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HomeMy WebLinkAboutCOM 0632.019 2000-2002 8 ~ ~ 4 ~ Ys$a ~ ~9~ I~EPIJA~AIN J. CAIPIETAIN® ~ KATHRYN S. ~tRATAYOSHI GovERNOR MABJf= K. H1R®N® ~ aIAiN K. YA~IABd€ LIEUTENANT GOVERBdOR ~ ACTING LICENSING 61GMINISTRATOR STATE OF HAWAII ~~1. ~~'T~~~ I~~~~~ PROFESSIONAL ANO VOCATIONAL LICENSING DIVISION DEPARTA9ENT OF COI~AAERCE AND CONSUPAER AFFAIRS 250 SOUTH HQtdG S'PREE', t~00aA 702 HONOLULU, MAWAN 98813 IattpJ/anvaratate.P>i.USAeirec April 19, 2002 . REc.:[IVi~~Ce Mr. Christopher J. Yuen ~ ~n,~_.__~ _ >3 Planning Director ~~~;.ti County Of Hawaii Planning ®epartment ~t~nry Council 25 Aupuni Street, Doom 109 Hilo, Hawaii 96720-4252 Dear Mr. Yuen: Re: Proposed Ordinance Implementing H.R.S. Section 514A-1.6 . Thank you for the opportunity to provide comments on the above-entitled matter. We understand this redraft of the proposed ordinance does, among other things, the following: Requires a condominium developer, of Hawaii County real property, to certify compliance with H.R.S. section 514A-1.6 only upon receiving final map approval for a condominium property regime from the director; Requires in a conversion condominium project that the director certify that a project is in compliance with all applicable county permitting requirements, when the project has received final map approval; • Conditions final map approval upon a developer's submission of an application containing information required for a county subdivision preliminary plat and final plat, construction plans and specifications showing :details of road construction, drainage structure, sewers, water mains and all other utilities proposed to be installed in the proposed subdivision and receiving approval of such (section 23-79 Hawaii County Ordinane~); • Allows the director to issue a final map approval for a condominium property regime at the same time as a tentative approval if the project requires no construction of streets, private streets, drainage improvements, sewers, water systems, utilities, or other infrastructure; and further conditions map approval upon the developer's conformance to other procedures for a county subdivision approval except as otherwise set forth in the proposed ordinance. While the Commission understands the concerns underlying the proposed ordinance, the Commission is concerned that the proposed redrafted ordinance may be in conflict with Chapter 514A, HRS, and other state statutes. A good part of its concerns relate to the proposed redrafted ordinance and its implications for condominium conversio c What follows is a discussion of these and other concerns. 3, . ~i.e ~1~ _ fit. Itef. JI~~t~e 3 Mr. Christopher Yuen April 19, 20®2 Page 2 fibs Redrafted Proposed f=indings (Section One O$ The Pro faosed Redrafted Ordinanceh Stilt Appears to f~e$lect lillisperce Lions O$ What The State Coradorvainiurra Law is And Isn't And The County's Role And Authorit~~llith Respect To Condorn6niu~es We reiterate some basic principles of the State Condominium Law previously set forth in our letter to you of January 31, 2002, as follows. The legislative history for the Condominium Property RegiPnes Law, Chapter 514A, HRS, indicates that law is a land ownership law, a consumer protecfion law, and governance law. It provides specifically for the creation of the condominium property regime, 'the regulation ®f its sales and offering of sales, z s and the marketing of the condominium project in phases through the use of varying types of developer's public reports. 4 §514A-20 Condominium property regimes. Whenever the sole owner or all of the owners including all of the lessees of a property expressly declare, through the execution and recordation of a master deed, together with a declaration, which declaration shall set forth the particulars enumerated by section 514A-11, the sole owner's or their desire to submit the property to the regime established by this chapter, there shall thereby be established a condominium property regime with respect to the property, and this chapter shall be applicable to the property. If the master deed is already recorded, the recordation of the declaration is sufFcient to achieve the same result. [L 1977, c 98, pt of §2; gen ch 1985; am L 1988, c 65, §~l z §514e4-31 Notification of intention. (a) Prior to the time when apartments in a condominium project are to be offered for sale in this State, the developer shall register the project with the commission by notifying the commission in writing of the developer's intention to sell such apartments. IVo offer of sale or sale shall be made until the project has been registered with the commission and the commission has issued an effective date for the project's preliminary, contingent final or final public report. (b) Prior to the time when a developer offers or proposes to offer for sale a-time share plan located in a condominium project where apartments are being offered or proposed to be ®ffered for sale for the first time 4o the public, the developer shall register the project with the commission and obtain an effective date for the developer's public report; provided that the developer shall not be required to deliver to a prospective purchaser or purchaser a true copy of the developer's public report or disclosure abstract, as required by this chapter, when a time share plan is duly registered under chapter 5141=, and for which a disclosure statement under chapter 514E is effective and required to be delivered to the purchaser or prospective purchaser. [L 