Vested rights

It’s appearing more and more that Honolulu’s massive $4B+ rail project is on the fast track, and the City wants to control all development anywhere near the proposed project.  In additon to the technical amendment to eminent domain law noted here allowing the City to to enter into longer term leases for land it grabs by condemnation, the City Council, as reported here, here (video), and here, is contemplating enacting a moratorium on all development within 1/4 mile of the rail route, and 1/2 mile of a transit station. 

Supposedly designed to thwart land speculators anticipating the rail project, the proposal as drafted would put a halt to all development or improvement of any kind, large or small, within the noted zones. 

In addition to the usual legal problems that accompany development bans (inverse condemnation), it is not clear why the City believes a moratorium in necessary unless it plans on taking huge swaths of private property by eminent domain (which it might if it follows the usual course for mass transit projects) in excess of what is needed for the rail footprint, and leasing or selling off the overage.  If that is the case, the proposal may makes sense from the City’s perspective, since it may be seeking to capture any market gain that results from the project.  But what does this mean for private property owners who now may find themselves in the path of the rail line?  Someone down at the City better go read Klopping v. City of Whittier, a decision which prohibits the government from attempting to depress the market value of property in anticipation of condemnation.

     Continue Reading ▪ Contemplating a Rail Development Moratorium

“County zoning flaws leading landowners to court” reads the headline in the December 10 Maui News, detailing two cases where property owners have alleged that the County of Maui long ago confirmed that certain land uses were legal, and cannot now change its mind. 

Under Hawaii’s top-down system of land use classification, the State must first classifiy land as “urban” before the counties are able to zone it.  However, decades ago, the County of Maui apparently zoned the parcels at issue before the state got around to classifying it:

Back in 1964, shortly after the new state government established its land use laws, Maui County granted zoning to land in Pukalani and Makena without having the state first approve urban use.

Under the state land use law, counties are allowed to grant zoning only to properties that are in the urban district. The Land Use Commission determines the classification of lands as conservation, agricultural/rural and urban.

In the cases that now are leading to suits in 2nd Circuit Court and for a Makena family, Maui County not only approved the zoning before the lands were classified urban, but issued letters to the landowners verifying the zoning.

Except the county since has retracted the verification of zoning.

The fallout so far has been at least two lawsuits against the county by landowners in Pukalani and an ongoing headache for a Makena family that seeks to get the zoning that had previously been granted and then retracted.

The county’s somewhat casual approach to zoning in the old days has provided plenty of work for lawyers.

But these lawsuits are not a case of “make work” for lawyers, and reflect a serious issue of who must bear the burden of government’s official mistakes, when they are compounded with years of reliance by property owners, most of whom have no inkling of the error.  The County, it seems, wants to shift the responsibility for its errors onto innocent property owners.  In such instances, however, it seems that the burden of the error should fall on the entity responsible for the mistake, and with the resources to catch it: the government.  Given the scope of the problem, this will no doubt not be the last we hear of such lawsuits.

     Continue Reading ▪ More Maui Land Use Issues

Two land use stories out of Maui today.  The first is a question of vested rights.  The second is about the county’s “affordable housing” impact fee/exaction scheme, which I posted about earlier here and here.

Update: another angle on the impact fee/exaction scheme.

     Continue Reading ▪ Maui Land Use Issues in the News – Twice

More on Leslie v. Board of Appeals, 109 Haw. 384, 126 P.3d 1071 (2006), discussed previously in this post.

The property owner’s subdivision application included a portion of its parcel within the shoreline Special Management Area (SMA), even though all of the construction was planned outside the SMA.

One of the major purposes of Hawaii’s Coastal Zone Management Act (CZMA) is to encourage development mauka (upland) of the SMA, the land closest to the ocean.  The SMA boundary is the critical line in the sand – a property owner need only seek a SMA permit for “development within the SMA” as required by the CZMA if it plans development makai (oceanward) of this boundary.  It appeared the property owner proposed development as contemplated by the CZMA — all of it was mauka of the SMA line.

The county determined that the subdivision of Kiilae’s land was not “development within the SMA” since no actual construction was proposed within the SMA, and did not require the property owner to apply for a SMA permit.  However, a portion of the property being subdivided was within the SMA, even though no actual construction was planned on that parcel.

