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### IN THE SUPREME COURT OF THE STATE OF HAWAI # I ---o0o---

DW AINA LE # A DEVELOPMENT, LLC, Respondent/Co-Petitioner-Appellant-Appellee,

vs. BRIDGE AINA LE # A, LLC., Respondent/Co-Petitioner-Appellant-Appellee,
and
STATE OF HAWAI # I LAND USE COMMISSION, Petitioner/Appellee-Appellant,

and
STATE OF HAWAI # I OFFICE OF PLANNING, COUNTY OF HAWAII PLANNING AGENCY, Respondents/Appellees, (CIV. NO. 11-1-112K)

---------------------------------------------------------------- BRIDGE AINA LE # A, LLC., Respondent/Appellant-Appellee,

vs. STATE OF HAWAI # I LAND USE COMMISSION, Respondent/Appellee-Appellant, Electronically Filed Supreme Court SCAP-13-0000091 25-NOV-2014 09:52 AM* ** FOR PUB LICAT ION I N WES T’S HAWAI # I REPORTS AND PACIFI C REPORTER ***



### and
STATE OF HAWAI # I OFFICE OF PLANNING and COUNTY OF HAWAI # I, Respondents/Appellees,

and
DW AINA LE # A DEVELOPMENT, LLC., Respondent/Appellee-Appellant. (CIV. NO. 11-1-0969-05)

SCAP-13-0000091
APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT (CAAP-13-0000091; CIV. NOS. 11-1-112K and 11-1-0969-05) NOVEMBER 25, 2014 RECKTENWALD, C.J., NAKAYAMA, MCKENNA, AND POLLACK, JJ., AND CIRCUIT JUDGE LEE, IN PLACE OF ACOBA, J., RECUSED OPINION OF THE COURT BY RECKTENWALD, C.J. This appeal turns on whether the Land Use Commission (the LUC) properly reverted land to its former land use classification pursuant to Hawai # i Revised Statutes § 205-4(g) (2001 & Supp. 2007). We hold that the LUC erred in reverting the land without complying with the requirements of HRS § 205-4 because the land owners had substantially commenced use of the land in accordance with the representations they had made to the Commission.

The instant dispute concerns the classification of land in Waikoloa on Hawai # i Island. In 1989, the land was reclassified from agricultural to urban, in order to allow for the development of a residential community. The reclassification
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### was made subject to numerous conditions, including a condition that at least sixty percent of the residential units be affordable. Over time, the land changed hands several times and the LUC granted requests to amend the affordable housing condition.

By 2005, the condition required the landowner, Bridge Aina Le # a, LLC (Bridge), to construct no fewer than 385 affordable units, i.e., twenty percent of the total units to be constructed. It further required Bridge to provide certificates of occupancy for all of these units within five years, and submit a joint venture agreement and mass grading contract within a
year. In December 2008, the LUC issued an order to show cause (OSC) why the land should not revert to its former agricultural land use classification. The LUC stated that it had reason to believe that Bridge and its predecessors in interest had “failed to perform according to the conditions imposed and to the representations and commitments made to [the LUC] in obtaining reclassification of the Subject Area and in obtaining amendments to conditions of reclassification.” Soon thereafter, Bridge informed the LUC that it intended to assign its interest in the land to DW Aina Le # a Development, LLC (DW) through an installment sale. DW subsequently invested more than $20 million in developing the site. Nevertheless, after proceedings over the

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### course of several years, the LUC issued an order reverting the land to the agricultural use district. Bridge and DW each sought judicial review of the LUC’s decision and order, and their cases were consolidated in the circuit court.

The circuit court reversed and vacated the LUC’s decision and order. The circuit court concluded that the LUC: (1) exceeded its statutory authority and violated HRS chapter 205; (2) violated HRS §§ 205-4(h), 205-17, and 205-4(g); (3) violated HRS chapters 91 and 205 and Hawai # i Administrative Rules (HAR) chapter 15; and (4) violated Bridge’s and DW’s due process and equal protection rights.

On appeal, the LUC raises three arguments. First, the LUC argues that HRS § 205-4(g) expressly authorizes it to issue an OSC why reclassified land should not revert to its former land use classification. Second, the LUC argues that the circuit court erred in denying its motion to strike certain documents from other LUC cases, which had been included in the record on appeal. Third, the LUC argues that the circuit court erred in considering Bridge’s and DW’s constitutional arguments, and that those arguments were unfounded.

We hold that the LUC erred in reverting the property without complying with the requirements of HRS § 205-4 that are generally applicable when land use boundaries are changed. See infra at 64-65. Once the LUC issues an OSC, the procedures it

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### must follow before reverting land depend upon whether the petitioner has substantially commenced use of the land. Once use of the land has substantially commenced, the LUC is bound by the requirements of HRS § 205-4. Here, by the time the LUC reverted the property to the agricultural land use district, Bridge and DW had substantially commenced use of the land in accordance with their representations. Specifically, they had constructed sixteen townhouses on the property, commenced construction of numerous other townhouses, and graded the site for additional townhouses and roads. At that point, more than $20 million had been spent on the project. Although Bridge and DW had substantially commenced use of the land, the LUC failed to comply with the requirements of HRS § 205-4. The circuit court therefore correctly concluded that the LUC erred in reverting the property. The circuit court erred, however, in denying the LUC’s motion to strike. The disputed documents are portions of dockets from other cases in the LUC. Because these documents were not part of the administrative record, and neither Bridge nor DW sought to supplement the record in the circuit court, these documents should not have been included in the record on appeal.

The circuit court also erred in concluding that Bridge’s and DW’s procedural and substantive due process rights and equal protection rights were violated. With respect to

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### procedural due process, both Bridge and DW had notice of the OSC and that the LUC might revert the property. They also each had a meaningful opportunity to be heard on the proposed reversion. With regard to substantive due process, the LUC’s reversion was not “clearly arbitrary and unreasonable,” given the project’s long history, the various representations made to the LUC, and the petitioners’ failure to meet deadlines. With respect to Bridge’s and DW’s equal protection arguments, the record does not establish that the LUC’s imposition of a condition and subsequent reversion of the property constituted a violation of the petitioners’ equal protection rights.

We therefore affirm the circuit court’s second amended judgment in part because the LUC failed to comply with the requirements of HRS § 205-4. We vacate the second amended judgment to the extent it is based on the circuit court’s conclusion that the LUC violated Bridge’s and DW’s constitutional rights. I. Background

The following factual background is taken from the record on appeal.
A. Land Use Commission proceedings

This appeal arises out of a dispute over the classification of approximately 1,060 acres of land in Waikoloa. In 1989, the LUC granted a petition to reclassify the land from

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### the agricultural to the urban land use district to allow for the development of a residential community. The original proposal, submitted by Signal Puako Corporation (Signal), included approximately 2,760 residential units. Signal offered to provide thirty percent of the units at prices which families with an income range of 80-120% of the County of Hawaii’s median income
could afford.

On January 17, 1989, the LUC reclassified the land subject to eleven conditions, including the following relevant condition related to the affordable housing units:

1. P etiti oner shall prov ide h ousin g opp ortun ities for low, low-m odera te, a nd mo derat e inc ome H awaii resi dents by offer ing f or sa le at leas t thi rty p ercen t (30 %) ofthe units at pr ices whichfami lies with an in come range up t o one hundr ed tw enty perce nt (1 20%) of th e Cou nty o f Haw aii’s media n inc ome c an af ford, and thirt y per cent (30%) of t he units at p rices whic h fam ilies withan i ncome rang e of one hundr ed tw enty to on e hun dred fortyperc ent ( 120-1 40%) of the C ountyof H awaii ’s me dian incom e canaffo rd. This condi tion may b e ful fille d thr ough proje cts u nder such terms as m ay be mutu ally agree able betwe en th e Petit ionerand the H ousin g Fin ance and D evelo pment Corpo ratio n of the S tate of Ha waii. Thi s con ditio n mayalso be fu lfill ed, w ith t he ap prova l of the H ousin g Fin ance and Devel opmen t Cor porat ion, throu gh co nstru ctionof r ental units to b e mad e ava ilabl e at rents whic h fam ilies in t he speci fied incom e ran ges c an af ford. This affor dable hous ing r equir ement shal l be imple mente d con curre ntly with the c omple tion of th e mar ket units for the r eside ntial proj ect. The deter minat ion o f media n inc ome, as th at te rm is usedin t his c ondit ion, shall be ba sed o n med ian i ncome figu res t hat e xist at th e tim e that this condi tion must be impleme nted. 

### In 1991, Puako Hawaii Properties (PHP), Signal’s successor-in-interest, filed a motion to amend the LUC’s findings of fact, conclusions of law, and decision and order. PHP’s

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### revised proposal included two “world class championship golf courses,” and 1,550 residential units, including multi-family units and single-family lots. PHP offered to construct affordable units off-site, in a number equal to sixty percent of the unit count on the property.

On July 9, 1991, the LUC issued amended findings of fact, conclusions of law, and decision and order, which included the following fifteen conditions:

1. P etiti oner shall prov ide h ousin g opp ortun ities for low, low-m odera te, a nd mo derat e inc ome H awaii resi dents by offer ing f or sa le at leas t thi rty p ercen t (30 %) ofthe units at pr ices whichfami lies with an in come range up t o one hundr ed tw enty (120% ) of the C ountyof H awaii ’s me dian incom e canaffo rd, a nd th irty perce nt (3 0%) o f the unit s at price s whi ch fa milie s wit h an incom e ran ge ofone hundr ed twent y to one h undre d for ty pe rcent (120 -140% ) of the C ounty of Ha waii’ s med ian i ncome can affor d, pr ovide d, ho wever , in no ev ent s hall the g ross numbe r of affor dable unit s be less than 1,000 unit s. This condi tion may b e ful fille d thr ough proje cts u nder such terms as m ay be mutu ally agree able betwe en th e Petit ionerand the H ousin g Fin ance and D evelo pment Corpo ratio n of the S tate of Ha waii. Thi s con ditio n mayalso be fu lfill ed, w ith t he ap prova l of the H ousin g Fin ance and Devel opmen t Cor porat ion, throu gh co nstru ctionof r ental units to b e mad e ava ilabl e at rents whic h fam ilies in t he speci fied incom e ran ges c an af ford. This affor dable hous ing r equir ement shal l be imple mente d con curre ntly with the c omple tion of th e mar ket units for the r eside ntial proj ect. The deter minat ion o f media n inc ome, as th at te rm is usedin t his c ondit ion, shall be ba sed o n med ian i ncome figu res t hat e xist at th e tim e that this condi tion must be impleme nted. 2. P etiti oner shall deve lop, at it s exp ense and i n coord inati on wi th th e Sta te De partm ent o f Lan d andNatu ral Resou rces and t he Co unty of Ha waii Depar tment of W ater Suppl y, th e nec essar y wat er so urce, stor age, and trans missi on fa cilit ies t o pro vide an ad equat e sup ply o f potab le wa ter t o the Prop erty. Pet ition er sh all d evelo p the neces sary watersour ce pr ior t o dev elopm ent o f the Prop erty. 3. P etiti oner shall ensu re th at a buffe r are a alo ng th e bound ary o f the Prop erty front ing t he Qu een K aahum anu Highw ay ri ght-o f-waywill be p reser ved t o pro tect natur al 

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open space and sceni c vie ws. This buffe r are a sha ll be prese rved in pe rpetu ity e itherthro ugh t he es tabli shmen t of a con serva tion easem ent p ursua nt to Chap ter 1 98, H RS, a s amend ed, o r suc h oth er me ans a s sha ll be revi ewed and appro ved b y the Offi ce ofStat e Pla nningof t he St ate o f Hawai i. The b ufferarea shal l be compr ised of ap proxi matel y two h undre d twe nty-f ive ( 225) acres and shall exte nd in land from the Q ueen Kaahu manu Highw ay ri ght-o f-wayto a dept h of appro ximat ely o ne th ousan d two hund red ( 1,200 ) fee t. T he depthof t he bu ffer area may m eande r to a les ser o r gre ater depthto a ccomm odate the Proje ct’s devel opmen t pla n and prese rvati on ofnatu ral o pen s pace and s cenic view s. Excep tions shal l be made for i nfras truct ure i mprov ement s or corri dors that may b e nec essar y to servi ce th e dev elope d porti ons o f the Prop erty. The appr oxima te bo undar ies o f the natur al op en sp ace b ufferarea are refle cted in Pe titio ner’s Exhib it 11 whic h is attac hed h ereto and incor porat ed he rein as Ex hibit B. 4. P etiti oner shall part icipa te inthe fundi ng an d const ructi on ofpres ent a nd fu ture trans porta tion impro vemen ts at proj ect a ccess poin ts as iden tifie d and deeme d nec essar y by the S tate Depar tment of T ransp ortat ion. Such impro vemen ts ma y inc lude a hig hway overp ass o r under pass. Pet ition er sh all a lso p artic ipate in t he fu nding and c onstr uctio n of otheron-s ite a nd of f-sit e trans porta tion impro vemen ts ne cessi tatedby p ropos ed devel opmen t andin d esign s andsche dules acce pted by an d coord inate d wit h the Stat e Dep artme nt ofTran sport ation , provi ded t hat t he ex tent of Pe titio ner’s part icipa tion shall not e xceedits share of t he in creas ed co mmuni ty tr affic impac ts inthe regio n and , pro videdfurt her t hat, in th e event the Count y ado pts a n imp act f ee fo r tra nspor tatio n impro vemen ts, t he fo regoi ng re quire ments shal l not incl ude or do uble- count the cost of an y spe cific traf fic impro vemen ts wh ich m ay al so be incl uded in th e Cou nty’s impac t fee comp utati on. 5. P etiti oner shall desi gn, l ocate and const ruct a sew age treat ment plant as m ay be requ ired by th e Cou nty o f Haw aii and t he St ate D epart ment of He alth as to mini mize adver se impac ts onadjo iningprop ertie s. 6. P etiti oner shall imme diate ly st op wo rk onthe impac ted area and c ontac t the Stat e His toric Pres ervat ion O ffice shoul d anyarch aeolo gical reso urces , suc h as artif acts, shell , bon e, orchar coal depos its, humanburi al, r ock o r coral alig nment s, pa ving or wa lls b e enc ounte red d uringthe Proje ct’s devel opmen t. 7. P etiti oner shall prov ide a maxi mum o f six teen (16) acres withi n the Prop erty for p ublic scho ol si te(s) , as the S tate Depar tment of E ducat ion m ay de termi ne to be n ecess ary t o servi ce th e Pro perty , at no co st to the State of H awaii

. These scho ol si te(s) shal l be provi ded, if th ere i s a n eed for s uch s ite(s ), inloca tion( s) de signa ted f or co mmuni ty


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facil ities on P etiti oner’ s mas ter p lan, or inloca tion( s) as may b e mut uallyagre eable to t he Pe titio ner a nd th e Sta te Depar tment of E ducat ion. 8. P rior to th e dev elopm ent o r tra nsferof a ny in teres ts whats oeverin a nd to the Proje ct, P etiti oner shall prov ide commu nity benef it as sessm ents as ag reed betwe en Pe titio ner and t he Of fice of St ate P lanni ng an d sha ll fi le it withthe Commi ssionwith in 30 days of t he ex ecuti on ofthe agree ment. 9. P etiti oner shall comp ly wi th “T he Ei ght ( 8) Co nditi ons Appli cable to T his G old C ourse Deve lopme nt”, prepa red b y the State Depa rtmen t of Healt h dat ed Ap ril, 1990 (Vers ion 3 ) and attac hed h ereto
. 10. Petit ionershal l eng age t he se rvice s of a qua lifie d golf cours e man ager to ov ersee the irrig ationof t he go lf cours e andappl icati on offert ilize rs an d pes ticid es to the golf cours e andwho shall be c ertif ied b y the Stat e Depar tment of A gricu lture in t he ap plica tion of fe rtili zers and p estic ides. 11. Petit ionershal l mak e ava ilabl e ade quate golftee times , no less than forty(40) perc ent o f tot al da ily g olf tee t imes, at a fford able rates for publi c pla y by Hawai i State resi dents
. 12. Petit ionershal l pro vide annua l rep orts to th e Lan d Use Commi ssion , The Offi ce ofStat e Pla nningand the C ountyof Hawai i Pla nningDepa rtmen t in conne ctionwiththe statu s of the P rojec t andPeti tione r’s p rogre ss incomp lyingwiththe condi tions impo sed. 13. Petit ionershal l dev elop the P roper ty insubs tanti al compl iance withthe repre senta tions made to t he Co mmiss ion. Failu re to so d evelo p the Prop erty may r esult in r evers ion of th e Pro pertyto i ts fo rmer class ifica tion, or c hange to a more appro priat e cla ssifi catio n. 14. Petit ionershal l giv e not ice t o the LandUse Commi ssion of an y int ent t o sel l, le ase, assig n, pl ace i n tru st, o r other wise volun taril y alt er th e own ershi p int erest in t he Prope rty c overe d in the p etiti on, p rior to de velop ment of the P roper ty. 15. The C ommis sion may f ully or pa rtial ly re lease thes e condi tions as t o all or a ny po rtionof t he Pr opert y upo n timel y, an d upo n the prov isionof a dequa te as suran ce of satis facti on ofthes e con ditio ns bythe Petit ioner

. 

