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PropertyProf's Summary Of The SCOTUS Beachfront Takings Case

In What's At Stake in Stop the Beach Renourishment, Lawprof D. Benjamin Barros posts a comprehensive summary of "judicial takings" case accepted for review by the US Supreme Court, Stop the Beachfront Renourishment, Inc. v. Florida Dep't of Environmental Protection, No. 08-11 (cert. granted. June 15, 2009). Raises several interesting points and worth a read.

Further Thoughts On Property Taxes And Voting

I've received a few interesting comments and e-mails on an earlier post ("Why Hawaii Can't Vote On Property Taxes") about the Ohana Kauai property tax charter amendment and how it was declared unconstitutional by a 3-2 Hawaii Supreme Court.

Here's one that I thought was worth moving from the below-the-fold comment section:

I know you're addressing strict legal interpretations here at inversecondemnation.com, but I feel compelled to mention that giving the direct power to tax to the electorate does not necessarily mean that it will be exercised fairly and wisely. To deprive the electorate of ability to directly set tax policy through charter amendments does not deprive them of the ample power they have to effect tax policy through their choice of elected representatives and their ability to remove unresponsive representatives. It also permits elected representatives to make wise and balanced decisions fair to all taxpayers many of which have no right to vote. These decisions may then also be enacted with an eye to economic consequences which are often overlooked by the electorate. My primary concern over the Ohana Kauai charter amendment was that it would tend to shift the property tax burden to non-owner occupants such as owners of rental units who in turn must pass this along in rent increases to their non-home owning, less affluent tenants. 

I recall talking to a less than affluent renter I know who voted for the amendment because he wanted to prevent tutus from being forced to sell their homes due to rising property taxes. This was one of the several heart-wrenching and effective pleas that were voiced during the public debate regardless of their factual validity. He had no clue that by voting for the amendment, he might just as likely be voting to indirectly increase his own rent. As we all know, government is reluctant to reduce spending in the face of lower revenues when it can increase them simply by raising taxes, especially when the heavier financial burden is shifted to non-voters, the uninformed and minority classes of taxpayers.

It's true that the voters are not presently without remedies, and that reasonable people can differ regarding whether establishing or amending property tax policy by direct democracy is a good idea from a philosophical or political standpoint. At issue in the Baptiste case, however, was not whether a property tax cap or whether allowing voting on taxes was a good idea or not, but but whether judges are the ultimate arbiters of that question. In the end, the 3-2 majority of the Hawaii Supreme Court held they are.

Why Hawaii Can't Vote On Property Taxes

Faced with a budget shortfalls and declining revenue projections (and what level of government these days isn't?), the Honolulu City Council voted today to raise property taxes and eliminate a property tax credit that would have softened the raise for some homeowners. See the reports here and here. It also voted to raise the bus fare from $2 to $2.50 for a single fare (with corresponding increases in monthly pass fares), up the vehicle weight tax 25% this year and an additional 25% next year (Hawaii taxes automobiles by weight, not by age as California does), and quadruple parking rates at the Honolulu Zoo.

There's been a lot of rumbling lately from Hawaii taxpayers about decreasing government expenditures and controlling property tax rates, but a few years ago, after years of pleading with their elected representatives for relief, Kauai voters actually did something about it. They voted to amend the Kauai Charter themselves to establish a baseline property tax rate and cap yearly increases. That charter amendment -- known on Kauai as the "Ohana Kauai" amendment after the grassroots citizens' group that drafted the proposal and gathered enough signatures to put it on the ballot -- passed by an overwhelming margin.

[Before we go further, a disclosure: I was the pro bono appellate lawyer for the four members of Ohana Kauai who defended the charter amendment in court.]