1977, c 98, pt of §2; gen ch 1985; am L 1991, c 44, §2; am L 1997, c 135, §4; am L 2001, c 237, §1] s§514A-36 Public reports and registration fees. (a) Concurrently with its filing with the commission of the notification of intention pursuant to sections 514A-31 and 514A-32, the developer shalB prepare and submit to the commission a public report disclosing all materiaB facts pertaining to the project. T'he public report shall be in such form and content as prescribed by the commission. Such public report may not be used for the purpose of selling any apartments in the project unless and until the commission issues an effective date for the public report. The commission's issuance of an effective date for a public report shall not be construed to constitute the commission's approval or disapproval of the project, or the commission's representation 4hat all material facts concerning the project have been fully or adequately disclosed, or the commission's judgment of the value or merits of the project. IVo effective date for a final public report shall be issued until execution and recordation of the deed or master lease, the declaration, the bylaws, and floor plans, as provided by sections Mr. Christopher Yuen April 19, 2002 Page 3 Specifically, the law allows: Persons to own real estate under the condominium form of property ownership (i.e., a form of real property ownership where each individual member holds title to a specific unit and an undivided interest as a "tenant in-common" with other unit owners in common elements such as the exterior of buildings, structural components, grounds, amenities, and internal roads and infrastructure); • Consumer protection regulation of the sale of apartments in the condominium property regime by means of adequate d'osclosures of all material facts pertaining to the condominium project; and 1=or the management of the ongoing affairs of the condominium community with minimal government involvement. Contrary to some belief, the State Condominium Law does not: • Provide the Deal estate Commission with authority to approve or disapprove a proposed condominium project. fibs Commission's authority is to issue an effective date f®r a developer's public report upon the developer disclosing al! materia! facts pertaining to the project and- satisfying certain other requirements;5 Subdivide land: It is not a land use law. It does not govern what structures may be built on real property, or the density/size, location and conditions of the structures. Those issues are specifically left to separate state and county lands use laws. 1=or these reasons, we have concerns with some of the findings, as follows: 514A-12, 514A-20, and 514A-81. (b) `The commission may determine when a public report will supersede the public reports previously issued for the project. {c) The developer shall be assessed nonrefundable fees as provided in the rules adopted by the director of commerce and consumer affairs pursuant to chapter 91, for each effective date requested for a public report, including extensions, if any. [L 1977, c 98, pt of §2; am L 1986, c 295, §1; am L 1988, c 72, §2; am L 1991, c 44, §7; am L 1997, c 135, §7j ° A developer's preliminary public report allows the developer to test the feasibility of the project without binding the purchasers. For this marketing phase, the developer is simply "testing the waters," and can d® so without recording a declaration, floor plans, and even without building permits and a construction loan. A developer with a developer's contingent public report, for a period of 9 months, may among other things bind purchasers to a contract without having among other things, a construction contract or building permits (section 514A-64.5(c), HRS). With a final developer's public report, the developer can bind prospective purchasers to a contract. Among other requirements, for a developer's final public report, the developer must have recorded a declaration, executed construction contracts, and obtained building ~erenits. Supra 3. Mr. Christopher Yuen April 19, 2002 Page 4 7" • The characterization that CPRs create separate areas of ownership on a single lot; CPR ownership interest is an undivided joint interest in the land (a common element), not a separate ownership (Page 2 lines 6-7). • That CPRs have been used to create separate_ ownership on a single lot, without following the subdivision code. We are surprised wVith this finding sine the State Condominium Law requires compliance with the subdivision code if a building is being constructed on a lot. (page 2, lines 5-7). May we inquire as to the specific examples of the referred to non-compliance. • That most CPRs in Hawaii County, in the agricultural district, have actually involved lots that could not legally be subdivided because they were not large enough to meet the minimum lot size required for an additional lot in the.