Opinion ID: 2755311
Heading Depth: 3
Heading Rank: 8

Heading: The necessary utility easements have been

Text: identified and topographic maps have been completed (Installation of site utilities to begin about 1/1/2010); i. Plan Approval by the Planning Department for the affordable housing component was issued on November 30, 2009; j. Groundbreaking for the affordable housing phase was held on September 22, 2009; All necessary permits, including vertical construction permits for the affordable housing site have been prepared and were recently submitted. DW is working with the County to [ensure] that the applications for permits will be processed to meet the development schedule. DW is working with the Office of Housing and Community Development on the terms of the affordable housing agreement. The affordable housing units will be in buildings which have 16 units in each pad area. The 25 pad areas will accordingly produce 400 units of which at least 385 will be affordable housing units. For the affordable housing units, the mix will be 289 three bedroom units and 96 four bedroom units. A revised affordable housing agreement was presented to the Office of Housing for its review and approval. The affordable housing units will be fee simple condominium units. DW is processing [sic] to create the condominium units so that specific affordable housing units can be identified for the affordable housing agreement. On May 4, 2010, the State Office of Planning submitted a letter to the LUC commenting on DW’s progress. With respect to -23-  FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER  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 -24-  FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER  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 understood the requirement to be that it needed to complete construction of at least 16 of the affordable housing units by March 31, 2010. Since these units are in 8 unit buildings, this required the completion of construction of two buildings. DW completed the first two buildings with 8 affordable housing units each by March 31, 2010. These buildings have completed exteriors and interiors. The electrical and plumbing for the units in these buildings is completed and ready to hook up. The units have cabinets and appliances installed. . . . . The condition precedent did not require that DW obtain certificates of occupancy for the 16 affordable units by March 31, 2010. The presentation to the Commission and the proceedings on August 27, 2009 show that it was understood construction work would be proceeding even if the certificates of occupancy could not be obtained until a later time. DW had submitted to the Commission its schedules for construction of the . . . 385 affordable housing units required by Condition 1 of the Decision and Order filed on November 25, 2005. Those schedules described the site work needed to create access to building sites, the establishment of the building pads for the structures for the affordable housing units and the vertical construction of the structures. . . . . I had submitted a July 30, 2009 status report in response to your July 10, 2009 letter for a status report on how Petitioners would comply with conditions for reclassification. The July 30, 2009 status report included a Phase 1 schedule for vertical construction of Phase 1[.] In the status report, I had indicated “[t]he goal for Phase 1 is to obtain occupancy permits for the affordable housing units by November 17, 2010[.]” The condition was imposed after the Commissioners had expressed concerns over the lack of action to implement representations made by prior owners in the past. The imposition of the condition precedent was a means of holding DW to actually constructing affordable housing improvements. -25-  FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER  Given the testimony that was submitted before the Commission imposed its condition precedent, the record showed that a number of facts, including the completion of this EIS process and the approval of Queen Kaahumanu Highway intersection and wastewater treatment plans would be needed . . . before occupancy permits could be obtained. DW’s plans as presented to the Commission were to start with construction of the affordable housing units as soon as appropriate grading and building permits were obtained and not to wait for the EIS, intersection plan or wastewater treatment plant approvals. DW believes that it has complied with the condition precedent and has demonstrated by actions its commitment to proceed with this project. As noted below, DW has not limited its construction efforts to these two buildings. The site grading for all of the Phase 1 building is completed. . . . DW has also had 5 more buildings erected which are under construction. . . . Other efforts by DW to further work on this project are also described below. To date, DW and its contractors have spent more than $19,000,000 in proceedings with this project. 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 -26-  FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER  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 -27-  FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER  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 requirement that an updated master plan covering all 5 phases of the development be submitted to the Land Use Commission (hereinafter referred to as “LUC”) for its review and approval; b. That the phasing be adjusted to be consistent with the current requirements of the LUC. The phasing requirements would therefore be adjusted to fit within 10 year development periods. The phasing would also include requirements that infrastructure benefitting more that one phase be completed before development of later phases which would be dependent on when such infrastructure can begin; c. That DW Aina Le’a will continue to complete the affordable housing units in Phase I and related infrastructure as the priority of the development. DW Aina Le’a will not proceed with the development of units after Phase I until the updated Master Plan has been reviewed and approved by the LUC and the first 56 affordable housing units have been completed and the affordable housing sales program has been started, DW Aina Le’a will maintain its sales program for such units and will continue to build affordable housing units so as to maintain an inventory of such units for sale to qualified residents with a minimum inventory of 16 units; and d. The current conditions of approval would be amended to be consistent with the current practices and requirements of the 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; -28-  FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER  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 to preserve 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 -29-  FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER  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.4 By a 6-2 vote, the LUC also granted a 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 4 Bridge subsequently filed exceptions and objections to the proposed findings of fact, conclusions of law, and decision and order, and filed its own proposed findings, conclusions, and decision. DW also filed exceptions to the proposed findings, conclusions, and decision and order. -30-  FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER  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. Violations 57. As of November 17, 2010, Petitioners had failed to provide certificates of occupancy for at least 385 affordable dwelling units, and violated Condition 1 of the 2005 Order. 