Under the Ohana Kauai charter amendment, property taxes for owner-occupied homes were capped at 1998-1999 amounts for taxpayers who purchased their homes in 1998 or earlier, and capped at the amount paid in the year of purchase for homes purchased after 1998. The measure also limited tax increases to 2% per year. It was designed to bring a measure of certainty and predictability to residential real property taxes, as homeowners would know from year-to-year their maximum tax liability, and county officials would know how much tax revenue to expect from resident homeowners.

To a Californian, voting on property taxes probably does not seem like that big of a deal. More than 30 years ago, the people passed Proposition 13, a statewide initiative that capped taxes and limited increases to 2% annually. After it was challenged on equal protection grounds, the U.S. Supreme Court upheld its constitutionality in Nordlinger v. Hahn, 505 U.S. 1 (1992), noting it was rational for the voters to have believed that Proposition 13 would give new homeowners full information about future tax liability at the time of purchase, whereas an existing homeowner was captive to the whims of the tax man, and didn't have that same choice:

[A]lready saddled with his purchase, [the existing homeowner] does not have the option of deciding not to buy his home if taxes become prohibitively high. To meet his tax obligations, he might be forced to sell his home or to divert his income away from the purchase of food, clothing, and other necessities. In short, the State may decide that it is worse to have owned and lost, than never to have owned at all.

Id. at 13. 

Kauai's similar experiment in citizen-initiated property tax revolts would have a different outcome. After the Ohana Kauai amendment was placed on the November 2004 ballot, in the run-up to the vote, virtually every Kauai elected official attacked the measure, with the Mayor and the members of the County Council leading the charge. They advanced the predictable claims: rolling back property taxes and capping increases would hamstring their ability to deliver vital government services such as police and fire (they took the usual approach of threatening police and fire services first and not last) and, most importantly, claimed the amendment would limit the County’s expenditures on the public worker’s union. However, since 1998, the Kauai budget had risen 50%, and the 2005 budget had increased 25% over the previous year’s alone. With Kauai government spending at a record $123 million, the officials’ cries apparently rang hollow with voters: in spite of the organized and well-financed opposition, in November 2004 the voters of Kauai approved the measure by a nearly two-to-one margin.

The County officials did not accept the political defeat lightly, and instituted what can only be described as a "friendly" lawsuit. The Kauai County Attorney sued the Mayor (her boss), the County Council (who finance her office), and the Finance Director, claiming the Hawaii Constitution -- which provides that "counties" may establish property tax law -- grants county councils a monopoly on that issue. In other words, the people of Kauai were without the legal authority to amend their county charter on the subject of property taxes -- only the County Council could set and change property taxes. The County vs. County lawsuit asserted the voter-enacted measure was void because the term "counties" in article VIII, section 3 of the Hawaii Constitution really means "county councils." The lawsuit was, to say the least, a novel procedure: the County Attorney represented both the plaintiff and the defendants, and the litigation was funded by a $250,000 war chest of taxpayer money, budgeted by the defendant County Council to hire Hawaii’s largest private law firm to represent the plaintiff to attack the charter amendment.

Four Ohana Kauai homeowners intervened in the collusive lawsuit -- somebody had the defend the charter after all. They asserted the plaintiff lacked standing and the complaint sought an advisory opinion, and that government officials should not be able to manufacture a lawsuit in which they were both the plaintiff and the defendants, fund the case with public money, and represent both sides in litigation. The Kauai county trial court disagreed, held the case was justiciable, and voided the charter amendment, ruling that only county councils may set property tax policy, and the people have no right to vote to amend the county charter regarding property taxes.

Up to the Hawaii Supreme Court the homeowners went, arguing first that the officials-versus-themselves lawsuit sought a nonjusticiable advisory opinion, and the case should have been dismissed before the court reached the merits. The second issue raised was whether the Hawaii Constitution delegated the property tax power to county councils when it said it delegated the property tax power to the "counties."

