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HomeMy WebLinkAboutCOM 0092.028 2004-2006 From: Claudia Rohr [claud@hilo.net] ~ ~ ] ? ! ~'I Sent: Tuesday, February 22, 2005 10:09 AM To: Higa, Stacy; Safarik, Gary; counciltestimony@co.hawaii.hi,us Subject: Re: Bill 356 Fw: BOA HEARING TRANSCRIPTS r(Jt -.~i Importance: High TConhnenta? 109.doc Hawaii County Council County Building 25 Aupuni SL Hilo, HI 96720 Chris Yuen Planning Director Hawaii County Planning Department Re: Bill 356 and BOA transcripts (attached) Dear Ms. Kiriu and Mr. Safarik, Dear Honorable Chair Gary Safarik and County Council Members, It has come to my attention that several of the former Council members and all of the new Council members have not received the informational packet accompanying the Planning Commission's recommendations concerning Bills 355 and 356. The "Settlement Agreement" and other important information is in there. Please copy and distribute this information or the Council will not understand what they are approving. I am also forwarding the attached transcript from Continental Pacific LLC's November 9, 2002 Board of Appeal Case as I received it by email attachment from the Planning department. This is for the Council's review, as it pertains to the "Settlement Agreement." The issues revolving around Bill 356 cannot be understood without reviewing this hearing transcript. Please print it out and distribute it among the Council members. Sincerely, Claudia Rohr 369 Nene St Hilo, HI 96720 934-8040 Original Message From: Nomura, Sharon <mailto:snomura@co.hawaii.hi.us> To: 'Claudia Rohr' <mailto:claud@hilo.net> Sent: Friday, October 08, 2004 11:24 AM Subject: RE: BOA HEARING TRANSCRIPTS Attached are the requested transcripts: Comm. No. ~ 2• ~ -----Original Message----- Ref. Tore+e-'-.i YIU From: Claudia Rohr [mailto:claud@hilo.net] Ref. Uate A ~ ~nn5 - Sent: Thursday, October 07, 2004 11:56 PM i To: Nomura, Sharon Subject: Re: BOA HEARING TRANSCRIPTS Hi Sharon- I was requesting to get all of the hearing transcripts for all of the four Continental Pacific LLC appeals that started in 2001. I know it must be a lot of files but it seems they should exist since they were published at one time. It seems impossible to follow the arguments of the recent land use hearings without understanding the April 15, 2002 BOA settlement agreement between Continental Pacific LLC and County of Hawaii and out of what discussions it came from. I appreciate your help in this matter. Mahalo, Claudia Rohr 934-8040. Original Message From: SNOMURA(a~co hawaii hi.us <mailto:SNOMURA(o~co.hawaii.hi.us> To: Claud(c~hilo.net <mailto:Claud(a hilo.net> Sent: Thursday, October 07, 2004 2:10 PM Subject: BOA HEARING TRANSCRIPTS Per your request, attached are the 2002 BOA hearing transcripts for Continental Pacific. z BOARD OF APPEALS COUNTY OF HAWAII HEARING TRANSCRIPT November 9, 2001 A regularly advertised hearing on the appeals of CONTINENTAL PACIFIC, LLC was called to order at 10:06 a.m. in the West Hawaii Mayor's Office, 75-5706 Kuakini Highway, Suite 103, Kailua-Kona, Hawaii with Chairman Evarts Fox presiding. PRESENT: Evarts Fox Wayne Easley Alfred Franco Harold Tanouye Gerald Yamada Rodney Nakano Staff to the Board Dudley Akaina, Counsel to the Board Appellant: Continental Pacific, LLC Jerry M. Hiatt, Esq. Intervenor: County of Hawaigi Lester Ishado, Esq. Christopher J. Yuen, Planning Director And approximately I S people from the public in attendance. Appeal of the Planning Director's Decision of May 24, 200] filed by CONTINENTAL PACIFIC, LLC (BOA Ol -23) relating to the recognition of the number of existing lots. The properties are formerly known as Kainole Camp and Maukaloa Camp, Onomea/Kawainui, Kaupakuea, South Hilo, Hawaii, TMK: (3) 2-7-007:001 and (3) 2-8-004:001. Appeal of the Planning Director's Decision of August 10, 2001 filed by CONTINENTAL PACIFIC, LLC (BOA Ol -31) relating to the recognition of the number of existing lots. The properties are formerly known as Pepeekeo Mill Village, Makahanaloa and Pepeekeo, South Hilo, Hawaii, TMK: (3) 2-8-007:001 FOX: New business. We have appeals of the Planning Director's decisions 01-23 of May 24, 2001, and there's 01-31 of August 10, 2001, filed by Continental Pacific, LLC. Before we start with, with Continental Pacific's presentation, we do have a request for public comment. Ms. Ross? 1 When you come to the microphone, to the chair, please use the microphone and state your full name and who you represent so that we may have a, for the record. ROSS: Good morning. My name is Henrietta Ross. These are my brothers, George and Thomas Laikupu. We're here because we're concerned about what's going to happen in the area that we own at Kahua, which is Pepeekeo. We'd like to know what are you folks are going to do there. Because previous people that run the mill were planting on our place, too, and they shouldn't. So we'd like to know what's going to happen. That's why we came from Honolulu this morning. And can you tell me all about it, please? FOX: The Board of Appeals does not have the discretion to say what's going to happen there and what's going to be done. That's a, that's another part of government. We're here to hear an appeal by the Continental LLC against the decision that was made by the Planning Director. And if you stay, you can hear what, how Chat plays out. The Planning Director has, has denied that particular company the right to go in and develop the lots that they had proposed to do; and they are appealing that. And what we have to do, in this Board, is to decide whether in fact there is a law that, that is on the books, whether in fact that law is being violated or whether in fact that the Planning Department has, has been arbitrary in their decision. So I, please, would encourage you to stay and listen, and see what the, and see what we do. We don't have the authority to do any, to do any of the development sort of thing. ROSS: Thank you. FOX: But thank you for your concern and your attention, and it's always good to have people come and see us. Okay. Representative of Continental Pacific, LLC, please start the presentation. We'll just wait a minute before we start and try to let enough chairs out for people to sit down. Okay, so everybody got a place to sit now. All right, sir, would you please go ahead. HIATT: Thank you very much members of the panel My name is FOX: Use the microphone, please, cause she can't pick it up. 2 BOARD OF APPEALS COUNTY OF HAWAII HEARING TRANSCRIPT November 9, 2001 A regularly advertised hearing on the appeals of CONTINENTAL PACIFIC, LLC was called to order at 10:06 a.m. in the West Hawaii Mayor's Office, 75-5706 Kuakini Highway, Suite 103, Kailua-Kona, Hawaii with Chairman Evarts Fox presiding. PRESENT: Evarts Fox Wayne Easley Alfred Franco Harold Tanouyc Gerald Yamada Rodney Nakano Staff to the Board Dudley Aka~na, Counsel to the Board Appellant: Continental Pacific, LLC Jerry M. Hiatt, Esq. Intervenor: County of Hawaigi Lester Ishado, Esq. Christopher J. Yuen, Planning Director And approximately l5 people from the public in attendance. Appeal of the Planning Director's Decision of May 24, 2001 filed by CONTINENTAL PACIFIC, LLC (BOA O1-23) relating to the recognition of the number of existing lots. The properties are formerly known as Kainole Camp and Maukaloa Camp, Onomea/Kawainui, Kaupakuea, South Hilo, Hawaii, TMK: (3) 2-7-007:001 and (3) 2-8-004:001. Appeal of the Planning Director's Decision of August 10, 2001 filed by CONTINENTAL PACIFIC, LLC (BOA 01-31) relating to the recognition of the number of existing lots. The properties are formerly known as Pepeekeo Mill Village, Makahanaloa and Pepeekeo, South Hilo, Hawaii, TMK: (3) 2-8-007:001 FOX: New business. We have appeals of the Planning Director's decisions 01-23 of May 24, 2001, and there's 01-31 of August 10, 2001, filed by Continental Pacific, LLC. Before we start with, with Continental Pacific's presentation, we do have a request for public comment. Ms. Ross? 1 When you come to the microphone, to the chair, please use the microphone and state your full name and who you represent so that we may have a, for the record. ROSS: Good morning. My name is Henrietta Ross. These are my brothers, George and Thomas I,aikupu. We're here because we're concerned about what's going to happen in the area that we own at Kahua, which is Pepeekeo. We'd like to know what are you folks are going to do there. Because previous people that run the mill were planting on our place, too, and they shouldn't. So we'd like to know what's going to happen. That's why we came from Honolulu this morning. And can you tell me all about it, please? FOX: The Board of Appeals does not have the discretion to say what's going to happen there and what's going to be done. That's a, that's another part of government. We're here to hear an appeal by the Continental LLC against the decision that was made by the Planning Director. And if you stay, you can hear what, how that plays out. The Planning Director has, has denied that particular company the right to go in and develop the lots that they had proposed to do; and they are appealing that. And what we have to do, in this Board, is to decide whether in fact there is a law that, that is on the books, whether in fact that law is being violated or whether in fact that the Planning Department has, has been arbitrary in their decision. So I, please, would encourage you to stay and listen, and see what the, and see what we do. We don't have the authority to do any, to do any of the development sort of thing. ROSS: Thank you. FOX: But thank you for your concern and your attention, and it's always good to have people come and see us. Okay. Representative of Continental Pacific, LLC, please start the presentation. We'll just wait a minute before we start and try to let enough chairs out for people to sit down. Okay, so everybody got a place to sit now. All right, sir, would you please go ahead. HIATT: Thank you very much members of the panel. My name is FOX: Use the microphone, please, cause she can't pick it up. 2 HIATT: Okay. My name is Jerry Hiatt. Is that okay, picking up? NOMURA: Yes, thank you. HIATT: Thank you very much. I understand the panel has given us 2 hours this morning if we need it; and we've worked hard with Mr. Ishado and Mr. Yuen's office to try to be as efficient as we can in covering lots of material. My name is Jerry Hiatt from the law firm of, Law Offices of Jerry Hiatt. With me is Peter Kubota. We're both representing Continental Pacific, LLC. The only introductory remark 1 would like to make is that we have filed a brief, and the Planning Department has also filed a brief,on what we believe are the legal issues and the relevant factual background in the case. In essence, the Planning Department's decision denying the recognition of three former plantation camps, lots deprives our client's, Peter's and my client's, of the use of two hundred and, approximately 224 lots. And that denial was made in the face of ten previous camps lot subdivisions which were approved in 1995. That's a big point, number one. And it was made in the face of three prior Corporation Counsel opinions dating from 1985 given to, I believe, this Board which recognize that pre-existing lots, if they existed before 1944, must be recognized. So that creates issues under Chapter 91 and also creates due process issues, and it also creates equal protection issues. We will have four witnesses. Mr. Kubota will go first, and we'll review the history. We'll then call Mr. Cheplic, if he's here; and potentially Mr. Correa; and then we'll wind up with Mr. David Callies, Professor David Callies, from the UH Law School. With nothing further than that, I'll begin with my first witness if that's agreeable to the panel? FOX: Go right ahead, please. ISHADO: Excuse me. FOX: Mr.lshado. ISHADO: You're right, they did cut off my mike. I suppose, Mr. Chairman, there the County also has right to make an opening statement? FOX: Yes, you do, I'm sorry. Please go ahead. NOMURA: Use that other microphone. 3 ISHADO: Let me have one of those mikes. YUEN: Okay. Lester, is this is yours? ISHADO: Mr. Chairman, whaC Fd like to do is ask the Board's permission to have Mr. Yuen, you know, make the opening statement on behalf of the County. This one is NAKANO: You can use this with Jeny. This one is a shorter one. Thank you. ISHADO: if the Board does not object, I'd like to have Mr. Yuen make the opening statement on behalf of the County. FOX: There's no objection to Mr. Yuen making the statement on behalf of the County. YUEN: Good morning, members of the Board of Appeals. [wanted to make the opening here because of the critical importance of this issue for the County and for the community. What this corporation, Continental Pacific, is going to do is something that has never been before. It has never been allowed before in the County. It has never even tried before in the County. [t is so far out of bounds of what has ever been contemplated in this County of Hawaii. It completely subverts, undermines and violates the Subdivision Code and the Zoning Code. It would create a disastrous precedent for the community. What they want to do is take lots that existed in plantation camps, take pieces of land, plantation camps that existed years ago that were abandoned, destroyed, demolished and then planted in cane over 20 years ago, take those as parcels of the record, and use those to create new lots spread out among hundreds of thousands of acres of land that they are purchasing without going through the normal subdivision regulations of the County. The significance of this is that when you have pre-existing lots, when the County recognizes lots that you have, then you can go ahead and distribute those or reconfigure the property using that number of lots. The County recognizes the idea of pre-, of lots that pre-exist the Subdivision Code. Those, there are lots that, and the County in fact has recognized that they can create 55 lots out of the nine TMKs or Tax Map Keys that they have mauka part of the property and 33 lots, I believe, out of the, I believe, one or two tax map keys that exist in the makai part of the property. The property that we're talking about, by the way, is about 5,000 acres located on the mauka side of the highway in the general area of Pepeckeo, and about 800 acres on the makai side of the highway in Pepeckeo going down to, and including, Pepeckeo Point. What they want to do is to be able to count 224 lots out of these demolished plantation camps, and make those into parcels that then can be sold without having to build the kind 4 of County-required roads that you would, and that you would have to in, and did a normal subdivision, without having to do the flood and drainage studies that you would have to do in a normal subdivision if you went through the County Code. They want to recreate the substandard subdivisions of the past by avoiding the County Subdivision Ordinance by using these lots. The only reason they will give you PUBLIC: You need more chairs. Thank you. YUEN: The only reason they will give you for being able to do this is that in 1995 the County allowed the Hamakua Housing Corporation to take over plantation camps that were in existence, where people were actually living in those plantation camps, and sell those plantation camp houses to the workers who were, of Hamakua Sugar, who were out of a job, the retirees, people who have been living in those camps for a long period of time. That is totally different from what they are planning to do, again, recognizing plantation camps that existed a long time ago. What they're trying to do is exploit what the County did to try to help people in Hamakua for their own gain to make millions of dollars that has no relation to what happened, and no relation to the reasons for what happened in 1995. They can make a good subdivision within the rules. They, in fact, can make 400 lots mauka of the highway within the present zoning and following the Subdivision Code. They make over a 100 lots makai of the highway within the present regulations and following the Subdivision Code. What they want to do is avoid the law and avoid the Subdivision Code. We're going to ask you not to let them use these plantation lots that were abandoned 20 years ago or more as the basis for doing this subdivision now. FOX: Thank you, Mr. Yuen. Mr. Ishado, do you have anything else you want to ISHADO: No. Thank you. FOX: Please go ahead. HIATT: Well, I appreciate Mr. Yuen's, [appreciate Mr. Yuen's views. And I would respond, but I think the best response is, basically, that I give you the facts as we understand them. Is this on? NAKANO: Yes. 5 HIATT: Yeah. So, I will call Mr., well, let me do one housekeeping thing first. I believe that Mr. Ishado and 1 have agreed that the Petitioner's Exhibits 1 through 16 can be received in evidence. ]s that all right? ISHADO: That's correct. And I believe that Exhibits A through E from the County will also be received into evidence. Is that correct? HIATT: [s that all of yours or the ones before the 26°i? 1SHAD0: They're all before the 26's. HIATT: Okay, on that basis we would have no objection to County's A through E. Were there any supplementals from the County, Mr. Ishado? ISHADO: Yeah, that's, that's something that we're going to ask the Board to address on both sides. HIATT: So just to keep the record clear, and for your notes, gentlemen, that means all the exhibits from my clients are in, except for 17 through 24; and we will offer those when they come up. But everything that I'll be showing as a visual aid here is a copy, just a blowup of something that's already in evidence. ISHADO: Wcll, I, if it's all right, just one further point of clarification. There are three exhibits, there are three exhibits attached to the memorandum, trial memorandum, by the Appellant in this case. And those are not, well, they weren't submitted until, until after the 26'x. HIATT: Those are the Corporation Counsel opinions. And we regard those as legal arguments, so we offered them as exhibits to the brief. If necessary, at the conclusion, we'll offer them as exhibits to this proceeding. But we haven't offered them yet. Okay. Is there a procedure for swearing Mr. Kubota, or how do we do that? NAKANO: Do you swear that the testimony that you are about to present before the Board will he the truth? KUBOTA: Yes, I do. HIATT: Mr. Kubota, could you state your full name for the record? KUBOTA: Peter Kenji Kubota. HIATT: And where were you born? 6 KUBOTA: I was bom and raised in Hilo. WATT: And where did you attend high school? KUBOTA: Went to Hilo High School. HIATT: And where did you, you're an attorney? KUBOTA: Correct. I graduated from the William S. Richardson School of Law in, at the University of Hawaii at Manoa. WATT: Okay. And where do you practice? KUBOTA: [practice in Hilo. I moved back in 1990 and began practicing in Hilo; and I've been here continuously for the past 11 years. HIATT: And, for the record, did you represent Continental Pacific, LLC in seeking subdivision recognition for the three camps that are at issue here? KUBOTA: Yes, I did. HIATT: Okay. Now if the Board would like to follow along, an overview of the camps, as referred to briefly by Chris, ['m sorry, by Mr. Yuen, an overview of the camps and their location is Exhibit 1, this map which is in evidence. And what were the three camps, Peter? KUBOTA: The three camps that, that we applied for recognition on were Kainole, Maukaloa and Pepeekeo Mill Village. And their general locations are shown in Exhibit 1, so that the Board is familiar with the area. HIATT: Now do Exhibits 2A, 3A and 4A, what do they show? KUBOTA: Exhibit 2A appears, that surround the board here, is the aerial photo taken of Kainole camp in ] 950 which shows the camp as it existed, and the photo has an overlay of the proposed lots that were requested to be recognized by the Planning Director. HIATT: Okay. So I'm going to pause for a minute on that. But with respect to this blowup NOMURA: Can you use the mike, please. WATT: Yes. 7 HIATT: Thanks very much, Rodney. With respect to each blowup, is each lot numbered so that we know the number of lots at issue in that camp? KUBOTA: Yes, the photo shows that the lots were numbered 1 through 19, corresponding with each of the camp houses that were in existence at the time. HIATT: Okay. And what's the date of the photo`? KUBOTA: The date of the photo is August 19, 1950. HIATT: Okay. So for Kainole camp, what you're seeking from the Planning Department is recognition of those 19pre-existing lots? KUBOTA: Correct. HIATT: Okay. So any doubt that those were in existence and were occupied prior to 1944? KUBOTA: No, there's no doubt. In the Record of Appeal, if the Board would want to leaf through it, we did other research and contacted residents and got affidavits that the camps were in existence prior to that date. Also we submitted, I believe, insurance valuation photos. And in some camps situations, we've submitted census records which show that as of June 30, 1944, there were these nwnber of camp houses in existence. HIATT: Now that's already in evidence, so I'll move on. What does Exhibit 3A show? KUBOTA: Exhibit 3A is a similar aerial photo taken the same date, August 19, 1950. This is a photo of Maukaloa camp which is on, located just makai of Kaupakuea Homesteads and above Richard Ha's banana operation. This is about, 1 would say, about a mile up from the highway in Pepeekeo. HIATT: And, again, are the lots numbered on 3A? KUBOTA: Yes, the lots are numbered 1 through 52. HIATT: Okay. And each one of those were also occupied prior to 1944? KUBOTA: Correct. Again, the record on appeal shows the evidence that we submitted to the County that established the existence as of 1944. HIATT: Okay. And then Exhibit 4A, can you tell us what that shows, please? 8 KUBOTA: Exhibit 4A is an aerial photo of Pepeekeo Mill Camp, and this is probably taken more recently. There's not a date on it, but this shows the existence of 153 camp houses. And, again, the evidence that we submitted to the Planning Director included census information that showed that as of June 30, 1944, there are, I believe, the 152 houses, I think, shown on the census information. HIATT: Okay. As you understand it, has the County ever disputed that each of these three camp subdivisions was existing and occupied prior to 1944 for each of the lots in question? KUBOTA: No, the County has not disputed that fact. HIATT: Okay. Now I'm going to go, excuse me. I want to go just for the record so that the, we're keeping up with the other exhibits that are in the 2, 3, and 4 series. Can you summarize for the Board what are the "B" series of Exhibits 2B, 3B, and 4B'? KUBOTA: The "B" series of exhibits in 2B, 3B and 4B are copies of camp resident affidavits that were submitted to the County with the request. We found residents from each of the camps, and I personally interviewed them, and basically established that they lived in the camps prior to that date. Where there was a rental history, I documented that. And where the residents said that they had the exclusive use of their houses and lots, it was also documented in the affidavit. So that's the `B" series. HIATT: Okay. And what, okay, that ends it for those. So why was it important whether they had exclusive use of their home, and why was it important whether they were paying rent? KUBOTA: Okay. That's important issues. Because in, as we'll discuss a little bit later in the application of the law and the rules which apply to recognition of pre- existinglots, the County has always taken the position, I believe, from 1944 that where there were lots of record which existed as of the adoption of the County Subdivision Code on November 22, 1944, those lots have, are recognized as pre-existing the Subdivision Code. And, therefore, they're lots of record. In order to show that the lots were separate, it either have to be sold, or carved out, or leased out separately so that different people had exclusive uses of the lots. And that's why the exclusivity part of the affidavit is somewhat important in that a camp resident who had a house had the right to say, "hey, get off my house, get off of my lot." And they occupied the houses as part of their employee contract, which, at that time, was typically three years on a labor contract; and as part of the contract, they received the right to use the house. 9 HIATT: Okay. Did you research Corporation Counsel's opinions and find three opinions which reiterated that point? KUBOTA: Yes, I did. We got three opinions. And I believe they might have been from three different administrations, three different Corporation Counsels. But that just basically reiterated what the County's policy had been on recognition of pre-existing lots. Basically, again, if the lots existed prior to 1944, then the County would recognize it as, as legally separate lots of record. HIATT: And are those three opinions attached as Exhibits A, B, and C, to the pre-hearing brief that was filed? KUBOTA: Yes, there are. HIATT: And one was dated October 5°i, 1988, Exhibit A, correct? KUBOTA: Correct. HIATT: One was dated October 19a', 1988, Exhibit B? KUBOTA: That is correct. HIATT: And one was dated March 21 s', 1990, Exhibit C? KUBOTA: Yes. And I believe they were all signed by three different Corporation Counsel attorneys, meaning that they came from three different administrations. WATT: Okay. Okay. Now we're going to turn now to these, this application. Can you summarize for the Board what you did for your client, Continental, in representing them on these applications? KUBOTA: Yes. What we did is we obtained the area photos of plantation camps that were recognized by the Planning Director in 1995. These were ten plantation camps on the Hamakua Coast. The applicant was Hamakua Housing Corporation. And we obtained aerial photos all dated in 1990, so this is before the application was filed. The photo up here is, you know, one of the representative photos. We'll go through each of them. But what we did is we had someone overlay the tax map lots that were resulted from the application that was granted to Hamakua Housing so we could show how the lots were subdivided in that application. HIATT: David, in that little tackle box over there, there's a pointer, laser pointer. If you can find it for me, that would be great. Not that one. Excuse me. 10 With respect to that Exhibit 4A, can you just explain in an overview where the Board let the, oh, sorry. Can you explain in an overview for the Board what the layout as shown by R. M. Towill is on those, on those lots? What do the lines show? KUBOTA: The lines overlaid onto the lots correspond with lots of record that were requested and granted by Hamakua Housing in 1995. The, the lines themselves are basically a tax map, exactly the same from the tax map, and is overlaid onto the photos. WATT: Here's a pointer if you want to use it. Just press this thing. Okay. Okay. So let's go through those for a minute. This is 6A, Kekoa Camp, correct? KUBOTA: Correct. WATT: And Papaaloa Camp, can you tell us what that was and where it was? KUBOTA: Well, Papaaloa, as you know, is located basically just makai of Laupahoehoe. And the Papaaloa Skilled Camp application actually involved mainly these properties here. This is the Papaaloa Skilled Camp. These are, the lots up here were already in existence, and we're not making any claim that the County granted these. It were, the application included these lots up to about this vacant lot right here. HIATT: Okay. Now I've circled that, and I circled a couple of lots here on Kekoa. Why were the circles placed around those lots? KUBOTA: Yes, in Kekoa Camp, you'll notice these two red circle lots there. Those lots were vacant at the time of the application. And I believe it was shown on the subdivision maps that Hamakua Housing submitted at the time that they were vacant. They were granted and given separate lots of record. WATT: Now the "B" series of exhibits, 6B for example, does that have those vacant lots highlighted? KUBOTA: Yes, the "B" series of exhibits in your file, are copies of real property tax printouts. The printouts were from 1996 f?om the Real Property Tax Office. And we marked on the "B" series of exhibits which lots were vacant. We highlighted the vacant ones in yellow. And where there was anon-residential building on the property like a commercial building or a garage building, that got a vacant lot, that got a lot status, they are highlighted in pink. So that's the 6B, 7B, 8B and all those series. WATT: Okay. Why is it important whether the County pre-approved, approved a subdivision with vacant lots in this Hamakua Housing application? KUBOTA: Well, if you apply the standard of you would only, the County would only grant what is existing there and currently leased out to camp residents, you 11 can't, you cannot give those vacant lots. The standard, I believe, that was a part in 1995 was, were those lots in occupancy as of November 22, 1944. And because there were, they were granted lot status. HIATT: Okay. So the standard wasn't whether they were occupied or you were creating housing for people who needed it in 1995 at the time these subdivision were approved? These lots, vacant, unoccupied, they were approved and granted subdivision status in 1995? KUBOTA: Correct. As we will get to later, there's some exhibits, [mean, letters from the County to the applicant that basically said we're granting the status because they were separated out as camp lots as of November 22, 1944. And that's the only date that was relevant. HIATT: And I pause there for a moment, because that's probably the most important piece of information we're going to convey to you today, gentlemen. And so Kekoa was the first one that had vacant lots, correct? KUBOTA: Correct. HIATT: Papaaloa was the second one, that also had vacant lots at the time the County approved it? KUBOTA: Yes, there was that one vacant lot. HIATT: Okay. Waipunale, can you tell us about Waipunale? KUBOTA: Waipunale is a small camp located between the second and third gulch. It's along the oceanfront. And that lot right there that's circled is not a vacant lot, but it was a garage structure that, that was given lot status. HIATT: On this visual aid where it's a garage or commercial structure as opposed to a home, I put a little "c" by the circle; and if there's no "c" then it was just vacant. Niu Camp, can you tell us about that one? This is 9A. KUBOTA: Yes. Niu Camp, Exhibit 9A is, as you're coming out of the third gulch, heading out from Hilo, there's a turnoff to Ookala. Right at the turnoff, there's a gymnasium that you can see on the photo there, and there's a bus stop. Niu Camp is right makai of that. HIATT: Okay. Two vacant lots at the top and one commercial garage at the bottom'? 