~oning Code. For example, a 20-acre lot in the A-20a zone cannot be legally subdivided because it is already the smallest legal parcel, but it has been possible to create several CPR units and sell them off separately in effect, a do-it yourself rezoning. VNe are surprised with this finding since we understand that Hawaii County has the power to regulate what can be built on that type of lot (page 2, lines 17-23). • The characterization that some CPRs are equivalent of subdivisions of land (page 3, line 7). Again we reiterate that the State Condominium Law is an ownership, consumer protection, and governance- law. It is not a land use law. Thus, the State Condominium Law does not and cannot subdivide land. The legislature intended a separate regulation of that subject in enacting Chapter 434, HRS, lDniform Land Sales Practice Act, and providing counties with zoning authority. • The characterizations that the Legislature passed Act 251 in response to concerns about the use of the CPR to circumvent the zoning and subdivision codes. A review of the legislative findings and standing committee reports for Act 251 (SLH 2000) indicate the intent and purpose of that legislation was to °clarify that projects created and established as condominium property regimes are subject to the county land use and regulatory authority..." (page 3, first sentence). Accordingly, we respectfully request a reconsideration of these and other perceptions set forth in the proposed ordinance. ®irector's Certification For Condominium Conversion F~ro'eca is s4ppear to exceed / ®efeat The Intent ®f.State Statutes And Is Preernpteci It appears that section 23A-4(b) proposes a certifecation of a subject area that is preempted by state statutes° and in effect defeats the intent of such, namely sections 514A-40(b)(1)', HRS, 46-4(a), HRS 8, and 205-8, HRS.9 s §46-1.5 General powers and lienltation ®f the counties. (laepeal and reenacPment on June 30, 1996 by L 1993, c 168, §5 deleted by L 1996, c 19, §2.J Subject to general Baw, each county shall have the following powers and shall be subject to the following liabilities and limitations: (13) Each county shall have the power to enact ordinances deemed necessary to protect health, life, and property, and to preserve the order and security of the county and its inhabitants on any subject or matter not inconsistent with, or tending to defeat, the intent Nlr. Christopher Yuen April 19, 2002 Page 5 Section 514A-40(b)(1), HRS, requires the Commission to issue an effective date for a developer's final public report that includes one or more existing structures being converted to condominium property regime when the developer files with the commission, among other items, a statement by an appropriate county official that the project is in compliance with all zoning and building ordinance and codes and specifying where applicable any variances granted to achieve compliance and whether the project contains any legal nonconfomning uses or structures The Commission has informally interpreted that the required county compliance statement report compliance with the zoning and building ordinance and codes applicable to the condominium project at the time the structures were built. The county statements from Honolulu, Kauai, and the county of Hawaii (although not of recent submittals) have submitted statements indicating this interpretation. See sample county letters attached. The Commission's informal interpretation is also supported by, and consistent with, Section 46-4~(a), of any state statute, provided also that the statute does not disclose an express or implied intent that the statute shall be exclusive or uniform throughout the State. ~ §514A-40 Final reports. (b) No effective date shall be issued by the commission for a final public report for a project that includes one or more existing structures being converted to condominium status unless there is fled with the commission all items required under subsection (a) and: (1) A statement signed by an appropriate county official that the project is in compliance with all zoning and building ordinances and codes applicable to the project, and specifying, if applicable: (A) Any variances which have been granted to achieve such compliancy; and (B) Whether the project contains any legal nonconforming uses or structures as a result of the adoption or amendment of any ordinances or codes; . e §46-4 (a) County coning. . . Neither this section nor any ordinance enacted under this section shall prohibit the c®ntinuance of the lawful use of any building or premises for any trade, industry, residential, agricultural, or other purpose for which the building or premises is used at the time this section or the ordinance takes effect; provided that a zoning ordinance may provide for elimination of nonconforming uses as the uses are discontinued or_for the amortization or phasing out of nonconforming uses or signs over a reasonable penod of tame on commercial industrial resort and,~artment zoned areas only In no event shall such amortization or phasing-out of nonconforming uses appl~to a_~existinq buildeng or premises used for residential (sengle family or duplex) or agricultural uses. Nothing in this section shalt affect or impair the powers and dutaes of the director of transportation as set forth in chapter 262... . s §205-~ ionconforming uses. The lawful use of land or buildings existing on the date of establishment of any interim agricultural district and rural district in final form may be continued although the use, including lot size, does not conform to this chapter; provided that no nonconforming buiiding shall be replaced, reconstructed, or enlarged or changed to another nonconforming use and no nonconforming use of land shall be expanded or changed to another nonconforming use. in add'ation, if any nonconforming use of land or building is discontinued or held in abeyance for a period of one year, the further continuation of such use shall be prohibited. [L 1963, c 205, pt of §2; Supp, §98i-i-8; MRS §205-8J Mr. Christopher Yuen Apri9 19, 2002 Page 6 HRS, and section 205-8, HRS. These state statutes allow for the continuance of any legal