In the end, a sharply divided Hawaii Supreme Court ruled 3-2 that the case was justiciable and government officials have standing to manufacture a lawsuit, the county attorney may represent both the plaintiff and the defendant, and the county council could take a quarter million dollars of taxpayer money and spend it on private lawyers to assist in the anti-citizen lawsuit. On the merits, the majority struck down the Ohana Kauai charter amendment as unconstitutional, holding only county councils have the property taxation power. See County of Kauai ex rel. Nakazawa v. Baptiste, 165 P.3d 916 (Haw. 2007).

As the lawyer who ended up with the short stick, I naturally preferred the opinion of the two dissenting justices who excoriated the opinion in unusually strong terms (check it out here), accusing the majority of factual manipulations and procedural sleight-of-hand, suggesting the majority’s decision to define "county" as "county council" and preclude popular voting on property taxes was more driven by politics and the majority’s notions of good policy than by a principled analysis of the law.

But a dissenting opinion is by defintion a minority report and not the law, so even though we fought the good fight and (I continue to believe) had the better arguments, those arguments did not carry the day. The Hawaii Constitution, according to the three-justice majority of the Hawaii Supreme Court, gives county councils a property tax monopoly.

And that, dear reader, is why Hawaii voters do not have a direct say in property taxes.

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For more about this case, visit our summary page, which includes links to a Wall Street Journal report on the decision, an article with a legal focus I wrote for the ABA State and Local Government Law News, an op-ed I wrote for the Honolulu Advertiser, all the briefs of the parties and amici, oral argument transcripts, and on and on.

Coming Soon To A City Near You: "We Want To Emphasize That This Is In People's Interest" - Berkeley To Mandate $34k+ Draconian Energy Efficiency

University Avenue in Berkeley, California -- the main entry to the city hosting the flagship campus of the University of California system -- is not exactly a grand introduction:  the street is rutted with potholes (a trip west of San Pablo Avenue can be especially bone-jarring), the median strip was revamped as a "xeriscape" a few years ago at a six-figure cost but still looks mostly like a weed patch (ok, a water efficient weed patch), and vacant storefronts with semi-permanent homeless encampments in their doorways line the street. And University Avenue is not unique. The city's other main drags - Shattuck, MLK, Jr. Way, Ashby, Sacramento, Telegraph, and College are in similar (or worse) condition.

I guess these basic issues must be getting fixed, because the city fathers and mothers have moved on to more pressing issues: from the San Francisco Chronicle comes word that Berkeley is on the verge of requiring the owners of the city's nearly 50,000 residential buildings to hire an "energy auditor" and based on the results of the audit make changes to meet "city standards," such as a new roof, new windows, new appliances, and other repairs projected to cost tens of thousands.  In "Hot debate ahead on Berkeley's energy plans," the Chron reports:

The classic Berkeley home - a creaky Victorian with drafty windows, a Wedgewood stove and musty furnace - will undergo a drastic makeover under the city's aggressive new plans to fight global warming.

Within the next few years, the city is likely to mandate that all homes meet strict energy standards. In many cases this would mean new double-paned windows, insulation in the attic, walls and floors, a new white roof that reflects heat, a forced-air furnace and high-efficiency appliances.

The cost: upward of $33,800.

"The improvements will not only save energy, they'll make the home less drafty and more comfortable," said Billi Romain, the city's sustainability coordinator. "There are many benefits not just for the city, but for the homeowner."

No telling how this squares with Berkeley's landmarks ordinance; I doubt that vinyl windows and a "new white roof" is what Julia Morgan had in mind. The proposal isn't just an aspirational suggestion -- the regulations come with teeth: 

In the beginning, the city will offer incentives, such as rebates and financial assistance, for homeowners to comply. But within a few years, the city will start imposing penalties for those who don't meet the standards, said Timothy Burroughs, the city's climate action coordinator.

"We want to emphasize that this is in people's interest," he said. "If we're serious about reducing our emissions, it's only possible if virtually every building achieves significant improvements in energy efficiency."

