August 2006

an earlier version of this post was published in Hawaii Agriculture magazine (July – September 2006)

Hawaii law protects the “right to farm.”  But what exactly does that mean? 

In addition to the Right to Farm Act detailed here, the Hawaii Legislature recently outlawed certain agriculture-restrictive deed restrictions known as “conditions, covenants, and restrictions,” or CC&Rs. 

Ag-restrictive CC&Rs

Use of land within many so-called “agricultural subdivisions” is governed by CC&Rs which limit or restrict otherwise legal agricultural uses.  CC&Rs have been characterized as “private zoning,” because they represent a private agreement among neighboring landowners to mutually restrict the otherwise legal uses of their land. 

For example, ag-restrictive CC&Rs may restrict crop height or prohibit more than a certain number of animals on a parcel, despite these uses being perfectly permissible in an Agriculture district. 

Act 5

Overriding Governor Lingle’s veto, the 2003 Legislature enacted Act 5 (now codified here) and outlawed CC&Rs that restrict “agricultural uses and activities” on land classified “Agriculture,” if the CC&Rs were created after July 8, 2003, the effective date of the Act. 

The definition of “agricultural uses and activities” is somewhat different than the definition of “farm operation” in the Right to Farm Act, but does cover a broad range of activities.

Protected agricultural uses include crop cultivation, orchards, farming, animal husbandry, ranching, aquaculture, forestry, wind energy generation, and accessory uses.  A more detailed list of protected activities is set out in the State Land Use Law.

The only ag-restrictive CC&Rs allowed are those that protect environmental or cultural resources, agriculture leases, or utility or access easements.  Act 5 also permits the counties to enact further limitations under their zoning power, but no county has yet done so.

“Voidable” not “Void”

Act 5 makes ag-restrictive CC&Rs “voidable,” not “void.”  What this means is that if a community association or neighboring landowner attempts to enforce an ag-restrictive CC&R, it is not automatically invalid and the farmer must properly assert Act 5 as a defense. 

In other words, if Act 5 is applicable, care must be taken to insure that the farmer does not inadvertently waive Act 5’s protections. 

Finally, what if a deed contains ag-restrictive CC&Rs that were agreed to before July 8, 2003?  If that’s the case, the Act 5 defense may not be available.  The Legislature avoided constitutional problems of interfering with existing agreements and property rights when it enacted the law, so only outlawed CC&Rs entered into after the Act’s passage.

    Continue Reading ▪ Examining the Impact of Act 5 on Restrictive Deed Covenants (CC&Rs)

an earlier version of this post was published in Hawaii Agriculture magazine (April – June 2006)

Hawaii law protects the “right to farm,” but what does that mean? 

Can a farm’s or ranch’s neighbors complain about tractor noise, flies that may be attracted to livestock, the height of crops, or if spray drifts over their property?

Hawaii law, like the laws of many other states, contains a powerful legal tool to protect a farm against such claims: the Right to Farm Act, which prohibits certain tort claims against farmers and ranchers involving their use of their property.

Nuisance Lawsuits

Generally speaking, a property owner may sue neighboring landowners if his or her property is being used in a way that harms another’s property or the public.  These claims are known as “nuisance” lawsuits.

Typical claims in the agriculture context involve a neighbor complaining about odors, noise, dust, and insects, and other activities typical of farming operations.  And, unfair as it may seem, the result in a nuisance lawsuit is not governed by which landowner was there first

For example, a newly arrived neighbor might sue a nearby ranch claiming a nuisance, even if the ranch existed long before the neighbor purchased the property, and even if it was bought with the full awareness of the ranch’s operations.

The ability to bring a nuisance lawsuit is not set out in statutes or rules, but comes to us via the common law, or precedent-setting decisions by judges.  The Legislature, however, may supplant the common law by enacting statutes limiting the ability to file such lawsuits.

Constitutional Rights

The people of Hawaii recognize the importance of agriculture to our economy, our environment, and our lifestyle, and the Hawaii Constitution spells out the state’s express policy favoring agriculture and agricultural uses of land. 

In the Constitution, the State is commanded to “conserve and protect agricultural lands, promote diversified agriculture, increase agricultural self-sufficiency and assure the availability of agriculturally suitable lands.”

Reasonable Practices

In 1982, the Legislature recognized the potential threat to agriculture posed by nuisance lawsuits interfering with reasonable farm uses.  Implementing the constitutional mandate to “conserve and protect” agricultural lands, the Legislature enacted the Right to Farm Act, which bars nuisance lawsuits if certain conditions are met.

First, the protected activity must be a “farm operation.”   This is very broadly defined to include commercial agriculture, aquaculture, forestry, ranching and livestock, poultry, and beekeeping operations, among others. 