12 KUBOTA: Correct. HIATT: And Exhibit 10A, which camp is that? KUBOTA: Exhibit l0A is also in the Ookala area. If you follow along on the old highway, you come up to Kukui Camp; and that's one of three camps in the Ookala area. HIATT: And two vacant lots and two commercial lots, correct? KUBOTA: No, actually, I think there are three vacant lots and one, this one right here in the corner, Lot No. 1 was the clubhouse. Oh, I'm sorry, two vacant lots, one garage lot and one clubhouse lot. HIATT: Okay. And Ookala Camp? KUBOTA: Ookala Camp is the third of the camps in the Ookala area. And, again, this overlay, Mr. Hiatt has circled the lots which were vacant at the time. This one looks a little bit different, cause there it looks like there's houses on it. But according to the Real Property Tax information, it was vacant. And I think it's just because the houses were all fallen in and dilapidated at the time and abandoned. This large lot here was vacant at the time of the application, granted lot status and had since been sold on the open market. ISHADO: Mr. Chairman, as to the last point FOX: Mr.Ishado. ISHADO: I'd like to raise an objection. I, you know, I think that's just speculation on Mr. Kubota's part as to whether or not the house was there or not. HIATT: Let me try to answer that. We'll withdraw the last question, and F11 try to solve, solve the issue by a following question. Mr. Kubota, can you turn to Exhibit 11, sorry, what was the last one we were looking at? Was it Ookala? Yeah, it was Ookala. So, can you turn Exhibit 11 C. And in looking at that, can you tell the Board, generally, what the "C" series of exhibits show`? KUBOTA: The "C" series of exhibits are, are true and correct copies of Real Property Tax Office printouts. And they were printouts made in 1996, which is the first year after the camp lot recognitions were granted. And if you flip down to Parcel 16 on 13 that Exhibit 11C, you'll find that there is a land value for that property. But there's no building value, which indicates that as far as the County knows it was a vacant lot. HIATT: So is that how you made the determinations for filling in in yellow or pink, these various lots on the "B" series of exhibits? KUBOTA: Yes. And, actually, one more thing, too, that might help this Board is, I believe, either the "C" or the "D" series of exhibits contained the actual subdivision maps that were submitted by Hamakua Housing at the time. And if you look at that map, you'll see that they were submitted as vacant lots. HIATT: Okay. So Hamakua Housing itself recognized each of the ones that you say is vacant as vacant? ISHADO: Objection, leading question. FOX: Sustained. HIATT: Okay. What do the "D" series of exhibits show? KUBOTA: I'm sorry. It was actually "E" series of exhibits. The "E" series are copies of subdivision maps that Hamakua Housing submitted. And if you'd look at it, it's shown as Lot 10 on this subdivision map, the 79,855 square foot lot was vacant at the time. Also Lot 2, 34,606 square feet was vacant at the time. Same with I,ot C. FOX: Excuse me, is this, are you looking on I lE series? KUBOTA: Yes, 11 E, Mr. Chairman. FOX: I'm afraid I don't have one here. NAKANO: Yeah, mine also. HIATT: Did those not get copied? Okay, let me KUBOTA: You know what, I'm sorry. HIATT: That's the D? KUBOTA: You know what, I'm sorry. Sony, sir, it's 11 D. We submitted the letter and the map together as one exhibit. Sorry, for that problem. FOX: Okay, great. We got D. 14 KUBOTA: So as I was saying, on 11D there's a subdivision approval letter and a subdivision map. And the map shows that the lots were vacant at the time that recognitions were granted. HIATT: Okay. So let me go to then what we were at, Ookala Camp; and we'll go down to Paauilo Camp. Can you tell us what that shows? KUBOTA: Again, this is an aerial photo of Paauilo Camp, which is located just makai of Earl Store, if you know where that is. Earl Store is up here along the highway. The overpass is right about here, and then there's this one way that feeds down into Paauilo Camp; and there are 91 lots in Paauilo Camp. Also, for clarification, these lots out here, these vacant ones are on the Tax Map, but they were not requested by Hamakua Housing. So what they had requested at the time, I believe, were all, all of these, those lots as I'm indicating here. HIATT: Okay. And 13A, what does that show us? KUBOTA: 'T'hirteen A is over, an overlay of a photo of Nakalei Camp, which is located directly makai of Paauilo Camp. So if you just head down the road about maybe'/ of a mile, Nakalei Camp is right there. HIATT: Okay. And the circled area was a vacant lot for Nakalei? KUBOTA: Correct. HIATT: And Paauhau, 14A, what does that show us? KUBOTA: Paauhau Camp is the largest of all of the camps that Hamakua Housing requested recognition for. This camp, if you, I'm not sure if you all know where Paauhau is, but as you're driving from Hilo towards Honokaa, it's at that last turn just before the Honokaa sign. There's a road that goes down the hill. It's kind of a steep road; and Paauhau is about maybe a mile or maybe two miles down the hill. And there are 146 lots recognized in 1995. HIATT: And were there a mm~ber of vacant lots, was that the greatest number of vacant lots recognized? KUBOTA: Yes. In doing the research, we found that out of all of the camps, Paauhau had the most, the greatest number of vacant lots as shown by the subdivision, or the recognition application and by the Real Property Tax records. So we've prepared a Real Property Tax map which has, has been colored-coded to show the vacants and the commercials. So as you can see, you know, looks like roughly about half of the camp has been vacant at the time of the application and the approval. And these four pink colored lots are commercial-type buildings; and one is a garage building, I believe. And I've 15 submitted photos of them in with the exhibits of all the vacant, all of the garage and commercial buildings. HIATT: So, again if, did you find a rational or legal basis for distinction between [SHADO: Objection. It calls for an opinion. Is Mr. Kubota testifying as an expert in this case? And if he is, you know, we would object to any testimony on the law. The law should be, you know, should be set forth in the court cases, rather than the opinion of an attorney. You know, I could submit my opinion on the law itself. But we're only, we're only citing the case law. HIATT: I haven't finished the question. FOX: Go ahead then. Finish your question. HIATT: Thanks. Did you find when you were looking into this, before you made the application for your clients, did you find a basis for distinction between the lots which had already been approved by the County on the basis of whether they were vacant or not? ISHADO: Same objection, Mr. Chairman. FOX: Your objection is sustained. WATT: Okay. In any case, when you did factual research, you found that in at least in this subdivision around 40 lots were vacant when it was approved? KUBOTA: Actually, my research showed there were 44 vacant lots plus four lots which were either commercial or non-residential. HIATT: Okay. All right, Haina Camp, can you tell us about that one? KUBOTA: Yes. Haina Camp is located in the, below Honokaa. If, directly across from T. Kaneshiro Store there is a roadway that goes down and Haina Camp is, I would say, about a mile down the hill there. HIATT: And 15B, what does that, what does that show? KUBOTA: Fifreen B, again, is a Real Property Tax map colored to show which lots were vacant at the time of the recognition in 1995. There were 16 lots out of 58 in Haina that were vacant. 16 HIATT: Okay. Okay, next. Okay. Let me go back to Exhibit 5 just so we've mentioned it. What is Exhibit 5, Mr. Kubota? KUBOTA: Oh, Exhibit 5 is, is a map that's on which we've just highlighted the locations of the various plantation camps so that the Board members would be familiar with, with proximity. HIATT: Okay. And so these are actually from an overview, the location of all the camps you just discussed? KUBOTA: Yes, it is. HIATT: Okay. We've gone and, through the exhibits, the "B" exhibits, the "C" exhibits, the "D" exhibits. Tell us about the "E" exhibits, SE through I SE? KUBOTA: Okay. Sorry, Mr. Chairman, again. The exhibits in the "E" series were the affidavits of camp residents in support of Hamakua Housing's applications. I believe that we submitted affidavits for seven of the camps and no affidavits for three of the camps. The affidavits, again, as I explained were to establish the existence of the camps prior to 1944 and also, you know, to establish their rental use or some kind of exclusive use of the property prior to 1944. HIATT: Okay. In submitting the applications that Hamakua submitted, was there any affidavits required or that you saw in the file to say that a particular person was going to occupy a lot or buy a lot if the subdivision was approved? KUBOTA: No. That was not part of the application or requirements by the County. WATT: Did the County require that the lots be sold at a particular price for low-cost housing? KUBOTA: No, the County basically wasn't involved in any of the sale part of the transaction. HIATT: Did the County impose any restriction on resale of the lots? KUBOTA: No, not that I'm aware of. HIATT: Did the County impose any restriction on Hamakua Housing Authority's ability to sell those lots at market prices for a profit? KUBOTA: No, there were no restrictions. And, I think, as I may testify later, the, the actual practice is that they have been selling lots at market prices. 17 HIATT: Okay. All right. Based on what had happened in the past, did you expect the applications for your clients to be approved? KUBOTA: Yes, we did. HIATT: Okay. Can you tell the Board what was done to file those applications, please? KUBOTA: When, April of 2001, R. M. Towil] prepared for an application which is part of the record on appeal. And, basically, they, they compiled their research of the camp lots including the photos that we showed you earlier, insurance valuation which showed that the houses were built in typically like 1905 through 1925, and that as of 1944, when the subdivision law came into effect, there were 52 camp lots at Maukaloa and 19 camp lots at Kainolc. HIATT: Okay. And who submitted the application for those two camps? KUBOTA: R. M. Towill Survey Company submitted that application. HIATT: And was there an application submitted for Pepeekeo'? KUBOTA: Yes. In July 2001, Hank Correa filed an application for recognition of Pepeekeo Mill Village, which is on the same grounds, as that the camp existed prior to 1944; and we submitted a bunch of camp resident affidavits. We submitted, I believe, the census history for Pepeekeo Mill Village and also are the documentation showing that the camp existed as of November 1944. Pepeekeo Mill Village, by the way, was in existence until about the early 1980's. So this is a little more recent, in fact, a lot more recent camp than the other two. HIATT: And what happened after you filed the applications? KUBOTA: Well, the Planning Director denied the applications for al] three of the camps. HIATT: Okay. Did you think that determination was correct? KUBOTA: No, I didn't. ISHADO: Objection. You know, you're calling for a legal, you're calling an opinion, basically. And, you know, Mr. Kubota is here as a witness, and I appreciate the fact that he's an attorney, and a very good attorney. But, you know, that's strictly just asking for his opinion. FOX: Your objection is sustained. 18 HIATT: The, the affidavits, well, was there an issue about whether these camp lots were leased as opposed to an employment benefit? KUBOTA: Yes. One of the reasons that the Planning Director gave us as a reason for denial, and I'll kind of refresh this Board on what ]testified to earlier, is that the lots have to be held out for separate use by, you know, different individuals. And part of the evidence that we submitted was that the lots were leased to the employees as part of the employment contract I think Exhibit 4B is a affidavit of Harold Luscomb who is a long time employee of the sugar company; and his affidavit explains the history. Basically, the camp employees signed labor contracts back around the 1920's for 3 years at a time, in which they would be bound to work for the company for sometimes $12.00 a month or $20.00 a month for six days of work; and in turn they received housing as part of their contract. So there was a give and a take in this contract. And so, anyway, the affidavit shows that there was this exclusive use of the respective house, houses and lots, and that it was pursuant to employment contracts. WATT: Okay. And with respect to the applications for the ten that were approved by the County for the Hawaii Housing Authority, did the County require affidavits that those lots have been sold previously, had been conveyed by sale as opposed to a lease? KUBOTA: No, not tcom what I was able to find. In fact, the affidavits of the camp residents for the ten Hamakua Housing ones were pretty skimpy in what they provided. I think they just, at the most, established that the camps existed therein 1944. HIATT: So there wasn't a requirement previously from the County that they had been sold prior to L944, these lots KUBOTA: No, not at all. HIATT: Okay. All right. What did you do after the applications were denied? KUBOTA: Well, we filed the appeal to this Board. HIATT: Okay. And, NAKANO: Jerry, hold it a little closer. H[ATT: Sorry. Thank you, Rodney. You filed the appeal. I want to briefly review then the grounds for the appeal. What was the first ground for the appeal? 19 KUBOTA: The first ground for appeal was submitted on the notice of appeal was that the Planning Director's decision was in violation of applicable subdivision laws and rules, and that it was arbitrary and capricious. HIATT: Okay. And with respect to the rule, what rule are you talking about? KUBOTA: Okay, the rule that I'm talking about here is, the County has a long- standing practice of recognizing existing lots of record, whether they be camp lots or other kinds of lots, if they predated the Subdivision Code; and that effective date was November 22, 1944. So the County has said if your lots existed prior to November 22, 1944, the rule is that we'll recognize the lots. HIATT: Okay. And how is the, why is that a rule under the law, under Chapter 91? KUBOTA: Okay. If you look at Chapter 91-1, that's the Sunshine Law which basically requires government to do business in the open. Chapter 91-1 defines agency as each state or county board, commission, department or officer. So the department would be the Planning Department, and the officer would be Mr. Yuen as a Planning Director. That defines Mr. Yuen and the Planning Department as an agency. Now, basically what, oh, let me get to where I'm sorry. Rule means each agency statement of general or particular applicability that either implements, interprets, or prescribes law or policy. And you can forget about this part about describes the organization, because that doesn't apply. But the decisions that the Planning Department has made through past administrations and in this administration is the statement of particular applicability that implements laws. And the law that, the law and the rule that we're applying here is that if lots existed as of November 22, 1944, then they arc recognized as pre-existing lots of record. WATT: Was that rule followed with respect to your client's application? KUBOTA: No. It was last followed, I believe, in 1995. WATT: Okay. Was that rule ever repealed? The rule had been followed up to the time that you made your application. Was it ever repealed? KUBOTA: No, it wasn't. HIATT: Was the-? ISHADO: Mr. Chair, I'm going to object to the use of the word "rule" in this case. I don't see anything in writing that Mr. Kubota is referring to. He's referring to a 20 practice that he understands to be. But, you know, we're going to object to the use of the word. HIATT: Mr. Chairman, I don't think it's appropriate for an objection to be made to the use of a word. Objections are made to a question as to whether or not it's an appropriate question. And our position is, and the record shows, that this is a rule. I don't think the County should be able to muzzle a witness' testimony just because they don't like it. ISHADO: I object to the word "muzzle." Mr. Chairman, the objection basically is Mr. Kubota is testifying as to a, a alleged practice or rule. You know, and I just don't think it's an appropriate You know, it's a misstatement based upon the facts. HIATT: Well, Mr. Chairman, I refer Counsel to Exhibits A, B and C to the brief. One of which says ISHADO: Well, Mr. Chairman, those were never introduced into evidence. We did object to those. HIATT: There has been testimony about them, one of which says that, "In the present case, it is our conclusion that the four above-mentioned lots were pre-existing lots before the effective date of the 1944 ordinance." That's a, and on the second page of that, Mr. Wagner, the Corporation Counsel, says, "The above-mention lots were in existence prior Co this time." FOX: Excuse me, those were never submitted, never admitted. They came after your stipulation. And I think you're sort of overstepping your bounds here with it. HIATT: Okay. Well, the rules allow the admission of exhibits at the hearing. And, I guess, if that's necessary, then we will offer Exhibits A, B and C at the hearing. The rules encourage the Board to accept all relevant evidence, and this is certainly relevant evidence. You know, we didn't anticipate that the, that the Department was going to take the position that previous Corporation Counsel opinions somehow didn't apply when they were related to this area. So we would formally offer Exhibits A, B and C and ask the County to admit them. FOX: Mr.lshado? ISHADO: ['m sorry. Mr. Chairman, the County is going to object. You know, I personally don't have a problem with these rules and everything and with his opinions, you know. But really what we're coming down to is there is, there is this order by the Chair at the pre-hearing conference that October 26`h be the deadline for submission of and exchange of exhibits. I think the, the County's position is, basically, 21 that this Chair has, in the past, you know, enforced the deadlines by the rules set by, the deadline set by the Chair. And we would object to the introduction of these exhibits at this time. HIATT: Brief response. FOX: Go ahead. HIATT: The County submitted exhibits afrer the 26°i as well. Both sides were trying to get ready for the hearing. There has been plenty of time For these particular things to be reviewed. And the problem whenever an exhibit is refused where there's not real prejudice is that the proceedings can be affected by the refusal to admit evidence. And this particular proceeding is the first, it's really a trial, in other words, it's the first time that the parties have had a chancre to put in the record everything that they think is important to the appeal. And there's a chance that it's going to go up from here. I don't know. But it seems to me the better part of wisdom is to allow the record to be complete rather than exclude things when there's no real prejudice shown on the other side. These opinions are well known to the County and are L2 to I S years old. ISHADO: Well, Mr. Chairman, if I could respond to that? FOX: Please, go ahead. ISHADO: You know, it is correct that you can say that the County has submitted a supplemental exhibit, Exhibit F. I would like to explain to the Chair and to the Board that when we submitted this, you know, we asked the appellant's attorney if they'd be willing to allow our, our exhibit into evidence and, you know, we wouldn't object to theirs. They've indicated that they won't object to our exhibit. Frankly, I'm not, I don't see the point in agreeing to allow their, their exhibit in if they're going to object to ours. HIATT: ['m perfectly willing to stipulate in all the County's exhibits, and indicated that to Mr. [shado this morning. And he indicated that he would decline. One, one other point I'd like to make ISHADO: ['m sorry. Is that basically your offering to HIATT: Yes. All your stuff can come in, and we can argue about it as far as I'm concerned, Lester. FOX: Mr. Ishado, do you agree to that? 22 ISHADO: We don't have any problems with that. FOX: All right, fine. HIATT: Thank you. So if I understand the ruling, then exhibits, just so the record is clear, and, Lester, you may want to recite your numbers too, the Petitioners Exhibits 1 through 24 and A, B and C, the Corporation Counsel opinions, are in evidence. ISHADO: And the County's exhibits A through F are now in evidence. FOX: Then both new submissions are in evidence at this time. HIATT: Thank you very much, Mr. Chairman. I appreciate it. So then, oh, there was an objection pending which got lost in the call there, I'm sorry, about whether we could say "rule" when we asked, answered/asked a question. If you want to go ahead and rule on that, rule on the rule issue FOX: I have sustained Mr. Ishado's objection. HIATT: Okay. Thank you. With respect to this practice on whether or not it's a rule, was it followed, was it ever subject to any procedure for amendment or repeal? KUBOTA: No, not that 1 know of. HIATT: Okay. And does Chapter 91 require a process for amendment or repeal of a rule? KUBOTA: Well, if, if a practice is deemed to be a rule, then, yes, for the Planning Director to change the rule there's a statutory procedure. Under 91-3, basically, it says that for the amendment of a rule, we have to give at least 30 days public notice. You have to state what the proposed rule change is going to be. You have to state that the copies of the rules are going to be made available to the public. You have to send a copy of the proposed rule change to anyone who has an interest in it. And after adopting the rule and, well, after giving the public a chance to comment and testify on it, then you adopt the rule or adopt the change of rules. And for that change to be effective, it has to be signed by the Mayor of the County. ISHADO: Mr. Chairman, again, two objections on this point, and 1 hate keep doing this. But, first of all, you know, I'm not sure whether Mr. Kubota is testifying as a witness to the proceedings or as an expert as to what the law is. And, you know, I believe that the law can speak for itself. You have a copy of the statute. You have a copy of the memorandum. You know, and I, I just would object on that basis that Mr. Kubota's 23 testifying as an expert. He hasn't been called upon as one. I would object to the expert testimony, in any case, as to what the law is. And, you know, we believe also that Mr. Kubota may not be stating, you know, any law correctly to the Board. We'd ask the Board to, to look at the law itself and then make its own decisions. HIATT: Brief response. The foundational question for these rules, what were the grounds for the appeal and what were the grounds for the denial. And Mr. Kubota is a fact witness on the issue of what was presented to the Planning Department in this appeal, and the Chapter 91 issue. And the question of a rule is a factual matter that was placed before the Department with respect to the appeal. So it's, it's direct testimony about what's at issue before you. Is there a rule? Is there not a rule? Was there a procedure for changing it? Was it followed? For that reason, I think it's appropriate. FOX: Mr.lshado? ISHADO: Yes, Mr. Chairman. You know, again, I suppose Mr. Kubota can testify that the objection, or that the basis of appeal is what they believe to be a violation of the rule making procedures. But for him to go further and to testify as to what the rule- making procedure is, you know, I don't see the point. HIATT: We're done with that area if it makes a difference. I think the objection came afrer the question was answered. FOX: [think we'll just, we'll continue. HIATT: Thank you very much. Now, you know, just as a matter of fact, were any of the procedures for the adoption or an amendment of a rule, this alleged rule, followed? KUBOTA: No. HIATT: Okay. Thanks. I want to turn now to a different area, Mr. Kubota, the difference between the ten Hamakua camps previously approved in the application made for your clients. I want to talk about density for a second. Have you, have you reviewed the density of the subdivisions that were already approved by the Planning Director in relation to those for which Continental seeks approval? KUBOTA: Yes. Onc of the exhibits that the County actually submitted to this Board was an agreement with Hamakua Sugar and, I believe, Hamakua Housing. In that document, it listed the sizes of the different camps that were part of the agreement. And what I did is I just kind of did a rough calculation of three representative camps which 24 amounted to a total of 2291ots. And that roughly corresponds, you know, equally with the number of the lots we're requesting at 224. HIATT: Which camps did you, which camps did you use? KUBOTA: I used Pauhau Camp, Haina Camp and Kukui Camp. And they added up to a total of 229 lots there. And according to the County's exhibit, the camps comprised an area of 61 acres in total. HIATT: And what was the density of the, average density of the subdivisions approved for those camps? KUBOTA: Well, using my rough calculation, it came out to 11,761 square feet as the average lot size in those camps. And that included some lots which were four acres in size, and two acres in size. But, overall, and that also included park sites too; but ovcrall it came out L I ,761 square feet. HIATT: So around a of an acre per lot, roughly? KUBOTA: Yes. HIATT: And what was the average density? If the 224 lots that have not been approved were approved for your clients, what would the average density spread over the 4,000 acres be? KUBOTA: We, we got already approved for 94 lots, which are not the subject of this appeal. But if you added that to the 224, and divided it into the 4,071 acres, our average lot size comes out to 12.8 acres per lot. HIATT: Okay. So less dense than what has already been approved, on average? KUBOTA: Yes, 47 times less dense than what was approved in ] 995. HIATT: Okay. I want to go through the remaining exhibits quickly. We're nearly done with you. But just to alert the Board to what they are and why they are being offered, can you tell them first what is Exhibit 16A? KUBOTA: Sixteen A is a printout of lot sales that were made of vacant or garage lots by Hamakua Housing since the lots were approved. H[ATT: Okay. And why is that relevant? 