No deadlines or specific standards have been set yet. But the city's goal is for all of Berkeley's 23,000 homes and 25,000 duplexes and apartment units to reduce energy use by 35 percent by 2020.

The city's "sustainability coordinator" apparently has a different definition of "inexpensive" than we do: 

In some cases, the standards can be met relatively inexpensively, [Billi] Romain said. Caulking, sealing, insulation and new appliances - an investment of under $10,000 - can reduce energy use by more than 25 percent.

Don't forget that Berkeley has one of the most restrictive residential rent-control ordinances in the country, so property owners will most likely have to absorb these costs themselves, despite the promise of "financial assistance" from the cash-strapped city.

But that's OK because "this is in people's interest." 

Not to worry, Berkeley homeowners, you can always work a second job as an "energy auditor," "sustainability coordinator," or "climate action coordinator."

HAWSCT: Separation of Powers Prohibits Legislative Transfer of Agency's Regulatory Fees to General Fund

How often in an appellate opinion does the court use the term "glom?" 

[The Appellee] gloms onto the "police power" aspect of the definition [of regulatory fees] in arguing that "Medeiros plainly concern[ed] the 'police power' of 'criminal investigative services,' not a user fee as suggested by [the state]."

No matter what you may think of the phraseology of Hawaii Insurers Council v. Lingle, No. 27840 (Haw. Dec. 18, 2008), the decision is important because who can take your money,  how they go about doing it, and what happens to your money afterwards, matters. As Chief Justice John Marshall famously wrote in McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819), "the power to tax is the power to destroy," and that may be even more true today where the power to regulate and impose fees may be the same thing.

Under Hawaii law, only the state Legislature and the various County Councils can impose taxes: the Legislature has the general taxation power, and the Councils have -- at least according to a recent decision by the Hawaii Supreme Court -- the exclusive power to determine property taxes. In Hawaii Insurers Council, the Hawaii Supreme Court held that assessments imposed by the state Insurance Commissioner were not unconstitutional "taxes" when imposed -- they were "regulatory fees" -- but the Legislature's transference of $3.5 million of the collected funds into the general fund violated separation of powers. 

The facts of the case are relatively straightforward and are set out in the opinion, so we won't repeat that effort. Read the slip opinion for the details. The short story is that the State of Hawaii no longer funds the Department of Commerce and Consumer Affairs from the general fund, but by user fees and fees imposed on regulated industries, including the insurance industry. The Insurance Regulation Fund contained the monies collected by the Insurance Commissioner. By statute, the money in the IRF could not be transferred to the state's general fund. Included in the insurance division's budget was a "reserve of surplus funds" to be used to cover expenses and contingencies that may  arise in the insurance industry (the rehabilitations, insolvencies, etc., we have all become very aware of recently on a national level). In 2004, the Legislature decided to change the statute and transfer $4 million of this money into the general fund, but that amount was cut by the Governor's line-item veto to $2 million. The following year, the Legislature transferred an additional $1.5 million to the general fund.

A lawsuit by the Hawaii Insurers Council followed, and eventually the Intermediate Court of Appeals held, among other things, that the assessments were "taxes" because they were not allocated to defraying the costs of providing services to the insurance industry and were not proportionate to the benefits received. See Hawaii Insurers Council v. Lingle, 117 Haw. 454, 459-60, 184 P.3d 769, 775 (Haw. Ct. App. 2008). The Hawaii Supreme Court partly agreed, and partly did not. The court first discussed its earlier opinion in State v. Medeiros, 89 Haw. 361, 973 P.3d 736 (1999), which identified two permissible types of fees: user fees (those charged for the use of an item of facility), and regulatory fees which include those imposed by an agency to cover the expenses of regulating an industry. At the end of the day, the Hawaii Supreme Court disagreed with the ICA and held that the fees imposed by the DCCA were not illegal "taxes" or "user fees," but were constitutional "regulatory fees" Ben Lowenthal does a good job of summarizing the court's reasoning here.

