and regulations;” “minimum requirements for on-site and off-site improvements, if any;” and set the minimum rental of the lands to be developed on the basis of an appraisal report prepared by an appraiser for the board determining fair market value of the lands to be developed.”
On September 23, 2005, the Land Board approved a development agreement with JDI, which was later signed on November 18. Under the agreement, if JDI meets certain conditions within a certain time frame, it is guaranteed a 65-year lease from the state to develop marina, resort, commercial, business and other facilities on DLNR’s lands at Honokohau, Hawai`i. The conditions, which are similar to those set forth in 171-60, require JDI to obtain all necessary entitlements – including county zoning , which it does not have – and permits.
Flaherty, a party in the lawsuit against the controversial development at Hokuli`a, believes that 171-60 applies to JDI’s development, called Kona Kai Ola, but has been completely ignored.
In testimony before the Hawai`i County Council on August 1, which at the time was deciding whether or not to approve a resolution that would have opened the door to re-zoning Honokohau from an open area to a resort area, Flaherty calls out the condition in HRS 171-60 that requires the Land Board to decide what uses its lands will be put to — and the fact that those uses must conform with all applicable government laws, ordinances, or regulations — before entering into a development contract.
“It is obvious…that BLNR, JDI, and certain County officials had constructive knowledge that:
1. Existing Open County zoning and [proposed General Plan amendments] were in conflict with the [DLNR’s] Honokohau RFQ/RFP when issued.
2. The Agreement was in conflict with existing Open County zoning and the adopted General Plan Open designation.
3. The Agreement was in conflict with 171-60(C).
“Therefore, the Agreement is void under existing state law. Kona Marina has no ‘entitlements’ to the public’s land at Honokohau,” Flaherty wrote.
DLNR Land Division administrator Russell Tsuji, a former deputy attorney general who helped draft the development agreement, agrees that JDI has no entitlements, but disagrees with Flaherty’s position that the development agreement is invalid.
Tsuji notes that the Land Board did not approve the development agreement under section 171-60; it did so under HRS section 171-59, “Disposition by negotiation.”
If the Land Board had used 171- 60, it would have had to have known specifically what it wanted on the lands,” Tsuji says.
The board really wanted a new marina, but didn’t know what kind of response it was going to get to its request for proposals, he says.
Section 171-59 allows the Land Board to issue leases through direct negotiation and seems to allow for a request for proposals process.
“It’s something we looked at for a long time,” Tsuji says of the various possible applicable statutes. With 171-59, although “you may not see the words ‘development agreement’ in there,” it still applies.
In an email to Environment Hawai`i, Keith Chun, also with the Land Division, explains that the Land Board is granted various powers under HRS §171-6, which allows it to “[e]stablish additional restrictions, requirements, or conditions, not inconsistent with those prescribed in this chapter, relating to the use of particular land being disposed of, the terms of sale, lease, license, or permit, and the qualifications of any person to draw, bid, or negotiate for public land.”
Chun states that the development agreement with JDI does just that – it imposes additional requirements and conditions on JDI, and JDI must satisfy “all such additional requirements/conditions before any lease can be issued. For example, JDI is required to prepare/process an environmental impact statement in accordance with HRS Chapter 343, obtain all required land use entitlements (such as the County GP, zoning, SMA, etc), and submit bonds for various required infrastructure.”
As for Flaherty’s claims that the development agreement is invalid because it doesn’t conform to 171-60, Chun states, “HRS §171-60 does not apply to this project because the Land Board elected to approve the project under HRS §171-59. HRS Chapter 171 grants the Land Board broad powers to dispose of public lands….HRS Chapter 171 also contains various different provisions under which the Land Board may dispose of public lands, and many of these provisions are not mutually exclusive. Therefore, there may be more than one provision of HRS Chapter 171 that could possibly apply to a particular disposition. For example, DLNR could have sought to issue a lease to a private developer for the Kealakehe lands by public auction pursuant to HRS §171-14.”
“They need zoning, SMA…He has 10 million things to do. The [development agreement] gives him an opportunity to go do his due diligence. If he doesn’t get entitlements, the project is dead, Tsuji says, adding, “No developer is going to spend that kind of resources if they’re not guaranteed he’s gonna get a lease. We’re trying to do it in a practical way so it can be done.”
— Teresa Dawson
Volume 17, Number 3 September 2006