### In 2005, Bridge (who had acquired the land at issue in 1999) filed a motion with the LUC to amend the 1991 decision and order, including the affordable housing condition. Specifically,

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### Bridge sought to have the affordable housing condition (condition #1) amended to read as follows:

Petit ionershal l pro vide affor dable hous ing o pport uniti es for l ow, l ow mo derat e andmode rate incom e res ident s of the State of H awaii , whi ch sh all b e con siste nt an d coi ncide with Count y of Hawai i aff ordab le ho usingrequ ireme nts. The locat ion a nd di strib utionof t he af forda ble h ousin g or other provi sion for a fford able housi ng sh all b e und er su ch te rms as ma y be mutua lly a greea ble b etwee n the Peti tione r andthe Count y of Hawai i. 

### Bridge explained that the scope of the project had changed significantly from the time of the original order, and that Bridge was proposing to build 1,924 residential units, 384 of which would be for affordable housing. Bridge further explained that the then-existing sixty percent affordable unit requirement was “not economically feasible because the cost of compliance effectively prevent[ed] the Petitioners from going forward with the development of the Project.” Bridge also explained that the proposed 384 affordable housing units were in line with the County of Hawaii’s twenty-percent affordable housing requirement.

On November 25, 2005, the LUC granted Bridge’s motion to amend the affordable housing condition. The LUC amended that condition to provide the following:

1. P etiti oner shall prov ide h ousin g opp ortun ities for low, low-m odera te, a nd mo derat e inc ome r eside nts o f the Stat e of Hawai # i by offer ing f or sa le at leas t twe nty p ercen t (20 %) of th e Pro ject’ s res ident ial u nit p rices dete rmine d to be affor dable by t he Co unty of Ha wai # i Off ice o f Hou sing and Commu nity Devel opmen t, pr ovide d, ho wever , in no ev ent s hall the g ross numbe r of affor dable hous ing u nits withi n the Petit ion A rea b e les s tha n 385 unit s. T he af forda ble housi ng un its s hall meet or ex ceed all a pplic able Count y of Hawai # i aff ordab le ho usingstan dards , andshal l be compl eted


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in su bstan tial compl iance withthe repre senta tions made to the C ommis sion. 1b. Petit ionershal l obt ain, and p rovid e cop ies t o the Commi ssion , the cert ifica tes o f occ upanc y forall of th e Proje ct’s affor dable hous ing u nits withi n fiv e (5) year s of November 1 7, 20 05. 1c. Petit ionershal l sub mit t o the Comm issio n the Petit ioner ’s si gned joint vent ure a greem ent a nd a mass gradi ng co ntrac t wit hin a reas onabl e amo unt o f tim e, no t to excee d one (1) year from November 1 7, 20 05. 

### During 2006 and 2007, Bridge periodically appeared before the LUC to provide updates on the project. On October 11, 2007, the County Planning Department informed Bridge that an Environmental Impact Statement (EIS) was required for the project, pursuant to this court’s decision in Sierra Club v. Department of Transportation, 115 Hawai # i 299, 167 P.3d 292 (2007). During a meeting held by the LUC on September 18, 2008, commissioners expressed concern that annual progress reports submitted by Bridge in 2005, 2006, and 2007 showed “no activity” with respect to the conditions imposed by the 1991 decision and order, as amended in 2005. Specifically, Commissioner Lisa M. Judge stated:

I mea n it’ s cle ar th ey ha ve no t, I belie ve, o r we have

reaso n to belie ve, t hat t hey’r e fai ling to pe rformon t he condi tion that was i mpose d, sp ecifi callythis affo rdabl e housi ng co nditi on. I wou ld sa y tha t the Comm issio n sho uld i ssue an Or der to Sh ow Ca use t o saywhy the p roper ty cl assif icati on -- that the p roper ty sh ould not r evert to i ts fo rmer land use class ifica tion.
I wou ld se t for th a motio n tha t the Comm issio n iss ue an Or der t o Sho w Cau se wh y the peti tion area shoul d not rever t to its f ormerclas sific ationor m ore a pprop riate



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class ifica tion. 

### The LUC voted 6-0 to issue an OSC. On October 2, 2008, Bridge submitted to the LUC its annual progress report for 2008. In the report, Bridge stated that it “was proceeding with its efforts to develop and complete the affordable housing units,” but that “progress has been set back by the determination by the [Planning Director of the County of Hawai # i] that an accepted EIS will be required before the Planning Department accepts the Project District Application for review and processing and by the denial of the [Nonsignificant Zoning Change Application], presently on appeal with the Board of Appeals.” On December 9, 2008, the LUC issued an OSC, pursuant to HRS § 205-4(g), and HAR § 15-15-93 (2000), 1 2

HRS § 205- 4(g) provi des: 1
Withi n a p eriodof n ot mo re th an th ree h undre d six ty-fi ve days afterthe prope r fil ing o f a p etiti on, u nless othe rwise order ed bya co urt, or un less a tim e ext ensio n, wh ich s hall not e xceednine ty da ys, i s est ablis hed b y a t wo-th irds vote of th e members of th e commissi on, t he co mmiss ion, by fi ling findi ngs o f fac t andconc lusio ns oflaw, shal l act to appro ve th e pet ition , den y the peti tion, or t o mod ify t he petit ion b y imp osingcond ition s nec essar y to uphol d the inten t andspir it ofthis chap ter o r the poli cies and crite ria e stabl ishedpurs uant to se ction205- 17 orto a ssure subst antia l complian ce wi th re prese ntati ons m ade b y the petit ionerin s eekin g a b ounda ry ch ange. The commi ssionmay provi de bycond itionthat abse nt su bstan tial comme nceme nt of use o f the landin a ccord ance with such repre senta tions , the commi ssionshal l iss ue an d ser ve up on th e par ty bo und b y the condi tion an or der t o sho w cau se wh y the prop erty shoul d not rever t to its f ormerlanduse class ifica tion or be chan ged to a more appro priat e cla ssifi catio n. S uch c ondit ions, if any, shall run with the l and a nd be reco rded in th e bur eau of co nveya nces. (cont inued ...) 

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(...c ontin ued) 1 (Emph asis added ). HAR § 15-1 5-93 provi ded: 2 (a) A ny pa rty o r int erest ed pe rson may f ile a moti on wi th the c ommis sion reque stingan i ssuan ce ofan o rder to sh ow cause upona sh owingthat ther e has beena fa ilure to perfo rm a condi tion, repr esent ation , or commi tment on t he part of th e pet ition er. The p arty or pe rson shall also serve a co py ofthe motio n foran o rder to sh ow ca use u pon any p ersonboun d by the c ondit ion, repre senta tion, or commi tment . Th e mot ion f or or der t o sho w cau se sh all s tate: (1) T he in teres t of the m ovant ; (2) T he re asons for filin g the moti on; (3) Adesc ripti on an d a m ap ofthe prope rty affec ted b y the cond ition ; (4) T he co nditi on or deredby t he co mmiss ion whichhas not b een p erfor med o r sat isfie d; (5) C oncis ely a nd wi th pa rticu larit y the fact s, suppo rted by anaffi davit , giv ing r ise t o a belie f tha t a c ondit ion o rdere d by the commi ssionhas not b een p erfor med o r sat isfie d; and (6) T he sp ecifi c rel ief r eques ted. (b) W henev er th e commissi on sh all h ave r easonto b eliev e that there has been a fai lure to pe rformacco rdingto t he condi tions impo sed, or th e rep resen tatio ns orcomm itmen ts made by th e pet ition er, t he co mmiss ion s hall issue and serve upon the p arty or pe rson boundby t he co nditi ons, repre senta tions , or commi tment s, anorde r to show cause why the p roper ty sh ould not r evert to i ts fo rmer land use class ifica tion or be chan ged t o a m ore a pprop riate class ifica tion. The comm issio n sha ll se rve t he or der t o show cause in w ritin g by regis teredor c ertif ied m ail w ith retur n rec eipt reque sted at le ast t hirtydays befo re th e heari ng. A cop y sha ll be also sent to a ll pa rties in t he bound ary a mendm ent p rocee dings . Th e ord er to showcaus e shall incl ude: (1) Astat ement of t he da te, t ime, place , and natur e of the h earin g; (2) Adesc ripti on an d a m ap ofthe prope rty t o be af fecte d; (3) Astat ement of t he le gal a uthor ity u nder (cont inued ...)



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### why the land “should not revert to its former land use classification or be changed to a more appropriate classification.” The LUC stated that it had reason to believe that Bridge and its predecessors in interest had “failed to perform according to the conditions imposed and to the representations and commitments made to [the LUC] in obtaining reclassification of the Subject Area and in obtaining amendments to conditions of reclassification.” Specifically, the LUC noted the following:

1. C ondit ion 1 a and1b o f the Find ings of Fa ct, C onclu sions of La w andDeci sion and O rder, date d Jul y 9, 1991, as amend ed onNove mber 25, 2 005 ( “Deci sion & Ord er”) requi res Petit ioner , by November 1 7, 20 10, t o pro vide no fe wer t han 385 a fford able housi ng un its w ithinthe Petit ion A rea t hat meet or ex ceed all a pplic able Count y of Hawai i aff ordab le housi ng st andar ds an d sub stant iallycomp ly wi th

(...c ontin ued) 2 whichthe heari ng is to b e hel d; (4) T he sp ecifi c sec tions of t he st atute s, or rules , or both, invo lved; and (5) Astat ement that any partymay retai n couns el ifthe partyso d esire s. (c) T he co mmiss ion s hall condu ct a heari ng onan o rder to show cause in a ccord ance with the r equir ement s of subch apter 7, wh ere a pplic able. Anyproc edure in a n ord er to show cause hear ing m ay be modi fied or wa ived by st ipula tion of the p artie s andinfo rmal dispo sitio n maybe m ade i n anycase by st ipula tion, agre ed se ttlem ent, conse nt or der, or defau lt. (d) P ost h earin g pro cedur es sh all c onfor m to subch apter7 or subch apter9. Decis ions and o rders shal l be issue d in accor dance withsubc hapte r 7 o r sub chapt er 9. (e) T he co mmiss ion s hall amendits decis ion a nd or der t o incor porat e the orde r to show cause by i nclud ing t he rever sion of th e pro pertyto i ts fo rmer land use class ifica tion or to a mo re ap propr iate class ifica tion. (Emph asis added ). 

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repre senta tions made to t he Co mmiss ion. 2. C ondit ion 1 c of the D ecisi on & Orderrequ ires Petit ioner to su bmit to th e Commissi on byNove mber 17, 2 006: 1) th e Proje ct’s signe d joi nt ve nture agre ement , and2) a mass gradi ng co ntrac t. 3. P etiti oner has r epres entedthat the infra struc ture and concr ete p ad fo r the affo rdabl e hou sing porti on ofthe Proje ct wi ll be the first part of t he Pr oject to b e const ructe d, th erebyenab ling the m arket unit s andthe affor dable hous ing u nits to be cons truct ed co ncurr ently
. 4. P etiti oner has c ommit ted t o bui ldingthe Proje ct’s affor dable unit s ins tead of pa ying an in -lieufee to th e Count y of Hawai i.
5. P etiti oner repre sente d tha t all cont racts withthe gener al co ntrac tor, subco ntrac tors and o ther const ructi on relat ed co nsult ants have been fullynego tiate d andwill be execu ted w ithin30 d ays f ollow ing t he Co mmiss ion’s deci sion [in N ovemb er 20 05]. 6. P etiti oner has r epres entedthat no a dditi onal discr etion ary g overn menta l app roval s rem ain o utsta nding , with the s ole e xcept ion o f the high way a ccess appr oval by the S tate Depar tment of T ransp ortat ion. 

### (Brackets in original).

The LUC held a hearing on the OSC on January 9, 2009. 3 

### During the hearing, several Commissioners expressed concern over the project’s lack of progress. For example, Commissioner Judge stated the following:

And i n 200 5 the Peti tione r pro misedto p rovid e 385 affor dable hous ing u nits to th e Kon a communit y wit hin t hree years . Th ey pr omise d tha t the deve lopme nt wo uld p rovid e jobs and t he ve ry mu ch ne eded workf orce housi ng fo r Wes t Hawai # i.

. . . . Unfor tunat ely, here we ar e tod ay an d the re ar e no affor dable home s on that devel opmen t. W orse yet, there ’s

In th e mea ntime , Bri dge h ad fi led a nothe r mot ion t o ame nd th e 3 affor dable hous ing c ondit ion. In t his m otion , Bri dge r eques ted t hat t he affor dable hous ing c ondit ion b e ame nded to re quire Brid ge to prov ide u p to one hundr ed wo rkfor ce ho usingunit s wit hin t hree years of t he fi ling of th e amend ed co nditi on. Bridg e sub seque ntly withd rew t his m otion

. 

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not e ven a glimmer o f the m com ing a ny ti me so on. There ’s no build ing p ermit s, th ere’s no i nfras truct ure. But t he re al ca use o r the real reas on th at we are here todayI th ink i s muc h big ger. It’s a mu ch la rger issue

. Becau se inmy m ind t he he aringfor the O rder to Sh ow Ca use is wh en I looke d bac k thi s pet itionstar ted b ack i n Nov ember 25th, 1987 , mor e tha n 20 years ago when the f irst Petit ioner , Sig nal P uako Corpo ratio n, fi led t heir distr ict bound ary [ ] ame ndmen t pet ition

.

. . . . So th e aff ordab le ho usingcond itionin m y min d is reall y jus t the stra w tha t bro ke th e cam el’s back. The real[ ] rea son I made the Motio n forthe Orderto S how C ause is th ere’s a st ate s tatu[ t]e, [HRS § 205 -4(g) ] tha t sta tes that, “The Comm issio n mayprov ide b y con ditio n tha t abs ent subst antia l commence ment of us e of the l and i n acc ordan ce with such repre senta tions the Commi ssionshal l iss ue an d serve uponthe partyboun d by the c ondit ion a n Ord er to Show Cause why the p roper ty sh ould not r evert to i ts fo rmer land use c lassi ficat ion o r be chang ed to a mo re ap propr iate class ifica tion. ” So inmy m ind t here’ s bee n 20 years that have gone by and n othin g has happ ened. The re we re re prese ntati ons m ade to th e communit y. T here are s evera l con ditio ns at tache d to those deci sion and o rders
.