The most interesting part of the opinion, however, is not the minutiae of the different legal tests for taxes or user fees or regulatory fees, but the court's conclusion that the transfer of the funds by the Legislature to the General Fund violated the separation of powers doctrine. The court recognized that "separation of powers" is not formally a part of the Hawaii Constitution, but is an implied requirement, and concluded:

The legislature's promulgation of the transfer bills amounted to an impermissible blurring of the distinction between the executive power to assess regulatory fees and the legislative power to tax for general purposes. We therefore hold that the transfer bills unlawfully sought to transform $3,500,000 of legitimate regulatory fees into general tax revenue....As such, the $3,500,000 that was moved into the general fund pursuant to the transfer bills must be returned to the CRF so that they may be used for the regulation or benefit of the parties upon whom the assessments were imposed.

Slip op. at 41-42 (footnote omitted). While the opinion does not expressly say so, what seems to animating the court's decision is that the Legislature's raid of the funds crossed some indistinct and not-quite-defined line because when the IRF funds were placed into the General Fund, they could be spent in the same way as collected taxes. The court established a bright-line rule: agencies collect fees and legislatures tax, and never the twain shall meet. In other words, if the government collects a fee in order to regulate an industry, it better use the money collected to regulate the industry.

Finally, the court easily disposed of the equal protection class-of-one disparate treatment claim, holding there was a rational basis for requiring a regulated industry to pay for the costs of regulation. The court also rejected the State's claim that HIC did not exhaust administrative remedies, holding that the administrative process cannot make constitutional determinations, and consequently, there were no administrative remedies to exahust. 

New Article Published: "Because They Can: Judicially Excising the People from the Definition of 'County' in the Hawaii Constitution"

The ABA Section on State & Local Government has published my article "Because They Can: Judicially Excising the People from the Definition of “County” in the Hawaii Constitution" in the State & Local Government Law News (Spring 2008). 

The article is a summary and analysis of County of Kauai ex rel. Nakazawa v. Baptiste, 165 P.3d 916 (Haw. 2007), the 3-2 decision in which the Hawaii Supreme Court creatively overcame justiciability problems to hold that the term "the counties" in the Hawaii Constitution's provisions regarding property taxes means "county councils."  In doing so, the court invalidated a voter-enacted Kauai charter amendment that would have rolled back property taxes to 1998 levels, and set a yearly cap on increases.  The dissenting justices accused the majority of "subverting the judicial process," and would have dismissed the case for lack of standing. 

The article is posted on the ABA's web site here.  For those of you who are not section members and don't receive a copy in the mail, the article is reposted here.  More on the case, including the majority and dissenting opinions, a Wall St. Journal story about the decision, and the briefs and oral arguments, is posted here.   

Commentary on Kauai Real Property Tax Charter Amendment Decision

California's Flash Report posted my op-ed "Hawaii Government Sues Itself to Quash Property Tax Relief -- And Wins" about the Kauai real property tax charter amendment appeal. 

2007 in Review: Hawaii Supreme Court Rewrites the Constitution

In August, by a 3-2 vote, the Hawaii Supreme Court determined that the term "county" in article VIII, section 3 of the Hawaii Constitution means "county councils."  The majority held that only county councils may establish property tax policies, and that voters of the county have no power to do so directly by amending their county charter. 

The majority first determined that it was perfectly acceptable for government officials to be both the plaintiffs and the defendants, and sue each other in a friendly lawsuit in which the County Attorney represented both sides.  The majority also approved of the county council hiring a private law firm to prosecute the case in which it was a defendant, with $250,000 of public funds.

The dissenting justices accused the majority of "subverting the judicial process" by ignoring standing and justiciability requirements by rearranging the parties after oral arguments, and by attributing the arguments of the defendants to the plaintiff.  Disclosure: I had a dog in this hunt, as I was counsel for the homeowners/intervenors who challenged the collusive lawsuit. 