Also included within the definition of “farm operations” are accessory uses such roadside stands, machinery or irrigation pumps, chemical fertilizer and pesticide application, and labor operations

Second, the farming operation must use “generally accepted agriculture and management practices.”  In other words, if a farmer uses reasonable practices – as established by fellow farmers – those practices are protected.  The law also places the burden of proof on this issue on the person alleging the nuisance by creating a legal presumption that a farm is being operated reasonably according to industry standards.

The farming activity cannot be causing water pollution or flooding.  Also, the Act only limits nuisance claims by private parties, and does not prohibit the government from stopping farm operations that threaten the public health or safety. 

Right to Farm Act

If these conditions are met, the courts and all “public employees” – a term not defined but most likely meaning state and local government personnel and agency officials – are prohibited from determining that farming activity is a nuisance.   A farm that qualifies may operate normally without fear of being sued by neighbors.  As the Indiana Court of Appeals held when it determined that the Indiana Right to Farm Act protected a hog operation from a neighbor’s nuisance lawsuit about odors, “so long as the human race consumes pork, someone must tolerate the smell.”

As a final disincentive to nuisance lawsuits, the law also provides that if a farmer is frivolously sued for a nuisance despite the Right to Farm Act, the farmer may recover attorneys’ fees and costs.

In sum, the Hawaii Right to Farm Act allow the farmer – not neighbors or judges – to manage the farm.

    Continue Reading ▪ Protecting the Right to Farm

An earlier version of this commentary was published in the Honolulu Advertiser

According to Kaua’i government officials, how much property tax homeowners pay is an issue too important to be trusted to the people who pay them.

In recent years, the median value of Kaua’i homes has soared to nearly $700,000, a 48 percent increase this past year alone. The staggering prices are the product of a hyperactive market fueled by speculation, and investors flush with cash willing to pay top dollar for modest properties.

A rise in market value has little benefit to those who have no intention of selling. When a neighbor’s home sells, or is upgraded by a new owner, all of the properties in the neighborhood see an increase in assessed value, which the tax collector uses to justify increased property taxes.

There is little a homeowner can do, except challenge the assessment through the often byzantine maze of local bureaucracy, with only a slight chance of success.

Since 1998, the average Kaua’i homeowner experienced a nearly 50 percent increase in property tax, and county coffers are bulging. But middle-class families of longtime Kaua’i residents, seniors and others on fixed incomes are in danger of being taxed out of their homes.

After years to trying to convince their elected officials to provide tax relief, the people of Kaua’i exercised their right to change the system themselves. Local homeowners proposed an amendment to the Kaua’i Charter to roll back property taxes to 1998 levels for owner-occupied homes.

For those who bought their homes after 1998, property taxes are based on the assessment at the time of purchase. Yearly tax increases for all resident homeowners are capped at 2 percent.

Under this system, resident homeowners are not at the mercy of an unpredictable and volatile housing market and are able to plan their property-tax liability from year to year and to budget accordingly.

And there is no surprise to the new purchaser, who is able to factor future property-tax liability into the decision to buy.

The charter amendment was placed on the November 2004 ballot, and in the run-up to the vote, virtually every Kaua’i elected official attacked the measure, with the mayor and the County Council leading the charge.

They claimed it would adversely affect their ability to provide services. However, since 1998, the Kaua’i budget has risen 50 percent, and the current budget increased 25 percent over last year’s alone. Kaua’i government spending is now a record $123 million.

In spite of the organized and well-financed opposition, the people of Kaua’i approved the measure by a nearly 2-to-1 margin. Instead of accepting this decisive political defeat, Kaua’i officials went to court.

Against themselves.

The Kaua’i county attorney sued the mayor, the finance director and the County Council. The claim: the County Council has a monopoly on property-tax policy, and the people of the county had no right to propose and vote on the charter amendment.

To top it off, the county attorney represents both sides in the lawsuit. The litigation is backed by a $100,000 war chest of taxpayer money, budgeted for private lawyers hired to attack the charter amendment.

Four local homeowners intervened in the officials-against-themselves case. They argued that government officials should not be able to concoct a lawsuit, in which they are both the plaintiff and the defendant, in order to gain court approval for their claimed real-property-tax policy monopoly.

The Kaua’i Circuit Court voided the charter amendment, ruling that only county councils may set property-tax policy, and the people have no right to do it themselves by amending their charter.

The homeowners have now appealed to the state Supreme Court because the people — not just local politicians — have the right to vote and decide on how property taxes are imposed.

Until now, this case has received scant attention beyond Kaua’i’s shores, but Honolulu property owners should take notice.

With similar market forces at work and an average 26 percent increase in property value, Honolulu homeowners are beginning to rethink whether property taxes should be tied to an unpredictable housing market that penalizes long-term owners for not selling their properties.

Would Honolulu’s politicians consider enacting a measure like Kaua’i’s? If the Kaua’i case is any guide, it is doubtful.