. . . . So inmy m ind i t’s n ot on ly th e aff ordab le ho using condi tion that needs to b e ame nded. In my mi nd it ’s ev ery condi tion needs to b e rev isite d, di scuss ed an d ame nded. Then a dec isioncan be ma de. 

### The LUC ultimately continued the hearing. In closing, the LUC chairman stated the following:

Durin g thi s per iod t he Pe titio ner i s urg ed to prep are and p resen t an updat ed de scrip tion of it s pro jects with timet ables and criti cal p aths, and to re view the e xisti ng LUC c ondit ions and c ommit ments , andto d eterm ine w hethe r a furth er mo tion is ne cessa ry inorde r to obtai n rel ief f rom condi tions that cann ot be met, and, if n ecess ary, to re quest chang es to cond ition s nec essar y to harmo nize the P rojec t with the L UC co nditi ons. 

### In February 2009, Bridge informed the LUC that it intended to assign “all of its right, title, and interest” in the land to DW through an installment sale. DW, in turn, filed a

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### petition to be a co-petitioner with Bridge or, alternatively, to be given party status or to intervene.

The LUC resumed the hearing on the OSC on April 30, 2009. For purposes of the hearing, Bridge was treated as the sole petitioner. DW did not participate in the hearing because the LUC had not yet ruled on DW’s request to be a co-petitioner. During the hearing, the County Planning Department argued that “the current Urban District designation is appropriate and that the public interest would be best served by allowing [Bridge] to maintain its current classification.” The State Office of Planning argued, however, that “reversion of the property to its original classification of Agriculture would be appropriate under the facts and circumstances of this case.” Specifically, the State Office of Planning argued the following:

The i ssue todayis w hethe r the Peti tione r has comp lied with theirrepr esent ation s in devel opingthe prope rty a nd wheth er th ey ar e abl e to build[385 ] aff ordab le un its o n site and o btainCert ifica tes o f Occ upanc y by November 2 010.
In ou r vie w the y hav e not deve lopedin a ccord ance with theirrepr esent ation s. . . . Our o nly c ommen ts wo uld b e tha t in our v iew t he ch ange in ow nersh ip is irre levan t to the i nitia l andonlyques tion whichis w hethe r the y wil l be able to co mply with the condi tion.
We wo uld n ot su pport any chang e, an y ame ndmen t, an y exten sion. Thi s mat ter h as go ne onfor many years . Yo u may remember t hat t he af forda ble h ousin g req uirem ent w as am ended to re duce those requ ireme nts i n 200 5. T hat a mendm ent, that reduc tion in th e req uirem ents was b ased upon a var iety of repre senta tions

. In or der t o pre serve the integ rity of th is pr ocess we canno t all ow de velop ers t o com e bac k bef ore y ou re peate dly each time they canno t comply w ith t hose repre senta tions , each time they canno t comply w ith a cond itionand simpl y ask


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that a con ditio n be chang ed orremo ved. 

### At the end of the hearing, the LUC voted 7-0 to revert the land to agricultural use. DW then moved to stay entry of decision and order on the LUC’s April 30 action, pending consideration of additional evidence. In its motion, DW argued that its evidence included “facts that were not available to the Land Use Commission at the April 30, 2009 meeting and include[d] certain key facts which [would] allow the development to proceed and which [would] allow fulfillment of the affordable housing condition applicable to this docket.”

On June 5, 2009, the LUC took under advisement DW’s request to be a co-petitioner, granted DW’s motion to stay entry of a decision and order on the OSC, and decided to schedule a one-day hearing for the submission of additional evidence on the OSC. Bridge filed a motion to rescind the OSC, arguing that it had made “substantial commencement of use of the land.”

The LUC held the one-day evidentiary hearing on August 27, 2009. Bridge designated DW as its agent for purposes of presenting evidence on the progress of the project and compliance with the decision and order of the LUC. During the hearing, DW’s president, Robert Wessels, testified that DW and Bridge were prepared to close on the sale of approximately 61 acres of the 1,060 acre parcel for the development of the affordable housing units. Wessels explained that grading of this

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### site had begun, and that a second access road to the site had been prepared so that infrastructure work and construction of the townhouses could occur simultaneously. Wessels explained that a “package” sewage treatment plant would be used for the affordable housing units.

During cross-examination by the State Office of Planning, the following exchange occurred:

Q: Mr. W essel s, yo u are fami liar with the r equir ement s for a cert ifica te ofoccu pancy ?
A: Yes, I am. Q: In or der t o get a ce rtifi cate of oc cupan cy do you know wheth er ornot you n eed t o hav e a w orkin g ele ctric al hooku p?
A: I bel ieve you d o, ye s. Y ou ha ve to meet the life safet y sta ndard s. A nd el ectri cal w ould be on e of the requi remen ts. Q: You w ould also need to ha ve se wage hooku p, co rrect ?
A: That’ s cor rect. Q: You w ould also need to ha ve th e wat er ho okup, corr ect?
A: Yes. Q: And y ou wo uld n eed t o hav e acc ess t o the roadsuchas QueenKa # ahuma nu Hi ghway , cor rect?
A: That’ s cor rect. Q: You w ould need all o f tha t bef ore a cert ifica te of occup ancy couldbe i ssued , cor rect?
A: That’ s cor rect. 

### And later, the following exchange occurred:
Q: Your curre nt co nstru ctionplanwoul d hav e the vert ical const ructi on [i .e., townh ouse const ructi on] g oing on while hori zonta l con struc tion [i.e. , inf rastr uctur e const ructi on] i s con tinui ng, i s tha t rig ht?
A: That’ s cor rect.



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Q: Wouldthe verti cal c onstr uctio n beg in be fore the infra struc ture conne ction s to that pad o r tha t podis compl eted?
A: Yes. It h as to in o rder to me et th e sch edule
. Q: So yo u bui ld th e hou se be fore you h ave a conn ectio n to the s ewer, wate r, an d ele ctric al li nes. A: That’ s cor rect. 

### In response to questions from the commissioners, Wessel testified that DW had already spent approximately $4.5 million on the project. The following exchange also occurred:

COMMI SSION ER WO NG: Anoth er qu estio n. O n the affo rdabl e housi ng, o nce y ou st art v ertic al const ructi on ho w man y hom es wo uld you b e abl e to buildsay, per month ?
A: We ar e sta rting32 h ouses a mo nth, basic ally. Andas w e bui ld to begi n with, we b uild so we will be deliv eringand finis hing rough ly 30

- 40 ho uses a mon th, r oughl y one [- ]and- a-hal f a d ay. COMMI SSION ER WO NG: So le t us say b y Mar ch 31 st ho w man y homes woul d yoube a ble t o fin ish, 31st of ne xt ye ar?
A: (off mic) By th e 31s t of March accor ding to ou r sch edule we h ad rough ly 32 unit s. CHAIRMAN P LITZ: Couldyou repea t tha t wit h the mic[? ]
A: Yes. Acco rdingto o ur co nstru ction sched ule a s lin ed ou t we will have one p ad co mplet ed bythe 31st of March , whi ch is 32 t own h omes. 

### By a 6-3 vote, the LUC rescinded and vacated the OSC “provided that as a condition precedent, [Bridge] completes 16 affordable units by March 31, 2010. Further, that the County of Hawai # i shall provide quarterly reports to the [LUC] in connection with the status of [Bridge’s] progress in complying

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### with this condition.” The LUC also voted 8-1 to accept DW as a co-petitioner. The LUC issued a written order rescinding the OSC and accepting DW as co-petitioner.

On December 16, 2009, the LUC received DW’s annual report. The report detailed how DW was progressing on satisfying each of the conditions. With respect to the affordable housing condition, the report provided the following:

DW Ai na Le # a Dev elopm ent, LLC ( “DW”) is w orkin g to satis fy co nditi on 1. As previ ouslyrepo rted to th e Commi ssionin t he Co mmiss ion’s hear ing i n the dock et ea rlier this year, DW s ubdiv ided a por tion of th e Pet itionarea (Parc el D- 1-B) in wh ich t he in itial affo rdabl e hou sing units will be bu ilt a s par t of Phase 1. Phase 1 in volve s the const ructi on offift y fou r (54 ) 8 u nit multip le fa mily struc tures . Tw o str uctur es wi ll be loca ted o n eac h of 27 pads. The indi vidua l uni ts wh ich w ill b e pro videdto m eet the a fford able housi ng re quire ments will be e itherthre e bedro om un its o r fou r bed room units . DWhas previ ously submi tted to th e Commissi on it s fin ancin g commitme nts f or Phase 1. Not l ess t han 3 85 ofthes e uni ts wi ll co nformto t he affor dable hous ing r equir ement s in the a fford able housi ng agree ment with the C ountyOffi ce ofHous ing A gency . Th e actua l number o f aff ordab le ho usingunit s maybe i ncrea sed to co nformto C ountyof H awaii affo rdabl e hou sing requi remen ts. The P hase 1 sch eduli ng is desi gned to pr oduce certi ficat es ofoccu pancyfor the 3 85 Ph ase 1 affo rdabl e housi ng un its b y Nov ember17, 2010. DW ha s ent ered into a joi nt de velop ment agree ment with Bridg e Ain a Le # a LLC whic h pro vides the devel opmen t wit h right s to acces s ove r the agri cultu rallyclas sifie d lan d, right s to obtai n wat er fo r the Proj ect a nd to esta blisha schoo l sit e acc eptab le to the State Depa rtmen t of Educa tion on Br idge Aina Le # a’s a gricu ltura lly c lassi fied land. DW ha s a m ass g radin g anddesi gn bu ild c ontra ct wi th Goodf ellowBrot hers whichhas been previ ouslysubm ittedto the C ommis sion. The grad ing p lans for P hase 1 wer e app roved by th e Cou nty D epart ment of Pu blic Works and appro priat e gradi ng pe rmits were issu ed. Mass gradi ng ha s bee n ong oing to cr eate the b uildi ng si tes a nd th e acc ess r oads. Alt hough the g radin g pla n rev iew a nd ap prova l pro cess took longe r than DW in itial ly an ticip ated, mass grad ing d esigndraw ings for t he af forda ble u nits are 9 0% co mplet e andall requi red


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permi ts ha ve be en ob taine d to allowgrad ing t o pro ceed. Sched ule a djust ments are beingmade to a llow the P rojec t to retai n its sche dule. The f ollow ing h as be en co mplet ed:

a. About 90% of th e mas s gra ding for t he af forda ble housi ng to wnhou se si tes h as be en co mplet ed; b. Finis h gra ding for 1 8 aff ordab le ho using found ationpads is c omple te (f ounda tion slabs are s chedu led t o beg in inmid- December 2 009); c. The i mmedi ate a ccess roadway h as be en gr aded; d. About 80% of th e int ernal roadways have been grade d; e. The i nitia l eng ineer ing f or th e roa ds an d utili ties has b een c omple ted; f. The w ater suppl y tan k sit es an d ser vice corri dors have been ident ified ; g. Impro vemen ts ha ve be en ma de to the exist ing waterwell and a 750 ,000 gallo n col lecti on reser voir for d ust c ontro l dur ing c onstr uctio n has b een b uilt; h. The n ecess ary u tilit y eas ement s hav e bee n ident ifiedand topog raphi c map s hav e bee n compl eted (Inst allat ion o f sit e uti litie s to beginabou t 1/1 /2010 ); i. Plan Appro val b y the Plan ning Depar tment for the affor dable hous ing c ompon ent w as is sued on November 3 0, 20 09; j. Groun dbrea king for t he af forda ble h ousin g pha se was h eld o n Sep tembe r 22, 2009 ; All n ecess ary p ermit s, in cludi ng ve rtica l con struc tion permi ts fo r the affo rdabl e hou sing site have been prepa red and w ere r ecent ly su bmitt ed. DW is work ing w ith t he Co unty to [e nsure ] tha t the appl icati ons f or pe rmits will be proce ssed to me et th e dev elopm ent s chedu le. DW is work ing w ith t he Of fice of Ho usingand Commu nity Devel opmen t on the t erms of th e aff ordab le ho using agree ment. The affo rdabl e hou sing units will be i n build ings whichhave 16 u nits in ea ch pa d are a. T he 25 pad areas will acco rding ly pr oduce 400 units of w hich at le ast 385 w ill b e aff ordab le ho usingunit s. F or th e aff ordab le housi ng un its, the m ix wi ll be 289 three bedr oom u nits and 96 fo ur be droomunit s. Arevi sed a fford able housi ng agree ment was p resen ted t o the Offi ce ofHous ing f or it s revie w andappr oval. The affo rdabl e hou sing units will be fee s imple cond omini um un its. DW i s pro cessi ng [s ic] t o creat e the cond omini um un its s o tha t spe cific affo rdabl e housi ng un its c an be iden tifie d forthe affor dable hous ing agree ment. 

### On May 4, 2010, the State Office of Planning submitted a letter to the LUC commenting on DW’s progress. With respect to

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### the condition precedent that sixteen units be completed by March 31, 2010, the letter noted that “any vertical construction which occurred was not accompanied by any utility connections, and the units cannot be occupied. The Commission has not addressed whether a unit which has no electricity, water, sewage connection or roadway infrastructure can be deemed ‘complete.’” The State Office of Planning further noted that DW was behind schedule in seeking approval of the EIS, and that the EIS needed to be approved before DW could secure approval for required road improvements and installation of the wastewater treatment plant.

The State Office of Planning also stated that Capital Asia Group, one of the investors in the project, was using a “troubling advertisement” guaranteeing a thirty percent return on investment over the course of thirty months. The State Office of Planning explained that the advertisement was troubling because “it indicates that financing is likely not secure.”

The LUC visited the construction site on May 6, 2010. The following month, the LUC mailed a letter to DW, requesting a written status report in preparation for a hearing scheduled for July 1, 2010. The LUC requested that DW comment on the status of its compliance with the condition precedent that sixteen units be completed by March 31, 2010, and to address the concerns raised by the State Office of Planning in its May 4, 2010 letter. The LUC also asked DW to provide an update on its compliance with

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### each of the conditions under the 1991 decision and order, as amended in 2005.

The LUC received DW’s status report on June 14, 2010. In its report, DW stated the following:

DW un derst ood t he re quire ment to be that it n eededto compl ete c onstr uctio n of at le ast 1 6 of the a fford able housi ng un its b y Mar ch 31 , 201 0. S ince these unit s are in 8 unit build ings, this requ ired the c omple tion of co nstru ction of tw o bui lding s. DW co mplet ed th e fir st tw o bui lding s wit h 8 a fford able housi ng un its e ach b y Mar ch 31 , 201 0. T hese build ings have compl eted exter iors and i nteri ors. The elect rical and plumb ing f or th e uni ts inthes e bui lding s is compl eted and readyto h ook u p. T he un its h ave c abine ts an d app lianc es insta lled.

. . . . The c ondit ion p reced ent d id no t req uire that DW ob tain certi ficat es ofoccu pancyfor the 1 6 aff ordab le un its b y March31, 2010. The pres entat ion t o the Comm issio n andthe proce eding s on Augus t 27, 2009 showthat it w as un derst ood const ructi on wo rk wo uld b e pro ceedi ng ev en ifthe certi ficat es ofoccu pancycoul d not be o btain ed un til a latertime

. DW ha d sub mitte d to the C ommis sion its s chedu les f or const ructi on ofthe
. . . 385 affor dable hous ing u nits requi red b y Con ditio n 1 o f the Deci sion and O rder filedon November 2 5, 20 05. Those sche dules desc ribedthe site work neede d to creat e acc ess t o bui ldingsite s, th e est ablis hment of th e bui ldingpads for the s truct ures for t he af forda ble housi ng un its a nd th e ver tical cons truct ion o f the struc tures
.