25 KUBOTA: Well, if the grounds for denial of our application was that they were abandoned and vacant, then that being currently leased by a camp employee, all of these were vacant or were garage sites, and were not resided in by camp employee also. HIATT: Okay. And they were all sold or listed for sale by Hamakua Housing Corp? KUBOTA: [don't think they were listed for sale, but they were sold at points in time from 1995 to the present. HIATT: At market prices? KUBOTA: No, these in 16 were sold for pretty reasonable prices. I believe that most of these were sold to camp residents, but they were vacant lots that were sold. HIATT: Okay. And Exhibit 17, what is that? KUBOTA: Exhibit 17 is a letter from Virginia Goldstein to Blaine lto who, I believe, was the surveyor representing Hamakua Housing at the time. HIATT: Okay. What's the date of that, please? KUBOTA: The date of the letter is March 3, 1995. HIATT: Okay. Now I'm going to take them as a group to save time for the FOX: Excuse me, we don't have that in our, we only go 16. HIATT: Oh, that was asupplemental FOX: Supplemental, all right. HIATT: Yeah, that should be your first supplemental. Let me take a minute while you find that. EASLEY: [s that A, B, C? WATT: No. They should have been marked Exhibits 17, 18 You should have two supplementals, and they should cover Exhibits 16 through 24, sir. ISHADO: Mr. Chairman, it's file marked November 2"d, if that helps. 26 HIATT: If I can offer it, I've got two sets that we can use right here. So I'll loan you mine and, I'll loan you both of mine. Here's one that perhaps this side could use. Just turn to 17. And here's one that perhaps that side could use. FOX: Thank you. WATT: And the points are pretty simple, and the letters are pretty brief. First of all, with respect to Exhibits 17 through 20, are they all the same date, Peter, or closing time? KUBOTA: Yeah, they'rc all, they're all dated March 1995. HIATT: Okay. And are they all to Mr. Ito? KUBOTA: Yes, they're all to Mr. Ito from Virginia Goldstein, Planning Director. WATT: Do each of them relate to approval of the pre-existing lots for one of the Hamakua subdivisions, the camp subdivisions? KUBO'FA: Yes. They refer to, I believe, four different subdivision approvals. HIATT: Okay. Why is the date relevant for these letters? KUBOTA: Well, the date is relevant because one of the reasons that the Planning Director gavc us as a reason for denial is that there's now a plantation camp subdivision ordinance in effect, and he said that you need to follow that ordinance. That ordinance went into affect in 1994, which is before this was approved. So that ordinance was in place, but Hamakua Housing received this approval in 1995. WATT: The point, the point being that the ordinance was not the basis, did not stop these approvals trom being made after the ordinance was in effect, is that correct? KUBOTA: Yes. And the other thing that, that is significant in these four letters is that the reason granted, that the applications were granted is that the subdivision was established prior to the first County wide subdivision ordinance of November 22, 1944. And that's the grounds in which it was approved. HIATT: And it's the only ground, correct? KUBOTA: It's the only grounds. HIATT: And it matches the Corp. Counsel opinions A, B and C, correct? 27 KUBOTA: Ycs. It's consistent with the County's opinions and past practices. HIATT: And no requirement of low cost housing? No requirement of resales to low cost housing people, correct? KUBOTA: Nothing at all. H[ATT: Okay. Then what is Exhibit 22? KUBOTA: Exhibit 22 HIATT: That would he the last one? KUBOTA: I'm sorry, Exhibit 21. HIATT: Fm sorry. What's Exhibit 21? KUBOTA: Exhibit 21 is a letter dated June 3, 1996 from Virginia Goldstein to the president of Hamakua Housing, at the time Mr. Clarence Souza. The importance of this letter is just basically that the County is telling him that any understandings and agreements between you as HFC, Hamakua Sugar and former employees are basically your guys own deal and the County is staying out of it. They're not a part of anything about the sales of lots, or low-income housing requirements, and all of that. ISHADO: l'd like to object. I think that's a misstatement of what's in the, what's in the document. HIATT: Well, let me ask this question. Was the County a party to the bankruptcy settlement with respect to Hamakua Housing Corporation in these lots? KUBOTA: As far as I can tell, no, it wasn't. HIATT: And this letter indicates that, correct? KUBOTA: Yes. HIATT: Okay. And Exhibit 22, was Exhibit 22 a printout from Title Guarantee showing sales at Paauhau, Haina and Ookala at market prices? KUBOTA: Yes. What I did was I contacted Title Guarantee, and they ran a quick search on sales of lots in the year 2001; and Exhibit 22 is a summary of what Title Guarantee found on sales of lots. Now, the ones, we're only concerned with sales by Hamakua Housing Corporation that are shown on Exhibit 22. HIATT: Okay. And the Exhibit 23 are those deeds for the 28 KUBOTA: Exhibit 23 is a set of all of those deeds of sales by Hamakua Housing at market prices. WATT: And Exhibit 24 KUBOTA: Exhibit WATT: Go ahead. KUBOTA: Yeah, I'm sorry. Exhibit 24 is a letter dated December 11, 1995 from Virginia Goldstein to Roy Takemoto who was a project coordinator for Hamakua Housing Corporation at the time. HIATT: What's Mr. Takemoto's position now? KUBOTA: Roy Takemoto is now the Deputy Planning Director of the County. WATT: Okay. But, at that time, he was seeking approval for the subdivisions, these pre-existing subdivisions? KUBOTA: Correct. WATT: Okay. 1 want to turn a separate area now. We've been through all the exhibits. With respect to Continental's application, is Continental currently leasing some of this land to family fanners? KUBOTA: Yes. We have about 64 farmers, I believe, on the property at the time. WATT: And has Continental made a commitment to continue leasing or to make available land for farming, small family farms if this is approved? KUBOTA: Yes, if this is approved, we'll ISHADO: Mr. Chairman, I don't, I don't see the relevance of this line of questioning. H[ATT: Briefly though, we just heard an opening statement, which I understand Mr. Yuen's point of view and it was a public interest, or in an opening statement about what would happen if this was approved, what would happen if this was approved, and the claim that it would affect density or the problems in that area. And 1 29 think you need to understand what would, what would happen if it was approved with respect to the family farmers who are now on that land. FOX: You nay proceed. HIATT: Thanks. What would happen`? KUBOTA: Well, first of all, Continental would continue leasing lands to the farmers. And if this application is approved, and we get the extra 224 lots, Continental will have a plan to sell a lot of lots to our existing farmers at very reasonable prices. HIATT: What discount are they going to offer them? KUBOTA: They're thinking about a 15 % discount from market prices. HIATT: And they've committed to that, haven't they? They've committed to a 15% discount? KUBOTA: Oh, yes, they have, definitely. HIATT: What interest rate are they committed to? KUBOTA: Well, generally, the farmers can apply for whatever loans, Ag loans are available through farm credit or through the Ag iSHADO: [don't see the relevance in this line of questioning. FOX: Yeah, I tend to agree with you. I think we're way off speculating on what the company will do, what it can do, and what it won't do. I agree. HIATT: You have anything else to add? KUBOTA: Yeah. Just generally, what we're asking for here today is just that the County Planning Department apply the rules fairly as they've applied it in the past. And we're not asking for any kind of special treatment here. We're just saying that if the County had established practices and rules, please apply to us in the same way. And if the rules are going to be changed, then go through the process legally that's provided under the law. HIATT: Okay. No further questions. FOX: Mr. Ishado, do you have any? 30 ISHADO: Thank you, Mr. Chairman. Mr. Kubota, you're an attorney licensed in the, excuse me, in the State of Hawaii? KUBOTA: Correct. ISHADO: And you represented Continental Pacific with this proceeding? KUBOTA: Yes. [SHADO: And how long has Continental Pacific been a client ofyours? KUBOTA: I've represented them for about three years, from 1998. ISHADO: And the principals involved in that limited liability company is? KUBOTA: Barron Strother who's present here; Jere A. Henderson who is present here, Reynolds Henderson, one of the sons of Jere Henderson, and Jeremy Henderson. 1SHAD0: And Mr. Kubota, I assume that you are being paid for your work in this case? KUBOTA: Yes, I am. ISHADO: And are you being paid to appear, are you charging for the time you're spending here today? KUBOTA: Yes, I am. ISHADO: Were you representing Continental Pacific when they worked on the purchase of this property? KUBOTA: Yes, I did. I represented them. ISHADO: Okay. And at the time that, well, can you tell me what the term of that sale was? KUBOTA: Well, I don't think it's really relevant. But I can just tell you off the top of my head because it wasn't an issue before. HIATT: I guess, I will object to relevance for the record. ISAHDO: Well, Mr. Chairman, they're talking about a taking. And I'd like to know, you know, basically, first of all to establish whether they have a property interest in 31 the land. And, basically, I'd like to know, basically, what they have invested into the property. They have mentioned their investment, and their, you know, that the County is trying to take something from them; and 1'd like to know what it is. H1ATT: Whatever the, on that legal issue, Mr. Chairman, whatever the FOX: Would you like to use the mike? HIATT: Oh, sorry. Whatever the investment is, is not relevant to what's being lost by the refusal to approve 224 lots; and there's no showing in the record that the County was interested in the investment made by Hamakua Housing Corporation or indeed in our investment in this property. FOX: F11 allow Mr. Ishado's question. ISHADO: Mr. Kubota, can you tell me, basically, first of all, how large is the parcel? KUBOTA: The properties are comprising a total of about 4,071 acres. ISHADO: And that includes the camp lots? KUBOTA: Yes, it does. ISHADO: And what was the purchase price for the 4,071 acres? KUBOTA: There were actually three separate purchase transactions. Now, again, I wasn't prepared to testify about this because it wasn't an issue before. But [ believe one transaction was $5 million for about 800 acres. The second transaction was about $11.6 million for the large parcel, and I've got to do some addition or subtraction to figure it out. That would have been about 2,800 acres, I think. Okay. And the third transaction was a million dollars. ISHADO: And what parcel would that have been? KUBOTA: The third transaction is for the, well, actually, it's not a subject of this appeal, so it's really not relevant. The third transaction was for lands near Pepeekeo Mill. But it's not part of the lands on which the camps are located, so I don't think that really matters here. ISHADO: I'm sorry, Mr. Kubota, let me backtrack a little. The purchase price for the tlrst transaction was? KUBOTA: [t was $5 million. 32 ISHADO: And how large a parcel? KUBOTA: I believe that was 812 acres. ISHADO: And where were the land, the camp, the camp lots fall, which transaction would that be? KUBOTA: Okay. The transaction for the $5 million, the 812 acres, was basically makai of Kulaimano Camp. Down, if you're familiar with the area, it's from the sewage treatment plant wrapping around the mill and going out to a little past Alia Point; and that was 800 acres down around the ocean. Pepeekeo Mill Village, the 153 lots were situated on that, one of those parcels. ISHADO: And where would the other two camps be? KUBOTA: Kainole and Maukaloa Camps are located mauka of Kulaimano Subdivision in Pepeekeo; and they're located on the transaction, within the transaction that was sold for 1.6 million. ISHADO: And in the transaction of this magnitude, basically, you have a due diligence period? KUBOTA: On this transaction, I'm thinking that we did do a due diligence before signing the contract. So when we signed the ISHADO: The reason I'm asking is because there was a letter from Mr. Yuen to yourself in which you had apparently indicated that you'd asked for his opinion in a rush, because you were in a due diligence period. Is that correct? KUBOTA: Well, if I can explain, yeah. Just, 1 don't know how this is important to you, but we had a contract to purchase a larger portion of the property which was basically all of the property from Kaieie Homestead Road mauka of the highway, and there was a due diligence period in that contract. And that's, I think, when Mr.Yuen responded. Subsequently, we terminated and signed a different contract with C. Brewer for purchase. ISHADO: And, the, I'm sorry. The last sale that $1 million, the third transaction, how large an acreage is that? KUBOTA: I believe it's about 50 acres. It's an undivided interest in property. And it hasn't been subdivided or staked out, so we don't know the exact size of it. ISHADO: And these are three separate sales? KUBOTA: Yes, throe separate sales all recorded as agreements of sale. 33 ISHADO: So the purchase has, the agreement of sale had been recorded? KUBOTA: Monies have been made, and, yes, the agreement has been recorded. ISHADO: Is there any clause in the agreement of sale or in the sale contract which provides for any kind of adjustment depending on the outcome of this proceeding? KUBOTA: I don't think so. ISHADO: Is there any - ? KUBOTA: In fact, you know what, there isn't. There isn't any provision for adjustment of price. [SHADO: Any provision for cancellation of that contract? KUBOTA: No, definitely not. The agreements sale are publicly recorded documents if you ever needed Co get a copy of them. ISHADO: Can you tell me when the first transaction closed? KUBOTA: The first transaction for Pepeekeo Point, I believe, and that's the 812-acre transaction, 1 believe that recorded on June 1 s` of 2001. ISHADO: And when was the contract signed? FOX: Excuse me, Mr. Ishado, just a minute. I'm, I'm a little a lost. Could you explain to us the relevance of this line of questioning? ISHADO: Mr. Chairman, it's basically, the parties are claiming that somehow they're losing a property right being taken by the County of Hawaii. And, basically, what we're trying to find out is if they had a contract to purchase the property, you know, when did that contract take place? [fit took place after the discussions with the Planning Director, then basically our argument is going to be there is no reliance at that point. And so we're trying to, to basically find out when did the sale close, when did the discussion with the Director take place, and to try and match those two up. FOX: All right, go ahead. HIATT: Mr. Chairman, I Chink that the witness could confirm that, which contracts closed before they applied, and which contracts closed before the decision was made, and that might solve the question easily. Can you 34 KUBOTA: Sure. Is that, is that what you're getting at, Mr. Ishado? ISHADO: Basically, I want to match up the dates. KUBOTA: Okay. I'm trying to think of what, on the transaction dated, well, which closed on June I, I think the application was made in June, and the decision was made in August. So we closed in June, application was made in June; decision was made denying the 153 camp lots in August. The other transaction, as I explained, we went from a larger transaction to a smaller transaction. The decision was, well, Chris Yuen's decision was issued May 24°i on the denial. And we closed that transaction on, I'm thinking, September, September 7°i, perhaps. ISHADO: So this would have been after the decision was, was rendered? KUBOTA: Yes. ISHADO: Well, you know, I also understand that there's a written decision. Did you have verbal conversations with Mr. Yuen regarding the application? KUBOTA: Yes, I spoke to him, 1 believe, once over the phone; and 1 met with him in his office in the beginning of May. ISHADO: And in those conversations, did you discuss what your plans were for the 4,071 acres? KUBOTA: Yes, we did. But I thought that you didn't want me testifying about it I believe there was an objection to me stating what our plans were, so Yes, I did discuss it with Mr. Yuen. ISHADO: Let me back track, Mr. Kubota. On, on the aerial photos that we were looking at earlier, and Mr. Chairman and members of the Board, I don't wish to insult anyone's intelligence, but the overlay from the tax map on the photos, those lines don't actually appear in the original photos do they? KUBOTA: No, no. As I said, they're an overlay. And what we did was we took the tax maps which were resulted from the application, and laid it over the photos of the actual camps, correct. ISHADO: And those photos were taken in for their first two camps in 1950? KUBOTA: Yes. If you're talking about Maukaloa and Kainole Camp, yes, those photos were taken in 1950. 35 ISHADO: And for Pcpeckco? KUBOTA: For Pepeekeo, as I said, the photos are not dated, so I don't know what date it was taken. ISHADO: But, in any event, the camps were, the first two camps, Kainole and Maukaloa, they were abandoned in 1950? KUBOTA: Yeah, I think the affidavit of Harold Luscomb explains it, that's 4B. And I think he said that they were occupied until probably the mid 1950s. ISHADO: And at about that time they were, they ceased to exist? KUBOTA: I don't know when they ceased to exist. They weren't lived in at that point in time. Thcy could have continued on from that, from that date on. But, again, you know, as I explained, Mr. Ishado, the relevant date is November 22, 1944. And, and the record is very clear that we submitted evidence that the camps were in existence at least, existence and leased out in 1944. ISHADO: Mr. Kubota, you had gone through the records for the Hamakua Housing Corporation, and for the ten camps, and you have pointed out to the Board, basically, there were vacant lots here and there? KUBOTA: Actually, one camp there, 1/3 vacant lots. So I would say that's a lot more than here and there. ISHADO: And we're talking about a total of 460 lots or so? KUBOTA: I think it came up to a total of 448 lots granted to Hamakua Housing. ISHADO: And out of those 448 lots, can you tell me how many lots were vacant? KUBOTA: I can't tell you an exact number. I would say Paauhau alone had 44, Haina had 16, so that's 60. There were probably about four or five vacant in Ookala, sixty four; two in Kekoa, 66; two more in, what's the name of that camp I'm thinking that there were probably 70 something vacant lots. I'm sorry, 1 don't know exactly, unless you want me to go through the photos. ISHADO: That is fine. I'm sure the Board could follow up on that. KUBOTA: So it would be about 70 somewhat vacant lots at the time of the application. 36 ISHADO: So the other 370 lots or so, that had houses on them? KUBOTA: Yes. [don't know whether they were occupied or not, but there were houses. ISHADO: And the, your understanding of the, the recognition ofpre-existing lots, you had referred to a longstanding practice of recognizing pre-existing lots. Basically, the application that the appellant submitted in this case was for two types of categories, Categories A and B'? KUBOTA: Yes. ISHADO: And Category A was, could you explain what would that category consist of? KUBOTA: I'm assuming that B were camp lots, right? ISHADO: Yes. KUBOTA: Okay. Category A were pre-existing lots of record that, again, under a different version of the County's practice, was recognizing that where there is separate land commission awards, land patent grants, and kuleanas and different little lots, that the County would recognize their existence prior to 1944. Now those lots are not an issue today. So, you know, what we're dealing with are only the camp lots as the "B" portion of that application. ISHADO: Okay. When you mention there's a longstanding practice, you're referring to the Category A lots? KUBOTA: Actually of both, both categories, A and B. ISHADO: Well, as far as Category B goes, other than the Hamakua Camp, are you familiar with any other recognition of plantation camp houses as, as pre-existing lots? KUBOTA: I believe there are. I don't know specifically, but it's, it's part of the general County's recognition of lots of record in general, prior to 1944. ISHADO: Can you name any examples? KUBOTA: I don't know. The camps that stood out the most were the ones most recently granted in 1995, and they were those ten camps at Hamakua. ISHADO: You did check the records, though? 37 KUBOTA: Yes. But, you know, 1 actually asked Ed Cheplic. You know, he's the senior planner there, and he couldn't really recall or point me in the right direction. But, you know, I was able to find these ten. ISHADO: Hamakua Sugar Company went into bankruptcy about 1992, is that correct? KUBOTA: I don't know, that could be correct. ISHADO: And have you seen a copy of our Exhibit C, bankruptcy court of order? KUBOTA: Yes, you sent a copy of this to me. ISHADO: And in that Exhibit C on page, I believe it's paragraph 12, it refers to conveyance of the camp lots to a non-profit operation. KUBOTA: What page are you on, Mr. Ishado? Page 12, what page? Mr. Ishado, I think you're on page 24, is that correct, paragraph 12, page 24? ISHADO: That is correct. Basically, were you, I'm sorry. First of all, let me try and clarify this, were you representing anyone in this bankruptcy proceeding? KUBOTA: I believe [ represented I filed a claim for Arakakai Mechanical which was owned money by Hamakua Sugar, but no one else. ISHADO: And, Mr. Kubota, the, the Hamakua Sugar, Hamakua Sugar when it was in bankruptcy, your understanding of the bankruptcy proceeding is the property was owned by the trustee? KUBOTA: Yes. He took title under that jurisdiction of the bankruptcy court. ISHADO: And your understanding also is that because of the bankruptcy, the people who were living in those 370 houses or so faced eviction? KUBOTA: I didn't know what the circumstances were, Mr. Ishado. ISHADO: The order contemplates the conveyance to a non-profit entity, is that correct? KUBOTA: I suppose so, if that's what paragraph 12 says. It says it "shall be subdivided the Trustee from the larger tax keys...at no cost...and released to Trustee free and clear of the Bank and State liens". Okay. It says that, "the bargaining unit employee 38 housing," whatever that will be, "will be transferred to anon-profit entity to be administered by such entity upon completion of harvest." That's what the paragraph says. ISHADO: In your review of the files for Hamakua Sugar, and in your preparation for this case, did you find any subdivision maps for the three camps in question here, any old subdivision maps? KUBOTA: No, I did not. ISHADO: Mr. Chairman, if I could just take a minute to look at my notes, I think I'm about ready to close. FOX: Okay, please. ISHADO: Just one further question, Mr. Kubota, the, your memorandum, [ guess, refers to selling the properties if the 224 lots are accorded pre-existing status and plans are to sell the properties for $150,000 each per acre? KUBOTA: I don't think the memorandum said that. [SHADO: A $150,000 for each parcel? KUBOTA: I don't think it talked about sale of properties. Oh, Mr. Ishado, 1 think what you're referring to is potential damages if the lots are denied. That might be what it is. ISHADO: So in your estimation the lots arc worth something like, if they were, if the status is granted by the Board, the lots, each lot, would be worth about $150,000? KUBOTA: I think what, what was said in the memo is that a conservative average estimated, oh, I'm sorry, yes, it does say sales price of $150,000 for the 224 lots, would he the loss if the lots were not recognized. ISHADO: Thank you, Mr. Chairman. FOX: Mr. Ishado, I'll give you a chance to comeback, but let's take a short recess. 1'd like to take five minutes. ISHADO: Thank you. RECESSED The Chair called a short recess at 11:35 a.m. RECONVENED The meeting reconvened at 11:45 a.m. 39 FOX: The meeting will reconvene. What we'll do is to go to 12:30, and then we'll recess for lunch, and then come back. And I'm sorry that's going to impose maybe a problem for some people, but I think that's the best course. So, Mr. Ishado, you had finished. Mr. Hiatt, were you ready to come back to HIATT: Yes, I have a couple of questions for him. Mr. Kubota, Mr. Ishado asked you some questions about the damage numbers that were ball-parked in the brief. Do you recall those questions? KUBOTA: Ycs. HIATT: Okay. And is it your client's preference to have to claim damages in this matter? KUBOTA: Certainly not. We'd rather get the recognition of the camp lots and not pursue damages claim against the County. HIATT: And does the damages claim relate to the issue of whether there's been a taking of these 224 lots, because of the action of not, not following the previous alleged rule? KUBOTA: Yes, it relates directly to it. HIATT: Okay. All right. Okay, and that's the subject of legal argument if a taking is found, is that right? KUBOTA: Yeah, that's, that's for a later day. HIATT: Okay. All right. I have no further questions. Thank you. FOX: Mr. Ishado, do you have anything? ISHADO: No, thank you. FOX: Any member of the Board have any questions to ask of the witness? Mr. Easley? EASLEY: Just one. Current land taxes are being paid by whom, on the lots in question? KUBOTA: The land taxes are paid by Continental Pacific. Under the teens of an agreement of sale, all beneficial ownership and obligations transfer over to Continental from the date of recordation. So we pay the Caxes, we work the land, and the land is just 40 basically pledged back to, to Mauna Kea Agribusiness as security for the payment of the rest of the purchase price. FOX: Any other questions? Mr. Hiatt, would you like to call your next witness? HIATT: Thank you, sir. I appreciate it. The next witness would be Mr. Henderson. NAKANO: Mr. Henderson, do you swear that the testimony that you're about to present before the Board is the truth? JERE HENDERSON: I do. NAKANO: Thank you. HIATT: Good morning, Mr. Henderson. Can you tell the Board what your position is? First of all, are you resident of Hawaii? JERE HENDERSON: Yes. HIATT: And can you state your full name for the record. JERE HENDERSON: Jeremiah Augustus Henderson. HIATT: Okay. And you got a Hawaii driver's license? JERE HENDERSON: Yes. HIATT: Are you principal of Continental Pacific, LLC? JERE HENDERSON: Yes, I ann. HIATT: Can you tell the Board who else are principals of that company? JERE HENDERSON: Barron Strother; my son, Reynolds Henderson; and my other son Jeremy Henderson. HIATT: Okay. Can you point those gentlemen out? JERE HENDERSON: Barron Strother is here in the dark blue shirt, and Reynolds is in back against the wall. And my other son, Jeremy, is not here right now. 41 HIATT: Okay. When you, there was some testimony in response to questions to Mr. Kubota a minute ago about when these deals closed, okay. Had you made a commitment to purchase these lands before they closed? JERE HENDERSON: Yes. We made a commitment to purchase, yes. HIATT: So you basically had an agreement to purchase them JERE HENDERSON: Right. HIATT: And then it eventually closed? JERE HENDERSON: Exactly. HIATT: And the dates that he was referring to were the dates that it closed, not the date that you made the ageement to purchase? JERE HENDERSON: Right, those are the closing dates. HIATT: And the agreement to purchase preceded the actual closing? JERE HENDERSON: Exactly. HIATT: When you purchased this property from, who did you purchase it from? JERE HENDERSON: From Mauna Kea Agribusiness, which is a company of C. Brewer. HIATT: Okay. And did you do so on the understanding that the camp lots would be recognized as pre-existing lots? JERE HENDERSON: Ycs. HIATT: Now, how did you get that understanding? Did you work with the broker on the purchase`? JERE HENDERSON: Well, we had, Hank Correa was our broker, and we gathered information liom Hank, and Peter. That's, that's how we got the information. HIATT: Did you ask Mr. Kubota to research the issue by looking at what had been done in the past'? JERF, HENDERSON: Yes, we did. WATT: And did he find the ten previous subdivisions? 42 JERE HENDERSON: Well, I guess it was the basis of the decision that we would be allowed the camp lots as parcel of records. WATT: And did he also find the three previous Corporation Counsel decisions? JERE HENDERSON: Yes. WATT: Okay. And what are your, what are you, what did you offer to do for existing farmers on that land if these 224 lots are approved? JERE HENDERSON: We offered the sale parcels for farming and finance the parcels for them. WATT: What discount were you going to give to them? JERE HENDERSON: We're going to discount around 15% of the, what we consider market value. 1SHAD0: You know, Mr. Chairman, we had, we had objected to this line of questioning by Mr. Kubota. HIATT: Well ISHADO: The same objection, Mr. Chairman. HIATT: Can 1 come back? FOX: Yes, Mr. Hiatt. WATT: Following that objection, Mr. Ishado asked Mr. Kubota what he told Mr. Yuen; and I believe that this what was conveyed to Mr. Yuen. And, in any case, it is important, at least our commitments which the Board can hold my clients to what they're willing to do for fanners in that area. And you got the President of this company who has been trying to make those commitments. I think it's relevant in terms of use. ISHADO: Mr. Chairman, again, it's the same objection. We're talking about something that's Well, first of all, it's not on the record. It's something that's really is irrelevant to this proceeding. We're talking about something, which they may or may not, you know, live up to. FOX: Mr. [shado, your objection is sustained. One thing I'd like to remind here is that we're looking at whether there is an existing law, whether it was broken, or whether the Department was arbitrary in its decision. We need to stay in - . 