Comes news that the State Land Use Commission has reclassified a large portion of state-owned land in east Oahu from “urban” to “conservation.” See Ka Iwi shoreline area reclassified as conservation land (via Hawaii News Now) and Ka Iwi coast gets added protection (via the Honolulu Advertis…Honolulu Star-Advertiser). The reports state the “reclassification should make the development of the makai [seaward] area of the coastline ‘a remote possibility'” (quoting the governor’s press release).
The reclassification from urban to conservation means that instead of the City and County of Honolulu’s zoning regulating the land, the State Department of Land and Natural Resources will exercise exclusive regulatory control. (Land classified urban is zoned and primarily regulated by the counties, whereas under Haw. Rev. Stat. § 205-5, the DLNR exclusively regulates conservation-designated land.)
But we’re not quite sure what we’re missing here, since it seems the fact the state owns the land — having acquired it by condemnation a few years ago — is the much more determinative fact insulating it from private development. Put another way, the State “rezoning” its own land should not have been the critical missing piece in preserving it unless the State were planning to develop it (very unlikely politically), or sell it (also unlikely, given the State condemned to prevent its development). Thus, the story leaves us wondering whether something else is afoot.
The governor’s press release also notes “[t]he Governor noted the battle to preserve Ka Iwi for future generations is not over. The mauka [landward] area is not designated conservation, and the potential development of this land remains of paramount concern to the community.” The press release does not mention that much of the “mauka area” land remains in private ownership. As the newspaper reported:
Still, there is privately owned land in the area — above the Hawai’i Kai golf course and mauka of the state land above Queen’s Beach — that could potentially be developed.
Developers controlling the 181-acre site in 2007 announced plans to build 180 large cabins and recreational amenities. The property is in the state’s urban district and zoned for preservation by the county, which in some cases allows recreational-type uses on such land. Though an initial application to develop the site was rejected by the county, the potential remains for the land to be developed.
Here’s where it gets interesting. As long as that property remains privately owned, preventing development won’t be as simple as down-zoning or down-designating the land, because the government has a constitutional obligation to pay for private land if zoning or other use regulations restrict it to the point where it has no “economically beneficial” use. This is your classic “Lucas wipeout.”
The government may be further liable for a regulatory taking even if zoning does not completely destroy use if, after balancing a number of factors, the regulation can be said to be the equivalent of an exercise of eminent domain. This is the Penn Central test, recently reaffirmed in Lingle.
The overarching concern in both circumstances is that the Fifth Amendment prohibits the government from using its regulatory power to force “some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” Armstrong v. United States, 364 U.S. 40 (1960). In other words, because the right to make reasonable use of property is a constitutional right, zoning regulations must leave an owner with some reasonable use, and cannot be imposed as a substitute for condemnation or to flatly prohibit development.
The city understands this only too well. When it repeatedly attempted to prohibit the development of two nearby parcels by downzoning them — rather than condemn them for a public park — it ended up costing the city $85 million. [Disclosure: my Damon Key colleagues and I represented the property owner in that case.] The court ruled this a regulatory taking, and facing damages that could have exceed the entire annual fire and police protection budgets, the city settled.
This legal reality hasn’t stopped calls for the city or the State to try and leverage their regulatory powers to prohibit development of the private property within “Ka Iwi” instead of using their eminent domain powers to take and pay for it. In A new victory in efforts to save the Ka Iwi coast of Oahu, business reporter Howard Dicus asserts that the fact the public has long opposed development means a property owner who attempts to make reasonable and allowable use is “speculating” —
If you buy land in a scenic area where you know there is a grass roots movement to bar development, you run the risk that they will fail to lose their battle.
A landowner can argue that its “appropriate” profit is clearly indicated by the zoning of the land before it is downzoned. But a reasonable judge should agree that all the “Save Sandy Beach” bumper stickers constitute evidence that it has been known for a quarter century that any development potential east of Hawaii Kai has been a matter of speculation.
This is a common misperception — that somehow, as long as advance notice is provided, any owner or purchaser of property loses their right to make use of the property. In 2001, however, the U.S. Supreme Court refuted the “notice” defense to a taking, rejecting the argument that regulation (or public opinion) can “define property rights and reasonable investment-backed expectations” such that an owner cannot claim any injury from lost value. Ownership and the right to make use property do not become “speculation” simply because people think an owner should not develop their land.
Bumper stickers or no, a property owner has a right to make use of her land. If it is in the public interest interest to prohibit development, it is only fair (and constitutional) that the entire public, and not a single property owner, should bear the cost.