. . . . I hadsubm itteda Ju ly 30 , 200 9 sta tus r eport in respo nse t o you r Jul y 10, 2009 lett er fo r a s tatus repo rt on how P etiti oners woul d comply w ith c ondit ions for recla ssifi catio n. T he Ju ly 30 , 200 9 sta tus r eport incl uded a Pha se 1 sched ule f or ve rtica l con struc tion of Ph ase 1 [.] In th e sta tus r eport , I h ad in dicat ed “[ t]he goal for P hase 1 is to ob tain occup ancy permi ts fo r the affo rdabl e hou sing units by N ovemb er 17 , 201 0[.]” The c ondit ion w as imposedafte r the Comm issio ners had expre ssed conce rns o ver t he la ck ofacti on to impl ement repre senta tions made by p rior owner s in the p ast. The impos itionof t he co nditi on pr ecede nt wa s a m eans of ho lding DW to actu ally const ructi ng af forda ble h ousin g imp rovem ents.



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Giventhe testi mony that was s ubmit ted b efore the Commi ssion impos ed it s con ditio n pre ceden t, th e rec ord s howedthat a numbe r of facts , inc ludin g the comp letio n of this EIS proce ss an d the appr oval of Qu een K aahum anu H ighwa y inter secti on an d was tewat er tr eatme nt pl ans w ould be ne eded

. . . befo re oc cupan cy pe rmits coul d be obtai ned. DW’s plans as p resen ted t o the Comm issio n wer e to start withcons truct ion o f the affo rdabl e hou sing units as soon as ap propr iate gradi ng an d bui ldingperm its w ere obtai ned a nd no t to wait for t he EI S, in terse ctionplanor waste watertrea tment plan t app roval s. DW be lieve s tha t it has c ompli ed wi th th e con ditio n prece dent and h as de monst ratedby a ction s its comm itmen t to proce ed wi th th is pr oject . As note d bel ow, D W has not limit ed it s con struc tion effor ts to thes e two buil dings

. The s ite g radin g forall of th e Pha se 1 build ing i s compl eted.
. . . DW has a lso h ad 5 more build ings erect ed whichare undercons truct ion.

. . . Othe r eff orts by DWto furth er wo rk onthis proj ect a re al so de scrib ed be low. To da te, D W andits contr actor s hav e spe nt mo re th an $19,0 00,00 0 in proce eding s wit h thi s pro ject. 

### During the July 1, 2010 hearing, Commissioners expressed concern that DW had not yet secured title to the remaining 1,000 acres of land, the lack of communication with the LUC, and the availability of financing for the project. The State Office of Planning also stated that it was concerned because the condition precedent was not satisfied, the EIS was behind schedule, the pace of construction had slowed, the representations made by Capital Asia were problematic, the failure to provide the LUC with notice of changes in ownership, Bridge’s continuing interest in the project, and November 17, 2010 should be considered a deadline, not a goal.

At the end of the hearing, Commissioner Devens moved to keep the OSC pending, to schedule a hearing on or after September 17, 2010 to consider the OSC, to affirm that

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### November 17, 2010 was a deadline, and that the condition precedent had not been satisfied. The motion passed by a vote of 8-0. The LUC also issued a written order finding that DW had failed to meet the condition precedent for rescinding the OSC.

On August 31, 2010, DW filed a motion to amend conditions 1, 5, and 7. Specifically, DW moved to amend the affordable housing condition to allow it to complete “the minimum 385 affordable housing units on the following schedule: 190 units by December 31, 2011, 195 units by December 31, 2012”; to modify condition 5 “to allow the waste water treatment plant which will service the entire project to be located outside the urban classified area”; and to amend condition 7 “to require either that [DW] provide to the State Department of Education (“DOE”) 16 acres of land within the urban classified area for a public school or provide to DOE 32 acres of land outside the urban classified area at such location and upon such terms as are acceptable to DW and to the DOE.” The County Planning Department took no position on DW’s motion, the State Office of Planning opposed the motion, and Bridge concurred in the motion, but argued that the LUC should “eliminate any artificial, arbitrary ‘deadlines,’ and instead base [the affordable housing condition] upon a revised development schedule that reasonably and credibly reflects demand, absorption, and financing in the current market.” DW later submitted a supporting exhibit, i.e., a letter

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### from the County Planning Department indicating that it had accepted the final EIS for the project.

DW later moved to amend its motion. Specifically, DW sought to have condition 1 amended to read as follows:

a. A req uirem ent t hat a n upd ated maste r pla n cov eringall 5 pha ses o f the deve lopme nt be subm ittedto t he La nd Use C ommis sion (here inaft er re ferre d to as “L UC”) for its r eviewand appro val; b. That the p hasin g be adjus ted t o be consi stent withthe curre nt re quire ments of t he LU C. T he ph asing requi remen ts wo uld t heref ore b e adj ustedto f it wi thin 10 ye ar de velop ment perio ds. The p hasin g wou ld al so inclu de re quire ments that infr astru cture bene fitti ng more that one p hase be co mplet ed be fore devel opmen t of laterphas es wh ich w ould be de pende nt onwhensuch infra struc ture can b egin;

c. That DW Ai na Le ’a wi ll co ntinu e to compl ete t he affor dable hous ing u nits in Ph ase I and relat ed infra struc ture as th e pri orityof t he de velop ment. DW Aina Le’a will not p rocee d wit h the deve lopme nt of units afte r Pha se I until the updat ed Ma ster Plan has been revie wed a nd ap prove d by the L UC an d the firs t 56 affor dable hous ing u nits have been compl eted and t he affor dable hous ing s ales progr am ha s bee n sta rted, DW Aina Le’a will maint ain i ts sa les p rogra m forsuch units and will conti nue t o bui ld af forda ble h ousin g units so a s to maint ain a n inv entor y of such units for sale to qu alifi ed re siden ts wi th a minimum in vento ry of 16 unit s; an d d. The c urren t con ditio ns ofappr oval wouldbe a mende d to be co nsist ent w ith t he cu rrent prac tices and requi remen ts ofthe LUC. 

### On November 12, 2010, Bridge filed a motion requesting an order providing the following: (1) the LUC shall not act on the OSC scheduled on the agenda for November 18, 2010; (2) the LUC is required to strictly follow HRS Chapter 91, HRS Chapter 92, HRS Chapter 205, and Hawai # i Administrative Rules (HAR) Chapter 15 with respect to the OSC; (3) the OSC is null and void because the LUC did not follow the applicable statutes and rules;

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### and (4) the LUC is estopped from proceeding with or taking any further action on the matters set forth in the OSC. DW joined Bridge’s motion.

The following week, the LUC held a hearing on the OSC. Due to “the limited number of Commissioners available,” however, the LUC heard “evidence and argument on the Show Cause Order,” but deferred ruling on the order.

The State Office of Planning then filed a motion for an OSC. The Office of Planning argued that Bridge and DW “clearly violated the LUC’s terms and conditions,” and that “[i]n order topreserve the integrity of LUC decisions and the LUC decisionmaking process, Petitioner must be held accountable, and must come forward to explain why the Petition Area should not be reclassified to its former more appropriate classification.”

The LUC scheduled a January 20, 2011 hearing on the OSC, Bridge’s November 12, 2010 motion, the State Office of Planning’s motion, and Bridge’s August 31, 2010 motion to amend. Following the hearing, the LUC voted 5-3 to revert the property to the agricultural land use district. The LUC also voted 8-0 to deny as moot the State Office of Planning’s motion for an OSC, and Bridge’s November 12, 2010 motion. The LUC did not rule on DW’s motion to amend.

On February 17, 2011, DW submitted a request for a hearing on its motion to amend. On the same day, DW also

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### submitted a request to comment on any proposed findings of fact and conclusions of law. The LUC scheduled a March 10, 2011 hearing on the adoption of proposed findings of fact, conclusions of law, and decision and order, and on the motion to amend.

The day before the hearing, DW moved for a continuance. During the hearing, the LUC voted 6-2 to adopt the proposed findings of fact, conclusions of law, and decision and order, with amendments. By a 6-2 vote, the LUC also granted a 4


### continuance on DW’s motion to amend.

On March 17, 2011, DW filed a motion to reconsider and to defer entry of final findings of fact, conclusions of law, and decision and order. Bridge joined DW’s motion. The State Office of Planning took no position on the motion.

Following a hearing on April 8, 2011, the LUC deferred acting on DW’s motion to reconsider, and deferred acting on the proposed findings of fact, conclusions of law, and decision and order. During a subsequent hearing, Commissioner Kanuha moved to grant in part and deny in part DW’s motion to amend. Commissioner Kanuha’s motion was defeated 3-5. With respect to DW’s motion to reconsider and defer entry of final findings of fact, conclusions of law, and decision and order, the LUC voted 5-3 to deny the motion. The LUC also voted 6-2 to adopt the

Bridg e sub seque ntly filedexce ption s andobje ction s to the 4 propo sed f indin gs offact , con clusi ons o f law , anddeci sion and o rder, and filedits own p ropos ed fi nding s, co nclus ions, and decis ion. DW a lso f iled excep tions to t he pr opose d fin dings , con clusi ons, and d ecisi on an d ord er. 

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### proposed findings of fact, conclusions of law, and decision and order, with amendments. Finally, on May 13, 2011, the LUC voted 6-0 to deny DW’s motion to amend.

On April 25, 2011, the LUC entered an order adopting the proposed findings of fact, conclusions of law, and decision and order. The LUC made the following relevant findings of fact:

G. Vi olati ons 57. A s of November 1 7, 20 10, P etiti oners had faile d to provi de ce rtifi cates of o ccupa ncy f or at leas t 385 affor dable dwel ling units , andviol ated Condi tion 1 of the 2005 Order
. 58. A s of Janua ry 20 , 201 1, ov er 22 year s sin ce th e recla ssifi catio n was firs t gra nted, Peti tione rs ha d fai led to ob tain a cer tific ate o f occ upanc y forevenone affor dable dwell ing u nit w ithinthe Petit ion A rea. 59. O f the 385 affor dable dwel ling units , Pet ition ers h ave appro ximat ely 4 0 dwe llingunit s in vario us st ages of verti cal c onstr uctio n all in t he sa me ar ea. 60. T here is no infr astru cture conn ectio n to any o f the affor dable dwel ling units , inc ludin g ele ctric al li nes, sewag e lin es, w ater lines , andfini shed roads . Cu rrent const ructi on an d pre limin ary i nfras truct ure d evelo pment has been limit ed to a 62 -acre port ion o f the 1,06 0 acr e Pet ition Area, incl udingtemp oraryacce ss ro ads. 61. A s of July 1, 20 10, P etiti oners owedappr oxima tely 5.5 milli on do llars to t he Ge neral Cont racto r, Go odfel low Broth ers f or wo rk pr eviou sly d one. 62. P etiti oners cont inue to be in v iolat ion o f Con ditio n 1 of th e 200 5 Ord er, a nd ar e unl ikelyto c omple te 38 5 affor dable unit s in the n ear f uture
. 63. P etiti oners have not subst antia lly c ommen ced u se ofthe Petit ion A rea i n con forma nce w ith t he re prese ntati ons m ade in 20 05 orin c onfor mance withthe appli cable repre senta tions and condi tions as o f Jan uary 20, 2 011. Furth ermor e, Pe titio ners have faile d to subst antia lly c omply with repre senta tions made to t he Co mmiss ion. 64. T hroug h mul tiple stat us he aring s andthe issua nce o f the December 9 , 200 8 Ord er to ShowCaus e, th e Commissi on ha s clear ly in forme d Pet ition ers o f the impo rtanc e of compl ying with theirrepr esent ation s andall condi tions of a pprov al, inclu ding but n ot li mitedto C ondit ions 1 and13.



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65. I t is impor tant to th e int egrit y of the S tate land use proce ss th at Pe titio ners compl y wit h the cond ition s imp osed by th e Commissi on an d wit h the repr esent ation s mad e by the Petit ioner s. 66. U nder the f acts and c ircum stanc es ofthis case , Petit ioner s hav e fai led t o sho w cau se wh y the Peti tion Area shoul d not be r evert ed to its origi nal c lassi ficat ion. Petit ioner s hav e con tinua lly v iolat ed Co nditi on 13 , whi ch requi res t hem t o sub stant iallycomp ly wi th re prese ntati ons made to th e Commissi on, i nclud ing b ut no t lim ited to th e follo wing:
• On Septe mber 30, 2 005, Mr. P aoa r epres entedthat Petit ionerBrid ge wo uld b uild 385 a fford able housi ng un its on-si te wi thin the P etiti on Ar ea (2 005 O rder, FOF 9); t hat the h omes wouldbe b uilt and c ertif icate s of occup ancy obtai ned w ithinthre e yea rs (2 005 O rder, FOF 12); that no addit ional disc retio nary gover nment al ap prova ls we re ne eded, with the s ole e xcept ion o f the high way a ccess appr oval (2005 OrderFOP 26); and t hat a ll Pe titio ner B ridge ’s co ntrac ts with contr actor s andcons ultan ts ha ve be en ne gotia ted a nd wouldbe e xecut ed an d con struc tion site work start ed wi thin 30 da ys ofthe Commi ssion ’s de cisio n (20 05 Or der, FOF 2 4 and 25).
• On April 30, 2009, Peti tione r Bri dge r epres entedthe capab iliti es, p artic ularl y the expe rienc e andfina ncial capab ilityof D W # Aina Le # a to step into Bridg e’s s hoes and meet all t he co nditi ons t he Co mmiss ion h ad se t dow n. Furth er, M r. Pa oa re prese nted that Petit ionerBrid ge ha d the capab iliti es to meet the timel ine f or co nstru ctionof t he affor dable hous ing.
• On June 5, 20 09, i n res ponse to a ques tion by th e Commi ssionprio r to beingacce pted as a co-pe titio ner, a repre senta tive of DW # Aina Le # a rep resen ted t hat t hey h ad revie wed t he co nditi ons i mpose d by the C ommis sion and t hat they were prepa red t o comply w ith t he co nditi ons. The repre senta tive of DW # Aina Le # a als o rep resen ted t hat t hey had n o int ent t o see k to amendcond ition s in the 2 005 O rder.
• On Augus t 27, 2009 , Mr. Wess els, a rep resen tativ e of DW
# Aina Le # a, re prese nted that DW # Aina Le # a was fami liar with the C ommis sion’ s Jul y 10, 2009 lett er to Peti tione r Bri dge reque stinginfo rmati on oncomp lianc e wit h con ditio ns, t he subse quent resp onse lette r by Petit ionerBrid ge onJuly30, 2009, DW # Aina Le # a’s r espon se le tter on Ju ly 31 , 200 9, an d that DW # Aina Le # a was prep ared to co mply with the c ondit ions impos ed bythe Commi ssionin t heir 2005 Decis ion a nd Or der.
• On December 1 6, 20 09, C o-Pet ition er DW # Aina Le # a sub mitte d an an nual repor t tha t rep resen ted t hat a ll ne cessa ry permi ts, i nclud ing v ertic al co nstru ctionperm its f or th e affor dable hous ing s ite h ad be en pr epare d andrece ntly submi tted; that theyplan ned t o con struc t the wast ewate r treat ment plant in t he Ag ricul tural Dist rict whichwoul d requi re a State Spec ial P ermit and amendments to t he


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condi tions ; tha t the y int end t o pro vide 32 ac res i n the Agric ultur al Di stric t to the D epart ment of Ed ucati on wh ich wouldrequ ire a mendm ents to th e con ditio ns; t hat t hey w ould compl y wit h DOHcond ition s; an d tha t the y wil l pro vide the Commi ssionwithnoti ce ofany inten t to sell, leas e, as sign, place in t rust, or o therw ise v olunt arilyalte r the owne rship inter est o f the Prop erty.
• On November 1 8, 20 10, C o-Pet ition er DW # Aina Le # a adm itted not m eetin g a d eadli ne bya “v ery m ajor amoun t” inrefe rence to th e req uirem ent t o pro vide certi ficat es ofoccu pancyfor 385 a fford able units by N ovemb er 17 , 201 0; an d fur ther admit ted t hat t hey c ould not p rovid e a f irm d ate b y whi ch the 1 6 uni ts th at ha d bee n con struc ted c ould be oc cupie d.
• On November 1 8, 20 10, i n res ponse to q uesti oningby t he Commi ssion , Co- Petit ionerDW # Aina Le # a rep resen ted t hat condo miniu m doc ument s hadnot been submi tted, the packa ge waste watertrea tment plan t hadnot been deliv ered and p lans not s ubmit ted t o the Stat e Dep artme nt ofHeal th fo r rev iew and a pprov al, n o app licat ion h ad be en ma de to the Publi c Utili ties Commi ssionfor appro val o f was tewat er orwate r utili ties, no p lans for l andsc apinghad been submi tted for revie w andappr oval by th e Cou nty, and C o-Pet ition er DWLea had n ot au thori zed a nythi ng to faci litat e the cons truct ion of th e int ersec tion to pr ovide acce ss to the Prope rty. 

