City & County of Honolulu v. Sherman, 110 Haw. 39, 129 P.3d 542 (Feb. 28, 2006), is the latest chapter in the use of eminent domain to effect “land reform” in Hawaii.
I. Background
The story begins long ago when the Hawaii legislatureenacted the statutethat was challenged and sustained in HawaiiHous. Auth. v. Midkiff, 467
After that statute was upheld by the U.S.Supreme Court against a Fifth Amendment public use challenge in Midkiff,and under the Hawaii Constitution’s public use clause by the Hawaii SupremeCourt in Hawaii Hous. Auth. v. Lyman, 68 Haw. 55, 704 P.2d 88 (1985), efforts were made topass similar legislation affording condominium owners the same ability to forcecondemnation of their leasehold interests.
At the state level, those efforts were ultimately unsuccessful, but the City& County of Honolulu eventually enacted a local version, codified as Hon.Rev. Ord. ch. 38. That ordinance, like the Land Reform Act, waschallenged under the public use clauses of the U.S. and Hawaii Constitutions,but as in Midkiff and Lyman, those challenges were rejectedby both federal (Richardson v. City and County of Honolulu, 124 F.3d1150 (9th Cir. 1997)) and state courts (Richardson v. City and County ofHonolulu, 76 Haw. 46, 868 P.2d 1193 (1994)).
Under chapter 38, the owners of many Honolulu condominium projects were permitted to condemn and take the leasehold interestsfrom their lessors. By 2005, however, public sentiment regarding eminentdomain had turned, and the City Council surprisingly repealed chapter 38.
The story does not end there, however, because at the time of repeal,several condominiums had begun the process to condemn their leaseholds, andwere entitledto continue.
II. Taking of a Church’s Private Property – RLUIPA
Sherman involved one of those condominiums in the process of condemnation. Inthat case, the apartment owners petitioned to condemn the leasehold interestfrom the owner, a church, which raised the federal Religious Land Useand Institutionalized Persons Act (RLUIPA) as a defense, asserting that thelease-to-fee conversion was a “land use regulation” thatimpermissibly interfered with the church’s free exercise of religion. Thetrial court denied the church the opportunity to prove these allegations,ruling against it on a motion for summary judgment. Relying on federalcases, the Hawaii Supreme Court held that chapter 38’s condemnation scheme wasnot a “land use regulation” as defined by RLUIPA, and the defense wastherefore unavailable.
The text of RUIPA defines “land use regulation” as a”zoning” or “landmark” law. There is a split offederal authority on whether an exercise of eminent domain is a “land useregulation,” with most courts holding that a typical condemnation of propertythat is owned by a religious organization does not trigger RLUIPA, while a fewother courts disagree.
It does seem odd for Congress to have excluded an outright appropriationof a church’s property, while requiring strict scrutiny for mere regulation. If onerous regulatory decisions should be judged strictly by the courts toinsure they do not interfere with the free exercise of religion, how is thatactually depriving a church of its property should be immune from suchscrutiny? Alas, such questions are not the province of the courts –especially state courts — and despite the apparent logical gap in RLUIPA, it isup to Congress to amend the statute, not the courts, so the Hawaii SupremeCourt’s decision appears sound.
III. Delegation of Eminent Domain Power
The court also rejected the church’s claim that the City improperlydelegated the power of eminent domain to the City Department of CommunityService. The church argued that even though the City Council ultimatelyhad the duty to approve chapter 38 takings, the DCS and the lessees were, inreality, the parties that actually determined what property was to becondemned.
The court did not really address the church’s argument, holding instead thatthe legality of delegation to DCS had already been decided in a prior case, Richardsonv. City and County of Honolulu, 76 Haw. 46, 868 P.2d 1193 (1994). Inthat case, the court had reviewed the chapter 38 procedures and held that DCS”merely” designated property, and it was the City Council’s ultimatedecision whether to actually take it.
While that may be how chapter 38 was designed to work, the church allegedthe reality was much different, and once DCS and apartment owners designatedproperty, the City Council would never be anything more than a “rubberstamp.” The church was denied the opportunity to support thatargument with evidence, however, because the Supreme Court upheld the trialcourt’s grant of summary judgment to the City.
Thus, under Sherman, it seems not to matter what actually happened in the decision whetherto take property, but only what the law states is supposed tohappen. If read to apply broadly, this conclusion does not hold up to thestandards of Kelo v.City of New London, particularly the warning in Justice Kennedy’sconcurring opinion that an exercise of eminent domain is not automaticallyimmune from judicial review, and plausible allegations of extra-legal conductmust be taken seriously. Thus,Sherman must be read narrowly in the context of the facts of the case; the propertyowner only alleged that the delegation violated Haw.Rev. Stat. § 101-13, and Haw.Rev. Stat. § 101-14, not that the delegation violated federal andstate constitutional standards. That issue, apparently, must be decidedin some other case.
IV. Impact
Finally, the court addressed technical issues of the City’s compliance withchapter 38, and the number of apartment owners who qualified for conversion,but since the ordinance has been repealed, this analysis holds little currentinterest. If you need to know more, it’s best to read the opinion.
In the end,Sherman will probably not be remembered as a landmark eminent domain case, since itdealt primarily with an ordinance that had already been repealed. But thetwo key issues in Sherman are sure to arise again, as governments become even more aggressive takingproperty in the wake of Kelo — including church property — and morewilling to delegate that authority to third parties.