43 HIATT: Stay FOX: In that kind of area, please. HIATT: Okay. Okay. [n terms of what you're asking for this Board to do, you're asking for this Board to reverse the decision of the Planning Director, is that correct? JERE HENDERSON: That's correct. HIATT: Okay. And is your first choice to have to pursue some kind of a claim for damages or to actually develop the land and, in line with your plans? JERE HENDERSON: No, absolutely not. We prefer to develop the land and sell the parcels. HIATT: Okay. All right. Nothing further. Thank you. FOX: Mr.Ishado? ISHADO: Yes, thank you, Mr. Chairman. Mr. Henderson, just a couple of quick questions. You mentioned a commitment to purchase before the Director made a decision in this case? JERE HENDERSON: Yes, sir. ISHADO: And this commitment was by way of a written contract? JERE HENDERSON: Yes, sir. ISHADO: And the written contract had been signed prior to any decision being made as to the camp lots? JERE HENDERSON: We made three different purchases; and I'm not exactly sure on the dates if all three of them were done by that time. But 1 know by the first one, it was before that time. ISHADO: A contract was signed'? JERE HENDERSON: Yes. ISHADO: And there was no provision For any kind of adjustment in that contract? 44 JERE HENDERSON: No. ISHADO: No provision for any type of cancellation if you could not get the recognition of the camp lots? JERE HENDERSON: In, 1 don't think so. I'm, I'm not completely sure, but I don't think so. ISHADO: And at the time you entered into the contract, had Mr. Kubota made contact with the Planning Department by that time? JERE HENDERSON: What date and time are we're talking about? ISHADO: By the time you had entered into the contracts for, let's say, the ftrst purchase. JERE HENDERSON: Well, we, we were talking mostly with Hank Correa, who's the real estate broker here in a couple of occasions. Listen, when we were looking at the property, 1 said it before we signed the contract, Hank had talked to the Planning Department at that time. And there was, while nobody knew what we could do, the sentiment was in favor of, I mean, appeared to be that it looked like that we were, should be allowed the camp lots because it had been done in the past. ISHADO: Mr. Henderson, at the time you entered into the contract, you did not have a decision by the Director, a written decision, is that correct? I'm trying to get the dates straight. WATT: Just to move things along, we'll stipulate that there wasn't a written decision at the time the contract was entered. ISHADO: At the time you'd entered into the written contract, you had mentioned that your attorney had done research which seemed to indicate that you'd be allowed to, to have these 224 pre-existing lots? JERE HENDERSON: The opinion of my attorney was that we should be allowed, not that, not that we detinitely would. He said you should be allowed the camp lots, because it has been done in the past. ISHADO: And, at that time, at that time the attorney had based his research on, I guess, by looking at some books, looking at different research materials? WATT: I'm going to object. That calls for speculation of what counsel did and is not for this witness. 45 FOX: Sustained. [SHADO: Let me try and clarify that, Mr. Henderson. At the time your attorney gave you this opinion that you would be allowed to have these 224 lots recognized as pre-existing, do you know whether the attorney had talked to the Planning Director by that time? JERE HENDERSON: 1 don't remember exactly whether he talked to him by that time. I just don't know. [don't know exactly when the attorney talked with the Planning Director. ISHADO: You don't know whether the attorney's opinion was based on any contact with the Planning Department? HIATT: Objection. It has been asked and answered. ISHADO: Let me clarify. Mr. Henderson, at the time the attorney gave you his opinion that you would be allowed to, to have 224 lots recognized under the, as pre- existing lots, it is your testimony that you don't know whether this attorney based his opinion of conversations with the Planning Department? JERE HENDERSON: I don't know what my attorney based his opinion on, other than what he told us that he had, that we should be allowed the camp lots because the Hamakua Housing Authority had; and it hadn't been done since then, but we should be allowed. ISHADO: Okay. Mr. Chairman, thank you. I have no further questions. FOX: Mr. Hiatt? HIATT: Thank you. I have nothing further for this witness. FOX: Does the Board have any questions of Mr. Henderson? Wait a minute, Mr. Henderson. We have to see if any of us guys want to say something. HIATT: He'd love to tell you about those fanners. FOX: No questions from the Board. I think you're excused. Mr. Hiatt, your next witness. HIATT: Thank you very much. Very briefly, Mr. Cheplic. NAKANO: Do you swear that the testimony you're about to present before the Board of Appeals is the truth? 46 CHEPLIC: Yes. NAKANO: Thank you. HIATT: Thank you coming down today, Mr. Cheplic. Could you state your full name for the record? CHEPLIC: Edward Thomas Cheplic. HIATT: And arc you employed at the Planning Department? CHEPLIC: I am. HIATT: And what's your current position there, sir? CHEPLIC: Planner N. HIATT: Planner IV. And how long have you been working there, Mr. Cheplic? CHEPLIC: Approximately 25 years. HIATT: Okay. And now we haven't ever met before, is that correct? CHEPLIC: That's correct. WATT: And we haven't had any discussion about what your testimony might be, correct? CHEPLIC: That's correct. HIATT: So, 1, [wanted to ask you a few things; and I apologize if I jump around a little bit. About how long were you at the Planning Department before Mr. Yuen became Director? CHEPLIC: He's there about l I months, so 24 years. HIATT: Okay. And did you agree that the Planning Department's rules should be interpreted consistently for applicants`? CHEPLIC: 1 would like to think so. HIATT: And fairly? 47 CHEPLIC: Yes. HIATT: Have there been some changes in interpretations since Mr. Yuen became Director? ISHADO: Objection, it's vague. I'm not sure what he's talking about. HIATT: In terms of subdivisions. FOX: Just a minute. Your objections is sustained. Please try to be more specific. HIATT: Have there been changes in interpretation ofpre-existing subdivisions since Mr. Yuen became Director? CHEPLIC: Well, as Mr. Yuen pointed out earlier, this issue or this question had not been asked before. HIATT: Okay. 13ut pre-existing subdivisions had been approved before? CHEPLIC: That's correct. HIATT: And at least ten times, correct? CHEPLIC: Numerous times. HIATT: Okay. And there was not a restriction or a condition based on these approvals that, for example, the party seeking approval be anon-profit corporation? That wasn't made a condition of those approvals that it be a non-profit corporation, correct? CHEPLIC: If you're talking about Hamakua camps HIATT: Yes. CHEPLIC: At that time, I was, I was transferred to another section of the office, and I did not work on the Hamakua camps. HIATT: Okay. I,et me see if I can, and I realize that it has been a while. This is 1995, but let me see if [can refresh your recollection in a minute. I'm going to, turning you to the Exhibit 17, which is one of the letters dated March 3rd, 1995. Let me wait for you to get your glasses out. Okay. Now this is one of the letters which dealt with the determination ofpre-existing lots of the Paauhau Camp, for example, is that correct? 48 CHEPLIC: That's correct. HIATT: And iYs dated March 3rd, 1995, correct? CHEPLIC: Correct. WATT: Are those your initials at the bottom, "ECam"? CHEPLIC: "EC is my initials. WATT: Okay. So that would indicate that you had some role in drafting and reviewing that letter, would it not? CHEPLIC: To some extent. But you've got to remember a lot of these letters are boilerplate letters. WATT: Yes. CHEPLIC: And other people fill them in. HIATT: I understand, and [accept that. But the same initials, EC, are in Exhibit 18, correct? CHEPLIC: That's correct. WATT: And Exhibit 19, correct? CHEPLIC: That's correct. HIATT: And Exhibit 2Q correct? CHEPLIC: ThaYs correct. WATT: And Exhibit 21, correct? CHEPLIC: ThaYs correct. WATT: So there are four letters dealing with these approvals of pre- existing lots which were either prepared or had input from you? CHEPLIC: Possibly. HIATT: And in those, the only reason given for the approval is that they pre-existed the first County wide subdivision ordinance of November 22°d, 1944? 49 ISHADO: Mr. Chairman, you know, I state an objection. I think the letters can speak for themselves. FOX: You're overruled. HIATT: The only reason given for approval in each of those letters was that the subdivision pre-existed the subdivision ordinance of November 22"d, 1944, correct? CHEPLIC: In this specific case, yes. HIATT: Okay. Now Mr. Yuen in his opening statement expressed some concern that I gather was directed at whether this might happen again. To your knowledge, as an employee of the Planning Department, there are no other applications for recognition ofpre-existing subdivisions that are in the Shute right now, are there, besides these three? CHEPLIC: I'm sorry, can you clarify that? HIATT: Yeah, there's no other person who has applied for recognition of subdivisions that pre-existed 1944 for plantation lots'? No, no other such application is, right now, pending before the Planning Department to your knowledge, isn't that correct? CHEPLIC: I cannot answer that question. HIATT: Okay. Let's ask it this way. Do you know of any which are? CHEPLIC: No. Off the top of my head, no. HIA"f'1': Okay. Now you know Mr. Correa, correct? CHEPLIC: Hank Correa? HIATT: Ycs. CHEPLIC: I'm, I've worked with him, yes. HIATT: Known him for some years? CHEPLIC: Yeah. HIATT: Okay. You recall a telephone conversation from, a telephone call from Mr. Correa when he was on these lots asking about these pre-existing subdivisions? CHEPLIC: Not specifically. 50 HIATT: Okay. But do you remember him asking about that topic with you at that time that these transactions were pending? CHEPLIC: Not specifically. HIATT: Okay. Do you remember telling him that the, such subdivisions had been approved in the past? CHEPLIC: No, not in this specific case. HIATT: Okay. Do you recall having had any conversation with him about that at all? CHEPLIC: I do vaguely. And what I normally tell all the people dealing with the Planning Department, submit and see what happens. HIATT: Okay. But you don't remember specifically what you told Mr. Cheplio, I'm sorry, what you told Mr. Correa? CHEPLIC: Not specifically. WATT: Okay. Now in terms of this practice or alleged rule that existed with respect to pre-existing subdivisions, did Mr. Yuen ever discuss with the senior members of his staff changing that interpretation to your knowledge, before he changed it? CHEPL[C: I, again, the issue in this specific case was the first time the question was raised. WATT: Okay. Did he ever discuss changing the rule, though, with you before it came up? CHEPLIC: Not to my knowledge. WATT: Okay. Did he ever prepare, say, a draft of an ordinance, an amendment to the ordinances to change this rule? CHEPLIC: Not to my knowledge. WATT: Okay. And you don't recall any staff meetings discussing that topic, whether it, there needed to be a new law or to change this rule? CHEPLIC: I don't recall. 51 WATT: Okay. All right. Thank you, Mr. Cheplic. I have nothing further. FOX: Mr.Ishado? ISHADO: Thank you, Mr. Chairman. Mr. Cheplic, I'll be as a brief as I can. It's your understanding that the three camps in question were abandoned 20 to 50 years ago, is that correct? CHEPLIC: I'm not quite sure on the dates. ISHADO: They were no longer in existence? CHEPLIC: Yes. ISHADO: And has the Planning Department, to the best of your knowledge, ever recognized pre-existing lots for plantation camps which are no longer in existence? CHEPLIC: Not to my knowledge. ISHADO: No further questions. Thank you, Mr. Chairman. FOX: Mr. Hiatt? HIATT: Nothing further. FOX: Members of the Board? Mr. Easley? EASLEY: I do. Please just help me clarify. Maybe I'm asking a question that, I'm missing something here. Exhibits, Mr. Hiatt, if you could show them to Mr. Cheplic. HIATT: Sure, tell us which ones. EASLEY: It's 17, l8, I'll use those, through 19. Are these sites that have to do with Hamakua Housing? CHEPLIC: Yes. EASLEY: They do? CHEPLIC: Yes. 52 EASLEY: Then I have some other questions to ask you. Sorry, if it's an uncomfortable position you're in. When you were with Planning Director Virginia Goldstein,l see very clearly in these letters, exhibits, I'll use 17 because they're very similar, in 17, where you were working for Virginia, you approved as pre-existing subdivisions? CHEPLIC: Can I clarify something? EASLEY: Let me ask my question first. Yet, currently, in the case we're looking at, it has been turned down. Fd just like your opinion how they differ. And then if you want to say something else, go right ahead. CHEPLIC: Number 1, I don't have approval authorization. EASLEY: I understand that. Pm asking your opinion, how these two cases, in your opinion, differ. l'm trying to understand it. CHEPLIC: The fact that supposedly in the Hamakua Camps the lots had existing dwellings on them. And, in this case, there, the camps have been demolished. EASLEY: Do you have any other reasoning that you could assume? CHEPLIC: No. EASLEY: Thank you. FOX: Any othcr questions of the witness? HIATT: I have a follow-up. FOX: Yes. HIATT: You understand basically that you were here all morning while the rest of the evidence came in, correct, Mr. Cheplic? CHEPLIC: Yes. HIATT: And you don't dispute the fact that for these applications, I mean, for the Hainakua applications, including Paauhau, there were many lots which were vacant at the time the application was approved? CHEPLIC: I rcalizc that now. 53 HIATT: So based on that, there's not really any distinction that you can think of in response to Mr. Easley's question between that case and this case, correct? ISHADO: Objection, it has already been asked by Mr. Easley, and he did give an answer to that question by Mr. Easley. FOX: [t's sustained. HIATT: Sustained means you don't have to answer, so you'll al] pau, Mr. Cheplic. Thank you very much. CHEPLIC: Okay. Thank you. ISHADO: Thank you very much, Mr. Cheplic. FOX: Mr. Hiatt, another witness. HIATT: Thanks very much. Our next witness would be Mr. Correa, also, very brief. NAKANO: Mr. Correa. Do you swear that the testimony that you're about to present before the Board of Appeals is the truth? CORREA: Yes. NAKANO: Thank you very much. HIATT: Mr. Correa, could you state your full name for the record. CORREA: Henry Correa. WATT: Are you a licensed real estate broker in Hawaii, sir? CORREA: Yes, I am. HIATT: Did you represent Continental Pacific, LLC on these purchases`? CORREA: Yes. WATT: Do you know Mr. Cheplic? CORREA: Yes, well. WATT: How long have you known him? 54 CORREA: About nine, ten years. HIATT: A moment ago Mr. Cheplic testified that he didn't recall conversations with you. Did you have a cell phone conversation with him at the purchase stage for these properties? CORREA: Yes, 1 did. [was at one of the sites with Jere Henderson. HIATT: Okay. And in that call, did he tell you whether previous subdivisions like these had been approved by the Planning Director? CORREA: Yeah, that there was some camps that had been recognized under the Hamakua Housing. HIATT: Did you tell that to the buyers'? CORREA: Yes. HIATT: Did they rely on that in making their purchase? CORREA: Yes, they did. ISHADO: Objection. That calls for speculation and, basically, you're asking Mr. Correa to read what is in their mind. FOX: Yeah, that's sustained. HIATT: Did they tell you they were going to rely on that in making their purchase`? CORREA: Yeah, that was an integral part of, of the decision. ISHADO: I'm sorry, same objection. l think he's trying to read, if he can state what, what they stated to him, that's fine. But to say that it was a part of the decision, it infers that Mr. Correa can read what's in their mind. FOX: That's overruled. HIATT: Okay. And you've answered the question. And thank you very much. I have nothing further. FOX: Mr.Ishado? 55 ISHADO: Mr. Correa, can I, let me ask you a few questions. Basically, Mr. Correa, when you had this conversation with Mr. Cheplic, did you Yell him that you were standing in the middle of a vacant property? CORREA: I, I think, I think the question came up because I was with Mr. Henderson as well as a representative of C. Brewer, and we were at one of the camps in which it was mentioned that it was old Kaupakuea Camp, or whichever camp it was. And that prompted the call to [SHADO: So you told him it was, I'm song. I didn't mean to interrupt. CORREA: And I prompted the call. ISHADO: And you told him that this was an old camp? CORREA: Actually, John Cross was with us. He mentioned it was one of the old camps. FOX: Excuse me. Sharon, can you hear through that mike? NOMURA: Barely. FOX: Mr. Correa, would you put the mike a little closer. ISHADO: Did you tell Mr. Cheplic that the camp was abandoned? CORREA: No, 1 don't think I did. ISHADO: Mr. Con ea, I'm sorry, are you still representing Continental in any further development or CORREA: Yes, I am. ISHADO: So the property is, if the lots are approved, you'll be handling those sales as well? CORREA: Yes, I will be. ISHADO: I have no further questions. Thank you, Mr. Chairman. FOX: Mr. Hiatt? HIATT: One follow-up. Does the fact that you've been representing Continental bear on the substance of your testimony today 56 CORREA: Not at all. HIATT: Saying anything different than it what happened? CORREA: No, not at all. FOX: Mr.Ishado? ISHADO: No. Thank you. FOX: Does any member of the Board have any a question of Mr. Correa? HIATT: Thanks for your tune, sir. FOX: You may stand down. Mr. Hiatt, another witness. HIAT: Yes, we're just racing along happily. Our last witness would be Professor David Callies of the UH Law School. NAKANO: Dr. Callies, do you swear that the testimony you're about to present before the Board of Appeals is the truth? CALLIES: I do. NAKANO: Thank you. HIATT: Professor Callies, can you state your full name for the record. CALLIES: David Lee Callies. HIATT: And can you describe your position at the UH Law School. CALLIES: I'm the Benjamin A. Kudo Professor of Law at the University of Hawaii's Richardson's School of Law. HIATT: And what do you teach there? CALLIES: I teach real property, state and local government, land use, and writing seminars, and also seminar on takings. HIA'CT: Have you written any books on that real property? CALLIES: Yes, I have. I've written about , I'm on my I 1 rn ,the ones that are probably relevant here are casebook on land use, which is in its third edition. A case book on real property, which is in its first edition, Pronertv Law and the Public Interest. 57 A collection of, of chapters I edited on, on regulatory takings in 1994 for the American Bar Association, and again in 1996 for the American Bar Association. WATT: Okay. Have you written books particularly, well, let me go back. What's a casebook? CALLIES: Casebooks are basic legal text, the text books that students use in law school. HIATT: Okay. And arc your casebooks widely used across the country? CALLIES: Yes, they are. HIATT: Okay. And have you written books particular about Hawaiian land use issues? CALLIES: 1 have. I've, I've written two; one in 1984 and one 1994, I suppose that means one is due to come up again, regulatory taking. The other one is regulating paradise, and the otheris preserving paradise. HIATT: And regulating paradise the full title of that Re ating Paradise: Land Use Controls in Hawaii? CALLIES: Yes, thank you. WATT: And is the other one Preserving Paradise: Why Regulations Won't Work? CALLIES: Yes. HIATT: Okay. Have you regularly been qualified as an expert in legal matters before relating to use issues? CALLIES: Yes, I have. HIATT: Including the issues that are at stake in this case, equal protection due process taking issues? CALLIES: Taking issues, for sure. WATT: Okay. Did you review the record in this case and, to try to arrive at some opinions that could be helpful to the Board? CALLIES: Yes, I have. l've reviewed documents and exhibits and many of which you've seen as, as blow-ups. 58 HIATT: Okay. So you've seen the exhibits. You've seen both the County and Continental, correct? CALLIES: Yes. HIATT: And you've reviewed the briefs about County and Continental? CALLIES: Yes, I have. HIATT: Okay. Do you have some opinions which you are prepared to offer the Board? ISHADO: Mr. Chairman? HIATT: I'm not, I'm just asking if he has got opinions, then I'll ask him to qualify himself. This is the last question before that. So, do you have some opinions? CALLIES: Yes, I do. HIATT: Okay. Based on his background and experience, we would offer Professor Callies as an expert in the area of land use, due process, takings, and the issues that are before the Board. FOX: Mr.Ishado? ISHADO: Yes, Mr. Chairman. I'm not sure what the offer of proof is going to be. I respect that, you know, Mr. Callies is fairly quite knowledge in some areas. But as to whether it's proper for this Board to have someone testify as to what the law is, I don't think that's the case. So I'd like to hear an offer of proof from the appellant on this matter. FOX: Do you think we could have Mr. Callies do an offer here? HIATT: Yeah. Normally, that's done by Counsel, and I'll just run through the areas that he would testify about. And I'll briefly respond to Mr. Ishado's points. FOX: All right. HIATT: I realize this is the Board, but you're got great counsel there at your right hand side. And first let me talk about the standard for expert opinion testimony. In this state, and in others, generally an expert can opine on any matter which would assist a lay person in coming to a conclusion on the dispute in front of you. And it can be any 59 matter which is not generally known. So the factual and legal issues here are not generally known. And Professor Callies' testimony is offered to help you come to a conclusion, because he's a nationally recognized expert on land use issues. Second, the particular areas, an expert can also offer opinions on any question of fact or law including the ultimate issue to be decided by the panel, including the ultimate issue if that will be helpful. And your judgment goes Co the weight of his testimony. So he would offering opinions on the due process issue, the equal protection issue based on the facts of this case, and the taking issue based on the facts of this case. Basically, that is, as a matter of fact, whether these ten Hamakua Housing Corporation approvals are different tactually under the law from the ones that are in front of you now, that's what he'll be offering opinions on. FOX: Mr. Ishado, do you have comments? ISHADO: Yes, Mr. Chairman. I would object to this line of questioning. I think it's highly improper that we have an expert testify as to what the law is I believe, in this case, where the Board has its own counsel and, you know, basically the law is determined by the Courts. And, you know, the cases can be cited, can be argued by the attorneys. But for a person to come here and, with all due respect to Professor Callies, come here and tell, tell, or testify and explain to the Board what the law is or what the law should be, I think is improper. I think the law is a matter for the, for the, basically this Board to decide. And, you know, I can give my opinion, but I'm not testifying today as to what the law is or should be. FOX: Mr. Ishado, your objection is overruled. HIATT: Thank you. Professor Callies, let's go through these opinions. I think we can do it before the lunch break. What's your first opinion, and you've heard all the testimony here this morning, correct? CALLIES: Yes, I have. HIATT: So with that as background, what's your first opinion with respect to the equal protection issues in this case? ISHADO: Excuse me, Mr. Chairman, just, just for a point, if I could have, state my objection to the entire line of questioning without having to repeat it. HIATT: I'll stipulate that you've got a continuing objection, Mr. Ishado. 60 ISHADO: Thank you. FOX: That's fine. HIATT: And I'm addressing this question to the facts, to the fact of the difference between these applications, the Hamakua Housing applications, and the previous Corp. Counsel opinions. On the basis of those facts, are these two applicants, is this applicant being treated consistently with prior applicants? CALLIES: No. He's really not being treated the same way, but being treated differently, given that both of the applications for approval were residential, both involve some vacant lots, both involve resale and, and again the main thing is that both are, in fact, residential. They are not being treated the same with respect to the use of land, which is the key. And not treating these, these two applications the same amounts to a, a denial of equal protection of the laws for Continental, in my opinion. HIATT: And what's the derivation of this equal protection of the law concept? Can you just explain that briefly, quickly? CALLIES: The Constitution requires that all parties be treated equally unless there is a, a sound reason for treating them separately. This is the reasonable basis test. If we had a suspect class or some kind of discrimination, then we would have a different test to apply. The reasonable basis testis, is the broadest. And under that test, the, the County needs to show that there is a, a rational land use based distinction between the treatment of these two applications. From what 1 read, from what I've heard, I don't find such a distinction. Again, I find this to be a violation of the equal protection rights of Continental. HIATT: Have you found any case which makes a distinction based on whether the developer and seller of subdivided lands is anon-profit corporation versus a for-profit corporation? CALLIES: No, 1 have not. HIATT: Okay. No case? No U.S. Constitutional cases made that distinction? CALLIES: No, I have not. kiIATT: Okay. Any State of Hawaii cases made that distinction'? CALLIES: I found no such case. HIATT: What's your second opinion with respect to equal protection? 