### The LUC also made the following conclusions of law:

1. An y con clusi ons o f lawhere in imprope rly d esign ated as a findi ng offact shou ld be deem ed an d con strue d as a concl usionof l aw; a ny fi ndingof f act h ereinimpr operl y desig natedas a conc lusio n of law s houldbe d eemedand const rued as a findi ng offact
. 2. Th e Commissi on ha s the auth orityto r evert a Pe titio n Area to it s ori ginal landuse class ifica tion for f ailur e to compl y wit h the cond ition s imp osed by th e Commissi on. Lana # i Co. Inc. v. L and U se Co mmiss ion, 105 H awai # i 296 , 318 (Haw. 2004 ), an d HRS Sect ion 2 05-4( g). 3. Un der t he fa cts a nd ci rcums tance s of this case, Petit ioner s hav e fai led t o sat isfy Condi tion 1 andhave faile d to subst antia lly c omplywithrepr esent ation s mad e to the C ommis sion, in v iolat ion o f Con ditio n 13. 4. Un der t he fa cts a nd ci rcums tance s of this case, reve rsion of th e Pet itionArea to i ts or igina l agr icult ural class ifica tion does not v iolat e anyappl icabl e rul e or statu tory provi sions , inclu ding Hawai # i Adm inist rativ e Rul es (HAR) s ubcha pter 7 of Chapt er 15 -15, and H RS Ch apter s 91, 92, and 2 05. 5. Th e Commissi on do es no t rul e upo n que stion s of const ituti onal law. 6. Un der t he fa cts a nd ci rcums tance s of this case, reve rsion



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of th e Pet itionArea to i ts or igina l agr icult ural class ifica tion for v iolat ion o f con ditio ns, i nclud ing Condi tion 1 andCond ition13, is no t pre clude d by the doctr ine o f est oppel
. 

### The LUC therefore ordered that the property be reverted to its prior agricultural land use classification.
B. Circuit court proceedings

Bridge appealed the LUC’s order to the Circuit Court of the First Circuit (Civil No. 11-1-0969-5), and DW appealed to the Circuit Court of the Third Circuit (Civil No. 11-1-0112K). The parties later stipulated to transfer venue of Bridge’s appeal to the Third Circuit, where the two appeals were consolidated. 5



### DW filed a motion to stay the LUC’s April 25, 2011 order. DW argued it was likely that it would prevail on the merits, it would sustain irreparable harm absent a stay, and the public interest would be served by a stay. The circuit court denied DW’s motion to stay. The circuit court concluded that the LUC had not violated HRS § 205-4(h) because the reversion was made pursuant to HRS § 205-4(g), but that there was insufficient evidence to determine whether DW would prevail on its argument that the LUC had violated HRS § 205-4(g). The circuit court also concluded that it could not assess the merits of DW’s vested rights, estoppel, and constitutional arguments. The circuit court further concluded that the threat of irreparable harm was

The p artie s als o sti pulat ed to dism issin g wit hout preju dice all 5 claim s aga inst the S tate of Ha wai # i Off ice o f Sta te Pl annin g, Co unty of Hawai # i, an d Cou nty o f Haw ai # i Pla nningDepa rtmen t. 

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### speculative, and that it could not determine whether the public interest would be served by a stay. The LUC filed a motion to strike a portion of the record on appeal. Specifically, the LUC sought an order:

strik ing t hat p ortio n of the D esign ationof R ecordon Appeal desig natin g the foll owingdock ets a s par t of the r ecordon appea l: L and U se Co mmiss ion d ocket s: “A 93-70 1; Ka upule hu Devel opmen ts; A 00-73 0, La nihauProp ertie s; A0 3-744 , Hiluh ilu; A06-7 70, T he Sh opoffGrou p, L. P.; A 06-76 7, Waika loa M auka, LLC; and A10-7 88, H HFDC Fores t Cit y”. 

### In a memorandum in support of its motion, the LUC argued that “[t]he additional 6 dockets designated by Appellant are not part of the evidentiary record in [this case].” DW opposed the motion to strike, arguing that the additional dockets demonstrated that the LUC violated DW’s equal protection rights. DW also argued that the First Circuit Court had denied a substantially similar motion during Bridge’s appeal to that court. Specifically, Bridge had requested that documents from eighteen LUC cases be included in the record on appeal in the First Circuit Court, and the First Circuit Court denied the LUC’s motion to strike those documents. The Third Circuit Court denied the LUC’s motion to strike.

Bridge made the following six main arguments in the circuit court: (1) the LUC violated HRS Chapters 205 and 91; (2) “zoning estoppel” prevented the LUC from enforcing the boundary amendment; (3) the LUC violated its equal protection rights; (4) the affordable housing condition was an “unconstitutional land

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### development condition”; (5) the LUC’s final order was not supported by the record; and (6) the LUC violated its due process rights. DW raised the following six arguments: (1) the LUC’s final order violated HRS Chapter 205 and HAR Chapter 15-15; (2) the LUC exceeded its statutory authority in enforcing the affordable housing condition; (3) equitable estoppel barred the LUC from reverting the property to the agricultural land use district because DW’s development rights in the property were vested; (4) its equal protection rights under the United States and Hawai # i Constitutions were violated; (5) its procedural and substantive due process rights were violated under the United States and Hawai # i Constitutions; and (6) the reversion amounted to an unlawful taking under the United States and Hawai # i Constitutions.

The LUC filed a consolidated answering brief, advancing seven arguments. Those arguments were that: (1) HRS § 205-4’s 6 

### requirements relating to district boundary amendments do not apply to reversions; (2) the affordable housing condition was

The C ountyPlan ning Depar tment also file d an answe ring brief . Th e 6 Count y Pla nningDepa rtmen t exp laine d tha t it relie d on the L UC’s recla ssifi catio n of the l and i n ado ptinga re zonin g ord inanc e, gr antin g subdi visio n app roval , andissu ing b uildi ng pe rmits . Th e Cou nty P lanni ng Depar tment expl ainedthat the LUC’s recl assif icati on ofthe prope rty b ack t o the a gricu ltura l lan d use dist rict “rais es si gnifi cant quest ions as to whet her the [ Count y’s] rezon ing a ction , pur suant to t he Ja nuary8, 1 993, Ordin ance No. 93-1, amen ding the C ounty ’s Zo ning Code for t he pr oject area fromUnpl annedto Resid entia l, Mu lti-F amily , andVill age C ommer cial uses, is s till valid .” T he Count y Pla nningDepa rtmen t, ho wever , didnot sugge st ho w the circ uit c ourt shoul d dec ide t he ca se. 

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### constitutional; (3) Bridge’s and DW’s equal protection and due process arguments were unfounded; (4) the doctrine of zoning estoppel did not apply because the classification was made subject to conditions; (5) its procedures were proper; (6) its decision was supported by the record and was neither arbitrary nor capricious; and (7) there was no unconstitutional taking.

The circuit court entered its amended findings of fact, conclusions of law, and order reversing and vacating the LUC’s final order on June 15, 2012. The circuit court did not address individual findings of fact and conclusions of law in its order. Instead, the circuit court’s order provided that the LUC’s April 25, 2011 order was “reversed and vacated in its entirety.”

The circuit court first concluded that the LUC exceeded its statutory authority and violated HRS Chapter 205. The circuit court explained that HRS Chapter 205 “granted the LUC authority to establish land use regulations for the major classes of uses and to establish the boundaries of the districts for these uses,” but that the “responsibility of enforcing the land use classification districts adopted by the LUC was expressly delegated to the counties.” The circuit court further noted that HRS Chapter 205 “expressly delegates the power to enforce land use conditions, and zoning, to the counties.” The circuit court therefore concluded that the LUC lacked “the authority to sanction Bridge and DW with reclassification of the Property to

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### the Agricultural land use district without consideration of the factors required for land use district boundary changes pursuant to HRS §§ 205-16 and 205-17 .” [ 7 ] [ 8 ]

Secti on 20 5-16 provi des: “No a mendm ent t o anylanduse distr ict 7 bound ary n or an y oth er ac tion by th e lan d use comm issio n sha ll be adop ted unles s suc h ame ndmen t or otheracti on co nform s to the H awaii stat e pla n.” HRS § 205 -16 ( 2001)
.

Secti on 20 5-17 provi des: 8 In it s rev iew o f anypeti tion for r eclas sific ationof distr ict b ounda ries pursu ant t o thi s cha pter, the commi ssion shall spec ifica lly c onsid er th e fol lowin g: (1) T he ex tent to wh ich t he pr opose d rec lassi ficat ion confo rms t o the appl icabl e goa ls, o bject ives, and polic ies of th e Haw aii s tate plan and r elate s to the a pplic able prior ity g uidel ines of th e Haw aii s tate plan and t he ad opted funct ional plan s; (2) T he ex tent to wh ich t he pr opose d rec lassi ficat ion confo rms t o the appl icabl e dis trict stan dards ; (3) T he impact of th e pro posedrecl assif icati on onthe follo wing areas of s tate conce rn: (A) P reser vatio n or maint enanc e of impor tant natur al syste ms orhabi tats; (B) M ainte nance of v aluedcult ural, hist orica l, or natur al re sourc es; (C) M ainte nance of o ther natur al re sourc es re levan t to Hawai i’s e conom y, in cludi ng ag ricul tural reso urces ; (D) C ommit ment of st ate f unds and r esour ces; (E) P rovis ion f or employm ent o pport uniti es an d econo mic d evelo pment ; and (F) P rovis ion f or ho usingoppo rtuni ties for a ll in come group s, pa rticu larlythe low, low-m odera te, a nd ga p gro ups; (4) T he st andar ds an d cri teria for the r eclas sific ationor rezon ing o f imp ortan t agr icult ural lands in s ectio n 205 -50; (5) T he co unty gener al pl an an d all community , dev elopm ent, or co mmuni ty de velop ment plans adop ted p ursua nt to the count y gen eral plan, as t hey r elate to t he la nd th at is the subje ct ofthe recla ssifi catio n pet ition ; and (6) T he re prese ntati ons a nd co mmitm ents made by th e petit ionerin s ecuri ng a bound ary c hange
. (cont inued ...) 

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### The circuit court expressly stated that it was not concluding that the LUC could never impose specific dates and benchmarks, only that “if the LUC is going to enforce these conditions, it must do so within a much broader context, and that context is found in HRS §§ 205-16 and -17.” In this regard, the circuit court noted that “one of the stated purposes of imposition of conditions under HRS Chapter 205 is to hold petitioners to their word of representations.”

The circuit court next concluded that the LUC violated HRS § 205-4(h). The circuit court explained that the LUC violated HRS § 205-4(h) by failing to “find upon the clear preponderance of the evidence that the proposed boundary is reasonable, not violative of HRS § 205-2 and part III of HRS Chapter 205, and consistent with the policies and criteria established pursuant to HRS §§ 205-16 and 205-17[,]” and “by failing to obtain six affirmative votes to amend the land use district boundary.”

Third, the circuit court concluded that the LUC violated HRS § 205-16 because “there are no findings of fact or conclusions of law in the Final Order, nor any evidence in the record, indicating that the LUC considered the Hawaii State Plan.” The circuit court next concluded the LUC also violated

(...c ontin ued) 8 HRS § 205- 17 (S upp. 2008) 

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### HRS § 205-17 because it failed to consider the factors listed therein. Fifth, the circuit court concluded that the LUC violated HRS § 205-4(g) because the OSC was not resolved within 365 days of its issuance.

The circuit court further concluded that the LUC violated HRS Chapters 91 and 205, and HAR Chapter 15 based on improper procedures. Specifically, the circuit court concluded that “instead of following these statutes and rules, the LUC implemented a rolling and continuing OSC procedure that not only extended far beyond the 365-day period required by HRS § 205- 4(g), but also ignored the required procedures, and created new procedures that were not already established.”

Sixth, the circuit court concluded that the LUC violated Bridge’s and DW’s procedural and substantive due process rights. The circuit court specifically noted “(1) [the LUC’s] rolling and continuing OSC that extended far beyond the time period allowed by law; (2) the LUC’s conduct that was in derogation of the statute and rules established to protect Bridge and DW; and (3) the LUC’s attempt to create a new procedure that was not already established.” The circuit court concluded that the LUC denied Bridge and DW their right to a meaningful opportunity to be heard, and that the final order was “arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.”

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### The circuit court also concluded that the LUC violated Bridge’s and DW’s equal protection rights. The circuit court explained that the LUC treated “Bridge, DW and this Project differently, and less favorably, than other petitioners in cases involving facts and circumstances substantially similar to this case.” The circuit court noted “at least six other major project dockets” where the LUC has taken no action to revert, even though “the petitioners have failed to fulfill their representations to the LUC; have failed to meet their projected development timeframes; and have failed to build any housing units, much less any affordable housing units.” 9



### The circuit court reversed and vacated the LUC’s final order in its entirety, declaring that the April 25, 2011 order,

viola tes c onsti tutio nal a nd st atuto ry pr ovisi ons, excee ds the L UC’s autho rity and j urisd ictio n, wa s mad e upo n unl awful proce dures , was affe cted by ot her e rrors of l aw, w as cl early erron eous in vi ew ofthe relia ble, proba tive, and subst antiv e evi dence on t he wh ole r ecord , andwas arbit rary, capri cious , or chara cteri zed b y abu se ofdisc retio n or clear ly un warra nted exerc ise o f dis creti on. 

### Finally, the circuit court ordered that the OSC and all other orders issued by the LUC that were inconsistent with the circuit court’s decision were rescinded and voided.

The circuit court entered an amended final judgment, from which the LUC timely filed a notice of appeal. The ICA

The c ircui t cou rt di d not reac h the zoni ng es toppe l andvest ed 9 right s arg ument s adv ancedby B ridge and DW, a nd th ey ar e not at i ssue on appea l. T he ci rcuit cour t als o didnot addre ss DW ’s un const ituti onal takin g argum ent. We t heref ore d o not cons ider these argu ments
. 

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### dismissed the appeal for lack of jurisdiction, however, because the amended final judgment neither entered judgment on nor dismissed the administrative appeals as to the State Office of Planning, the County Planning Department, and the County of Hawai # i. The circuit court thereafter entered a second amended final judgment, which stated that all claims against the County of Hawai # i, the County of Hawai # i Planning Department, and the State Office of Planning had been dismissed, and the LUC timely filed a notice of appeal.

The LUC timely filed an application for transfer of the appeal from the ICA to this court, and Bridge filed a joinder to the LUC’s motion. This court granted the LUC’s application for
transfer. On appeal, the LUC raises three points of error:

1. Haw. Rev. Stat. § 20 5-4(g ) (20 01) a nd Su preme Cour t case law s pecif icall y aff irm [ the i ssuan ce of ] “an orderto s how c ause why t he pr opert y sho uld n ot re vert to it s for mer c lassi ficat ion o r be chang ed to a mo re appro priat e cla ssifi catio n.” The c ircui t cou rt er red by ru ling to th e con trary [.]