Here are all the inversecondemnation.com posts on the case: opinion, briefs, oral argument transcripts, commentary, and the Wall Street Journal's take on the case.

▪ SLAPP Suits, Ballot Measures, and Curbing Eminent Domain Abuse

A "SLAPP suit" is a "strategic lawsuit against public participation," and many states have statutes designed to thwart retaliatory lawsuits to protect the public's willingness to exercise First Amendment rights.  For example, California's statute defines SLAPP suits as:

lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.

Cal. Code. Civ. Proc. § 425.16 (emphasis added).  Hawaii's anti-SLAPP statute is codified at Haw. Rev. Stat. ch. 634F, and defines a SLAPP suit somewhat differently than California:

"SLAPP" means a strategic lawsuit against public participation and refers to a lawsuit that lacks substantial justification or is interposed for delay or harassment and that is solely based on the party's public participation before a governmental body.

Haw. Rev. Stat. § 634F-1 (emphasis added).

In City of Riverside v. Stansbury, Nos. E040125 & E040973 (Cal. Ct. App. Oct. 12, 2007), the California Fourth District Court of Appeals held that a lawsuit by a local government against the proponents of an initiative was not an anti-SLAPP suit.  The court held that the lawsuit, which sought a declaratory judgment that an initiative designed to curb eminent domain abuse was not a proper subject for voters.  The lawsuit was not a SLAPP because it was "directed not at protected conduct, as required under the anti-SLAPP statute, but rather, at the validity of the proposed initiative." 

After citizens placed an initiative on the local ballot that would have curtailed the city's eminent domain power, the city sued the proponents of the measure.  The initiative was apparently in reaction to the US Supreme Court's decision in Kelo v. City of New London, 545 U.S. 469 (2005), which held that the use of eminent domain for "economic development" did not always violate the Fifth Amendment's Public Use Clause. The measure mandated that "neither this City nor any of its subdivisions shall use eminent domain to take private property without the consent of the owners to be used for economic development."  It also limited how the City could dispose of property taken by eminent domain, and prohibited the City from undertaking "a contractual obligation to use its powers of eminent domain."  More on the case and some interesting background from Eminent Domain Watch here.

The City sued the person who submitted the measure as well as the group that backed it, claiming that the initiative was beyond the power of the city's voters, since in California initiatives are limited to matters of local concern, and eminent domain is a matter of statewide concern.  In response, the defendant filed an anti-SLAPP motion, which the trial court granted. 

The court of appeals reversed, holding that the lawsuit went to the validity of the initiative, and did not arise out of protected first amendment activity:

By its declaratory relief action, the City was simply asking for guidance as to the constitutionality of the proposed initiative. Indeed, the City did nothing to limit respondents’ activities in connection with the initiative, nor did the City, by its action, otherwise impact respondents’ First Amendment rights.  Moreover, it was proper for the City to initiate its declaratory relief action as a means of
disputing, in a preelection challenge, the validity of the initiative.

Slip op. at 11.  Anti-SLAPP statutes are designed to prevent lawsuits against citizens that are meant to chill expression of first amendment rights, and it certainly seems like the City's lawsuit would have that effect -- it would take a very committed citizen to propose an initiative if she knew that by doing so, she would be subject to being named as a defendant.  The court held that the lawsuit did not implicate Stansbury's petition rights because "there is no constitutional right to place an invalid initiative on the ballot.  Slip op. at 13 (emphasis original).  This seems like circular logic because it assumes the initiative is invalid, the very cause of action that forms the basis for the City's complaint. 

What appears to have driven the court's result is its belief that if the lawsuit were to be barred by the anti-SLAPP statute, local governments would not be able to bring pre-election lawsuits challenging the constitutionality of initiatives.  Slip op. at 2 ("if the trial court’s ruling is allowed to stand, no one could ever challenge an initiative’s constitutionality prior to the election").  Why this is a bad thing is not explained.      

