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LUC Finds Landowners in Violation of Original Order

Impact of proposed Pi‘ilani Promenade, Maui Outlets, housing never discussed. “It could be anything.”

February 21, 2013
Susan Halas - Senior Contributing Writer ( , The Maui Weekly

With a 6-3 vote, the state Land Use Commission determined that owners of Kihei property slated for retail--Pi'ilani Promenade and Maui Outlets--and apartment development violated three conditions of the original 1995 order that changed the permitted land use from "Agricultural" to "Urban."

The matter, which had airings before the LUC in August and November of 2012, came before the commission again at a meeting on Maui on Thursday, Feb. 7, for public testimony, final oral arguments and decision-making. Commission Chair Kyle Chock told commissioners and members of the public repeatedly that the issue under consideration was not whether "it was a good or bad project," but only if what was presently proposed to be built complied with what had been described to the commission in 1995.

All nine commissioners were present and voted. Six cast votes in support of a motion to find the landowners in violation of three conditions of the original order. Specifically named in the motion were failure to comply with condition 15, which requires the project to be built "substantially as represented;" condition 5, which requires a frontage road; and condition 17, which requires that accurate reports be filed with the commission on an annual basis.

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All nine members of the state Land Use Commission were present on Thursday, Feb. 7. By a 6-3 vote, they found the landowners in violation of three conditions of the original order granted in 1995 that converted the land from “Agricultural” to “Urban” use. The majority felt that because neither retail nor housing use was originally included in the proposal, the impact of such use such as traffic, schools, roads, run-off and other matters had never been considered.

The three members who voted against the motion are Thomas Contrades, Sheldon Biga and Chock, who felt that despite the changes, the landowners had complied with all necessary regulations.

In previous LUC sessions, the word "substantially" influenced commission members. In the first step of the quasi-judicial proceeding, they ruled that the owners needed to show that what they proposed to build now was "substantially" the same as what had been described to the board in 1995.

In Thursday's hearing, the word "impact" seemed to hold the most persuasive powers. In their discussion, the commissioners noted that a light industrial area with 123 lots would have a much different "impact" than a major retail complex and a large affordable housing development. Although these uses are permitted by the zoning granted by the County of Maui, the LUC determined that the present owners departed from the substance of what had been originally presented to the commission, and the "impacts" of these new uses were never evaluated.

Impacts named were traffic, schools and run-off, which had not been considered because the project had not originally contained either residential use or a large retail component.

Commissioner Ronald Heller, one of the six voting aye, said it was hard to accept the landowners reasoning that "it could be anything," and that the material originally presented was just "conceptual." Heller said, in effect, that the LUC did not issue blank checks, and that if what was presented to the commission had no relationship to what was actually built, "it would be hard for us to do our job in a meaningful way."

At the heart of the dispute is an 88-acre parcel on the mauka side of the Pi'ilani Highway near the Ka'ono'ulu intersection that was formerly owned by the Ka'ono'ulu Ranch. Over 17 years ago, the ranch sought and was granted the change in land use status from "Agriculture" to "Urban." In 1995, the owners presented a 123-lot, fee-simple, light industrial subdivision that included a frontage road and a variety of internal roads.

In the intervening years, the property was sold twice and the original 123 lots were consolidated into four large lots. Of this area, about one-quarter is presently slated for apartment housing and the other three-quarters are designated for a 700,000-square-foot retail complex.

The start of a major state highway from Kihei to Upcountry is also intended to run through the middle of the retail development. The apartments and shopping centers have received all necessary county approvals to begin building. The value of the combined development has been previously estimated at about $200 million.

Construction, if allowed to go ahead, was projected to provide an estimated 200 jobs. Developers of the shopping complex estimated that when built out, the shopping centers could provide as many as 1,800 job.

The land for the shopping centers is now owned by Eclipse Development of Irvine, California and its affiliates, Pi'ilani Partners North and South. The portion slated for apartment housing is now owned by Honua'ula Partners LLC (formerly called Wailea 670) and is part of the developer's agreement to provide affordable housing in North Kihei as a pre-condition to constructing luxury residential condominiums in Wailea.

Pi'ilani Partners North and South were represented at the hearing by Attorney Jon Steiner. Attorney Joel Kam represented Honua'ula. They were supported by Jane Lovell and Mike Hopper, lawyers from the County of Maui. The commission also heard supporting testimony from a variety of witnesses, including Maui County Director of Planning Will Spence and Charles Jencks, the representative for the owners of all the parcels.

The lawyers for owners and the county argued that in the absence of specific conditions to the contrary, and given the M-1 zoning granted by the county (which incorporates a myriad of permitted B-1, B-2 and B-3 uses, including apartment and retail), the owners had complied with all state and county regulations and were not required to seek amendments to the original order or provide for additional public review of the changes.

The interveners in the matter were Maui Tomorrow represented by attorney Tom Pierce and Executive Director Irene Bowie; South Maui Citizens for Responsible Growth, a local community organization formed by retired Kihei Attorney Mark Hyde; and Kihei resident Daniel Kanahele. The state's Office of Planning, represented by its head, Jesse Souki, and Bryan Yee, a deputy state attorney general, took the similar positions.

The citizens and the state objected to the project as now conceived and took their concerns back to the commission seeking to have the docket reviewed. The interveners won the first round in August 2012, when the six commissioners present voted unanimously that there was sufficient reason to reopen the matter and hear evidence. In November 2012, the commission heard extensive testimony from both sides.

Reaction to the Feb. 7 decision was mixed.

Speaking for the state Office of Planning, Jesse Souki said he was "not surprised by the outcome. But you never know."

Bowie said she was "certainly happy" with the ruling and thanked the commission "for the time and thought they have given the matter."

Mark Hyde, representing South Maui Citizens for Responsible Growth, said, "This is a victory for all South Maui and for the rule of law."

Not surprisingly, Spence saw it differently. He called the county's position a "defense of property rights" and said it was "dangerous that those rights can be challenged."

Jencks, speaking for the landowners, called the vote a "definite setback for the economy, for jobs and affordable housing."

The dispute now will go to a third phase in which the commission will decide whether the property should revert to its original agricultural status. No date has been set for the next step, and it is not known at this time what other options might be available to the commission to resolve the matter.



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