. . . . 2. Haw. Rev. Stat. § 91 -14(f ) (20 12) a nd Ha w. Re v. St at. § 91- 9(e) (2012 ) pro vide that the c ourt’ s rev iew “shal l be confi ned t o the reco rd.” The circu it co urt erredby c onsid eringmatt ers n ot pa rt ofthe recor d.

. . . . 3. The c ircui t cou rt er red i n rul ing i n an agenc y app eal — wit hout any o pport unityfor prese ntati on ofevid ence and w ithou t reg ard t o the righ t to trial by j ury — that the L UC an d ind ividu al co mmiss ioner s vio lated devel opers ’ con stitu tiona l rig hts t o equ al pr otect ion and d ue pr ocess .



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### II. Standard of Review
A. Secondary appeal

Revie w of a dec isionmade by t he ci rcuit cour t upo n its revie w of an ag ency’ s dec isionis a seco ndaryappe al. The stand ard o f rev iew i s one in w hich this court must dete rmine wheth er th e cir cuit court was right or w rong in it s decis ion, apply ing t he st andar ds se t for th inHRS § 91– 14(g)

. . . to t he ag ency’ s dec ision

. 

### Citizens Against Reckless Dev. v. Zoning Bd. of Appeals of City & Cnty. of Honolulu, 114 Hawai # i 184, 193, 159 P.3d 143, 193 (2007). Section 91-14(g) provides the following:

Upon revie w of the r ecordthe court may affir m the deci sion of th e age ncy o r rem and t he ca se wi th in struc tions for furth er pr oceed ings; or i t mayreve rse o r mod ify t he decis ion a nd or der i f the subs tanti al ri ghts of th e petit ioner s mayhave beenprej udice d bec ause the admin istra tive findi ngs, concl usion s, de cisio ns, o r ord ers are: (1) I n vio latio n of const ituti onal or st atuto ry pr ovisi ons; or (2) I n exc ess o f the stat utoryauth orityor j urisd ictio n of the a gency ; or (3) M ade u pon u nlawf ul pr ocedu re; o r (4) A ffect ed byothe r err or oflaw; or (5) C learl y err oneou s in view of th e rel iable , pro bativ e, and s ubsta ntial evid ence on th e who le re cord; or (6) A rbitr ary, or ca prici ous, or ch aract erize d by abuse of discr etionor c learl y unw arran ted e xerci se ofdisc retio n. 

### HRS § 91-14(g).

“‘[U]nder HRS § 91–14(g), conclusions of law are reviewable under subsections (1), (2), and (4); questions regarding procedural defects under subsection (3); findings of fact under subsection (5); and an agency’s exercise of discretion -43-* ** FOR PUB LICAT ION I N WES T’S HAWAI # I REPORTS AND PACIFI C REPORTER *** 

### under subsection (6).’” Citizens Against Reckless Dev., 114 Hawai # i at 193, 159 P.3d at 152 (quoting In re Hawaiian Elec. Co., 81 Hawai # i 459, 465, 918 P.2d 561, 567 (1996)) (brackets in original). III. Discussion
A. The circuit court correctly concluded that the LUC erred in reverting the property to the agricultural land use district without complying with the requirements of HRS § 205-4 The LUC argues that the circuit court’s “fundamental error was to equate the reclassification process [under HRS § 205-4(a)], with reversion pursuant to [HRS § 205-4(g)].” Specifically, the LUC argues that pursuant to HRS § 205-4(g), it is authorized to impose conditions on a petition seeking to amend a district boundary, to issue an OSC, and to revert property to its former land use classification. In the LUC’s view, because reclassification is different than reversion, it was not required to consider the factors set forth in HRS §§ 205-16 and 205-17, it did not have to satisfy the requirements of HRS § 205-4(h), and it did not have to satisfy the 365 day deadline set forth in HRS § 205-4(g).

DW and Bridge argue that the LUC may only revert property pursuant to an OSC if the petitioner has not substantially commenced use of the property. DW and Bridge further argue that, upon issuance of an OSC, the LUC must follow the same procedures applied in considering any other district

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### boundary amendment petition. Thus, according to DW and Bridge, pursuant to HRS § 205-4(h), the LUC must find by a clear preponderance of the evidence that the proposed boundary is reasonable, not violative of HRS § 205-2, and consistent with the policies and criteria established under HRS §§ 205-16 and 205-17. They also argue that at least six affirmative votes are required to revert property.

To the extent DW and Bridge argue that the LUC must comply with the general requirements of HRS § 205-4 anytime it seeks to revert property, they are mistaken. The express language of HRS § 205-4(g) and its legislative history establish that the LUC may revert property without following those procedures, provided that the petitioner has not substantially commenced use of the property in accordance with its representations. In such a situation, the original reclassification is simply voided.

Thus, once the LUC issues an OSC, the relevant considerations to be taken into account by the LUC and the procedures it must follow turn on whether the petitioner has substantially commenced use of the land in accordance with its representations. When the LUC reverts property before the petitioner has substantially commenced use of the land, the LUC may do so without following the procedures otherwise applicable under HRS § 205-4. However, if the LUC seeks to revert property

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### after use of the land has substantially commenced, then the LUC is bound by the requirements of HRS § 205-4. Applying these principles to the facts of this case, the circuit court correctly concluded that the LUC erred in reverting the property to agricultural use without complying with the requirements of HRS § 205-4 because, by the time the LUC reverted the property, DW and Bridge had substantially commenced use of the land in accordance with their representations. 1. Amendments to district boundaries pursuant to HRS § 205-4 There are four major land use districts in which all lands in the state are placed: urban, rural, agricultural, and conservation. HRS § 205-2. The LUC generally sets the standards for determining the boundaries of each district. Id.

Section 205-4 generally sets forth the procedures the LUC must follow in amending a district boundary. Section 205- 4(a) provides that any department or agency of the State, any department or agency of the county in which the land is situated, or any person with a property interest in the land sought to be reclassified may petition the LUC for a boundary change. HRS § 205-4(a). Not less than sixty days and not more than one hundred eighty days after the proper filing of a petition, the LUC must conduct a hearing on the petition. HRS § 205-4(b).

Section 205-4(h) provides that no amendment to a

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### district boundary shall be approved unless the LUC “finds upon the clear preponderance of the evidence that the proposed boundary is reasonable, not violative of section 205-2 and consistent with the policies and criteria established pursuant to section 205-16 and 205-17.” HRS § 205-4(h). Section 205-4(h) further provides that “[s]ix affirmative votes of the commission shall be necessary for any boundary amendment under this section.” HRS § 205-4(h).

Section 205-4(g) is particularly relevant here. That section provides that within a period of not more than three hundred sixty-five days after the filing of a petition for a boundary amendment, the LUC shall act to approve, deny, or modify the petition, by filing findings of fact and conclusions of law. HRS § 205-4(g). This section further provides that the LUC may modify a petition by imposing conditions necessary to uphold the intent and spirit of HRS Chapter 205, the policies and criteria established pursuant to HRS § 205-17, or to assure substantial compliance with representations made by the petitioner in seeking a boundary change. HRS § 205-4(g). In other words, HRS § 205–4(g) gives the LUC broad authority to impose conditions on boundary amendment petitions. Lanai Co. v. Land Use Comm’n, 105 Hawai # i 296, 317, 97 P.3d 372, 393 (2004).

In general, however, enforcement of these conditions is

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### left to the counties under HRS § 205-12, and not the LUC. 1 0 

### Lanai Co., 105 Hawai # i at 394-95, 97 P.3d at 318-19. For example, in Lanai Co., the LUC reclassified land from the rural and agricultural land use districts to the urban land use district to allow for the construction of a golf course. 105 Hawai # i at 298, 97 P.3d at 374. The LUC reclassified the land subject to a condition prohibiting the landowner from utilizing potable water from the high-level groundwater aquifer for golf course irrigation use, and another condition requiring the landowner to develop its own sources of water to service the property. Id. at 300, 97 P.3d at 376. The reclassification was also made subject to the condition that the landowner “shall develop the property in substantial compliance with representations made to the [LUC]” and that “[f]ailure to do so may result in reclassification of the property to its former land use classification.” Id. at 300-01, 97 P.3d at 376-77.

After the land was being used as a golf course, the LUC issued an OSC why the land should not revert to its former classifications or be changed to a more appropriate

Secti on 20 5-12 provi des: 10
The a pprop riate offi cer o r age ncy c harge d wit h the admin istra tion of co unty zonin g law s sha ll en force withi n eac h cou nty t he us e cla ssifi catio n dis trict s adopt ed bythe land use c ommis sion and t he re stric tion on us e andthe condi tion relat ing t o agr icult ural distr icts under[HRS § 20 5-4.5 ] andshal l rep ort t o the c ommis sion all v iolat ions. HRS § 205- 12 (2 001). 

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### classification, based on a claim that the landowner had impermissibly used water from the high-level groundwater aquifer, and had failed to develop and utilize alternative sources of water. Id. at 302, 97 P.3d at 378. The LUC concluded that the landowner failed to perform according to the groundwater aquifer condition, and issued an order requiring the landowner to comply with this condition, to cease and desist any use of water from the high-level aquifer, and to file a detailed plan specifying how it would comply with the order. Id. at 306, 97 P.3d at 382. The circuit court concluded that the LUC’s finding that the landowner had violated the groundwater aquifer condition was clearly erroneous and the LUC exceeded its authority in issuing the cease and desist order. Id.

This court affirmed the circuit court’s ruling that the LUC’s finding regarding the alleged violation of the groundwater aquifer condition was clearly erroneous, but remanded the question of whether the landowner was using potable water from the high-level aquifer to the circuit court, with instructions to remand the issue to the LUC. Id. For purposes of remand, this court explained that whether there had been a breach of a condition was a determination to be made by the LUC. Id. at 317, 97 P.3d at 393.

This court explained that HRS § 205-4(g) empowers the LUC to use conditions to uphold the intent and spirit of HRS

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### Chapter 205, uphold the policies and criteria established pursuant the HRS § 205-17, and assure substantial compliance with representations made by a petitioner seeking a boundary change. Id. This court further explained, however, that HRS Chapter 205 does not expressly authorize the LUC to issue cease and desist orders. Id. at 318, 97 P.3d at 394. Thus, this court concluded, although “the LUC must necessarily be able to order that a condition it imposed be complied with, and that a violation of a condition cease,” the “power to enforce the LUC’s conditions and orders . . . lies with the various counties.” Id.

This court explained that “[t]here is no provision in HRS § 205-12 that expressly delegates enforcement power to the LUC,” and that “[i]f the legislature intended to grant the LUC enforcement powers, it could have expressly provided the LUC with such power.” Id. Thus, this court observed, “looking to the express language of HRS § 205-12, it is clear and unambiguous that enforcement power resides with the appropriate officer or agency charged with the administration of county zoning laws, namely the counties, and not the LUC. Id. 1 1

The L anai Co. c ourt also state d tha t “th e leg islat ure g rante d the 11 LUC t he au thori ty to impo se co nditi ons a nd to down -zone landfor the v iolat ion of su ch co nditi ons[. ]” 1 05 Ha wai # i at 318, 97 P. 3d at 394. As DW an d Bri dge obser ve, t his p assag e was dict um. Moreo ver, elsew here in th e opi nion, the court note d tha t the powe r to revok e was depe ndent on w hethe r sub stant ial comme nceme nt ofuse of th e lan d hadoccu rred. See Lana i Co. , 105 Hawa i # i at 317, 97 P. 3d at 393 (“Mor eover , ‘ab sent subst antia l commence ment of us e of the land in ac corda nce w ith s uch r epres entat ions made
. . . in s eekin g [th e] bound ary c hange [,]’ the L UC is expr esslyauth orize d to ordera re versi on of land to th e pri or cl assif icati on.” (elli psis and b racke ts inorig inal) (cont inued ...) 

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### The one exception to this general rule is found in HRS § 205-4(g). That section provides in relevant part that, “The commission may provide by condition that absent substantial commencement of use of the land in accordance with such representations [made to the LUC by the petitioner], the commission shall issue and serve upon the party bound by the condition an OSC why the property should not revert to its former land use classification or be changed to a more appropriate classification.” 1 2



### This sentence was added to HRS § 205-4(g) in 1990. 1990 Haw. Sess. Laws Act 261 § 1 at 563-64. The legislative history indicates that the legislature sought to empower the LUC to void a district boundary amendment where the petitioner does not substantially commence use of the land in accordance with representations made to the LUC. In this regard, the Senate Committee on Energy and Natural Resources explained in its report that the purpose of adding this sentence was “to allow the Land Use Commission to attach a condition to a boundary amendment decision which would void the boundary amendment when substantial commencement of the approved land use activity does not occur in

(...c ontin ued) 11 (foot note and e mphas is om itted )). Thus, this pass age i s not disp ositi ve of the i ssue here.

Altho ugh H RS § 205-4 (g) p rovid es th at th e LUC may eithe r rev ert 12 the l and o r cha nge i t to “a mo re ap propr iate class ifica tion, ” the latt er alter nativ e is not a t iss ue inthe insta nt ca se. 

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### accordance with representations made by the petitioner.” S. Stand. Comm. Rep. No. 2116, in 1990 S. Journal, at 915 (emphasis added). The House Committee on Planning, Energy, and Environmental similarly stated in its report that the purpose of the bill was to “strengthen existing statutes by permitting the Land Use Commission further control over a proposed development by voiding a change in zoning if the petitioner does not make a substantial commencement of the approved land use activity.” H. Stand. Comm. Rep. No. 1086-90, in 1990 H. Journal, at 1265 (emphasis added).

The legislative history further indicates that the legislature added this language in order to empower the LUC to address a particular situation, namely, where the landowner does not develop the property in a timely manner. The Senate Committee on Energy and Natural Resources specifically noted that “[v]acant land with the appropriate state and county land use designation is often subjected to undesirable private land speculation and uncertain development schedules[,]” and that “[s]uch speculation and untimely development inflates the value of land, increases development costs, and frustrates, federal, state, county, and private coordination of planning efforts, adequate funding, public services, and facilities.” S. Stand. Comm. Rep. No. 2116, in 1990 S. Journal, at 915.

The fact that the legislature sought to address

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### situations where the petitioner has not substantially commenced use of the land is further evidenced in the testimony presented to both the Senate and House committees. In both the Senate and the House, the Office of State Planning offered testimony that “[a] positive approach to comprehensive land use planning and a strong preventive measure to land speculation, necessitates this bill which will require that successful applicants for land use boundary amendments either ‘use it, or lose it.’” Letter from Office of State Planning, to S. Comm. on Energy & Natural Res. (Feb. 7, 1990) (on file with the Hawai # i State Archives) (emphasis added); Letter from Office of State Planning, to H. Comm. on Planning, Energy & Envtl. Protection (Mar. 8, 1990) (on file with the Hawai # i State Archives) (emphasis added). The LUC also offered testimony to both the Senate and the House, stating that “the proposed amendment will clarify the Commission’s authority to impose a specific condition to downzone property in the event that the Petitioner does not develop the property in a timely manner.” Letter from Land Use Comm’n, to S. Comm. on Energy & Natural Res. (Feb. 7, 1990) (on file with the Hawai # i State Archives) (emphasis added); Letter from Land Use Comm’n, to H. Comm. on Planning, Energy & Envtl. Protection (Mar. 8, 1990) (on file with the Hawai # i State Archives) (emphasis added). Thus, the legislative history establishes that by adding this sentence to HRS § 205-4(g) in 1990, the legislature sought to

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### empower the LUC to void a boundary amendment, after giving the landowner the opportunity for a hearing, if the landowner failed to substantially commence use of the land in accordance with its representations.