58. As of January 20, 2011, over 22 years since the reclassification was first granted, Petitioners had failed to obtain a certificate of occupancy for even one affordable dwelling unit within the Petition Area. 59. Of the 385 affordable dwelling units, Petitioners have approximately 40 dwelling units in various stages of vertical construction all in the same area. 60. There is no infrastructure connection to any of the affordable dwelling units, including electrical lines, sewage lines, water lines, and finished roads. Current construction and preliminary infrastructure development has been limited to a 62-acre portion of the 1,060 acre Petition Area, including temporary access roads. 61. As of July 1, 2010, Petitioners owed approximately 5.5 million dollars to the General Contractor, Goodfellow Brothers for work previously done. 62. Petitioners continue to be in violation of Condition 1 of the 2005 Order, and are unlikely to complete 385 affordable units in the near future. 63. 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. Furthermore, Petitioners have failed to substantially comply with representations made to the Commission. 64. Through multiple status hearings and the issuance of the December 9, 2008 Order to Show Cause, the Commission has clearly informed Petitioners of the importance of complying with their representations and all conditions of approval, including but not limited to Conditions 1 and 13. -31-  FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER  65. It is important to the integrity of the State land use process that Petitioners comply with the conditions imposed by the Commission and with the representations made by the Petitioners. 66. Under the facts and circumstances of this case, Petitioners have failed to show cause why the Petition Area should not be reverted to its original classification. Petitioners have continually violated Condition 13, which requires them to substantially comply with representations made to the Commission, including but not limited to the following: • On September 30, 2005, Mr. Paoa represented that Petitioner Bridge would build 385 affordable housing units on-site within the Petition Area (2005 Order, FOF 9); that the homes would be built and certificates of occupancy obtained within three years (2005 Order, FOF 12); that no additional discretionary governmental approvals were needed, with the sole exception of the highway access approval (2005 Order FOP 26); and that all Petitioner Bridge’s contracts with contractors and consultants have been negotiated and would be executed and construction site work started within 30 days of the Commission’s decision (2005 Order, FOF 24 and 25). • On April 30, 2009, Petitioner Bridge represented the capabilities, particularly the experience and financial capability of DW #Aina Le#a to step into Bridge’s shoes and meet all the conditions the Commission had set down. Further, Mr. Paoa represented that Petitioner Bridge had the capabilities to meet the timeline for construction of the affordable housing. • On June 5, 2009, in response to a question by the Commission prior to being accepted as a co-petitioner, a representative of DW #Aina Le#a represented that they had reviewed the conditions imposed by the Commission and that they were prepared to comply with the conditions. The representative of DW #Aina Le#a also represented that they had no intent to seek to amend conditions in the 2005 Order. • On August 27, 2009, Mr. Wessels, a representative of DW #Aina Le#a, represented that DW #Aina Le#a was familiar with the Commission’s July 10, 2009 letter to Petitioner Bridge requesting information on compliance with conditions, the subsequent response letter by Petitioner Bridge on July 30, 2009, DW #Aina Le#a’s response letter on July 31, 2009, and that DW #Aina Le#a was prepared to comply with the conditions imposed by the Commission in their 2005 Decision and Order. • On December 16, 2009, Co-Petitioner DW #Aina Le#a submitted an annual report that represented that all necessary permits, including vertical construction permits for the affordable housing site had been prepared and recently submitted; that they planned to construct the wastewater treatment plant in the Agricultural District which would require a State Special Permit and amendments to the -32-  FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER  conditions; that they intend to provide 32 acres in the Agricultural District to the Department of Education which would require amendments to the conditions; that they would comply with DOH conditions; and that they will provide the Commission with notice of any intent to sell, lease, assign, place in trust, or otherwise voluntarily alter the ownership interest of the Property. • On November 18, 2010, Co-Petitioner DW #Aina Le#a admitted not meeting a deadline by a “very major amount” in reference to the requirement to provide certificates of occupancy for 385 affordable units by November 17, 2010; and further admitted that they could not provide a firm date by which the 16 units that had been constructed could be occupied. • On November 18, 2010, in response to questioning by the Commission, Co-Petitioner DW #Aina Le#a represented that condominium documents had not been submitted, the package wastewater treatment plant had not been delivered and plans not submitted to the State Department of Health for review and approval, no application had been made to the Public Utilities Commission for approval of wastewater or water utilities, no plans for landscaping had been submitted for review and approval by the County, and Co-Petitioner DW Lea had not authorized anything to facilitate the construction of the intersection to provide access to the Property. The LUC also made the following conclusions of law: 1. Any conclusions of law herein improperly designated as a finding of fact should be deemed and construed as a conclusion of law; any finding of fact herein improperly designated as a conclusion of law should be deemed and construed as a finding of fact. 2. The Commission has the authority to revert a Petition Area to its original land use classification for failure to comply with the conditions imposed by the Commission. Lana#i Co. Inc. v. Land Use Commission, 105 Hawai#i 296, 318 (Haw. 2004), and HRS Section 205-4(g). 3. Under the facts and circumstances of this case, Petitioners have failed to satisfy Condition 1 and have failed to substantially comply with representations made to the Commission, in violation of Condition 13. 4. Under 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 of Chapter 15-15, and HRS Chapters 91, 92, and 205. 5. The Commission does not rule upon questions of constitutional law. 6. Under the facts and circumstances of this case, reversion -33-  FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER  of the Petition Area to its original agricultural classification for violation of conditions, including Condition 1 and Condition 13, is not precluded by the doctrine of estoppel. The LUC therefore ordered that the property be reverted to its prior agricultural land use classification.