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Evidentiary Portion of LUC Hearings Concludes

Kihei retail and housing vs. light industrial use arguments heard. Decision expected in January.

November 22, 2012
Susan Halas - Senior Contributing Writer ( , The Maui Weekly

The evidentiary portion of a dispute between landowners of commercial property in North Kihei and advocacy groups representing community residents opposed to the project concluded on Friday, Nov. 16, in quasi-judicial proceedings before members of the state Land Use Commission (LUC) in Kahului.

The disagreement pits owners of an 88-acre commercial site who want to build two large shopping complexes with over 700,000 square feet of retail space and 250 units of workforce housing against interveners representing those who contend that, although the original clearance to build a 123-lot, light industrial complex on the land was obtained back in 1995, the currently proposed project does not conform to the one formerly approved.

As it is now configured, the project is valued at more than $200 million in infrastructure improvements and construction.

The interveners assert that the development has changed so much--and without appropriate reporting, notice or amendments--that it is now something entirely different and should not be allowed to go forward.

The time-consuming, detailed and expensive proceedings now involve at least 10 lawyers representing the interests of the two sides. Each faction has so far produced expert witnesses to support their diametrically opposed positions.

On Thursday and Friday, Nov. 15 and 16, hand trucks and carts overflowing with boxes and stack of files representing the voluminous exhibits of the various parties were piled around the room.

On one side, the landowners joined by the County of Maui argued that every necessary legal requirement had been met, and in the absence of specific limitations in the original LUC order, no further approvals, amendments or reviews were needed.

On the other side, the interveners--Maui Tomorrow, South Maui Citizens for Responsible Growth and Kihei resident Daniel Kanahele, supported by the state's Office of Planning--disagreed with the developers of this project.

The interveners are asking the LUC to rule that the current project is not "substantially" what was represented to the commission during its 1994-95 proceedings. If this view prevails, the project would be unable to go forward as presently proposed. It is also possible that the commission could order that the land be reverted back to its pre-1995 agricultural status.

This legal action has held up progress on the Pi'ilani Promenade project for more than four months, and is likely to delay it until late January or early February 2013 as the LUC deliberates and issues a final ruling.

The dispute has already been through a lengthy "show cause" process in August, when the interveners argued that the proposed shopping centers were not what had been proposed in the original LUC order. At that time, the LUC found sufficient reason to reopen the 17-year-old docket.

The presentation of evidence phase began Nov. 1 and 2, when public testimony and witnesses produced by the landowners were heard.

Eclipse Development's Pi'ilani Partners North and South owns the properties projected for retail use--approximately three-quarters of what is now a four-lot subdivision. Honua'ula Partners own the remaining land.

Honua'ula Partners plans to build the apartment units that are required to be constructed before the Honua'ula project (formerly called Wailea 670) can begin.

Both Eclipse Development and Honua'ula Partners are represented by Charles Jencks, who was a key witness on Nov. 2, when earlier proceedings adjourned.

On Nov. 15, the commission took up where they left off and continued to hear testimony from Jencks.

In his testimony, Jencks discussed financial details of the project, such as the posting of a $22 million cash bond to ensure completion of all required infrastructure improvements, a one-million-gallon water tank to serve North Kihei at a cost to the project of $3 million, the first phase of the Upcountry highway and other infrastructure improvements.

However, this time he went through the material in exacting detail, answering questions from the lawyers by reading specific portions of the record and citing chapter, page, paragraph, sentence and individual clauses. This was done to substantiate that after the LUC had approved the conversion from agricultural to urban use, the various successive landowners who acquired the property (all formerly or presently represented by Jencks) had gone through all the required steps to obtain proper zoning and all required authorizations for its current proposed use.

A key point in Jencks' testimony was the meaning of the term "light industrial." He said that light industrial is a specific term used in conjunction with Maui County's M-1 zoning code designation.

The M-1 category includes uses such as warehousing and storage, but also, because of Maui's tiered zoning system, M-1 incorporates all lower categories, such as B1, B2 and B3. Therefore, many other different uses are also allowed, including retail shopping and apartments. The commission heard repeatedly that those other uses are also legal and permitted once the land had been zoned M-1.

Jencks contended that once M-1 zoning was in place, and authorization had been granted by the Maui County Planning Commission and the Maui County Council, in the intervening years, no further amendments, reviews or modifications were necessary.

Jencks testified that the representations made to the commission in the 1990s were "conceptual" in nature and that the LUC knew that the actual project could and likely would change to meet "market conditions."

His Nov. 15 testimony did contain several important highlights:

Among them were that Pi'ilani Partners, the owners of the land proposed for the two shopping centers, were now offering to dedicate approximately 11 acres, or roughly 125,000 square feet, to be designated as an under-roof "home improvement center" (of a type similar to a Home Depot or a Lowe's), which they believed could be applied toward satisfying the requirement for a light industrial component.

Second, that documents that would demonstrate that all necessary reports have been filed with the LUC between 1995 and 2012 have not been located by the various multiple owners who controlled the land at different times since 1995. Among the missing documents were three annual reports and the required notice of change in ownership.

When it came to the issue of a home improvement center, opponents argued that this was not a light industrial use, but retail instead. In any case, they said, a minor, not a major portion of the total land area was being offered for this function. No matter what name it was called, they said, it still did not satisfy the LUC's requirement to be in substantial compliance with the original LUC order.