The proper procedure to be followed by the LUC in ruling on the OSC therefore depends on whether the petitioner has substantially commenced use of the land in accordance with its representations. Section 205-4(g) represents a limited exception to the general principles set forth in HRS Chapter 205, which require consideration of whether the boundary change violates HRS § 205-2 (setting forth general considerations in districting and classifying land), is consistent with the policies and criteria set forth in HRS § 205-16 (compliance with the Hawai # i state plan) and HRS § 205-17 (setting forth decision-making criteria for the LUC).

Where the LUC issues an OSC and seeks to revert property based on a petitioner’s failure to substantially commence use of the land in accordance with its representations, the LUC is not required to follow the procedures otherwise applicable to boundary changes under HRS Chapter 205. A reversion in such circumstances simply restores the status quo ante, prior to the original reclassification. Following the general procedures set forth in HRS § 205-4 would serve no

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### purpose under these circumstances. 1 3



### Indeed, as noted above, the legislative history of HRS § 205-4(g) indicates that the legislature intended to empower the LUC to void a boundary change where the petitioner failed to substantially commence use of the property in accordance with its representations. S. Stand. Comm. Rep. No. 2116, in 1990 S. Journal, at 915 (“The purpose of this bill is to amend section 205-4(g), Hawaii Revised Statutes, to allow the Land Use Commission to attach a condition to a boundary amendment decision which would void the boundary amendment when substantial commencement of the approved land use activity does not occur in accordance with representations made by the petitioner.” (Emphasis added)); H. Stand. Comm. Rep. No. 1086-90, in 1990 H. Journal, at 1265 (“The purpose of this bill is to strengthen existing statutes by permitting the Land Use Commission further control over a proposed development by voiding a change in zoning if the petitioner does not make substantial commencement of the approved land use activity.” (Emphasis added)). In other words, the legislative history of HRS § 205-4(g) indicates that

DW an d Bri dge a rgue that the L UC vi olate d HRS § 20 5-16. Sec tion 13 205-1 6 pro vides that “[n] o ame ndmen t to any l and u se di stric t bou ndary amendment nor a ny ot her a ctionby t he la nd us e commissi on sh all b e ado pted unles s suc h ame ndmen t or otheracti on co nform s to the H awaii stat e pla n.” HRS § 205 -16 ( empha sis a dded) . Ho wever , as notedabov e, th e leg islat ure e xpres sly grant ed th e LUC the autho rity to re vert land where the petit ionerhas not subst antia lly c ommen ced u se ofthe prope rty i n acc ordan ce wi th it s repre senta tions unde r HRS § 20 5-4(g ). T here is no indi catio n tha t the LUC’ s autho rity to vo id a bound ary a mendm ent p ursua nt to HRS § 205 -4(g) is condi tione d on a fin ding underHRS § 205 -16. 

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### compliance with all of the procedures of HRS § 205-4 is unnecessary when the petitioner has not substantially commenced use of the land because the prior reclassification is simply voided. Thus, when the petitioner has not substantially commenced use of the land, the LUC may revert the land without following the procedures set forth in HRS § 205-4. 1 4



### On the other hand, if the LUC seeks to revert land after the petitioner has substantially commenced use of the land, the LUC is required to follow the procedures set forth in HRS § 205-4. After the petitioner substantially commences use of the land, the circumstances have changed and it may no longer be appropriate to revert the land to its prior classification.

Having the LUC follow the procedures set forth in HRS § 205-4 after the petitioner has substantially commenced use of the land is also consistent with the division of authority between the LUC and the counties of Hawai # i. As this court noted in Lanai Co., the power to enforce the LUC’s conditions and orders generally lies with the various counties. 105 Hawai # i at 318, 97 P.3d at 394. The one exception to this general rule, of course, is the LUC’s express grant of authority to revert land if the petitioner has not substantially commenced use of the land in

Of co urse, this is n ot to say that the L UC is free of a ny 14 proce dural cons train ts wh en it seek s to rever t lan d in such circu mstan ces. The L UC is boun d by the p roced ures it ha s set fort h in HAR § 15-1 5-93, inclu ding the s pecif ic re quire ments rela ting to th e inf ormat ion t o be inclu ded in th e ord er to showcaus e, th e nec essit y tha t a h earin g be held on th e motio n, an d the LUC’ s pos t-hea ring proce dures
. 

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### accordance with its representations. See HRS § 205-4(g).

Thus, where the petitioner has substantially commenced use of the land, the LUC is required to follow the procedures set forth in HRS § 205-4 that are generally applicable when boundaries are changed. The LUC is therefore required to find by a clear preponderance of the evidence that the reclassification is reasonable, not violative of HRS § 205-2, and consistent with the policies of HRS §§ 205-16 and 205-17. HRS § 205-4(h). The LUC is also required to obtain six votes in favor of the reclassification. HRS § 205-4(h). Finally, the LUC must resolve the reversion or reclassification issue within three hundred sixty-five days. HRS § 205-4(g). On the other hand, if the petitioner has not substantially commenced use of the property, then the LUC may revert the property without following the strictures of HRS § 205-4, so long as it otherwise complies with HAR § 15-15-93. 2. The LUC erred in reverting the property to the agricultural land use district without complying with the requirements of HRS § 205-4 because Bridge and DW substantially commenced use of the property We therefore consider as a threshold matter whether Bridge and DW substantially commenced use of the land in accordance with their representations. If Bridge and DW did not substantially commence use of the property, then the LUC was not required to follow the procedures of HRS § 205-4. If, however,

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### Bridge and DW did substantially commence use of the property in accordance with their representations, then the LUC was required to follow the procedures of that section.

Section 205-4(g) does not include a definition of “substantial commencement,” and the LUC’s April 25, 2011 order does not explain how the LUC interpreted that term. The interpretation of a statute is a question of law which is freely reviewable by this court. See Univ. of Haw. v. Befitel, 105 Hawai # i 485, 488, 100 P.3d 55, 58 (2004). “Substantial” is, according to Blacks’s Law Dictionary, “considerable in amount or value; large in volume or number.” Black’s Law Dictionary 1656 (10th ed. 2014). In drafting HRS § 205-4(g), the legislature did not require that the use be substantially completed, but rather that it be substantially commenced. This is consistent with the concerns identified by the legislature in the legislative history of the statute, i.e., that it was trying to deter speculators who obtained favorable land-use rulings and then sat on the land for speculative purposes.

In its April 25, 2011 order, the LUC found that “Petitioners have not substantially commenced use of the Petition Area in conformance with the representations made in 2005 or in conformance with the applicable representations and conditions as of January 20, 2011.” The LUC contends that Bridge and DW did not challenge that finding and are accordingly bound by it. DW,

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### however, challenged this finding in the circuit court, and the 1 5 

### circuit court reversed and vacated the April 25, 2011 order in its entirety.

To the extent the circuit court concluded that the LUC’s finding as to whether DW and Bridge had substantially commenced use of the land in accordance with their representations was clearly erroneous, that conclusion was correct. As the circuit court found, after the LUC rescinded the OSC on September 24, 2009, DW “continued to actively proceed with preparation of plans and studies, including building plans and studies for the EIS.” Moreover, “DW also continued work on infrastructure and proceeded forward with building the affordable housing townhomes for the Project.”

Specifically, DW had constructed sixteen townhouses on the property by March 31, 2010. DW explained that the units had “completed exteriors and interiors,” with “cabinets and appliances installed,” and with “electrical and plumbing . . . ready to hook up.” DW also offered testimony that an additional 24 townhouses had been constructed up to the roof, with 32 more townhouses in various stages of completion. In a status report submitted to the LUC, DW also stated that mass grading for the

In th e cir cuit court , DW expli citlyargu ed th at th e LUC find ing 15 “that ‘Pet ition ers h ave n ot su bstan tiall y commence d use of t he [P roper ty] i n confo rmanc e wit h [th eir] repre senta tions ,’” w as “c learl y err oneou s in view of th re liabl e, pr obati ve, a nd su bstan tial evide nce o n the reco rd.” (Brac kets in origi nal). 

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### affordable housing sites had been completed, foundation slabs for eight buildings (64 townhouses) were complete, and the immediate access and internal roadways were graded. In a later filing, DW also informed the LUC that by July 2010, “more than $20,000,000 had been expended for plans and construction work on the project.” Rather than holding the land undeveloped for speculative purposes — the result which the legislature sought to avoid in HRS § 205-4(g) — Bridge and DW invested a considerable amount of money and effort, by any reasonable measure, to develop the affordable housing. In these circumstances, Bridge and DW substantially commenced use of the land. This is particularly 1 6 

### clear when Bridge’s and DW’s actions in 2009 and later are viewed in the context of the events that occurred prior to the initial issuance (and subsequent conditional recision) of the December 9, 2008 OSC. The 1991 order amending the original reclassification order included a condition providing that “Petitioner shall develop the Property in substantial compliance with the representations made to the Commission[,]” and that “[f]ailure to so develop the Property may result in reversion of the Property

In th e abs ence of bo th a statu tory defin itionof “ subst antia l 16 comme nceme nt” a nd anexpr essio n of LUC’s inte rpret ationof “ subst antia l comme nceme nt” f or a parti cularproj ect, a det ermin ationof w hethe r a p arty has subst antia lly c ommen ced u se ofthe land will turn on th e cir cumst ances of e ach case, not on a dolla r amo unt o r per centa ge ofworkcomp leted
. 

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### to its former classification, or change to a more appropriate classification.” The LUC initially issued Bridge an OSC 1 7 

### stating that it had reason to believe that Bridge and its “predecessors in interest have failed to perform according to the conditions imposed and to the representations and commitments made to the Commission in obtaining reclassification of the Subject Area and in obtaining amendments to conditions of reclassification.” The LUC did not err in issuing the OSC. See HAR § 15-15-93(b) (“Whenever the commission shall have reason to believe that there has been a failure to perform according to the conditions imposed, or the representations or commitments made by the petitioner, the commission shall issue . . . an [OSC].”). Bridge and DW do not contend otherwise.

In this regard, during a January 9, 2009 hearing on the OSC, Commissioner Judge noted that despite the representations made by Bridge, “there are no affordable homes on that development. Worse yet, there’s not even a glimmer of them coming any time soon. There’s no building permits, there’s no infrastructure.” Commissioner Kanuha expressed similar concerns, noting that “thus far there has been no progress, no nothing

Bridg e arg ues t hat t he af forda ble h ousin g con ditio n was an 17 “unco nstit ution al la nd de velop ment condi tion. ” Ho wever , as notedabov e, HR S § 205-4 (g) g ives the L UC br oad a uthor ity t o imp ose c ondit ions, incl udingthos e neces sary “to a ssure subs tanti al co mplia nce w ith r epres entat ions made by th e petit ioner .” G iven this broadauth orityand Bridg e’s r epres entat ions to th e LUC, the a fford able housi ng co nditi on an d its incl uded deadl ine w ere v alid. Bridg e cit es no auth oritythat woul d pre vent the L UC fr om imposin g ben chmar ks or de adlin es ondeve lopme nt sc hedul es. 

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### related to the Project.” Commissioner Constrades later stated, “I don’t see anything happen when I go by that place. You can tell me ‘I spent millions of dollars.’ Where? What has happened? Why four years ago when they’re begging for housing and there’s still nothing there? Now you guys come back and say ‘Please, we need the housing.’ Nothing’s happening.” Following a subsequent hearing on April 30, 2009, the LUC voted 7-0 to revert the property to its former agricultural land use district.

Despite the LUC’s vote to revert the property, the Commission never entered a corresponding written order. Instead, the LUC later rescinded the OSC, provided that as a condition precedent, sixteen affordable units be completed by March 31, 2010. In this regard, DW notes that the “LUC did not define the term ‘complete[.]’” This is correct. In its order, the LUC stated that the OSC was rescinded “provided that as a condition precedent, the Petitioner completes 16 affordable units by March 31, 2010,” but the order did not make it clear what would qualify as a “complete” unit.

This court has observed that “[p]arties subject to an administrative decision must have fair warning of the conduct the government prohibits or requires, to ensure that the parties are entitled to fair notice in dealing with the government and it agencies.” Lanai Co., 105 Hawai # i at 314, 97 P.3d at 390. Thus, “[a]n administrative agency, such as the LUC, has the

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### responsibility of stating with ascertainable certainty what is meant by the conditions it has imposed.” Id. Here, the LUC failed to state what level of completion would satisfy the March 31, 2010 deadline.

Moreover, during the August 27, 2009 hearing, DW made it clear that the townhouse structures would be completed before utilities could be installed. In this regard, the following exchange occurred between DW’s president and an attorney for the State Office of Planning:

Q Your curre nt co nstru ctionplanwoul d hav e the vert ical const ructi on go ing o n whi le th e hor izont al const ructi on is cont inuin g is that right ?
A That’ s cor rect. Q Wouldthe verti cal c onstr uctio n beg in be fore the infra struc ture conne ction s to that pad o r tha t podis compl eted?
A Yes. It h as to in o rder to me et th e sch edule
. Q So yo u bui ld th e hou se be fore you h ave a conn ectio n to the s ewer, wate r, an d ele ctric al li nes.
A That’ s cor rect. 

### Thus, DW made it clear to the LUC that vertical and horizontal construction would be occurring simultaneously, and that townhouses would be completed before they would have connections to sewer, water, and electrical lines. The LUC failed to state with “ascertainable certainty” that in addition to completing the physical townhouse structures, certificates of occupancy were also required in order to satisfy the March 31, 2010 deadline. See Lanai Co., 105 Hawai # i at 314, 97 P.3d at

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### 390. Thus, to the extent the LUC kept the OSC pending because “[s]ixteen affordable units have been constructed, but no certificates of occupancy have been obtained,” it erred in doing

so. In any event, regardless of whether the sixteen townhouses were “complete” by March 31, 2010, the record is plain that by the time the LUC held its July 1, 2010 hearing, DW had substantially commenced use of the property in accordance with its representations to the LUC. At that point, the LUC could no longer revert the property without following the requirements of HRS § 205-4.

In this regard, before the LUC could revert the property, its was required to find by a “clear preponderance of the evidence” that the reversion was reasonable, not violative of HRS § 205-2, and consistent with the policies and criteria established pursuant to HRS §§ 205-16 and 205-17. HRS § 205- 4(h). The LUC was also required to resolve the OSC within 365 days. HRS § 205-4(g). These requirements were not met here.

In its order reverting the property to the agricultural land use district, the LUC explained how DW and Bridge had failed to comply with representations made to the commission. The LUC made no specific findings, however, relating to whether reversion was “reasonable,” not violative of HRS § 205-2, and consistent with the policies and criteria established under HRS §§ 205-16

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### and 205-17. At most, the LUC concluded that “[u]nder the facts and circumstances of this case, reversion of the Petition Area to its original agricultural classification does not violate any applicable rule or statutory provisions, including Hawai # i Administrative Rules (HAR) subchapter 7 or Chapter 15-15, and HRS Chapters 91, 92, and 205.” The LUC’s conclusion, without more, fails to demonstrate that the commission considered the requisite factors under HRS § 205-4(h).

Moreover, the circuit court correctly concluded that the LUC violated HRS § 205-4(g) in failing to resolve the OSC within 365 days. The circuit court concluded that the OSC had to be resolved by December 9, 2009, i.e., 365 days after the initial OSC was issued on December 9, 2008. The LUC’s findings of fact and conclusions of law were not filed until April 25, 2011. Although the LUC had rescinded the OSC on September 28, 2009, that recision was conditioned upon the completion of sixteen affordable housing units by March 31, 2010. On July 26, 2010, the LUC entered an order finding that the condition precedent was not satisfied, and that the OSC remained pending. Thus, the OSC was not resolved until April 25, 2011, well beyond the 365 days allowed under HRS § 205-4(g).