The issue before the supreme court was whether the subdivision of a parcel, a portion of which is within the SMA, requires a SMA permit.  The court held that because the owner sought subdivision of the entire parcel — its application included a portion of that parcel which was within the SMA — the impact of the entire proposed subdivision must be taken into account when determining whether a permit must be sought. 

This result, like the subdivision issue, was based on the language of the statute.  The property owner’s subdivision application included property within the SMA, and the statutory definition of “development” includes subdivision.  Once that fact was established, the result was consistent with the court’s reliance on plain stautory language.  It would have been another matter entirely, however, if the SMA portion of the property had first been subdivided out, and no part of the subdivided property was within the SMA, even if the act of subdivision were to have some effects on property within the SMA.

Thus, the second lesson that can be taken from the Leslie case is that a property owner must pay close attention to what property is included in an application, because it will be held to it. 

Disclosure: I filed an amicus brief in this appeal, supporting the position of the property owner and the county.

   Continue Reading ▪ SMA: The Line in the Sand

“When all else fails, read the instructions.” 

That old adage is the first lesson to be taken from the Supreme Court of Hawaii’s decision earlier this year in Leslie v. Board of Appeals, 109 Haw. 384, 126 P.3d 1071 (2006). Disclosure: I filed an amicus brief in that case, supporting one the arguments of the property owner and the county on a different issue. 

The case began when Kiilae Estates asked the County of Hawaii to approve a subdivision of its land.  The county subdivision code contains a long list of information that “shall” be submitted with preliminary subdivision plats.  The long-standing practice of the county Planning Department, however, was to defer submission of these materials until after the review of the preliminary subdivision plans.  It made more sense, the Department claimed, to wait until later in the process when the developer’s plans are more complete, and thus the information would be more useful to planners.    Continue Reading ▪ Court to Government: Read the Statute

The University of Hawaii Law Review has published an article on vested rights and development agreements, authored by me and my Damon Key colleagues Ken Kupchak and Greg Kugle.

“Vested rights” is a body of law designed to protect property owners who rely upon government assurances — often in the form of development permits — if the government subsequently attempts to change its mind, or revoke the issued permits.

The title of the article is Arrow of Time: Vested Rights, Zoning Estoppel, and Development Agreements in Hawaii, and the citation is 27 U. Haw. L. Rev. 17 (2004).

Although the article carries a date of 2004, it was published in February 2006, since the U.H. Law Review was a tad behind schedule.

Here’s a summary of the article, from its Introduction:

The modern land regulation and development process is a complex, lengthy, expensive, and very often uncertain undertaking.  The uncertainty is compounded by the ability of the government to change the regulations applicable to property after the owner has begun planning or building but has not completed construction.

Attempting to balance these competing interests, the courts have responded by creating the doctrines of vested rights and zoning estoppel. These closely-related principles permit the government to retain flexibility in land use planning only if a property owner has not proceeded sufficiently along the development path that it would be unconstitutional or unfair to prevent it from completion.

Once an owner’s rights have “vested,” the owner possesses development rights…if the government is estopped, it is prevented from applying any future incompatible, albeit legal, regulations to the property.  Vested rights and zoning estoppel thus counterbalance the government’s unfettered ability to use its police power to regulate land uses, providing some insulation of the land development process from shifting political winds.

This Article details the development of the doctrines by the Hawai’i courts and the application of vested rights and zoning estoppel in Hawai’i land use litigation. It also discusses remedies, and analyzes alternatives to vested rights and zoning estoppel litigation such as development agreements, land swaps, and transferred development rights.

It is a fairly comprehensive treatment of vested rights and zoning estoppel law in Hawaii, and compares our courts’ approach with that of fellow jurisdictions.  It also suggests some areas where the law can be filled out more fully in Hawaii. 

Finally, it deals with the interplay between development agreements and vested rights.  You can’t understand one without understanding the other.   

If you’d like a reprint of the complete article, drop me an e-mail.

    Continue Reading ▪ Law Review Article on Vested Rights and Development Agreements