Maybe they should just move to Hawaii: the Stansbury case is reminiscent of the recent "Ohana Kauai" property tax charter amendment case, County of Kauai ex rel. Nakazawa v. Baptiste, 115 Haw. 15, 165 P.3d 916 (2007).  In that case, when county officials claimed to doubt the constitutionality of a voter-approved charter amendment capping property taxes, they didn't sue the proponents of the measure as in Stansbury.  Instead, they sued themselves.  When government officials sue each other to strike down a law they disagree with, of course no one is going to raise an anti-SLAPP defense.  The County Attorney (Nakazawa) sued the Mayor (Baptiste), the County Council and the County Finance Director, seeking a declaratory judgment that the charter amendment was beyond the power of county voters.  The Hawaii Constitution delegates property tax power to "the counties," and the county officials argued that term meant "county councils."  The Hawaii Supreme Court agreed after first holding that the "county vs. county" lawsuit was procedurally proper. 

Hat tip to the California Public Law Blog for bringing the Stansbury case to our attention.  Tom Caso adds his thoughts about the decision in his blog post "City’s pre-election challenge to initiative not a SLAPP."

▪ Court Strikes Delegation of Eminent Domain and Reimbursement to Private Party

You can read the court's Findings of Fact, Conclusions of Law, and Order here.

I won't be commenting on this decision since my colleagues Ken Kupchak, Mark Murakami and I are the attorneys for the property owner, but the statement of the family that owns the land is below.

# # # #

Circuit Judge Ronald Ibarra has decided in favor of a local Kona family, ruling that the County of Hawaii illegally sold its power of eminent domain to Scottsdale, Arizona-based luxury developer Hokulia.  In the County-Hokulia Development Agreement, the County allowed Hokulia to control what property would be seized, permitted Hokulia's lawyers to threaten the Richards Family and its neighbors, and forced the County to bring lawsuits against its own citizens to take their property. 

The court ruled that the County-Hokulia Development Agreement violated state law because it illegally transferred the County's power to take the property by eminent domain to Hokulia.  The Richards Family's property was targeted by the developer for its "Hokulia Bypass," a road connecting the "luxury golf course real estate development project" to Mamalahoa Highway. 

 

The court struck down the first of the County's multiple attempts to take a portion of the Richards Family's property for the Bypass because the County "did not have a proper public purpose."  The court found "[i]f the government attempts to delegate its power of eminent domain to a private party in an agreement whereby the developer controls what property is taken and pays for all expenses, and the private party is able to demand the government institute eminent domain proceedings against other private property owners, then the attempted delegation is illegal and void." 

 

The court also invalided the portion of the County-Hokulia agreement that would have required the Richards Family and their Onouli neighbors to reimburse Hokulia for the cost of the road. 

 

Under the judge's ruling, however, the County will be able to build the Bypass since a second attempt to take the property did not suffer the same legal defects as the first.  The court awarded the Richards Family over $200,000 in compensation for the taking of their land.

 

"These cases were never about whether another road is needed in Kona," said Richards Family spokesman Charles Coupe.  "Our family fought for our rights and the rights of our neighbors because we couldn't believe that the County could sell governmental powers to the highest bidder.  It didn't seem right that the County could agree to allow Hokulia to take our property for Hokulia's road, and then pass back the cost of the road to us." 

 

After Hokulia directed the County to start eminent domain process in October 2000, the Richards Family called upon Kenneth Kupchak, Robert Thomas, and Mark Murakami, the legal team at Honolulu-based Damon Key Leong Kupchak Hastert (www.hawaiilawyer.com), to protect their rights in court. 

 

"It has been a long fight, but it has been worth it," said Coupe, "Our family knew this wasn't right, and we would stand up for our rights and our neighbors' rights again, if necessary."