61 CALLIES: Well, it, it builds on, on the first to some extent, since there is no such distinction. And since Courts have held in other situations when governmental agencies attempt to make such a distinction based on the quality of ownership, i.e., public versus private, the Courts have uniformly held that that is not a proper distinction between, to make between parties who are making such an application. It is, it is theoretically possible to make a distinction between blatantly and obviously commercial enterprises and residential enterprises; but these are both residential enterprises. One happens to be by the Hamakua Corporation, the other happens to be by Continental; but they are both residential. And, and the fact that, that one is for a, a different residential purpose doesn't affect the use of land. The land, the land is, is being used the same way in both instances for residential purposes or proposed to be used in this instance for residential purposes. And so it's a distinction without a difference. HIATT: Okay. And that means that for equal protection purposes, there's not a reasonable basis for the distinction which the Planning Director has made in this case? CALLIES: That's my opinion. WATT: Okay. Can you tell us about the College Area case which was, I think, cited by the Planning Director, the College Area Renters & Landlord Association v. City of San Diego. Do you have your notes on that? CALLIES: Actually, I'd, is that, let me do a quick refresher on that. Was that one he cited? I think that was H[ATT: Yeah. Those occupants in a single family home. CALLIES: That was, that was one that I looked up. The, the California Court had before it a situation in which an attempt was made by, by a city to distinguish between renter occupants and owner occupants of, of housing for the purposes of limiting the number of occupants per dwelling unit. The rational basis which alleged to be that there would be increased parking problems, traffic problems, and so forth with respect to renters, the Court said that people who owned and people who rented could be equally hard on existing facilities and roads and so forth and said the distinction was one that they could not accept under the equal protection clause. And so they held that was a denial of equal protection to concentrate on one group rather than the other. HIATT: And the last opinion, is there a due process issue here as well? CALLIES: Well, I believe there is. It's, it's related to the equal protection issue, and the facts that lead to a, a substitute due process issue are largely the svne. Substitute due process is, again, a constitutional issue, protected by the 14"' Amendment 62 to the U.S. Constitution. And, basically, a government agency is under a duty to actin a non-arbritary, not capricious, and not unreasonable fashion. Since, again I, I don't see the land use rational basis for the distinction, I would conclude that there's a denial of substitute due process as well. HIATT: And finally, did you review, did you review the brief that Mr. Ishado had tiled on the taking issue? CALLIES: Yes, 1 did. HIATT: Did you agree with the case with what he said about the cases on taking? CALLIES: I really can't. And I, you know, first of all, am the first to admit that this is a difficult area. And, and I've been sort of dealing with it since 1971, which is I guess about 30 years; and it's not an easy one to come up with. But I think that a fair reading of the brief would lead anyone reading it to conclude that in order for there to he a taking by regulation - in other words, a taking of, of all interest, of interest in properties sufficient so that a taking would result in the need for injunctive relief and compensation from the government should, say, be found to have taken the land by regulation as opposed to taking it by eminent domain, physical taking -that the property owner would have to be deprived of all economically beneficial use of the property. In other words, that there's no use left in it. With respect, that's not true. There is a U.S. Supreme Court case that says in the event that a land use regulation takes all economically beneficial use from property, it is a taking. And it doesn't make any difference what government thought or could have thought, it's a taking and compensation is payable. There is also a branch which, which, I think may have been glossed over in the brief somewhat, with respect, called the break, a partial taking. And the standard for that is, is somewhat different. Then the Court balances what the government has in mind with respect to its regulation against the distinct investment backed expectations of the landowner and decides whether a, a decrease in value, and there the Court speaks in value, is sufficiently great that there was a taking. But they are, they are two different items. It is not necessary for a landowner to show that all economically beneficial use is gone, or that there is no use of the property, to raise the regulatory takings claim. A facia] making of that claim is sufficient if the property owner can show that there has been a devaluation. HIATT: And that's a fact question in each case? 63 CALLIES: That's a fact, it's a very sensitive, fact sensitive question as the Supreme Court of the United States said in 1978 in Penn Central Transportation Company versus the City of New York, very fact sensitive. WATT: Okay. Thank you, Professor Callies. Is there something else that you wanted to add that I forgot to ask you? CALLIES: Not offhand that I can think of. [SHADO: Objection, Mr. Chairman. FOX: That's sustained. WATT: I'm done. FOX: Mr.Ishado? [SHADO: Thank you, Mr. Chairman. Mr. Callies, you're here as a witness on behalf of the appellant in this matter? CALLIES: Yes, I am. ISHADO: And you're not here in your role as a professor of law at the University of Hawaii`? CALLIES: I don't render opinions that I don't agree with, but that's accurate. I'm not here as a, as a representative of the University. I don't quite know how I would divorce myself from being a professor of law, but ISHADO: Okay. Professor, in, in your, you, I guess there was testimony to the effect that you've been qualified as an expert in other matters? CALLIES: I have, I have testified in, yes, yes, that's accurate. ISHADO: And these are court cases? CALLIES: Some didn't go to court, some did. ISHADO: Okay. And in those cases, you, basically you were paid for your services, is that correct? CALLIES: I don't undertake work for the private sector for free, that's accurate. 64 ISHADO: And you've been paid for your time today? CALLIES: Yes, I am. ISHADO: And I think already you had testified that regarding the approved, the matter of equal protections on the County to show rational basis? CALL[ES: What I said was, what I thought I said was that once a threshold case has been made that there is a distinction, then it's up to the County to show, and that they, then it's up to the County to show that that distinction is rational, the rational basis standard. ISHADO: Professor, I'm going to ask you to refer to page 9 of my memorandum. CALLIES: Got it. ISHADO: And, basically, it's the position of the County that the Appellant, or the party changing the, challenging the constitutionality of aclassification hasn't been approved. You will disagree with that statement? CALLIES: I guess, let me, let me modify that. Its switches back and forth with sufficient regularity that it's kind of hard to say. If it is true that the party attacking it must make a, a facial showing that there, that there is no rational basis, and then it's up to the County to respond and show that there is one. If I misstated that, I apologize. I am, for better or for worse, not a litigator. ISHADO: And if you would read, you know, further down on the page, the statement discrimination between classes not per se objectionable, so long as any state of facts can be conceived. CALLIF,S: I think you'll find that land use cases don't quite go so far as any state of facts can reasonably can be conceived. That is, as a general statement, off a statement that's repeated, no, [don't entirely a~ee with it. ISHADO: This is a statement taken out of the case of Sandy Defense, Sandy Beach Defense Fund. Arc you familiar with that case, sir? CALLIES: The Hawaii Supreme Court case? ISHADO: Yes. CALLIES: Yes. ISHADO: You would disagree with that, with that statement? 65 CALLIES: I would disagree with that statement to the extent that it says, "ate state of facts," if you mean a state of facts that goes beyond land use matters. ISHADO: Okay. CALLIES: Yes, it would have to be in the context of a land use difference. ISHADO: Okay. Then I refer you to page 10 where it says, where I cite the case Gardens at West Maui v. County of Maui, "Discrimination is not unconstitutional if there is a~ reasonable basis for such classification and there is a violation of equal protection only if it is totally arbitrary or capricious." CALLIES: Yes, I see that statement. ISHADO: You would disagree with that statement, sir? CALLIES: I would simply observe that it's taken out of context. The language before that says in analyzing tax classification under legal protection is not a land use case. ISHADO: Okay. And if we could go to the next case, cited on page l0, the Town of Huntington v. Park Shore Country Day. CALLIES: Yes, I have that as well. ISHADO: There the Court upheld a zoning ordinance and allowed private, non-profit clubs, but not commercial enterprises, to operate tennis, tennis courts. CALLIES: Yes. ISHADO: And the Court basically stated that there is a distinction between commercial enterprises and non-profit groups. Would you disagree with that? CALLIES: Within the context of the statement, I would agree with it. However, that's not quite what the Court held. The Court was, was distinguishing between commercial operations and non-commercial operations. And both of these operations are, are non-commercial. They are residential. In fact, the Court goes on to say as you quote or as you paraphrase, "The Court noted that a commercial venture's understandable goal of maximizing earnings poses the threat of more crowds, noise, traffic and other disruptive factors." [ can't, for the life of me, see how what is being proposed by, by Continental would be more crowded and, and more noise and more traffic than the high density in the Hamakua camps. 66 ISHADO: And, sir, if you could change to, turn to page, page ] 1. The case involving Herrick and Irish, I'll tell you that this is a non-land use case. It involves certification of court reporters. But, basically, the Court here says that, "A party alleging a violation of substantive due process must prove that the government's action was clearly arbitrary and unreasonable." Would you disagree with that statement? CALLIES: I really, ['m not really sure about that statement. I guess I would have to say again that ifit's anon-land use case, I'd have to stick with, with the rational basis or reason having to do with the use of the land. ISHADO: Sir, you had, you had stated earlier that the, it's your opinion that, well, if you, if you look at the bottom of page 1 1 CALLIES: Yes. ISHADO: We cite the Public Access Shoreline Hawaii (PASH) case. CALLIES: Yes. ISHADO: And in that case, the Court basically held that to prove a taking of a property right, the appellant must show it has been denied all economically beneficial use. CALLIES: Yes. ISHADO: And you would disagree with that statement? CALLIES: One hundred percent or, I guess whatever, whatever it will be, 180% from the Holding and Lucas, which is a U.S. Supreme Court case in 1992. There are two kinds of takings. One again, once again, the per se taking in Lucas where you have to show all economically beneficial use has been taken off the land, and there are the partial takings under Penn Central Transportation Company vs. City of New York, which the Lucas case cites in footnotes and makes crystal clear that that's the case to be used for partial takings, you're certainly accurate. And the Court is accurate with respect to total takings. But, there arc other than total takings. And, if I remember correctly, and this is a bit of a stretch for me because I have not read that part of PASH in some time, I believe that what the, the hotel corporation was claiming in that case that it was a total taking. And so the Court had no reason to address whether it was a claiming of partial taking or not. ISHADO: And, Professor, in distinguishing land use, have you run across a common distinction allowing continuation ofnon-conforming use? CALLIES: Could you clarify that for me? 67 ISHADO: Based on your experience, one distinction between the two cases would be the allowing the continuation ofnon-conforming use. CALLIES: Well, I couldn't say, but 1've certainly taught non-conforming uses for close to 32 years. ISHADO: And have the Courts distinguished the continuation of a non- conforming use versus a use that has been abandoned? HIATT: I object to the relevance on these ISHADO: Well, Mr. Chairman-. FOX: I'll sustain that objection. [SHADO: Mr. Chairman, if, if I may rephrase that question. FOX: Are we challenging his opinion here? ISHADO: Well, you know, he had, he had testified, I'm going to be asking questions about his statement earlier that he sees no difference between the appellant in this case and the Hamakua Housing Corporation. And it's on that basis that he is giving an opinion that there is a denial of equal protection. And I'm trying to cross-examine the witness whether there are any distinctions between the two. FOX: Proceed. ISHADO: Mr. Collies, the camps in this case in the three camps that are, that are owned by the appellants, you've heard testimony that these camps have been abandoned? CALLIES: I have heard testimony that there aren't any houses on them. ISHADO: And they were abandoned something like 20 years ago? CALLIES: That there haven't been any houses on them in, in some cases I gather for that period of time. But I have to go and have the record read back to me in terms of 20 years; but for the sake of argument, sure. ISHADO: And isn't it a distinction of, a common distinction of land use cases that, where you have anon-conforming use, the use will be allowed; but if it's abandoned, it will no longer be allowed? HIATT: Objection, relevance to this 68 ISHADO: Well, when we're talking about it, you know, basically a camp site that's no longer FOX: You're overruled on that objection. CALLIES: Yeah, I don't find the distinction relevant. The law of non- conforming uses is primarily statutory or ordinance. And particularly with respect to a, a division of land, which, which predates a subdivision ordinance, which I understand to be the case here, one would normally assume that other things being equal, a subdivision is a subdivision. As I expect, you know, counsels, it's almost impossible to abandon the subdivision no matter how long it lies, lies unused. There are Florida cases by the dozens so holding. ISHADO: As I understand your testimony, Professor, that you do not see a distinction between a rational basis for distinguishing between Hamakua Housing Corporation and the appellant in this case? CALLIES: It's a little broad. I don't see any distinction based on the use of land, which is the rclevant, which is the relevant question here. ISHADO: And the fact that one camp was in use and the other camp was abandoned, that is not sufficient in your opinion? CALLIES: No, sir. ISHADO: The fact that one is providing housing to employees about to be evicted and one is vacant, that is not sufficient enough? CALLIES: With respect, emphatically not. ISHADO: Do you understand what the purpose of the plantation subdivision law was? CALLIES: The plantation subdivision law, I'm not quite sure of the relevance here since as I understand it, we're dealing with, with a, a more or less common law situation with respect to the previous use in the application of the County Subdivision regulations. [SHADO: Sir, can you answer the question? CALLIES: Please repeat it for me, please. ISHADO: Do you understand what the basis for the plantation subdivision law was. 69 HIATT: I'm going to object on relevance, because that law was not used as a basis for any of the other, object on relevance, that law was not used as a basis for any of the other approvals or for this denial. ISHADO: It was cited as a basis for denial in this case. FOX: I'll sustain it. ISHADO: There's a fact that, you understand that the appellant in this case is attempting to seek recognition of 224 camp lots? CALLIES: Yes. ISHADO: And you understand that the appellant in this case intends to then consolidate those camp lots with a larger parcel containing 4,000 acres or so, and reconsolidating, consolidating these two lots, resubdivide those lots? CALLIES: It may very well be, it doesn't affect my opinion. ISHADO: And that is not a sufficient basis of your opinion? CALLIES: It's not what's before this group. It's not what, with respect to the zoning board and with respect to the Director of Planning whom I've known for many years. I don't see the relevance. ISHADO: So your answer is no, that is not a sufficient rational basis? CALLIES: That's correct. ISHADO: I have no further questions. Thank you, Mr. Callies. FOX: Mr. Hiatt? HIATT: Nothing further. FOX: Any member of the Board have questions? Okay. We will recess. Be back here at 2:00. And was there someone in the public that wanted to make a WILLIAMS: Yes. FOX: Did you fill out a form? 70 WILLIAMS: No. FOX: Will you do that, and we'll get to you when you come back this afternoon. HIAT'f: For the record, that was our final witness. The Appellant rests. FOX: Thank you. We'll put the County on when we come back. [SHADO: Thank you. RECESSED The Chair called a recess at 12:40 p.m. RECONVENED The meeting reconvened at 2:00 p.m. FOX: The meeting will now reconvene. Mr. Williams? WILLIAMS: Thank you. Actually, I think you can hear me so well. FOX: Would you take, go over there and get the microphone. WILLIAMS: Can you hear? FOX: Yes. WILLIAMS: Bob Williams. 1 farm nine acres of macadamia nuts, makai of the inauka portion of the Henderson project. I'm a retired educator. And I try to make a living on that nine acres, and a pension, and it's real hard to do, I have to say that. So, I came here today from Pepeekeo. Actually many of us in the rural Pepeekeo, rural South Hilo area have been talking about this. It has been a buzz. We really haven't heard anything about it firsthand, so I went to the Planning Department. Since I retired two months ago, 1 had the opportunity actually to go down and open the file and read about it a little bit. And came back and on short notice, actually I just came back and said l would at least journey over here, and there were many of us who wanted to journey over here and make public testimony on Chis. But it turns out that this is really noC all as we expected it to be. It turns out this is much more of a legalistic adventure than we ever anticipated. I would say this though that, first of all, the testimony by Professor Callies was fairly ingenious we thought, 1 think I thought, he thought. We discussed that. He didn't say how the addition of these lots could make much of a difference in density. [think maybe he's a nerd to all of that having lived in Honolulu all these years. Believe me, the addition of a couple of hundred lots coming out on the Belt Highway at Pepeekeo makes a tremendous difference and ditto of what comes out of the makai section as well. 71 But the real issue, I guess the big issue we have to say apart from all this, because much of this is subjective. Much of this is discretionary as 1 see it. There's a lot of legal, there's a lot of legal nuances here. I don't if this will wind up in the Supreme Court or what. But the common sense of all this would seem to suggest to me, at least, that what's going on with a plantation faun mauka and makai that have been plantation in, in crop production. Currently Pono Von Holt has got a very viable operation going on mauka on that piece. His cattle operation, and he'd like to be here to testify, but he's in a difficult position, because he's really tenant. But, it's a viable operation for him. IC seems like our fundamental economy here is agricu]ture and tourism. And it seems to me that any time we proliferate these kinds of subdivisions and the numbers discussed here, we're essentially putting one more nail in the coffin of agriculture and tourism. It becomes very difficult as fanners for us to compete with spec ag lands, spec ag land prices. To buy a 20-acre lot for $225,000 staggers the imagination to think that we can exceed, produce anything agriculturally with that underlying price of land. So as this Board exercises its discretionary authority, I would just like to implore you to consider seriously what the Planning Director says, because he is very focused on organized growth and, and the history of disorganized growth we've had else where on the Big Island over the years, such as Puna. This looks like to me just another Puna Subdivision done by a hui, only here perhaps more consequential, more input. I think that, correction, more effect. 1 think that, that big picture needs to be kept clear by this Board, because you really represent all of us. And we thank you for all your good work and suffering through these meetings time and time again. That's really all I have to say. FOX: Thank you very much. Mr. Wahler, would you have anything to add? WAHLER: I think he pretty well covered it. FOX: All right. Then I take it that no more public testimony. All right. Mr. Ishado, Mr. Yuen, it's your turn. ISHADO: Thank you, Mr. Chairman. At this time, I'd like to call Mr. Roy Takemoto. NAKANO: Mr. Takemoto, do you affirm that the testimony that you are about to present before the Board of Appeals is the truth? TAKEMOTO: [ do. NAKANO: Thank you. ISHADO: Can you state your name for the record? 72 TAKEMOTO: Roy Takemoto, presently Deputy Director of the Planning Department. ISHADO: County of Hawaii? TAKEMOTO: County of Hawaii. ISHADO: Mr. Takemoto, how long have you held that position`? TAKEMOTO: Since February. So not even a year yet. ISHADO: Well, what is your professional background? TAKEMOTO: I'm a planner with a law degree, as educational background. And prior to, to becoming deputy, you know, in private practice. One of my projects was being project manager for Hamakua Housing Corporation. ISHADO: And when were you the project manager, in what years? TAKEMOTO: From the date of the close down of the tnal harvest, so that was about October, 1995 to just before being deputy. ISHADO: And you're aware that Hamakua Sugar filed bankruptcy? TAKEMOTO: Yes, that's the reason why I came into the picture. Hamakua Sugar filed bankruptcy. Through going through the final harvest, the camps were at stake. Part of the bankruptcy settlement was to form anon-profit, which was Hamakua Housing to take over the plantation camps. ISHADO: And Hamakua Housing was formed then to administer the camps? TAKEMOTO: To administer it through the interim of the close down, where we had to set up a rental system to take over what Hamakua Sugar was doing. And for that interim period to start planning for the conveyance of the camps to the residents and former employees of Hamakua Sugar. ISHADO: So it was a transition group? TAKEMOTO: Yes. [SHADO: And there were ten camps in the Hamakua Sugar system? TAKEMOTO: Yes. 73 ISHADO: There was a prior testimony about the sale of lots and, in the camps. And with the ten camps involved, there were some vacant lots? TAKEMOTO: Yes, there were sprinkling vacant lots mixed among the existing house lots. ISHADO: And prior testimony by the appellant's counsel is that out of the approximately 446 lots, about 70 somewhat lots were vacant. Would that be your recollection? TAKEMOTO: That would be, 1 don't know the exact number, but that would on the higher side, if I recall. We conveyed 400 lots to existing residents. ISHADO: Four hundred lots out of 446? TAKEMOTO: Yeah, the number of vacant lots, yeah, I don't exactly. Paauhau had the predominate number. So if you take Paauhau out of the picture, and there were only like four, well, four, five in Ookala, there were several, well, there were classes of vacant lots. There were small lots that were, could he sold as house lots. There were lots that were intended to be conveyed to the community association, which was done as wimnon areas. And there were these large lots that were just left over, which the Board of Hamakua Housing is still deciding what they should do, whether to create low income housing or to give it to the community association. ISHADO: And if you could explain to the Board what was the mission or purpose of Hamakua Housing? TAKEMOTO: According to [SHADO: Objection on the grounds of relevance to this line of questioning. FOX: You're overruled. TAKEMOTO: According to the articles of incorporation for Hamakua Housing, the main purpose was to provide low income housing opportunities for the low income and former employees of Hamakua Sugar. In the Hamakua region So the target was Hamakua Sugar employees; and if that pool was satisfied, then to go to the Hamakua region. ISHADO: And so the purpose was to sell the lots to the employees? TAKEMOTO: Definitely, yes. ISHADO: And after that, the next preference was to sell to former employees? 74 TAKEMOTO: Yeah, the way it went in terms of priority was final harvest tirst, those, those employees who participated in the final harvest; and then former employees generally. And those Former employees generally they, there's a subclass of those who didn't own real estate in the County; and then those, then we put it to those who did. And then once that pool was satisfied, then we opened it generally. ISHADO: So after that pool was satisfied, then it was opened for sale to the public? TAKEMOTO: Ycs. ISHADO: And you mentioned that some of the lots were vacant but they were, I guess, community-type of lots, parks? TAKEMOTO: Yes. ISHADO: Roadways? TAKEMOTO: Oh, yeah, the roadway lots, those were pretty much undevelopable. So, again, those were clearly roadway lots. ISHADO: And some lots were odd in size or too small for houses? TAKEMOTO: Yeah, there was, but those are very few. There were instances where they, they came basically bus, school bus, places for the children to, to wait. ISHADO: Put up a little shelter? TAKEMOTO: Yeah, a little shelter, yes. ISHADO: Mr. Takemoto, you say you have a, you have a degree in planning? TAKEMOTO: Yes. ISHADO: And you also have a law degree? TAKEMOTO: Yes. ISHADO: That's very interesting. I didn't know that. But, you know, based on your experience as a planner, and I guess as a lawyer, there was some testimony earlier about whether there were any differences between Hamakua Housing Corporation, those camps, and the current situation by Continental. You see any differences? 75 WATT: Okay. I'm going to object to this point. Are you asking for opinion testimony from this witness? ISHADO: Yes. HIATT: Then can I voir dire on his expertise if he's offered as an expert? FOX: Go ahead. HIATT: Thank you. NAKANO: Mike, Jerry. Use the mike. HIATT: Thank you. I, I've got one. Mr. Takemoto, have you ever been qualified as an expert before? TAKEMOTO: No. HIATT: Have you ever testified as an expert before in any proceeding any place? TAKEMOTO: No. HIATT: And particularly in land use or constitutional issues, you've never been qualified as an expert or offered as an expert? TAKEMOTO: No. HIATT: First time you thought, you've ever been told that you might offer expert testimony is today? TAKEMOTO: Ycah, I'm not sure if it's an expert or is as a former experience in Hamakua Housing. HIATT: And, and really what's being asked you are fact questions about your experience, well, strike that. I move to exclude any expert tcstimony from this witness. It's not-. FOX: Mr.Ishado? ISHADO: Yes. Basically, unlike Professor Callies, we're asking Mr. Takemoto to testify as to factual differences between the two. We're not asking for his opinion as to whether equal protection applies or anything like that. Basically, we'll, 76 what is the difference between Hamakua Housing Corporation and Continental Pacific? And I think he's qualified to testify to that. FOX: I'll overrule your objection. [SHADO: Again, Mr. Takemoto, can you explain the differences between Hamakua Housing Corporation and Continental Pacific? TAKEMOTO: First of all, Hamakua Housing was set up as a 501(c)(3) non-profit. The primary purpose was to wnvey the lots that were created by the subdivision to existing residents in those camps. There were, there were 400 existing houses in those camps. And that was the primary mission, to give the houses to those people. The vacant lots were a secondary byproduct. They just kind of got created because the existing houses, or the vacant lots kind of were in between these existing houses. So when you create the house lots, some of these vacant lots kind of just fall out. The exception would be Paauhau, where there was one large area next to a park that was more vacant than occupied. But, in that case, we're following an old map created by the plantation, so the lot lines were following that map. So those lots got created, and those lots were seen as an opportunity to give former employees a chance to get, who didn't live in the camp, to get some kind of property. So non-profit is one distinction, and the mission was to give the house to the existing residents and former employees. ISHADO: Basically, to prevent the employees from being kicked out on the street? HIATT: Objection, leading and argumentative. FOX: Sustained. ISHADO: Well, let me rephrase. The, the camps were in the bankruptcy proceeding? TAKEMOTO: Well, those lots were, were, I guess, part of the bankruptcy settlement, yes. ISHADO: And with all this settlement, the employees did not have any right to live there after the camps closed? TAKEMOTO: Correct. ISHADO: So, basically, Hamakua set up, Hamakua Housing was set up to give them a means to, to obtain ownership of these camps? 77 TAKEMOTO: Yes, and at a very affordable price. The initial round to the existing residents, the house and lot was sold for $1,100. The next round was the vacant lots that were offered to former employees in the neighborhood of about $2,500. And then those former employees who were retired or didn't participate in the final harvest, another round. Most of this was taking place in Paauhau, because most of the vacant lots were snatched up in the other cvnps in the earlier rounds. So the subsequent rounds were primarily Paauhau, and those were offered at $2,500, $5,000; and in those still we had leftover lots. If adjoining homeowners didn't want to pick up the opportunity to consolidate the lots with the adjoining lots, then it was offered to the market at some market prices. I think around $18,000 was the offer. ISHADO: Mr. Chairman, I don't have any further questions. FOX: Mr. Hiatt? HIATT: Thank you. ISHADO: Mr. Chairnan, ['m sorry. I do have one further question. FOX: We'll let you go ahead. ISHADO: You know, Mr. Takemoto, one issue that came up, and I guess it came up especially in today's hearing. But you're familiar with the plantation subdivision law`? TAKEMOTO: Yes. ISHADO: Plantation camps subdivision law. And, can you explain to the Board why this law was not used in this particular proceeding? TAKEMOTO: When we were first setting up the process to subdivide, the plantation subdivision law wasn't really in place yet. But, at the time, it took us one year to kind of survey and set up the documents and get everything ready for the conveyance. When it was getting close, we were under a time pressure from two sources; one was the mayor, but the other was to use up Federal, the Federal funding that was specially appropriated for this emergency Hamakua situation. So because of that time pressure, one of the requirements under the plantation subdivision law was that you had to comply with the State Land Use Districts. All, there were, if I recall right, there were three camps, Paauhau, Nakalei and Niu Village in Ookala, that were in the agricultural district. To reclassify those under the State Land Use would have taken another six months to year. And because, and because of that, it was decided to, to use this pre-existing lots avenue as a way to expedite conveyance of the lots to the, to the people. 