Will Spence, director of planning for the County of Maui, was called as an expert witness by the county in support the landowners. He testified on Nov. 15 and 16. Spence said that in the absence of expressed provisions to the contrary, there had been "no breach" of the original LUC Decision and Order (D&O), because it did not set any specific requirements on the amount of the property that must be used for light industrial in the narrow sense of the word, or limitations on the amount that could be used for retail commercial purposes. In his view, the owners have not violated land use conditions imposed on the project.

Lacking those specifics, it was Spence's opinion that all of the site could be used for any of the many uses that fell into that section of the county's M-1 code.

Spence testified that former Planning Director Brian Miskae had advocated for a limit on the percentage of commercial and retail to be allowed on the property, but that the LUC, the Maui Planning Commission and the Maui County Council had declined to do so. He also testified he did not find a violation of the 1998 Kihei-Makena Community Plan.

When asked about the definition of "light industrial" found in the Kihei-Makena Community Plan, Spence replied, "The community plan is not zoning. The County Council does the zoning."

The planning director also acknowledged that prior to taking legal action, the interveners had requested enforcement action from his office. He said he declined, because "the D&O condition was vague." The planning director also acknowledged that prior to taking legal action, the interveners had requested enforcement action from his office, but he had declined, because, "as director of planning, there is no violation of this LUC decision and order."

"If the director of planning can't tell, how do you expect the landowners to know?" asked Joel Kam, one of their attorneys.

Spence responded, "The landowners wouldn't know if it's not specified."

Following Spence on Nov. 16 was Rodney Funakoshi, head of the Land Use Division for the state's Office of Planning. His testimony was exactly the opposite of Spence's.

Funakoshi broke it down to a simple chart. On one side he showed the original proposal for a 123-lot light industrial subdivision with individual parcels ranging from .3 acres to 1.2 acres slated for light industrial use with accessory commercial use and no residential area included.

On the other side, he showed the present configuration, consisting of four lots ranging in size from 13.1 acres to 30.1 acres with two retail shopping complexes, 250 apartments and no light industrial use, he said.

His testimony zeroed in on the differing impacts of the differing uses. Funakoshi testified that though the plan and market study presented in the original proceeding may have been "conceptual," they definitely focused on the light industrial and commercial uses, although mentioned, were incidental or accessory.

The commercial uses that were contemplated, he said, were things like a "hairdresser or a restaurant." He also noted portions of the record that suggested that these ancillary commercial uses would be kept to 20 percent of the total property.

When it was suggested that broader commercial use might have been contemplated, he responded, "possible but unlikely." He zeroed in on major impacts of the new uses, which had not been considered. Among the major differences in the impacts of the uses, he said, were traffic generated by the shopping centers and the need for educational facilities resulting from the addition of apartment units.

Funakoshi cited a number of other situations in which previously approved projects desired major changes in use. Most often, he said, the landowners filed a motion to amend with the LUC.

He also mentioned that the grading permits recently issued by the county were the first public record his office could locate that showed the entire nature of the project had changed.

In his opinion, it was now "clearly a different project."

When asked by an attorney for Eclipse Development what portion would be necessary to "substantially" comply with the initial representation of light industrial, Funakoshi said, "at least a majority."

The next witness was Michael Foley, former Maui County director of planning from 2003 to 2007. He was presented as an expert witness by the interveners. His testimony followed the lines laid down by Funakoshi.

Foley also said the current version is an "entirely different" project, and in his opinion, it also did not conform to the terms of the 1998 Kihei-Makena Community Plan. Foley thought that in addition to a LUC amendment, the project also required a community plan amendment.

Under questioning, he acknowledged, "It's not unusual for projects to change but this," he said, "is an end run."

A telling moment came in speculation about Foley's motives provided by Jane Lovell, an attorney for the county's Office of Corporation Counsel.

Lovell noted that though Foley was testifying as an expert in planning, he was also a board member of Maui Tomorrow, one of the interveners. She also pointed out that Maui Tomorrow had long opposed Wailea 670. She said that conditions imposed by the county on the construction of Wailea 670 required that the 250 workforce housing units be built before construction could start on that development.

She went on to suggest that Maui Tomorrow's opposition to this project was part of a larger strategy aimed at stopping Wailea 670.

The LUC chair ruled the assertion was not relevant to the matter under consideration and the proceedings moved on to the final witness.

Richard Mayer, a retired professor at the University of Hawai'i Maui College, was qualified as an expert witness in community planning and economics. His testimony hit many of the same points as Funakoshi and Foley's, but cast them in terms of likely economic consequences.

Mayer characterized light industrial use as one that would provide full-time, well-paid jobs to local residents and ownership opportunities to local businesses. Retail use, he said, might provide many jobs, but they would be low-wage positions that were likely to be part-time and provide few benefits to employees. He also claimed that monies generated by the shopping centers would mostly benefit off-island owners and that an influx of big-box tenants would be detrimental to the existing locally owned small businesses in Kihei.

The proceedings, which adjourned mid-day on Nov.16, are expected to reconvene in January 2013 to hear summary oral arguments by the attorneys and discussion by members of the LUC. A final decision will be written at a date yet to be determined.



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