Property-tax relief only comes when government officials understand that if they don’t provide it, the people will. Or when the people — fed up with inaction of government officials — do it themselves.

If the arguments of Kaua’i officials prevail on appeal, however, the right of the people to directly set property-tax policy will be lost forever. If this occurs, any incentive for government officials to reform the current property-tax system will drop dramatically.

In the end, this case will determine whether “we the people” determine how much property tax we are willing to bear, or whether the politicians alone have control.

Download the briefs in this appeal: Merits Brief | Reply Brief

Continue Reading ▪ Whose County is it, Anyway? Property Taxes, Charter Amendments, and the People’s Right to Vote

An earlier version of this commentary was published in the Honolulu Advertiser

Do you mean to tell me, Katie Scarlett O’Hara, that Tara, that land, doesn’t mean anything to you? Why, land is the only thing in the world worth working for, worth fighting for, worth dying for, because it’s the only thing that lasts!

– “Gone With the Wind”

Maybe not. In June 2005, the U.S. Supreme Court approved the radically un-American notion that you own your property only as long as someone more influential doesn’t want it.

In Kelo v. City of New London, the Court allowed a Connecticut redevelopment agency to use eminent domain to seize perfectly good homes in a working-class neighborhood and turn them over to a private developer. The homes will be demolished, replaced by a fashionable hotel, health club and marina to support a neighboring facility for the pharmaceutical company, Pfizer.

Eminent domain is the government’s power to confiscate private property against the will of the property owner. Using eminent domain, completely innocent families can be forced from their homesteads and established businesses shut down against their will. Incredibly, a property owner is nearly powerless to prevent it. It is, quite literally, the “offer you can’t refuse,” and it is most often the elderly, the poor, minorities, and others who lack money and political pull whose property ends up targeted for eminent domain.

This power is exercised not only by elected officials, but also by those who have no incentive to listen to the voice of the voters, such as redevelopment agencies, utility companies, and even private developers. Once they set their sights on property, the mere threat of eminent domain is usually enough to make an unwilling owner accept a “Godfather” offer – agree to our fire sale terms or we’ll have the government take your land.

Scarlett O’Hara thankfully never met Don Corleone.

To limit this potential for abuse, the U.S. Constitution’s Fifth Amendment permits eminent domain only if the owner receives “just compensation” and only if the property is taken for “public use.”

Common sense and tradition tell us that “public” uses are schools, roads, parks, and military bases, while hotels, health clubs and corporate parks are private uses.

But in the Kelo case, the redevelopment agency hypothesized that even though the homeowners’ property ended up in a developer’s hands, evicting the homeowners and upscaling the neighborhood would increase the city’s tax revenues and “create jobs.” And the mere promise of incidental public benefit, the Court agreed, is all the U.S. Constitution requires for “public use.”

If economically modest but still viable homes and small businesses can be bulldozed whenever politicians and their friends can put your property to more grandiose use, is it now open season on property owners?

Not quite, and state and county bureaucrats and those eyeing property still must exercise restraint for two reasons.

First, the Court left open the possibility that a taking of property which results from a bogus process will not pass “public use” scrutiny. Property owners remain free to show where claims of “public use” have been unduly influenced by private interests. “A court . . . should strike down a taking that, by a clear showing, is intended to favor a particular private party, with only incidental or pretextual public benefits.” Backroom deals to take another’s property are not in the public interest.

Second, Kelo at best only reduces federal involvement in the equation. The U.S. Constitution sets minimum standards, and state constitutions and the state courts which enforce them, remain free to provide greater protection to homeowners and others threatened with eminent domain.

And many do just that. Six states have already recognized their citizens have more rights under their constitutions. Last year, for example, the Michigan Supreme Court struck down an attempted taking justified by economic development. Property owners in Michigan have more rights than property owners in Connecticut.

So Kelo simply shifts the focus away from federal law and federal courts. State constitutions and state courts are now the primary forums to protect property rights from eminent domain abuse.

The stage is already set. Hawaii’s Constitution requires “public use,” and when applying that restriction, Hawaii state courts are not bound by restrictive federal interpretations of the U.S. Constitution. The U.S. Supreme Court’s failure in Kelo presents Hawaii courts with the opportunity to join Michigan, Arizona, Washington, and other states and enforce our own “public use” requirement in the manner plainly intended.

But individual rights such as property should not be dependent upon a court’s interpretation, and the ultimate power to prevent eminent domain abuse remains with the people. Local officials must understand that the type of action taken by New London’s redevelopment agency is not acceptable to the people of Hawaii. And if officials do not respond, the people have the power to clarify our state constitution to expressly prohibit eminent domain from being used to take private property from one owner and give it to another.

Home ownership, and the ability to protect your property from forced sale to the highest bidder under government cover is an issue that everyone – regardless of means or political persuasion – can and should get behind.