78 ISHADO: The application for the pre-existing lots that, that was prior to the enactment of this ordinance, plantation subdivision law? TAKEMOTO: No. 1 think on that point, the plantation subdivision law may have just been enacted. But all the paperwork was already being compiled to go with pre- existing. ISHADO: Mr. Chairman, now I have no further questions. Thank you. FOX: Mr. Hiatt? HIATT: Thank you. Just a housekeeping question, Mr. Ishado, would this be your only witness, or will you be calling Mr. Yuen as well? ISHADO: We will be calling Mr. Yuen. HIATT: Okay. Hi, Mr. Takemoto. You are now the Deputy Planning Director, correct? TAKEMOTO: Yes. HIATT: At the time of the applications for Hamakua Housing, you were acting for them as the project director, is that correct, or project coordinator? TAKEMOTO: Yes. HIATT: And Exhibit 27, or 24 which is in evidence, is that a copy of a letter which you wrote to Ms. Goldstein who was then the Planning Director? TAKEMOTO: Ycs. HIATT: And then you've now, you've been assisting the Planning Director how long`? TAKEMOTO: Since February. HIATT: Okay. Now the basis for the request for the approval of the Hamakua Housing subdivisions was that they had pre-existing status being in existence prior to 1944. Is that correct? TAKEMOTO: Yes. 79 HIATT: And you knew at the time you made those applications that there were many vacant lots in these subdivisions for which you were seeking approval, correct? TAKEMOTO: Ycs. HIATT: Okay. And the fact that they were vacant lots which had been abandoned, which had no houses on them, which had no people occupying them, that was not even raised by the Planning Department as a reason for not approving your subdivisions, correct? They expressed no concern about it, did they? TAKEMOTO: I recall vaguely thc, whether to recognize the vacant lots. There's nothing in writing. There was, even if it wasn't that would have been okay. HIATT: Let me see if I can understand that in real simple terms. The Planning Department knew there were vacant lots, they recognized the subdivisions anyway? TAKEMOTO: I think they raised the question. HIATT: That would mean they knew there were vacant lots, right? TAKEMOTO: Yes. H[ATT: And they recognized them anyway, correct? TAKEMOTO: Yeah, the vacant lots is quite evident. Because the survey maps, the subdivision maps that we provided were, were prepared by surveyors and they shot the existing structures. HIATT: So the maps that you submitted showed the vacant lots, correct? TAKEMOTO: Right. HIATT: All right. Now you gave some testimony about the purposes of Hamakua Housing Corporation. That it was a 501-C3 Corporation, okay. And you gave some testimony about Hamakua Housing Corporation's plans to sell first to people who were living on the lots, then to former employees, then to neighbors, then to the public; you recall that? TAKEMOTO: Right. HIATT: Okay. Those decisions to make that order of sale, those were Hamakua Housing Corporation's decision, correct? 80 TAKEMOTO: Correct. HIATT: There was no agreement between Hamakua Housing Corporation and the Planning Department which imposed those requirements on Hamakua Housing Corporation, correct? TAKEMOTO: Nothing in writing. But this whole process was a partnership with the County. We used funding trom the Office of Housing and Community Development, and the Mayor was an integral part of this whole process. HIATT: Okay. But that was not the, okay. I'm going to direct your attention to Exhibit 21. And that is a letter to Mr. Souza from the, from Virginia Goldstein, correct? TAKEMOTO: Okay. HIATT: And, on the second page, and Mr. Souza was the president of Hamakua Housing Corporation, correct? TAKEMOTO: Correct. HIATT: And you worked with him closely, correct? TAKEMOTO: Yes. HIATT: In that letter, have you ever seen that letter before, today? TAKEMOTO: If I did it, [don't recall. HIATT: In that letter, on the second page, it says, "With respect to other understandings and agreements between yourselves, Hamakua Sugar Company and former employees such as covenants and restrictions with land costs, etc., we have not been parties to such agreements and feel that these are matter which rest solely with the Housing Corporation, the employees, and Hamakua Sugar Company." Do you see that? TAKEMOTO: Yes. HIATT: So, at least by that letter, the Planning Deparhnent was not going to become a party to agreements with respect to the sale of this land, correct, who it was sold to, the conditions under which it was sold, the requirements for resale, correct? ISHADO: Let me state an objection, Mr. Chairman. I, I think if you take a look at that document, it's not clear whether they're referring to the plantation camps or other parcels being sold by Hamakua Sugar. Perhaps I'm reading it wrong, but that's my recollection. I think you would have to look at the document itself. 81 HIATT: May I direct the Chair's attention to the third paragraph, which is a specitic reference to recognition ofpre-existing lots in Haina camp, on the first page. FOX: Mr. Ishado, I'll overrule on your objection. HIATT: So do you have the question in mind, Mr. Takemoto? TAKEMOTO: Let me see if I understand your question. You say, you're asking whether the County was a party to any of the agreements? HIATT: Correct. TAKEMOTO: No. But they had, we submitted all these agreements for their review. HIATT: Okay. TAKEMOTO: So they were comfortable that we had those restrictions, which included a buyback, buyback restriction. So whoever got these properties, if they sold it within five years, they had to sell it back to Hamakua Housing. H[ATT: But, in particular, the County was not a party of the buyback restriction, correct? TAKEMOTO: No. HIATT: And now turning your attention to Exhibit 22 also in evidence, these are records of lot sales from the subdivided lots by Hamakua Housing Corporation. And you see that one of the lot sales was For $46,800? The second from the bottom. TAKEMOTO: Okay. HIATT: And you see that one of the lot sales, the second from the top, was for $175,000? TAKEMOTO: Wow, 1 didn't know this guy sold it. He had a nice house. Yeah, so they did make out. HIATT: They made out? TAKEMOTO: Right. HIATT: They made a market sale of these lots that were originally for low income? 82 TAKEMOTO: Yeah, but they sold it after the five-year buyback. Because Paauhau's one expired, I think, this year. WATT: In terms of what was approved by the County, nothing prevented that, correct, a market sale? TAKEMOTO: No, no. HIATT: Okay. '['hank you. FOX: Mr.lshado? HIATT: Actually, I'm sorry, I wasn't done. FOX: Oh, you weren't done? HIAT"t: Yeah. FOX: I'm sorry. HIATT: Thank you for that response. The Housing Corporation did let people buy more than one lot, correct? TAKEMOTO: Not initially, no. WATT: Okay. But eventually they could? TAKEMOTO: Yes. HIATT: If the lots weren't taken up? TAKEMOTO: Right. HIATT: They were eventually, if they weren't taken up, available for sale to the public, correct? TAKEMOTO: Correct. But this, there were just a very few. WATT: Okay. I think, as you noted, the subdivision law was not referenced in the approvals and was not a basis for the approvals of these subdivisions, the plantation subdivision law? TAKEMOTO: Right. 83 HIATT: Okay. TAKEMOTO: But I think it was recognized that the intent of the plantation subdivision law, and some of, most of the requirements, actually our applica the subdivision application would have complied with most of them except the State Land Use HIATT: State Land Use designation? TAKEMOTO: Yes. HIATT: And, finally, the pre-existing nature of these subdivisions was recognized based on the fact that they were leased to individual employees prior to 1944, correct? You didn't have to show that they had been sold, correct? TAKEMOTO: There was no evidence of it being sold, just that the existing boundaries were still in existence at the time of the survey. HIATT: Okay. TAKEMOTO: So they followed fences, hedges. Those existing evidence of boundaries complied, confonned with these historic maps. HIATT: Okay. So that the indications were that these lots had been provided to plantation employees as a part of their employment agreement for low-cost leases, is that correct? TAKEMOTO: Wait. Could you restate that? HIATT: The, your understanding was that these individual lots had been provided to plantation employees as a part of their employment agreement on a low-cost lease or rental basis, is that correct? TAKEMOTO: Ycs. ISHADO: I'm sorry, Mr. Hiatt, you mean when they were being rented out? HIATT: Yes. TAKEMOTO: Yes. HIATT: Okay. No further questions. Thank you. FOX: Mr. [shado, do you have anyfurther 84 ISHADO: Yes, thank you. You know, the plantation camps were deeded to the Hamakua Housing and by the trustee, I guess, in bankruptcy. And you received the lots, you know, in the manner that they were conveyed? TAKEMOTO: Right, as is, yes. ISHADO: And basically received the lots which had houses and some lots which were vacant? TAKEMOTO: Correct. ISHADO: And you didn't attempt to return any of the vacant lots to the trustee? TAKEMOTO: No, actually the conveyance from the trustee was a bulk lot, and we had to go through the subdivision process to create the house lots. So the bulk lot was the outlines of the plantation camp. ISHADO: So, basically, this is what you received? TAKEMOTO: Yes. ISHADO: And the question earlier was, basically, on whether the County had made any requirements as to restricting resales and so forth. The Hamakua Housing had a policy set in place as far as who to sell the lots to? TAKEMOTO: Correct. ISHADO: And it kept the County informed as to what its policy was? TAKEMOTO: Yes, definitely, especially through the Office of Housing. ISHADO: And this was representation to the County and made part of this application? TAKEMOTO: Yes. Yeah, the County, as [had mentioned, was really a partner in this whole effort. [SHADO: And Hamakua Housing as the vehicle, I guess you had mentioned earlier, to make this transfer to the employees? TAKEMOTO: Correct. [SHADO: [ have no further questions. Thank you, Mr. Chairman. 85 FOX: Mr. Hiatt? HIATT: Yes, just one follow-up. Using Exhibit 20 as an example, that's a typical letter which you got from the County making the determination that your subdivision, in this case for Paauilo, was accepted, correct? TAKEMOTO: Okay. HIATT: Okay. And the only basis noted in that was that it was established prior to the first county-wide subdivision ordinance of November 22"a, 1944, correct? TAKEMOTO: Yes, as stated in the letter, correct. HIATT: And there's no written agreement making, between Hamakua Housing Corporation and the County, an agreement signed by the County and Hamakua Housing placing restrictions on the resale of those lots, correct? TAKEMOTO: Correct. HIATT: Thank you. FOX: Mr. [shado? ISHADO: No, I don't have any questions, thank you. FOX: Does any member of the Board have questions? Mr. Easley. EASLEY: I have lots of questions. Mr. Takemoto, I think if I heard you right when you were head of the, or moving on the Hamakua Housing situation that you were working with, you didn't implement the Plantation Community Subdivision 23-103 because, not because it wasn't there, because it was there in '94, that's something Taka Domingo had worked on, but bccause you were far enough along and it was more expeditious to continue in the effort you were doing? Is that correct? TAKEMOTO: Correct. And the main reason was the State Land Use District problem, that three of the camps, at least three fell in the Agricultural District, would have required reclassifying to Urban. EASLEY: Okay. It has been established here today, I am hearing, that there were some vacant lots within this Hamakua Housing area. TAKEMOTO: Correct. EASLEY: Some of which you sold to employees, some of which you sold even to the general public eventually? 86 TAKEMOTO: Yes. And the general public was in Paauhau, after several rounds of attempts to sell it to former employees. EASLEY: A question that comes to my mind is under, the way I read it, the plantation community subdivision requirements, you couldn't sell vacant land anyway. So is that why it was being avoided? I hear you guys say that, well, it's timely. But if I read it right, you couldn't sell a vacant piece of property under the ordinance approved by the Council If I read it right, 23-104, Item 4, "The fee title of each proposed lot within the plantation community on which the housing and improvements exist is to be conveyed in fee simple to the former employees of the sugar plantation." So I could see why you guys wouldn't use that if that was brought out because it wouldn't qualify under that anyway. TAKEMOTO: I'm not familiar with that provision. EASLEY: It's Item 4, 23-104(4). TAKEMOTO: Yeah, and be EASLEY: So I see it being brought up and, in my mind, I'm wondering why. When, as I recall talking to Taka about this a long time ago, and, it was intended to help, you know, bridge the gap. But, you know, I saw you guys, 1 see what you were doing bridging the gap, but [also see market conditions taking effect here. So with that in mind, my mind now wonders how -and let's talk about the ones that you did sell on the open market, 1 realize that the majority was not -how does that differ from what Continental still has? To someone like me who's trying to decide fairness and equity in law, how does the ones that are sold on the open market by Hamakua Housing TAKEMOTO: Yeah EASLEY: Differ trom what Continental is proposing to do? TAKEMOTO: The revenue that is being generated by Hamakua Housing is being used to pay off debts like the carrying costs for property taxes that we tamed all these years, in the hundreds of thousands. So there's no profit being made. All of that monies is just being used to pay debts, to pay consultants; and once all those debts are cleared, then to possibly terminate Hamakua Housing as a corporation. EASLEY: I guess, I should qualify that. How does that, in terms of equity of law, qualify? I see the emotional end of it. But in terms of fairness of law, where Hamakua Housing can do something that someone else can't, and I wonder in my mind where the precedent goes after that? Where's the equity of law, from your viewpoint, as to how Hamakua Housing can do that and someone else couldn't do that? 87 TAKEMOTO: Well, you know, if there was a crystal ball back then that would have made us privy that this would have precedent for something like what is being proposed today, we would have abandoned that whole approach. It was not a primary reason to create, to go that way to create vacant lots. Our intent was to get the house to the people. And if we didn't have that avenue, we would have gladly just taken the lots, all the vacant lots, who knows what would have happened? Maybe the community association would have had all these common areas or people adjoining would have larger areas. We would have accommodated it in that way. The vacant lots is totally a by-product. FOX: Any other members of the Board have questions? I need a little clarification, Mr. Takemoto, on one thing. The Hamakua Housing Corporation is obviously non-profit. And when you file with the IRS for your SOl(c)(3), I suspect you had to say what your purposes were TAKEMOTO: Correct. FOX: And was the, in the purposes, of course, obviously, to get the houses to the employees. But in that statement of purpose, did you ever say that you would sell outside to the IRS when you applied? TAKEMOTO: No. But every year, they have to make an annual filing with IRS. So any revenues generated needs to be accounted for. There cannot be any profit making. So it has to go back and relate to the purpose of the corporation. FOX: But it was never part of the purpose of that corporation to sell to the outside? TAKEMOTO: No. No. And it was just an unintended consequence of not being able to sell it to former employees. FOX: Thank you. Any other questions? EASLEY: Mr. Chairman? I guess, I'm still bothered by the fact that we had a law on the books that would have accommodated I recall lots of discussion way back with Taka. I'm going to refer to that same section again which you guys may want to familiarize yourself with, because those were active hearings going on at the time, prior to. And I think it was Franny Morgan that had a problem that was quite well known, that the intent was to try and get these properties, and when I say properties, fiscal, physical, not fiscal, sorry, home sites to employees, certainly not empty lots. And the law addressed that. And I hear you saying it was a by-product. But with that law on the books, and you're dealing with other state issues, it just seems coincidental to me that because the current law addressed only homes, that you guys took a different avenue. And that bothers me and creates this inequity in my mind, and that's why I'm still bothered. 88 TAKEMOTO: You know, the fact that I'm not even familiar with that section kind of speaks to the fact that it wasn't even a factor in our decision. [f we had one unit to play with, it would have been better, actually, to go through the State Land Use classification, get it to Urban, because the problem these people have in an Agricultural District is now these lots are non-conforming. So when they wanted to build a house, although their setbacks may be okay now, when they want to rebuild, they're going to be subject, they will be subject to the existing setbacks by, by Code. So, actually, it was a very expedient decision; and if we, should we had more time, the better solution would have been to go through the Plantation Subdivision Ordinance. EASLEY: Thank you. FOX: Mr.Ishado? ISHADO: And, again, Mr. Takemoto, the end result was that some 400 lots were conveyed to employees or former employees? TAKEMOTO: Correct, at $1,100. ISHADO: Thank you. I have no further questions. FOX: Mr. Hiatt, do you have any HIATT: None. FOX: You may bring your next witness, please. ISHADO: Thank you, Mr. Takemoto. Thank you, Mr. Chairman. For our final witness, we'd like to call on Mr. Chris Yuen. NAKANO: Mr. Yuen, do you affirm that the testimony you are about to present before the Board of Appeals is the truth? YUEN: Yes, [ do. NAKANO: Thank you. ISHADO: Can you state your name for the record. YUEN: I'm Chris Yuen. [SHADO: And, Mr. Yuen, are you, can you state what your position with the County is. 89 YUEN: I'm the Planning Director. ISHADO: And how long have you been the Planning Director? YUEN: Since December 19, since December 2000. ISHADO: And can you tell us a little about your professional background. YUEN: I have a bachelors degree from Stanford University. I have a masters degree in Environmental Science. 1 have a law degree from the William Richardson School of Law. 1 was a lawyer from, in private practice from 19, from I was a lawyer with the County from 1982 to '87, and an attorney in private practice from 1987 to the year 2000. ISHADO: Mr. Yuen, I guess you are familiar with, part of yourjob is to enforce the Subdivision and Zoning Codes? YUEN: Under the County Charter, one of my responsibilities is to administer the Subdivision Code and administer the Zoning Code. ISHADO: And what is the purpose of the Subdivision Code? YUEN: The Subdivision Code's purpose is to ensure that when new lots are created, when land is cut up into smaller parcels, that the parcels have adequate access, that drainage is taken care of to account for additional development on the property. And the Subdivision Code also requires water supply which can he waived by a variance. It's both a consumer protection issue, making sure that lots created have some minimal level of services and access; and it's also a community protection issue for things like public safety, flooding, drainage, all those, where accesses come out to highways, where accesses come out to roads. All of these things are part of the Subdivision Code and the purposes of the Subdivision Code. ISHADO: And those issues deal with the public health and welfare? YUEN: Yes, they do. ISHADO: And what is the effect ofrecognizing apre-existing lot? YUEN: Well, that's why I, what I want to do is, and I'm song if this is really basic for members of the Board of Appeals. But I think it's, the easiest thing is to, just to show how the system works on the blackboard, just to give a couple of examples. ISHADO: Mr. Chairman? YUEN: [s that all right? 90 FOX: Yes, please, go ahead. HIATT: Let me move, Chris, so you can get at that more easily and I can see it. YUEN: Let's say this is a highway, and just for convenience sake, we say this is a 100-acre lot that is zoned Agricultural-10 acres, and that means it's a minimum lot size of 10 acres. You, under the zoning, you get to create, you can create ten lots out of this. But let's say it's a situation, you have a high speed highway, you only get one access, and you have to build a road in and you have to build lots off to the side, and the lots have to be a certain dimension. You can't make lots that are really skinny like that. At one time, the County had a very weak Subdivision Code, and you could make lots like that. But this road has to be a certain standard, according to the Code, depending on the size of the lots, is it an agricultural district, is it a residential district. And there I drew only eight, so let me draw ten. And this is what the end result of your subdivision is. You get to go ahead and make these ten lots. But you have to build the road, you have to lay it out properly. The County engineers will come and look at this, make sure the road is done properly. And they will, and then they'll pass the subdivision. Now if you have, say you have the same 100 acres, and you have, in the comer of this, you have ten lots that were, and I'm not drawing ten, but you have these lots that were recognized previously as being pre-existing lots. And just to give you an example of, let me give anon-controversial example ofwhat's apre-existing lot. A kuleana that was awarded in the 1850s by the Land Commission, there's a deed to it, metes and bounds conveyed out, that's apre-existing lot. It wasn't ever subdivided after the County had a Subdivision Code, but everybody would agree that thaYs something that was deeded out and exists, or a grant from the government, defined grant. Well, let's say that there are ten of these in the comer here. The County will say, oh, you have these ten lots. And then now, say you own, and you own the whole property, and you're subdividing to the same number of lots that you had before. The County will now pretty much let you do whatever you want in spreading these lots within this piece of property. So the end result, remember the other example I gave was a Cen-acre minimum lot, the end result would have to be the lots couldn't be less than ten acres in size. Well, in this example where you have these pre-existing lots and you spread them out on the property, they wouldn't have to be ten acres in size. The County would not hold you to the standard of the road coming in. That is, that is a regular subdivision standard road. And they would also not require the same kinds of, in the past, let's say, in the past practice, they would not require the same kinds of flooding studies that they would require if there are shown waterways going through the property. And that's just the way the Subdivision Code works. With a typical, a more typical kind of example would be the person has two lots, and they want to, for whatever reason, they want to change the boundary from this to here. Well, you still have to go through, you have to file an application for a subdivision to do, even 91 to do that. But the County, the idea is it's not really a big deal because you're not creating any additional lots. So what is at stake here and what they are proposing as far as their pre-existing lots, on the mauka of the highway, mauka of Pepeekeo I made a mistake earlier, I said it was 5,000 acres, it's 2,800 acres, and so the number, I also made a mistake in my opening of the number of lots that they can create under the zoning but, and so 1 wanted to mention that. But here we got this big parcel of 2,800 acres. And at one time, there was a camp here, and I'm just drawing, and there was a camp here. And one camp, there were 52 houses, and another camp, there were 19 houses. So we want to take this 52 and this 19 and use that to make lots wherever. And if this is recognized, they can make the lots pretty much wherever they want, however they want, to lay it out on this piece of property. That's the significance of recognizing these pre-existing camp lots. Now I think I need to say one last thing and this relates to what I did say in my opening. This 2,800 acres, they have rights to subdivide it to a certain number of lots. I believe it's, most of it's 20-acre zoning. So they can make, under the zoning, they can make a 140 lots. But that's the situation, like I started off with, where you have to go through a regular subdivision, put the road in, and follow the Subdivision Code to go ahead and make those kinds of lots. ISHADO: So, Mr. Yuen, as I understand your testimony, the recognition of pre-existing lots allows you to bypass the requirements of the Subdivision Code? YUEN: That's right. ISHADO: But there is a, would be, I guess, a legitimate reason to allow recognition ofpre-existing lots? YUEN: Well, the law has to allow recognition ofpre-existing lots. And we, in fact, recognized that they had 55 grants, old grants, valid pre-existing lots in this mauka portion of the property; and I believe the number is 33 grants in the makai portion going toward Pepeekeo Point. The reason that the law has to recognize these pre-existing lots is that otherwise everybody who had a piece of property would have had to go and register it at some point. You know, when the first subdivision law was passed in 1944, people were on lots, say you were on a piece of property that they considered to be their home. Sometimes they coincided with the tax maps. Most people now think of a lot as a TMK, and for that, most purposes, that's true. But not, it's not always true. So you had to have it either, has to be a way of saying that your, that a certain piece of property is a pre-existing lot, that the law has to have some recognition for that. ISHADO: And that's the category of lots of record? YUEN: That's what we would call lots of record, yes. 92 ISHADO: And has this law, other than the situation we're talking about today, before this Board, has this law ever been applied to allow pre-existing lots for abandoned subdivisions or abandoned camps? YUEN: Absolutely not. It has never been applied to a plantation camp that had been demolished and gonc out of existence. ISHADO: Now Mr. Kubota had testified conversations with Well, when did you ftrst talk to Mr. Kubota? YUEN: Actually, the first time we talked on this subject would be earlier than what he has discussed. It would have been, I believe, January or February of 2001. He came into my office with Alan Kugle, who is an executive from C. Brewer, and they did ask me a question about pre-existing subdivisions or the treatment ofpre-existing subdivisions. ISHADO: Okay. Cau you tell me what was discussed, or what did you tell him? YUEN: They told me that this actually involved real property in Ka`u, and, a C. Brewer property, and that Peter represented, Peter was going to represent a prospective buyer, Allen represented the seller, and that they wanted to know whether the County was going to continue to recognize pre-existing lots. ISHADO: And what did you tell them? YUEN: I told them, ycs, absolutely, and that is the case. And I gave them exvnples of legitimate lots of record; and those are things like pieces of property that were sold before the subdivision ordinance, old grants, old kuleanas, old awards. Those would be recognized. I told them that we were re-examining some of the ways that, some of the non-buildable type lots, and by that I mean that things like pole anchors, really small lots. And I was concerned about the use of those for consolidation and resubdivision purposes to change what maybe shown on the map as a 