The circuit court therefore correctly concluded that the LUC erred in reverting the property without complying with the requirements of HRS § 205-4.

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### B. The circuit court erred in denying the LUC’s motion to strike documents not in the administrative record The LUC next argues that the circuit court erred in considering materials not part of the record. Specifically, the LUC argues that the circuit court erred in denying its motion to strike from the record on appeal documents from other cases before the LUC. DW argues that the circuit court did not err in allowing supplementation of the record with documents from other dockets before the LUC. Because the additional documents were not part of the record before the LUC, they should have been stricken. In an agency appeal, judicial review is generally confined to the administrative record. See HRS § 91-14(f) (“The review shall be conducted by the appropriate court without a jury and shall be confined to the record, except that in the cases where a trial de novo . . . is provided by law and also in cases of alleged irregularities in procedure before the agency not shown in the record[.]” (Emphasis added)). Section 91-14(e), however, provides in pertinent part that

If, b efore the date set f or he aring , app licat ion i s mad e to the court for leave to p resen t add ition al ev idenc e mat erial to t he issue in t he ca se, a nd it is s hown to th e sat isfac tion of th e court that the addit ional evid ence is ma teria l andthat ther e wer e good reaso ns fo r fai lure to pr esent it i n the proc eedin g bef ore the a gency , the cour t mayorde r tha t the addi tiona l evi dence be takenbefo re th e age ncy u pon s uch c ondit ions as th e cou rt de ems prope r. 

### HRS § 91-14(e).

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### record pursuant to HRS § 91-14(e). The circuit court was therefore “confined to the record” under HRS § 91-14(f). See Diamond v. Dobbin, 132 Hawai # i 9, 24, 319 P.3d 1017, 1033 (2014) (“Pursuant to HRS § 91–14(f), a review of an agency decision ‘shall be conducted by the appropriate court . . . and shall be confined to the record.’”).

Under HRS § 91-9(e), for purposes of agency decisions, the record includes: (1) all pleadings, motions, intermediate rulings; (2) evidence received or considered, including oral testimony, exhibits, and a statement of matters officially noticed; (3) offers of proof and ruling thereon; (4) proposed findings and exceptions; (5) report of officer who presided at the hearing; and (6) staff memoranda submitted to members of the agency in connection with their consideration of the case.

The LUC argues that the circuit court erred in denying its motion to strike portions of the record on appeal designated by DW and Bridge. Specifically, the LUC argues that the circuit court erred in allowing 9,917 pages of documents from the dockets of six other cases before the LUC to be included in the record. To the extent these specific documents were not before the LUC, the LUC is correct that the circuit court erred in denying its motion to strike.

On numerous occasions before the LUC, Bridge and DW argued that they were being treated differently than other

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### petitioners before the LUC. In support of this argument, DW and Bridge cited specific cases both in writing and during hearings. They did not, however, present documents from those other cases to the LUC to consider. Moreover, to the extent Commissioner Kanuha referred to the six cases during the April 21, 2011 hearing, neither DW nor Bridge presented the actual dockets to the LUC. Also, they did not move to supplement the record on appeal once the case was in the circuit court, and did not request that the circuit court take judicial notice of the
dockets. 1 8 

### Although the LUC argues that the circuit court erred in “considering” the additional materials designated by Bridge and DW, it is unclear whether the circuit court in fact relied on the documents in issuing its order. In the LUC’s opening brief, it states that the circuit court “may have considered the material in its ultimate ruling but does not specifically refer to it.” Thus, although the circuit court erred in denying the LUC’s motion to strike, there is no indication that the circuit court in fact relied on the disputed documents.

Hawai # i Rul es ofEvid ence (HRE) Rule 201( d) (1 993) provi des t hat a 18 “cour t sha ll ta ke ju dicia l not ice i f req ueste d by a par ty an d sup pliedwith the n ecess ary i nform ation .” C f. Wi lliam s v. Aona, 121 Hawai # i 1, 11 n. 6, 21 0 P.3d 501, 511 n .6 (2 009) (cour t tak es ju dicia l not ice o f ter ms ofcoll ectiv e barga iningagre ement ). H oweve r, th ere i s no indic ationthat DW r eques ted t hat the c ircui t cou rt ta ke ju dicia l not ice o f the docu ments fromthe otherLUC cases , nordoes the recor d dem onstr ate t hat t he ci rcuit cour t in fact did s o. Addit ional ly, D W andBrid ge do not reque st th at th is co urt t ake j udici al notic e of the r ecord s. 

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### C. The circuit court erred in concluding that the LUC violated DW’s and Bridge’s constitutional rights to due process and equal protection The LUC’s final argument is that the circuit court erred in determining that the LUC violated DW’s and Bridge’s constitutional rights to due process and equal protection. On the merits, the LUC argues that it violated neither DW’s nor Bridge’s substantive or procedural due process rights. The LUC further argues that DW’s and Bridge’s equal protection arguments are unfounded. Both DW and Bridge argue that the LUC violated their procedural and substantive due process rights, and equal protection rights.

This court has observed that, “‘if a case can be decided on either of two grounds, one involving a constitutional question, the other a question of statutory construction or general law, . . . [this court] will decide only the latter.’” State v. Lo, 66 Haw. 653, 657, 675 P.2d 754, 757 (1983) (ellipsis and brackets in original) (quoting Ashwander v. Tenn. Valley Auth., 297 U.S. 288, 347 (1936) (Brandeis, J., concurring)). Here, however, Bridge has a suit pending against the LUC and its Commissioners in federal court, raising many of the same issues presented in the instant appeal. The federal district court stayed that case pending resolution of this appeal. See Bridge Aina Le # a, LLC v. Haw. Land Use Comm’n, No. 11-00414 SOM-BMK, 2012 WL 1109046, at *1 (D. Haw. Mar. 30, 2012). The LUC filed an

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### appeal and Bridge a cross-appeal from the district court’s order (9th Cir. Nos. 12-15971 and 12-16076). The United States Court of Appeals for the Ninth Circuit heard oral argument on the cross-appeals on June 10, 2014, and thereafter issued an order withdrawing submission of the appeal, pending our decision in this case. In the interest of judicial economy, we therefore also consider the constitutional claims decided by the circuit
court. 1. The circuit court may decide constitutional issues in an administrative appeal As a preliminary matter, the LUC argues that the circuit court erred in ruling on DW’s and Bridge’s due process and equal protection arguments because the LUC had no opportunity to present evidence and did not have the benefit of a trial by jury. The LUC argues that it was “inappropriate” for the circuit court to rule on these constitutional claims under such circumstances, and that in doing so, the court “deprived the LUC and Commissioners of any process whatsoever.” Section 91-14(g) explicitly provides, however, that the circuit court may reverse or modify an agency decision “if the substantial rights of the petitioners may have been prejudiced because the administrative findings, conclusions, decisions, or orders are . . . in violation of constitutional or statutory provisions[.]” (Emphasis added). Section 91-14(g) does not condition the

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### circuit court’s authority on either the opportunity of the parties to present evidence or whether the case was tried before a jury, and the LUC does not cite any authority supporting its argument that a court’s power is limited in the absence of these conditions. Thus, the circuit court properly considered DW’s and Bridge’s constitutional arguments in reversing and vacating the LUC’s final order. 2. The circuit court erred in concluding DW’s and Bridge’s due process rights were violated The circuit court concluded that the LUC’s conduct constituted “a denial of procedural and substantive due process” under both the United States and Hawai # i Constitutions. Specifically, the circuit court noted the LUC’s “rolling and continuing [OSC] that extended far beyond the time period allowed by law,” “conduct that was in derogation of the statute and rules established to protect Bridge and DW,” and “attempt to create a new procedure that was not already established.” The circuit court also concluded that the LUC “denied Bridge and DW their rights to a meaningful opportunity to be heard,” and that its final order was “arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.”

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### “The basic elements of procedural due process of law require notice and an opportunity to be heard at a meaningful time and in a meaningful manner before governmental deprivation of a significant property interest.” Sandy Beach Def. Fund v. City Council of City & Cnty. of Honolulu, 70 Haw. 361, 378, 773 P.2d 250, 261 (1989) (citing Matthews v. Eldridge, 424 U.S. 319, 333 (1976)).

Here, both Bridge and DW had notice and a meaningful opportunity to be heard before the LUC reverted the property. With respect to notice, as early as September 2008, Bridge was aware that the LUC was considering issuing an OSC. The LUC issued the written OSC on December 9, 2008. This was two months before DW had obtained any interest in the property. Both Bridge and DW therefore plainly had notice that the LUC might revert the property. With respect to a meaningful opportunity to be heard, Bridge presented testimony on its behalf with respect to the OSC during hearings on January 9, 2009, and April 30, 2009. As noted above, after the LUC voted to revert the property, it did not issue a written order effecting the reversion. In fact, the LUC stayed entry of its decision and order, and allowed DW to present evidence during a hearing on June 5, 2009. DW also presented additional testimony during a hearing on August 27, 2009. After the March 31, 2010 deadline for the completion of the sixteen

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### units had passed, DW was again heard by the LUC during a hearing on July 1, 2010. The LUC held subsequent hearings on November 18, 2010, January 20, 2011, March 10, 2011, April 8, 2011, April 21, 2011, and May 13, 2011. Bridge and DW were each represented by counsel during all of these subsequent hearings. Because both Bridge and DW had notice and a meaningful opportunity to be heard on the reversion issue, the circuit court erred in concluding that their procedural due process rights had been violated.

As this court has stated, “[d]ue process includes a substantive component that guards against arbitrary and capricious government action[.]” In re Applications of Herrick, 82 Hawai # i 329, 349, 922 P.2d 942, 962 (1996). To establish a violation of substantive due process, “an aggrieved person must prove that the government’s action was clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.” Lopez v. State, 133 Hawai # i 311, 322, 328 P.3d 320, 331 (2014) (quoting In re Herrick, 82 Hawai # i at 349, 922 P.2d at 962).

On this issue, the circuit court stated only that the LUC’s final order “was by its terms arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.” Although the circuit court echoed the language set forth by this court in Herrick, the facts of

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### this case do not support such a conclusion.

Here, the LUC first reclassified the land at issue from the agricultural to the urban land use district in 1989. By the time the LUC issued an OSC in December 2008, the land had changed hands numerous times and the LUC had amended the original reclassification order on multiple occasions. Moreover, as noted above, by the end of 2008, the landowners had done little to develop the property in accordance with representations made to the LUC. Given this history, the LUC was understandably wary of representations being made by Bridge and DW that they would be able to satisfy the 1991 order’s conditions, as amended in 2005. Nevertheless, Bridge and DW repeatedly assured the LUC that they would be able to complete the affordable housing units by November 2010. As it turned out, however, Bridge and DW did not satisfy the affordable housing condition, and did not comply with numerous other representations made to the LUC. Thus, although Bridge and DW may disagree with the process that ultimately resulted in the reversion, the LUC’s conduct was not “arbitrary and unreasonable,” given the long history of unfulfilled promises made in connection with the development of this property. In these circumstances, the circuit court erred in concluding the LUC violated Bridge’s and DW’s substantive due process rights.

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### 3. The circuit court erred in concluding Bridge’s and DW’s equal protection rights were violated The circuit court also concluded that the LUC “intentionally treated Bridge, DW, and this Project differently, and less favorably, than other petitioners in cases involving facts and circumstances substantially similar to this case.” Specifically, the circuit court concluded that the LUC treated Bridge and DW “in a materially, adversely different manner than other similarly situated developers, and that the LUC did so intentionally and without any rational basis for the differential
treatment.”

In general, the equal protection clauses of the United States and Hawai # i Constitutions “mandate[] that all persons similarly situated shall be treated alike, both in privileges conferred and in the liabilities imposed.” State v. Freitas, 61 Haw. 262, 271, 602 P.2d 914, 922 (1979). “[E]qual protection jurisprudence has typically been concerned with governmental classifications that ‘affect some groups of citizens differently than others.’” Engquist v. Oregon Dept. of Agric., 553 U.S. 591, 601 (2008). The United States Supreme Court has nevertheless recognized that an equal protection claim may be brought by a “class of one,” “where the plaintiff alleges that [he/she] has been intentionally treated differently from others similarly situated and that there is no rational basis for the difference

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### in treatment.” Vill. of Willowbrook v. Olech, 528 U.S. 562, 564 (2000). Bridge and DW do not argue that they are part of a group of persons that are being treated differently than others. Rather, Bridge and DW argue that their equal protection rights were violated because the LUC did not seek to revert the classification of properties owned by similarly situated developers that experienced similar delays. Their equal protection arguments are therefore dependent on the “class of one” theory. This court has not previously adopted that theory. Assuming arguendo that the “class of one” theory is applicable under Hawai # i law, the LUC did not violate Bridge’s and DW’s equal protection rights.

DW argues that it was treated differently than others who were similarly situated, citing the affordable housing condition and its November 2010 deadline, and the fact that the LUC reverted the property because DW failed to meet this deadline. Neither DW nor Bridge, however, have demonstrated that they were treated differently than other similarly situated developers because the documents from the LUC cases involving the other developers were not properly included in the record on appeal, supra at 86-89. In any event, even assuming Bridge and DW had demonstrated different treatment, their equal protection argument still fails because they did not establish that the LUC

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### was without a rational basis. As noted above, the LUC has broad discretion to attach conditions to orders granting reclassification petitions. Lanai Co., 105 Hawai # i at 317, 97 P.3d at 393. Given the long history of this property and the LUC’s dealings with the landowners over the course of many years, we cannot say it was irrational for the LUC to exercise its broad discretion by imposing a completion deadline. Again, the LUC had good reason to be wary of any assurances being offered by Bridge and DW, given the history of the project.

Moreover, the fact that the LUC enforced its conditions did not violate Bridge’s and DW’s equal protection rights. As the Court has explained:

There are some forms of s tate actio n, ho wever , whi ch by theirnatu re in volve disc retio nary decis ionma king basedon a vast arrayof s ubjec tive, indi vidua lizedasse ssmen ts. I n such cases the rule that peopl e sho uld b e “tr eatedalik e, underlike circ umsta nces and c ondit ions” is n ot vi olate d when one p ersonis t reate d dif feren tly f rom o thers , bec ause treat ing l ike i ndivi duals diff erent ly is an a ccept ed conse quenc e of the d iscre tion grant ed. In su ch si tuati ons, allow ing a chal lenge base d on the a rbitr ary s ingli ng ou t of a par ticul ar pe rson wouldunde rmine the very discr etionthat such state offi cials are entru sted to ex ercis e. 

### Engquist, 553 U.S. at 603.

In short, the LUC had broad authority to impose conditions and the power to determine whether Bridge and DW breached those conditions. See Lanai Co., 105 Hawai # i at 317, 97 P.3d at 393 (“Whether there has been a breach of [a condition] is a determination to be made by the LUC.”). Thus, Bridge’s and DW’s equal protection rights were not violated because the record

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### does not establish that the LUC lacked a rational basis for its decisions. IV. Conclusion

The circuit court’s second amended final judgment is therefore affirmed in part and vacated in part. We affirm the judgment to the extent it is based on the circuit court’s conclusion that the LUC erred in failing to comply with the requirements of HRS § 205-4, we vacate the judgment to the extent it is based on the circuit court’s conclusion that the LUC violated Bridge’s and DW’s constitutional rights, and we remand to the circuit court for further proceedings consistent with this opinion. William J. Wynhoff for petitioner
Bruce D. Voss and Matthew C. Shannon for respondent Bridge Aina Le # a, LLC David J. Minkin, Dayna H. Kamimura-Ching, and Troy J.H. Andrade for respondent DW Aina Le # a Development, LLC /s/ Mark E. Recktenwald /s/ Paula A. Nakayama /s/ Sabrina S. McKenna /s/ Richard W. Pollack /s/ Randal K.O. Lee

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