   Continue Reading ▪ Eminent Domain: The Offer You Can’t Refuse

“You work for the American dream – you don’t steal it.”

So says the protagonist to his cohorts in the 1998 film A Simple Plan, after finding a duffel bag laden with cash. Last summer’s U.S. Supreme Court decision in Kelo v. City of New London triggered a visceral reaction nationwide because it revealed that the government could steal the American dream from innocent homeowners.

Not surprisingly, the public is shaken that the Court would condone the use of eminent domain to bulldoze homes to make way for a hotel, health club, and marina.

After all, the U.S. Constitution’s Fifth Amendment is supposed to prohibit takings unless the property is condemned “for public use” and the owner receives “just compensation.” In Kelo, however, the Court accepted the government’s argument that the taking was for public use because it was claimed the new owner would make “better” – more intense, and therefore more publicly beneficial – use of the property. The decision eviscerated the public use” requirement as a meaningful limitation on eminent domain, except in a few circumstances.

Eminent domain is not a new phenomena. This ancient attribute of sovereignty has its roots in the ability of English kings to seize their subjects’ lands. Traditionally, the power was invoked to take property for schools, government buildings, and military bases. Since the 1950’s, however, it has been increasingly exercised for uses which are not obviously public such as urban redevelopment, land redistribution (Hawaii’s Land Reform Act), and, as in Kelo, “economic development.”

Kelo comes as no real surprise to those who follow eminent domain law, as it is just the latest in a long line of cases upholding the government’s broad power to take private property for virtually any reason. Yet, the public has finally expressed unprecedented revulsion to the manner in which this power is often exercised. Perhaps the contrast between the positions of the parties had never been drawn as starkly: the properties of Mrs. Kelo and her neighbors are well-kept middle class houses, but they were condemned so that another private owner could put them to more economically productive use. It appeared the government was strong-arming widows and families.

Minorities, the poor, the elderly, and those without political clout often find that their properties are targeted. Although the Court eventually upheld government’s power, Kelo shone light on the harsh inequities inherent in eminent domain which had for too long passed unnoticed, and laid bare the fable that property rights are only asserted by the rich and the powerful. Public reaction cut across the political spectrum, with traditional adversaries finding an issue on which they could agree: eminent domain is being overused, and has strayed from its original purpose.

Just ask the farmers, ranchers, small business owners, charitable trusts, churches, families, and homeowners whose properties have been threatened. Next to being wrongly charged with a crime, there is nothing like forced dispossession to make innocent citizens feel violated by their government. When the overwhelming power of the state is leveled directly at property owners, the Constitution should also protect them, and it is no coincidence that the limitations on eminent domain are contained in the same Fifth Amendment which also sets forth the rights of the criminally accused.

Kelo was not the last word on the subject, as it only removed federal law from the equation. The U.S. Constitution sets minimum standards and the states remain free, the Court said, to provide property owners with more protection.  Forty states, Hawaii included, responded quickly to Kelo’s invitation to reform their eminent domain laws. Article 1, section 19 of the Hawaii Constitution, and chapter 101 of the Hawaii Revised Statutes are now the first-line protection.

Several proposals are now pending in the Legislature to reform eminent domain.

Limiting reform to the Kelo issue and only prohibiting “economic development” takings will not curb abuse, however, because a condemnor bent on acquisition will simply create some other reason to support the taking. Piecemeal limitations on eminent domain have never been effective at ensuring the power is used properly.  For example, although several states require that property is deemed “blighted” before eminent domain may be exercised, the government strains to label perfectly good property as “blighted” in order to take it. The courts for the most part do not disturb blight findings, regardless how spurious they appear.

Broader reform is needed to provide more protection to property owners than the current system allows. Several proposals to reform eminent domain procedures are now pending in the legislature to address the greater problems which were exposed by Kelo. To be effective, the Legislature must establish broad checks on eminent domain power, while allowing takings for genuine public uses to continue.

First, the public use for the property should be expressly stated. Currently, condemnors need only hypothesize (in other words, make up) reasons supporting the taking if challenged in court.

Second, eminent domain should be used as a last – not first – resort. Under the current law, it is often cheaper and easier for a condemnor to take property by eminent domain than to attempt its purchase on the open market.

Third, the property should be owned or operated by the government or a PUC-licensed entity. This prevents a Kelo situation where the government’s power is used to force transfers of property primarily for private benefit.

Finally, if the property taken is not used for the stated public use, it should be offered for sale back to the former owner at the price at which it was taken. This prevents pretextual or “temporary” ownership by the government.

Without meaningful reform, eminent domain can turn a property owner’s American dream into the American nightmare. Government should work to support the dream, not steal it.

     Continue Reading ▪ Kelo Exposes Deeper Problems With Eminent Domain