50-square foot lot and do what I just showed on the blackboard and create a house lot out of it later. The specific question of plantation camp subdivisions or plantation camps that have been demolished never came up in that conversation. ISHADO: There was no suggestion that they would be allowed to take an abandoned camp and reconfigure it out of the pre-existing designation? YUEN: Not at any time. ISHADO: [n your practice, and I guess as Director of the Planning Department, when you were talking with Professor Callies about whether abandonment 93 was a distinguishing factor or a, could be a rational basis for distinguishing between different situations and, can you tell me what, basically, what your experience has been? YUEN: One of the most basic things in land use is the idea of continuing a non-conforming use and abandoning that use. Very ofren laws change, regulations change, and people who are sitting there had something that was legal when it began but it is no longer legal because of the change in regulations. And that use is called a non- conforming use. And, inmost cases, the law permits the non-conforming use to continue. But when it's abandoned, it's pau, it's over. ISHADO: And YUEN: And that's one of the most basic things. And it's just commonsense. It's, you have a house that's there, you let the person stay in the house. And say it's in an area where houses are not allowed, you let the person stay in the house. And then if, and if there's a regulation that it's not allowed any more, then when it's over, then if the house burns down, the person does not get to rebuild. Or I could give other examples like that, but that's a very basic situation. ISHADO: Mr. Yuen, are you familiar with the Kulaimano Subdivision? YUEN: Yes, I am. ISHADO: And the applicant for the subdivision in that case was Mauna Kea Sugar? YUEN: Yes, that's right. ISHADO: And Mauna Kea Sugar had applied for a subdivision, stating various reasons as to why it should be granted? YUEN: Yes. Yes, that's right. ISHADO: And one of those reasons dealt with employee housing? YUEN: Yes. Well, the significance of Kulaimano, and we put a couple of exhibits in concerning Kulaimano, relates directly to the Pepeekeo Mill Camp, which is the camp, about a 153-unit plantation camp that is discussed in this application. It's one of those, it's one of the camps, the three camps that they want to use as a basis for the pre-existing lots. The significance of what happened in Kulaimano is that Kulaimano rezoning, and you are familiar with Kulaimano as a community, those rezonings were done in order to be able to close that camp, among others, Pepeekeo Mill Camp. They had to close Pepeekeo Mil] 94 Camp. The sewage was going in the ocean. The housing was substandard. Actually, Pepeekeo Mill Camp was a lot better than the two other older camps, but one of the They came to the County. C. Brewer, Mauna Kea Agribusiness, the same group of companies, came to the County and said one of the reasons we need to rezone Kulaimano and develop it as a housing area is so that we can close our substandard camps along the coast. So this was the understanding. And if you read the letter from the Planning Commission transmitting one of the increments of rezoning of Kulaimano to the County Council, it says we, because, ifwe are able to do this rezoning, we can move people into Kulaimano. We're going to close these old camps, and among them, Pepeekeo Mill Camp, and the land is going to go back into agriculture. That is the idea. And, in fact, what happened with these camps, Pepeekeo Mill Camp was destroyed in the early `80s and it's demolished, it's gone, the area replanted. The other two camps were demolished and, much before that, and replanted into sugar cane, and they're, you know, they're gone. They're gone as facilities in Compared to the camps that we're talking about with Hamakua Sugar, you have houses there, you have people there, you have people living there; and all they did was allow a community to continue. ISHADO: And that is one of the differences you see between Hamakua Housing and the current situation? YUEN: Well, that's the two basic differences. The two basic differences are the plantation camps that Hamakua Housing did, that they recognized, they were plantation camps that were, they were there, they're in the ground. There are people living there, there's a community. What, and Roy used the word vehicle, I think, or device. The pre-existing subdivision was a vehicle that could be used to get to an objective of letting these people stay in their houses. This is the purpose of doing it. There's a purpose to why things get done. And there is a community purpose, a humanitarian purpose in letting people stay in their houses by using this pre-existing subdivision as the way to do it If they didn't have this ordinance Now the problem with these Hamakua f{ousing camps was you couldn't, you couldn't follow the present Subdivision Code and let people stay there. The roads are too small, the lots were too small, everything was substandard. They just did not fit the present Subdivision Code. So the vehicles, there were two vehicles that were created. One was a plantation subdivision ordinance, and the other vehicle, which was the one eventually used, was the pre-existing lots; but it was a way to achieve an end. And the other, and the other difference that should not be forgotten in this, the other important difference between what was done in Hamakua Housing and what Continental Pacific wants to do here is that the lots stayed completely within the boundaries of what had been a plantation camp at the time. We're not talking about spreading lots out over thousands of acres of property. We're talking about this was the camp, and it still was the camp. People were still there and all they were doing is letting people stay, letting people move into what had been lots in what was a community thereon the }found. 95 ISHADO: So there was no expansion outside of the camp area? YUEN: That's right. That's right. ISHADO: And there was really testimony by several parties about vacant lots in Paauhau Camp? YUEN: It seems as though, from all the testimony, that the only camp where there were a significant number of vacant lots was Paauhau Camp. I, and Roy mentioned the word, Roy mentioned the crystal ball. And what he was talking about was if they could crystal ball and see that someday, years later, somebody would come in and say, gee, because you let people move into the vacant lots on Paauhau Camp, that's precedent, and we're going to use that as saying, oh, now, you've got to let us resurrect these camps that got bulldozed years before, where there's nobody there, and use those as the basis for creating 224 lots on the rest of the plantafion, gee, we would never have gone that route. That's what, that's the crystal ball thing, he is; and I just can't see that. HIATT: I'm going to object at this point because it's a narrative response, a non-response to a question; it's essentially argument. FOX: Yeah, your objection is sustained. YUEN: Okay. I'll wait for the next question. ISHADO: Okay, let me just move along here. Mr. Yuen, the, along that line, you've expressed concern about this case. And I guess I have to ask you whether that's your personal opinion or is this your opinion as the Director of Planning? YUEN: Well, everything I say is in my role as Planning Director, and knowing my responsibilities, and knowing where this kind of thing can lead. ISHADO: And you've discussed this matter with the Mayor of the County of Hawaii? HIATT: Objection, relevance and hearsay. ISHADO: You know, again, we're looking at, we're looking at something that's, you know, we want to make sure the Board has sensed this is not a personal opinion by one person that has basically his thoughts and his thoughts only. This is a case where the Planning Director has the backing of the administration and the, basically it's the policy of the County of Hawaii. FOX: Mr. Hiatt? 96 HIATT: Okay. Yeah, I have great respect for the Mayor and notice that he's here. But who has whose backing is irrelevant to this Board's decision and, in fact FOX: Jerry, you're She can't pick up, your mike HIATT: ['m sorry. Can you get it now? NOMURA: Yes. HIATT: Who has whose backing is irrelevant to the Board's decision, which I'm sure will be made based on the principles in the law, and it smacks of political pressure, and it's certainly inappropriate direct testimony. And it wasn't relevant at the time these decisions were made. You've got a record on appeal indicating what reasons were given, and that's what they're limited to. FOX: I think we're going to policy matter here. And I think it's absolutely appropriate for the Board to understand what the policy of the County is, so I will object to your, I will not let you HIATT: Overrule it. FOX: I will overrule. HIATT: Sustain the objection, okay. Thanks. ISHADO: Thank you, Mr. Chairman. The Appellants in this case also referred to three Corporation Counsel opinions. Have you had a chance to review those opinions? YUEN: Yes, I have. ISHADO: And those opinions deal with the sale of parcels of record? YUEN: Yes. Two of the opinions are, all of the opinions cover circumstances that are very easy to recognize as pre-existing lots of record. Two of the opinions deal with the sale of property before 1944 to third parties. And the third opinion deals with the creation of a lot by the fact that it has been severed by a road. But it has been, and a portion of a lot was cut off by a road and it's, the lots have been created that way. ISHADO: And those would be your parcels of records which we discussed today'? YUEN: Yes, absolutely. 97 ISHADO: Now do you, as the Planning Director, have any concerns, or what concerns do you have if we allow the Continental Pacific to use the Hamakua Housing Corporation as a precedent? YUEN: Okay. Let me first talk about my concerns about the site itself. If they are granted the 224 lots, that is, that just increases the number of lots that they can sell where we have no control over the kind of, ultimately the kind of road that's put in, the kind of access, the kind of configuration of the lots. I am also, and it's, this is not just a matter of, gee, we would rather they have fewer lots than more because that's not really the case here. There is a way for them to get more lots, but it's not for Say you have, we all agree that they had, say everybody in the world agreed that they had 50 lots of record, and everybody in the world thought that they could do, that it would be a better subdivision if they had 300 lots in there. Well, it's not forme to say that it's better and that's where they should end up; and it's not for this Board even to say that that's better and where it should end up. That's a matter for the County Council If you're going to go in there and create another 224 lots, maybe that's a great idea. But it's for the County Council to rezone the property and to go through that kind of process in order to let them do that. That's not for, that's not for, that's how the system is supposed to work. And I'm very concerned about recognizing lots that are not supposed to be recognized when that's something that should go through the rezoning process. And then I have to be concerned about the precedent, if this actually goes through, that you count lots in destroyed plantation camps. And this is outside this particular piece of property. There were plantation camps everywhere on the Island. In 1930, the population of the Island was more than it was in 1970. There were, there was a tremendous decline in population in the `40s and the `SOs in the rural areas of the Island particularly as the areas mechanized. And there were many, many camps that were closed down, and if you want to go before that, there were many camps that closed down. The result of saying that you can recognize these plantation camp lots is To just give you an example, somebody buys a 50-acre property, they do some historical research, old maps, and I've seen those old maps. And they find, oh, there was a camp, donkey camp, or mango tree camp, or something there, and there were 50 houses on it. Well, here's a precedent. Now you can create a 50-lot subdivision out of nothing without following the County Subdivision Code. And that's the difficulty I see, that's a problem. There were camps all over the Island, all kinds of places. The camps, you know, just to give you an example, the camps, the two camps that they're talking about, if you look at the affidavit of Harold Luscomb in the two mauka camps, Kainole Camp and the other camp, he says they were walk-in camps. These were camps were people walked in and walked to the fields from these camps. They were way out in the boonies. And it's not just a big landowner that could wind up with this. This could, this sort of thing can pop up anywhere. 98 ISHADO: And, Mr. Yuen, also, as part of your duties as the Planning Director, you are charged with interpreting the law, and this YUEN: That's right. That's right. ISHADO: And part of that would be administering the Subdivision Code as we discussed earlier? YUEN: That's right. ISHADO: The last question I have, basically, and I'm going to try and wrap this up, is dealing with, well, the Board Member, Mr. Easley's question regarding whether there was any difference between an open market sale of vacant lots and the Continental Pacific. Do you see a difference between the two? YUEN: Well, I think the question of Mr. Easley's that I think the question that he asked of Mr. Takemoto is the question of the difference between the sale of the vacant lots. And, in this case, really the only area where there is the other vacant lots, there was one or two vacant lots in a camp here and.there. That's the kind, just to call that as an example, oh, you did this in that camp so you have to do it in the next camp But the difference with the sale of the vacant lots in Paauhau, first, you know, the overall purpose of doing it is as Mr. Takemoto said, but also that these were lots that are simply sold within the boundary of what had been along-established community. You had, at one time, had houses there, and you had this community in existence. And all they were doing is, in the end, people were going to get to put the houses back into a community that existed there and was ongoing. And you weren't talking then about taking lots out of a camp and spreading them Lord knows where over 4,000 acres of property like Continental Pacific is planning to do. [SHADO: Thank you, Mr. Chairman, 1 have no further questions at this time. FOX: Mr. Hiatt`? HIATT: Thank you. Mr. Yuen, I'm not sure if I'm going to refer you to cxhibits or not. FOX: Mike. HIATT: Oh. I'm not sure if I'm going to refer you to exhibits or not, but I'm going to put the binder in front of you in case we leaf through some. Let me just get my notes here. Okay. Let's start with the reference that you made to the Mauna Kea Sugar Company, Inc. application for rezoning. That was nowhere cited as one of the reasons for the denial of the recognition of the lots for my clients, correct? 99 YUEN: No. HIATT: Okay. And, indeed, the first time that came, and what we're doing here is we're appealing your denial of those, or your Department's YUEN: Right. HIATT: Denial of those lots, right? So if we look in the record for that appeal, we will not find your Exhibit F, which is papers related to that document, correct? YUEN: That's correct, nor will you find many of your exhibits. HIATT: Okay. Now the, on direct examination, the HHC, Hawaii Housing Corporation, for the ten subdivisions that were approved, they were not required to make any of the subdivision improvements to comply with the Subdivision Code that you've referred to in your testimony, correct? YUEN: That's right. HIATT: Okay. They were not asked to make road improvements, sewage improvements, flood studies or access improvements, correct? YUEN: That's right. HIATT: And in one of those cases, I think in Paauhau, those houses, 50 of those houses fed into the same cesspool, correct? YUEN: I'll take your word for it. I don't know the sewage situation in Paauhau. That may very well be true, yes. HIATT: But I mean in terms of what the Planning Department required, the Planning Department just didn't care about that enough to make it a requirement at the time it approved any of those ISHADO: Objection. HIATT: Subdivisions? ISHADO: To the form of the question. FOX: Sustained. HIATT: The Planning Department did not make fixing those things a requirement of approving these subdivisions, correct? 100 YUEN: I'm sure the Planning Department felt it was more important to let people who had lost their jobs, who worked for a company that was going broke, let them stay in their homes and keep the community together,- than to try to figure out a way to solve all the other problems that had existed there. They did allow these, they did allow that to forward without those kinds of improvements. HIATT: Okay. Now I think I wrote down this correctly from your direct examination. But did you say that the law has to allow recognition ofpre-existing lots at one point and that the law has to have some recognition ofpre-existing lots of record? YUEN: Yes, I said that. The alternative would have been to have some kind of overall sub you know, some overall kind of registration or process where we would have to come in. But you still would have to, you still have to recognize the existence of some, of laws before 1944, yes. HIATT: Okay. Let one pause for a second then and just refer to these exhibits which we had up before. This is ]4-B; this was Paauhau Camp. FOX: Take the microphone. HIATT: Sorry. Thank you. I tend to forget. This was Paauhau Camp, 14-B and 15-B. You also gave some testimony about, I think, non-conforming pre-existing use and abandonment, do you remember that? YUEN: Yes. WATT: Okay. But for all these lots in Paauhau Camp and for some lots in each of the other camps, there was no continuous existence or use of a house on those vacant lots, correct? YUEN: Not on those lots, but there was continuous use of the camp. WATT: Okay. But the lots were what was recognized, right? I mean among the camp, vacant lots where there was no continuing pre-existing use were recognized? YUEN: They did recognize the existence of some vacant lots, yes. WATT: Now you testified also about some conversations between yourself and Mr. Kubota and Mr. Kugle at the beginning of this, well, I guess early 2001, is that right? YUEN: Ycs, that's right. 101 HIATT: Okay. And they specifically brought up the question of whether the County would continue to recognize pre-existing lots? YUEN: Yes, they did. HIATT: You said the County intended to continue to recognize pre-existing lots? YUEN: Yes, I did. HIATT: Okay. And you were not YUEN: And it does. HIATT: And you were not aparty to I'm glad we don't disagree about everything. You were not a party to any conversation between Mr. Cheplic and Mr. Correa, correct'? YUEN: No. HIATT: Okay. Did you have meetings with your Staff to discuss the interpretation that you've applied in this case that the County would not, the Planning Department would not recognize pre-existing subdivision lots? ISHADO: At what period of time, Mr. Hiatt? HIATT: At the time that these approvals were being sought? YUEN: Right after I got the letter from Peter Kubota requesting a recognition of these lots, I consulted with all the senior managers in the Planning Department. And I satisfied myself from talking with them, both that this had never been done before and that there was no policy which required that these be recognized. HIATT: Was one of those Mr. Cheplic? YUEN: I know that we've talked about it at, I know that I've talked about it with him at some point; and I'm not sure if that was before the letter went out. I am pretty sure that I spoke with him before the letter went out. I am just not sure that he is one of the people that I talked with in the initial round when I consulted with the senior managers. And when I say the senior managers, there's one level of management in the Planning Department in between the Deputy Director and Mr. Cheplic. HIATT: Okay. You never sought to publish a rule or a rule change with respect to that issue, correct? 102 YUEN: I never thought it was necessary and still don't. HIATT: Okay. Now you talked about issues that were issues for the County Council with respect to subdivisions. Do you recall some testimony about that? YUEN: Yes. HIATT: Okay. And if 1 understood the gist of that, it would be that the County Council could make a law with respect to this if it wanted to, recognition of pre- existing subdivisions, limiting it or enlarging it? YUEN: No. I was testifying about how many lots get put on a piece of property. And the zoning for example, on this piece of property, the zoning allows "x" number of lots to be put on the property. And if you want to go beyond "x" number of lots, if you think that's a good idea, then you go to the County Council for a rezoning and you persuade the County Council that that's a good idea and that the community benefits from doing that; and then that goes forward. That's where I'm at. HIATT: Okay. Well, let me ask a different question. Does the Planning Department ever submit legislation to the County Council? YUEN: Yes. HIATT: Okay. And if the Planning Department wanted to, could it submit apiece of legislation clarifying this issue to the County Council? ISHADO: Object to the word clarification. HIATT: Well FOX: I'll overrule that. YUEN: Yes, the Planning Department can and, to be quite honest with you, l thought what was, after this application was made, I thought it was so far out that it was not necessary. But I am now putting or recommending that something be put in just to avoid this kind of situation and to clarify that absolutely you can't do this to a pending revision. There is a pending overall revision of the Subdivision Code which has a lot of different things in it, and I have prepared something for that. HIATT: Okay. And that would be an amendment of the County ordinance or the Subdivision Code? YUEN: To clarify what I think is already the case, that you can't do what Continental Pacific wants to do here. 103 HIATT: Okay. And how long, in your experience, does it take to process that kind of change in the law, assuming everybody's in favor of it and you've got a fair wind at your back? Because you have a YUEN: Anywhere HIATT: You have a fair wind at your back here. YUEN: Anywhere from Let me just say that the comprehensive revisions to the Subdivision Code have been pending at the County Council for more than four years. If I were to break this out as a separate item, if that were, if it were necessary to do that, it would be several months. HIATT: Okay. YUEN: So as a best case scenario, several months to go ahead and do something like that. HIATT: Okay. And you have no other applicant in the Planning Department who is now seeking to do what Continental is seeking to do, correct? YUEN: I hope not. WATT: Okay. Well, I'm just asking what you know about and YUEN: 1 don't know of one. HIATT: You don't know of one, yeah? Because I mean this, you gave some opinions that this was, you were giving some testimony in your capacity as Planning Director. But you have strong personal feelings about this, too, correct? ISHADO: I'm sorry, is that a question about his personal feelings? HIATT: Yeah. ISHADO: I don't see the relevance of that. FOX: I sustain your objection. H [ATT: Okay. [n terms of, though, your recollection of what's in process, you gave testimony about this being a, essentially it's a slippery slope argument, if I can use the law school term, that there might be other people who would do this. There might, you might find hundreds of plantation lots on old and abandoned camps around the Island. Right now, in reality, no one has asked to do this, and you are currently planning to change the law, correct? 104 YUEN: I would say your client is the first one that has had the audacity to use the fact that the County took care of the people in Hamakua Housing as a vehicle to try to subdivide the property without following the Subdivision Code. But there, and as far as it being, if this is allowed, as far, when you say slippery slope, to return to your question, you mean, well, if you do this, then the next step and the next step. If you allow this, then you have to allow all the others HIATT: No other YUEN: Anybody that comes in, you know. HIATT: Anybody that comes in. Right now, nobody has come in, correct? YUEN: As far as I know. HIATT: Okay. Thank you. I think you answered my question about whether you got personal feelings about it. Is YUEN: I have personal feelings about abusing the process. HIATT: Okay. As Planning Director, it is your job to not allow your personal feelings to interfere with the uniform enforcement of the law, correct? YUEN: Absolutely. HIATT: And probably when you were appointed, you took an oath to that effect, correct? YUEN: Absolutely. And if you want to 1 have a very close friend who has talked to me and wants to subdivide their property using this, and I've told them exactly the same thing. That I have a very close friend who has a demolished plantation camp on their property and would like to use it and, my personal feelings are not part of the administration of this. HIA'I"T: You would agree the public is entitled to a fair and consistent application of the rules from you, from your departmenC? YUEN: Absolutely. But I think that the differences are so profound in these two circumstances that it doesn't concern me at all. If the Applicant, Continental Pacific, can't see the difference between a plantation camp that's there, that exists where people are living, and one that was torn down 20 years ago, I don't know what difference somebody can see. That's as basic a difference between somebody alive and somebody dead. 105 HIATT: Did you ever seek a Corporation Counsel opinion before you rejected this application? ISHADO: Objection. Mr. Chairman, we're talking about attorney-client privilege; and I really don't want to get into this area. HIATT: Can I respond before you rule? If that's the objection, I'd like to at least make my offer. There are three existing Corporation Counsel opinions. The question goes to whether he ever sought a revision of those, which are published and a part of the public record, whether he ever sought a revision of those before issuing his decision here. It's not what the advice was, but did he seek advice. ISHADO: Same objection. HIATT: If I was asking what the advice was, it might be privileged. The question of whether he sought it is certainly not. ISHADO: You know, frankly, [don't know what the answer is, but I still have to make the same objection. FOX: Your objection is overruled. HIATT: Did you ever seek a Corporation Counsel opinion before you made this determination? YUEN: Not in the three weeks between the time the application came in and issuing the letter, but I do believe I did consult with Corporation Counsel. HIATT: Okay. Has the Corporation Counsel ever fornally revised any of the three opinions that are Exhibits A, B, and [SHADO: Same objection. Now we're getting to the content of what HIATT: I hadn't finished the question again. I'd appreciate if you'd just allow me the courtesy to finish it for the record and, sir, we'll listen to the objection. Have you ever seen a formal revision of the opinions of the Corporation Counsel issued that are Exhibits A, B, and C to the brief? [SHADO: Same objection, Mr. Chairman. FOX: It's overruled. YUEN: The question is I Say the question again. l06 HIATT: Ever seen a revision to Exhibits A, B, and C to the brief, the previous Corporation Counsel opinions? YUEN: No, and none is necessary. They deal with entirely different fact circumstances. HIATT: Now you also, I know you're a good lawyer, Mr. Yuen. You have not found any case of where a subdivider of property, being a profit corporation and a non-profit corporation, where the fact that the subdivider of the property was a profit versus anon-profit corporation, was upheld as the basis of a distinction for equal protection grounds, correct? YUEN: I haven't ISHADO: Let me state an objection here. I mean we're asking about any, I mean, what factual situation are we talking about, just any case at all? HIATT: Any case at all, any place at all. ISHADO: Then I would suggest to the Chair, and I will state my objection on this ground, what then is the relevance of this question? FOX: Mr. Hiatt, do you have a HIATT: Sure, the FOX: An argument? HIATT: The response is that the rational basis urged for the distinction here is the public use or the charitable use of this land. And if that's a basis for an equal protection distinction in law, then Pm asking you if you know if you can cite a case. YUEN: Well FOX: Just before you go on, I'm going to overrule. HIATT: Okay. YUEN: I haven't done any legal research on a point of the non-profit corporation being a difference. I do, the point that I would