Believing that discretion was the better part of valor, we didn't think there would be a challenge to the Hawaii Intermediate Court of Appeals' opinion in Leone v. County of Maui, No 29692 (June 22, 2012). But we were wrong, and the County of Maui is going all in.
Update Dec. 12, 2012: cert rejected.
The County has filed a cert application (remember, under Hawaii appellate procedure we don't "petition" for cert, we "apply") arguing that a property owner faced with the County's refusal to even process its request for a use permitted by zoning has an obligation to appeal that refusal up the County's administrative chain. The reason for the refusal to even consider the request was that the proposed use, while permissible as of right under applicable zoning, was inconsistent with the Community Plan designation (the same as General Plans in most other places), so the use could never be approved. For proposed uses in the Coastal Zone, Hawaii law requires "consistency" among the requested use, the zoning, and the CP. Absent consistency, the proposed use cannot be approved. The property owners recently filed an opposition brief (but more on that below).
The ICA held held that property owners alleging a Lucas regulatory taking are not required to seek an amendment to the CP in order to ripen their takings claims. A CP amendment is a legislative act, and plaintiffs are not required to try to change the law before they seek just compensation. The archive of our live blog of the ICA oral arguments is here.
Before we go further, we're disclosing that we filed an amicus brief in the ICA supporting the property owners, arguing that Williamson County Regional Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985) does not require a takings plaintiff to attempt to change the law to ripen her claim. But even considering our interest, we think that this one should not be a close call and the Hawaii Supreme Court would do best to shy away from this case. It strikes us as one where, if that court wades into the Williamson County swamp and accepts the County's arguments, that decision would then be a good vehicle for the U.S. Supreme Court to revist and (finally) overrule Williamson County. And that would not endear the County of Maui to its peers, although it would make us very happy.
The case involves two undeveloped 1/2 acre beachfront parcels, two of 11 similarly-situated lots. The zoning on the properties is is “Hotel-Multifamily,” which permits residential use. The CP designates them as “Park” because in the 1980’s, the County sought to condemn the 11 parcels for a public beach park. After acquiring two of the parcels, however, the County ran out of money and the other 9 remain in private ownership, and several of them are fully or partially developed. The owners wants to build homes, which is consistent with the zoning but which cannot be built on a 1/2 acre parcel designated "Park."
The entirety of the parcels are within the Special Management Area, a special coastal zone subject to an additional layer of regulation under the Hawaii Coastal Zone Management Act, Haw. Rev. Stat. § 205A-1, et seq. According to the Hawaii Supreme Court's decision in GATRI v. Blane, 962 P.2d 368 (Haw. 1998), the CZMA requires zone/plan consistency, meaning that before any "development" within the SMA can go forward, the zoning must be consistent with the Community Plan. The CZMA exempts a single-family residence from the definition of "development" for which a SMA permit is needed, unless the home will have a "cumulative impact, or a significant environmental or ecological effect" on the SMA. Haw. Rev. Stat. § 205A-22.
The CZMA is administered by the counties, and if a Maui property owner believes a proposed use is exempt because it is not a "development," under the local rules she must seek an exemption determination from the county planning department and request a ruling that no SMA permit is required. Under Maui's administrative rules, in accordance with GATRI, an application for development cannot be processed unless the zoning is consistent with the CP. Consequently, when the property owners filed requests for determinations that SMA permits were unnecessary, the county refused to process them.
Williamson County requires that plaintiffs initially file their federal regulatory takings claims in state court, and the property owners did so, asserting the regulations as applied took all economically beneficial use of their land. In other words, a per se taking under Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992). For years, we'd been pointing out this huge downside risk to the GATRI holding, and here was a case that exemplified the problem.
The trial court granted summary judgment to the County, holding among other things, that in order to ripen the takings claim, the property owners had an obligation to try and change the CP. In the court's view, a CP change was like a variance, and the property owners should at least try to amend it to make the designation consistent with the zoning. The court considered the failure to exhaust administrative remedies a jurisdictional problem and dismissed for lack of subject matter jurisdiction.
But a CP change is not like a variance, and to amend the designation on a parcel requires the County Council to enact an ordinance (in other words, it is a legislative act), and requires the production of an Environmental Impact Statement, so the property owners appealed to the ICA. That court agreed that Williamson County does not require the owners to try and change the CP, and reinstated the takings claims.
In the cert app, the County argues that the Planning Commission could "modify or revoke" the planning department's decision to not process the applications, and thus, under Williamson County, the property owners had an obligation to appeal to the Commission which could have determined the proposed uses were exempt. The County claims that neighboring property owners obtained their SMA exemptions, which demonstrates it is possible -- if they could do it, why not these owners?
Here's why (we know, because in the cases referenced, we represented one of the neighbors). In those cases, the property owners appealed to the Planning Commission because the Planning Department first informed them that they were exempt, then later did an about-face. The appeal confirmed that their rights to exemptions had vested and the County was equitably estopped from refusing them permission to build. Those appeals did not (and indeed, could not) involve a challenge to the Planning Department's refusal to process an application for GATRI zone/plan inconsistency.
The County misapplies Williamson County, which does not require a property owner to make futile appeals to ripen a takings claim, abut only requires a "final decision" by an agency so a reviewing court can determine what uses are and are not permitted. Here, there is nothing to be gained by an administrative appeal since GATRI forecloses even processing an "inconsistent" application. We already know what uses are allowed: none.
The Leone opposition brief points all of this out quite ably, noting the "[a]pplication miquotes the opinion, misrepresents the record, and mis-cites the law." Br. at 1. Recommended reading.