like to make is that things in government get done, hopefully, for a purpose. You're using, you're using and making decisions to try to accomplish something in the community. And anon-profit sale of the 400 house lots to people, that was the purpose of what was going on in the mid-1990s. It's something that people were trying to accomplish for a very valid reason; and it was something that's entirely different than what's going to be done here. 107 HIATT: I have no further FOX: Mr.lshado? ISHADO: Just one or two follow-up questions. Mr. Yuen, I think Counsel had asked you whether you felt that the County would have to allow recognition of pre- existing lots. Your answer to that was phrased yes, and But were you referring to lots of record or to plantation camps`? YUEN: Oh, Fm saying in principle that the County must and does recognize the creation of lots before 1944. The issue that we have here is what kinds of lots get created? The issue we have here is do you count lots in plantation camps that were destroyed a long, long time ago? So that's my answer to that question. And the answer, well, the answer to the question of the destroyed plantation camps is no, you don't recognize those lots. ISHADO: And there is nothing in your, the Counsel had also asked you about your conversation, I believe, with Mr. Kubota regarding, well, I think you had discussed recognition ofpre-existing lots. There was nothing in that conversation to indicate that the County would recognize an abandoned camp as apre-existing lot'? YUEN: No. ISHADO: Thank you. No further questions. FOX: Mr. Hiatt, do you have, do you want to re-cross? HIATT: No. Thank you, Mr. Yuen. FOX I want to let the Board have its chance HIATT: Sure. FOX: To see if they have any questions they want to ask. Does anybody on the Board have questions of Mr. Yuen? Mr. Easley. EASLEY: I do, but I'll let anyone go first. I've got quite a few questions. FOX: Okay. I have one that I'm a little bit troubled. I know we've heard from many sides about the creation of the plantation lots, and the lots of record. And I'm very clear about lots of record. I'm not terribly clear about how these plantation lots can actually be called lots of record. I know that we've heard a lot of testimony, we've heard a lot of things said. Somebody lives there, it's his house. But [have a Feeling that those houses, I know those houses were used by plantation workers because 108 they worked and it was part of their rent. And I don't think that you can really say they were real renters or that they really had control over that property. My interpretation may not be a good interpretation. But I would almost say a plantation camp was a lot and not 50 house lots. Because I don't, it just occurs to me that it doesn't fit into the, with what you would get, the kuleana, a land grant, something that was really recorded and deeded. And these never werc. It might have been, could it be that the contract for their three-year working contract was a deed to a piece of property? YUEN: 1 don't think that they were actually deeded. Basically, what happened in the Hamakua camp situation was that there was an urgent need to do something. The plantation was bankrupt. It was, the company was no longer going to Am I answering your question? I'm not sure. FOX: Yeah, even before that. YUEN: Yeah. Okay. FOX: I mean what I'm trying to clarity in my own mind whether a contracted worker had in 1925, that gave him a house to live in and, an affidavit that says yeah, we lived there for so many years and did this, can that be construed as a deeded piece of property or a lot of record? YUEN: Well, it's not a deeded piece of property. I think that the best answer I can give is that in the context of people, you know, all these things are, there's an overall law and an overall policy to this. And that's, I think, where the plantation, although it does not directly apply to this, the My Deputy Director made a good point in that a plantation subdivision ordinance gave a clear direction that it was, and this is a law, you know, it's Although it didn't directly imply, wasn't directly applied because of this other problem that we talked about, it gave the County a policy, very clear legal directive that in an existing camp you can go ahead and sell that off to the person who's there. And that's, I think that gave cover, let's say legal cover for doing that when this was done eventually in 1995. As far as what, you know, in 1928, 1 don't know what they were doing then. FOX: All right. Thank you. Just to go a little bit further with this, the opinions of the Corporation Counsel, was your interpretation that those opinions allowed lots of records or were they just plantation camps? YUEN: Well, they had nothing to do with, neither one had anything to, none of them had anything to do with plantation camps. There are pieces of property that somebody sold. There's a deed, there's a description. And then the issue arises much later, is that a legal lot? And it's true it's a legal lot. Otherwise, somebody owns a piece of property that's buried in another piece of property, are they tenants in common with the larger lot? You have to recognize that as a legal lot. They were, you know, there are things that are sold to somebody outside and they get conveyed down, and somebody 109 owns this piece of property separately. We're not talking about something that the plantation really owned itself, this whole, you know, this whole time until the bankruptcy came along and the lots were conveyed out. FOX: Thank you. Any members of the Board? Mr. Easley. EASLEY: Yes, I've got quite a few, Mr. Yuen. Of course, we all understand, I'm saying this for the Appellants mainly, that our duty here, an Appeals Board, is to listen to the Appellant to see if they have cause to approve their appeal. I prerequisite that because 1 have three areas that concern me quite strongly. Now I'm going to state them up front and then ask you questions about the three. One is law, two is the intent, and three is perception. We learn the law. Mr. Yuen, the approval of Hamakua Housing lots, previous administration, in your opinion, do you feel that was proper? YUEN: Yes. And with the possible exception of the vacant lots, but I understand why they did it, okay. EASLEY: Well, actually, Fm including the vacant lots. To be more specific, I'm going to say do you think it was proper for them to approve it with the vacant lots, particularly the vacant lots, since that is the concern here, that it's approved at one time and now it's not? YUEN: If you EASLEY: And my subject is law. YUEN: Yeah. And we're sitting here, if you could crystal ball it and understand that there would be this problem that would come up later, I would say approve it, but you would say something to the effect that this applies only to lots being created within an existing plantation subdivision. But we don't always have the foresight to see how somebody is going to take something in the future or how somebody is going to interpret something in the future, so I really can't blame them for not doing that. EASLEY: Correct. Blame them, referring to the past administration approving it? YUEN: Right. EASLEY: Which comes to my second word, which is intent, which is your intent, too. It's a noble intent. We clearly don't want to see, I think no one in this County, including the Appellant, the misuse of subdivisions. The problem ['m seeing here is this illusion you talk about, wrong illusion, audacity, dead-live body. Coming back to the same suggestion that you are saying that the Appellant, how could they, I hope 110 this isn't an improper word, misuse what was previously approved? I see the precedent setting as being set by the people who approved it previously which, to me, creates an illusion for the Appellant. And, having been a Councilman, it's clear to me this should have been cleared up, or should be cleared up, which is where you're going properly through Council. But I'm worried about the illusion that's created for the Appellants in the meantime. And then I'll get to my last part here, which is where a question will come in to you, is the perception we create for this Island, which I've always womed about, people who may or may not want to invest in this Island when we wait. Your administration, past administration, people like me sitting here, business people like me, whatever, send out the illusion that we've made a mistake, but it's okay here but it's not okay here. So that's where this law comes in. So my question would be if this perception is sent out, and if this illusion has alluded the Appellants, they came in, it appears to me, on some precedent that was approved previously by past administration showing a mythology that it was okay. And it's clear to me that Chris Yuen thinks that shouldn't have been done that way, it should have laws that prevented that, but there weren't. That Subdivision Code should have been a little more detailed, which is where I would hope Counci] would go now to prevent this from happening in the future. But that's just noble intent. I agree with that fully. But wouldn't it be somewhat understandable that someone is misguided by what has happened? And if that's the case, we've got this huge perception going on here that creates a problem. I can see it being solved clearly in Council, if they choose to do so. And this is where I've got a problem, perception. The rules are made in Council, they're interpreted by the Planning Director. But they have been interpreted by the Planning Direcaor before you, now they're being reinterpreted. And I see, in my opinion, two different interpretations which gives this illusion, and that's what I'm trying to detcnnine. [t appears past administrations have approved this by approving Hamakua Housing vacant lots. Today, because of the cause, noble cause, there's a difference. I don't see that difference under law. I don't see the nobility. The law doesn't, in my opinion, accommodate the noble cause of what's going on here. Laws take care of that. That's what Councils are for. So my question to you is since you were concerned about the Appellants misusing this or misunderstanding how they could create this circumvention, [kind of see it as that we, the County, has created this circumvention. Would you comment to that? YUEN: Yes, 1'd be very happy to comment on that. If the County had actually recognized destroyed plantation camps, entire destroyed plantation camps as the basis for pre-existing lots, and done so repeatedly, that would create a precedent. What they're taking is something where the County went maybe 30 percent of the way toward doing that, by doing something that is really quite different, recognizing vacant lots within an existing camp subdivision, they are taking that and they are using that as, oh, now we're going to go all the way, hundred percent of the way. And there's just no, 111 there's no reasonable basis for taking, for saying, oh, they went this far, so now we're going to go farther and take it as that; and that's just not a reasonable way to pursue it. [f, and then on your question of economic reliance, this is why we got into the point of when did they make the transaction? I got my letter out very quickly because Mr. Kubota said to me that they're in due diligence. And due diligence to me means that you're in a stage where you gather the facts; and if they aren't to your liking, you can pull out of the transaction. And I clearly, and that's why, and it says so in my letter. If this is what you're relying on to make this transaction, this is where I am coming from with this. 1 wanted to be sure that they could do that. So that's a totally fair situation for the buyer. My, I want, in fact, [wasn't sure who was, well, I think I knew he was representing the buyer. I wanted both sides, you know, to know where I'm coming with this. Well, they had, in their due diligence period, and they gave me a date, I'm quite sure, for it, they had the information. So if they didn't want to invest, if they were relying on where the Planning Department was coming from, they didn't have to invest in that transaction. They found out where we were coming from; and they chose to invest, they chose to make this appeal, which is their right. But I don't think that they can say that, oh, this County is being unfair. And it's just, [don't know whether they are using, you know, I don't know if they are using the prior action, you know, six years ago, in the Hamakua Sugar bankruptcy situation, if they are, if that's an argument or they really, really, you know How do we know, you know, whether it's an argument or they really, really, really felt that that was a solid precedent that was going to be applied in this, what to me is just an obviously totally different situation? EASLEY: Thank you. FOX: Any other comments or questions from the Board? Before we proceed with closing, I'll call afive-minute recess. And following that five-minute recess, I'm going to call the Board into Executive Session. WATT: Thank you. FOX: And before we do that, I have to ask for a vote from the Board if they will go into Executive Session after the recess. EASLEY: Mr. Chairman, may I clarify, recess first? FOX: Yeah, recess first. TANOUYE: Thank you. FOX: Let everybody do what, run out to the bathroom. WATT: Can I ask just a point of order kind of question? 112 FOX: Sure. HIATT: Were you, I'm perfectly willing to have a very abbreviated closing, as long as it's even-Steven, like five minutes, if that's agreeable to Mr. Ishado. I'm concerned that you've given us more time that you had anticipated, and I want you to be able to wrap us up today, if that's consistent with your own views of things. FOX: I would like to consider that, but I want to talk to the Board about HIATT: Okay. FOX: Those matters HIATT: That's fine. FOX: Before we go any further. HIATT: Okay. ]s that okay with you, though, Lester, real short'? ISHADO: That's tine. I think they have some concern about something else but HIATT: Okay. Well, 1 [SHADO: We didn't, we want the HIATT: If timing was a concern, we'll try to accommodate. FOX: Timing is not the concern. ISHADO: Thank you, Mr. Chairman. FOX: But I need a motion to go into Executive Session after the recess. EASLEY: So moved. TANOUYE: Second. FOX: All in favor? BOARD MEMBERS: Aye. FOX: Opposed? Okay, five minutes, and then we come back. 113 RECESSED The Chairman called a short recess at 4:02 p.m. RECONVENED The meeting reconvened at 4:08 p.m. FOX: We are back in session. I apologize for taking longer than I thought I would. We will go to your closing arguments. Mr. Hiatt. WATT: Thanks very much. is ten minutes a side okay, Lester? Max? 1 mean you don't have to use it all, and 1 may not use it. ISHADO: Five would be better. Do you think you can finish in five, Jerry? HIATT: Give me six. FOX: Okay. Who has got the stop watch? ISHADO: Okay. WATT: Okay. Well, first, Members of the Board, I want to thank you for your patience and attention during the long hearing. And I also want to thank my colleagues, Mr. ?shado and Mr. Yuen, because I know that this is a disagreement of principle over an issue that's complex. And nobody is taking the position, as far as we're concerned, that you don't have an important matter to decide, or that anybody is in bad faith in terms of bringing it to you, or that the convictions of both sides aren't strongly held. But [want to talk to you on the basis of what you've heard about the evidence, because you have to apply what you understand the facts to be to the law as you find it to be. The first basis for distinction between the Hamakua lots that were approved and the Corp. Counsel opinions which had previously approved the pre-existing lots, the first basis for a claim distinction was that the lots that we were seeking to get approved had been abandoned, abandoned. You've seen that they abandoned because they were vacant. And you've seen, and it has been conceded now that every single subdivision which was sought to be approved by Hamakua Housing had vacant and abandoned lots. So that basis for distinction doesn't exist. The second basis for distinction or a reason was that the person seeking approval was a non-profit entity doing things for a public purpose. And there has not been a single case cited any place in the country which allows that constitutional distinction to be made, that it makes a difference whether it's anon-profit entity. And beyond that, we've proved that this non-profit entity sold its lots for a profit, so that's not a basis for a distinction. The third argument that has been made is that basically it was a nice thing to do because farmers profited from this or residents profited from this at the time of the Hamakua 114 bankruptcy. Now, frankly, there are farmers on our land now who will profit from it, from these lots being approved. We will be enabled to sell those farmers land at discounted prices, which my clients have committed to do. And if that process is burdened by huge subdivision costs, that is frankly going to be impossible. So there is a public interest on both sides of this question. And there are 60 farmers who are going to be given their, an opportunity to buy five-acre lots at a I S percent market discount, ten- year financing, A percent interest. ISHADO: Jerry, I really hate to do this, but those facts are not in evidence. HIATT: Well, all right, I'm done with that point anyway. Second, or the next most important point is really you have to decide whether there should be a consistent application of the law, and the law is really admitted. The law was defined in three Corp. Counsel opinions and ten Hamakua applications which recognized pre-existing subdivisions. It would not be, it would be an aberration not to follow what has been done at least 13 times before. There's been an admission that there was no effort to change that law, but that the law could he changed in a matter of months. There has been an admission then that there are no other subdivisions that are pending here. So we're only talking about one applicant, 224 lots, in an area that used to support those same 224 lots. There were 224 families there 20 years ago. So we're not talking about an increase in density over what used to exist there. Next, the other side, the Planning Department has admitted that there is really a lack of authority, legal authority for the proposition that there is any difference whatsoever between the lots we're seeking to get approved and the lots that they have approved in the past. ISHADO: Second objection, Mr. Hiatt. You know, again, that goes into, you know, Chair, those facts are not in evidence either. HIATT: Well, I disagree. [think that FOX: I think we're in final arguments now; we'll just go ahead with it. HIATT: Yeah. Thank you. ISHADO: Very well, Mr. Chairman. HIATT: So you are being invited, really, to uphold the Planning Director's decision, which is a risky, strange, unprecedented decision, which only has application in one case. And if you go down the road, which you are invited to go down at this point, you expose this County, which could use the development that would be created by this 115 and which could use the confidence that would be created in investors by this decision, you're being invited to go down a road of costly litigation and a potential multi-million dollar damage award. For what? 7'o prevent something that an investor reasonably relied on as being the law, a law which will clearly be changed within a few months if Mr. Yuen and the mayor have their way. You are asked to uphold the law, not ideas. You are not asked to change the law. You are not asked to be an advocate for a particular social position. Based on that, we think, respectfully, that your duty is to overturn the Planning Director's decision and allow these lots to be recognized. Thank you. FOX: Thank you. Mr. Ishado? [SHADO: Mr. Chairman, if I could with the Board, Chair's permission, I'd like ask Mr. Yuen to make the closing argument on behalf of the County. HIATT: I think I'm going to object to that, because we've got a lawyer representing the County. Mr. Yuen was a witness in this matter and in, it would be inappropriate for that to be done other than by the counsel for the Planning Department. ISHADO: I believe the Board has the discretion in allowing closing arguments by a party. FOX: I'm going to rule that Mr. Yuen may give the final. ISHADO: Thank you, Mr. Chair. YUEN: I want to thank you for your attention to this and for spending the time that you do as Board Members. I'm also going to apologize that the minute I stop talking I'm going to have to rush away. I'm late to speak to the Board of Realtors, and I just thought it was important to come here and finish up. This is an extremely important matter for the County of Hawaii. The facts are very clear that what is happening here was never approved before. We've never had this situation. We've never had a destroyed plantation camp approved as pre- existing lots. They're trying to take as precedence something that was done in an entirely different situation. They're trying to take this precedent, the recognition of people's houses where they're actual living, plantation camps that actually existed and the creation of vacant, of houses on vacant lots within the bounds of an existing plantation camp; and that's a huge difference from a land use perspective. What they want to do is just take numbers, take numbers, take something that was destroyed and take those numbers and spread them out over thousands of acres where there's no, where there's no subdivision now, make lots over a vast area where there's no subdivision now. Their whole argument is based on the idea of what happened in Hamakua Housing as precedent. You have to be very careful about precedent. When the facts, you have to use common sense. The common sense is what happened in Hamakua is totally different. 116 You had people actually there. Here you haven't had people there for 20 years. That's as different as anybody could ask for. There's just a couple of things that came up in the closing especially that I'd like to address. And that is this, there's just a couple of things. And that's one thing that there's takings, and there's a law suit, and there's millions of dollars. They're, they're trying to bully the County. That's a lot of baloney. If they are right and this Board, if this Board says you're wrong says Continental you can't do this, they can take it to Court. And if the Judge says Continental you're wrong, that's the end of it If the Court eventually says Continental is right, then they get to do what they want. They haven't lost anything. There's no taking of property. Even the law professor didn't say there was taking. He just criticized what our brief said but he never said there was a taking of property rights. He never said there was a basis for a case on taking against the County. And the other thing they're doing is dangling this discount to the farmers in front of you. It's easy to sit here and make promises. What are you going to, don't make a decision based on somebody you've never, you've never heard of before sitting here making you a promise that there's no way to force them to keep. That's almost, they're just dangling that in front of the Board as a way to make a decision, and we objected to them trying to do that; and it's completely improper. The final thing ['d like to say has to do with how government works and returning to this idea of precedent, precedent by the government. Government has to do things. They have to get things, they try to get things done. They try to accomplish goals. And in the Hamakua Housing situation, they were trying to accomplish a goal. Now if you were sitting there and you had a crystal ball and you thought of You can't, but you can't sit there and think if I do this, if I take this one step of here and make this one decision, five years from now somebody might come by and say, oh, that means that you need to take this other step and make this entirely different decision. Well, that's what they're trying to get us to accept here. And if government has to think that you have to think about, oh, if [ do this, if 1 take this, if I do (A) today then somebody who is going to say five years from now, oh, you did (A) so then you have to do (B), (C), (D), (E), and (F), if that is what you're considering precedent, then government can't do anything. You can't sit there and think about how everybody might take it some day. And in this case it's completely unreasonable to think that because there's Hale Koa camps with the pipi in them, were allowed to continue by using pre-existing subdivision, pre-existing lots, that now you get to resurrect these old camps. It's entirely unreasonable to think of that as precedent for what they want to do. Thank you for all your attention. And [hope that you can see fit to uphold the decision that I made, uphold the policies of the County in trying to protect the subdivision ordinances and zoning code. 117 FOX: Thank you, Mr. Yuen. We appreciate the work of both of you. It has been, it has been very enlightening. ISHADO: Mr. Chairman, if I could just add my thanks here. FOX: Go right ahead. ISHADO: No, [just wanted to add my thanks for FOX: Oh. ISHADO: [ts patience and for its hard work. Sorry. FOX: Well, members of the Board, it's time for us to make a decision. And I want to be very clear that we want to think about this very carefully and make sure that our decision is made in accordance with the laws that are appropriate and that we NAKANO: Mr. Chairman, excuse me. Just as a matter of procedure, I think it would be best if the Board were to close the hearing on this matter formally. Fox: Before we make a decision? NAKANO: Yes. FOX: Okay. As a matter of procedure, I'm reminded that we will close this hearing, formally close this hearing at this tune. Thank you, Rodney. I forget HIATT: I would, too. FOX: Do I hear from the Board a motion on this subject? EASLEY: Mr. Chairman, I move to approve the appellant's appeal. FOX: Do I have a second? FRANCO: I second. FOX: All right. Now can we have some discussion? Mr. Easley? EASLEY: Yes, Mr. Chairman. [consider the inequities of law to be the basis of my wanting to approve. I agree with Mr.Yuen completely this is an area that needs to be addressed; and I think it can be addressed at Council. It's my belief it can be done. I think it will be done. But it's just unjust, to me, that this appellant has been alluded into this situation. An aside, I would hope that they properly develop. But it's my opinion that this should be approved on the basis of law. 118 NAKANO: Just as a point of information, we had a consolidated hearing on two separate appeals. And so for the formality, we would need to take votes on FOX: On both. NAKANO: Both appeals. FOX: Both appeals. EASLEY: Then I would, IeYs see, amend, lets see, first one, Imove NAKANO: As I understand, your motion is to approve the, both appeals? EASLEY: Correct. NAKANO: Okay. FOOX: And that would be considered as being consolidated. EASLEY: Do you need to have FOX: I mean EASLEY: Do I need a separate for two FOX: Do we need to separate NAKANO: No. EASLEY: No. Pm sorry, then for 01-23 and 01-31. l~ OX: Okay. Does anybody else on the Board have comments? Mr. Easley, 1 will Mr. Nakano will call the vote. NAKANO: Mr. Easley? EASLEY: Aye. NAKANO: Mr. Franco? FRANCO: Aye. NAKANO: Mr. Tanouye? 119 TANOUYE: Aye. NAKANO: Mr. Yamada? YAMADA: Aye. NAKANO: Mr. Chairman? FOX: No. NAKANO: Mr. Chairman, there are four votes in favor of the motion to approve the appeal filed by Continental Pacific for Board of Appeals Application Ol -23 and for Continental Pacific's Appeal identified as BOA 01-31. FOX: Okay. Mr. Hiatt, we request that you do the Findings of Fact and Conclusions of Law based on this hearing. HIATT: Thank you very much, sir. There were various legal bases which were urged, the due process issues, as well as the Chapter 91 issues. May we include each of those as a basis for the, for the majority finding? FOX: Ycs. HIATT: Okay. And would each of those be a separate basis for the majority's finding, separate and independent basis? FOX: Yes. HIATT: Okay. Thank you very much for your courtesy. We'll prepare Findings that are consistent with that. When would you like them by? FOX: Our rules say, Rodney, what are they? NAKANO: Just a minute. FOX: Fifteen days or something? HIATT: Okay. And we'll provide a copy of that to Mr. Ishado at the same time. FOX: Mr. Ishado? ISHADO: Yes, just for the record, Fll be on the mainland for a treatment the week of the 18`x', probably three or four days. So, you know, if you'll allow me time after Thanksgiving to look at it, 1'd appreciate it. l20 HIATT: Pd stipulate to allowing you that time. And if you need any other courtesies, we'll be happy to provide them. ISHADO: Thank you. FOX: All right then. This hearing is adjourned. HIATT: Thank you very much. The discussion ended at 4:25 p.m. Respectfully submitted, Sharon M. Nomura, Secretary ATTEST: Evarts Fox, Chairman Board of Appeals 121