nonconforming use. See footnote 8. Also see Walk/ki Marketplace Investment Company 86 Haw.343, 949 P.2d 183 (1997 Haw.App). . Thus, it appears that section 23-4(b) does not recognize the permitted legs! non- conforming uses allowed by sections 514A-40(b)(1), 46-4(a), 205-8, HRS. On the contrary, it appears that proposed section 23-4(b) conditions the county statement of compliance on new requirements to Include the subdivision infrastructure requirements. As proposed, then, conditioning the director's certification upon the approval of a final map appears to exceed that mandated by the state statutes, defeats the intent of the cited state statutes, and, as proposed, is preempted. On a technical Bssue, proposed section 23A-4, requires the director to certify compliance after the project has received fnal map approval. Proposed section 23A-14 requires the director to Issue a final map approval after approva! of construction plans. for conversion condominium projects, for the most part, there are no construction plans, only "as built" plans. Thus, as proposed for conversion projects, it would be impossible to obtain a certification from the director of Hawaii County. On another technical issue, the state condominium law 514A-1.6, 514A-11(13), 514A- 40(a), HRS, require the developer to declare the developer's compliance rather than "certify" as proposed in section 23A-4. Additionally, section 514A-40 (b), HRS, requires the county official to Issue a "statement" of compliance. !t does not require the county offaclal to "certify" compliance, as proposed section 23-4(b) requires. On a general note about legal nonconforming uses/structures, the developer includes d'osclosures about the nonconformity in its public report as part of the "material facts" disclosure requirement. fibs county has the opportunity to exercise its police power when the developer or the prospective purchaser proposes to make any changes to the legs! nonconforming use or structure. Proposed Section 23A-4(C) Appears Vague and ®verl~road as To the Applicability Of Subdivisi®n Approval Procedures To 'the Apolication ®f `The Map Approvai We recommend the drafting of another county section specifically settin4 forth which County subdivision procedures apply to the director's approval of the final map required for the d_evelocer to declare compliance. As an example, it is not clear whether the developer has to wait for the director to approve the final map (plat) pursuant to the subdivision .procedure outlined in section 23-76 of the Hawaii County Ordinance before the developer can offer to sell CPR apartments. We have previously stated and discussed at length in our January 31, 2002 letter to you, that Chapter 514A regulates the sale and offering of condominiums. The county is preempted in this area. It can be interpreted, however, that the application of Hawaii County Ordinance 23-76 Is an integral condition of the proposed director's approval of the fins! map approval. As such, proposed section 23A-4(c) defeats the intent of the state condominium law regulating the sale and offering of sages of CPRs and is preempted. Mr. Christopher Yuen April 19, 2002 rage ~ Criteria For Reduction ®f 1141inimum Building Site And Modification Cf ®irnensi®ns ,Appear Vague And Arrabiguous proposed sections 23A-9 and 23A-10 appear vague and ambiguous in allowing for the reduction of minimum building site and modification of dimensions based on the director's finding on the "overall development is consistent with the zoning district." We presume the agency will be adopting rules to clarify the criteria. It is lJnclear dOVhether Proposed Section 23x4-9. li~inimum l3uilding Site Area And IJeait ®irnensions grad Section 23-10. Minimum Unit ®irreensions, and 23A-12. Pie~ai Appr®mal if No Infrastructure Required Defeats `t'he Intent ®f the State Statute Aliowing t~®r CPIZ ®wnership ®f Aray Type Cf PropertX Intended For Anv'Type Cf flee Cdr flees In 1987, the Commission was advised by the then ®eputy Attorney General, that the legislative history indicated that the legislature considered that the then Horizontal i~roperty Act would have various uses. Senate Standing Comm. Rep. No. 305, Hawaii S.J. 965 (1965); See also, Senate Standing Comm. Rep. No. 364, Hawaii S.J. 1028 (1965); House Stand. Comm. Rep. No. 932, Hawaii H.J. 783 91965). For such reasons, the Commission could not bar the registration of agricultural condominium apartments consisting of galvanized steel storage buildings with limited common elements consisting of "the land set aside for the use of each owner of a unit." It is unc{ear whether proposed sections 23A-9, 23-7 0, and 23A-12, would allow for the certification of condominium projects consisting of apartments intended for any type of uses as contemplated iri the definition .for "apartment." (section 514A-3, HRS, definitional section). We understand the county may adopt ordinances on any subject or matter not inconsistent with, or tending to defeat, the intent of any state statute, provided also that the statute does not disclose an express or implied intent that the statute shall be exclusive or uniform throughout the State. . (section 46-1.5 (13), HRS). Should proposed sections 23A-9, 23-10, have the resulting effect of eliminating condominium projects with apartments intended for any types of uses, i.e. agricultural condominiums, a strong argument can be made that the proposed sections defeats the intent of chapter 514A, HRS. We recommend a clrifcation of the proposed sections to address the ambiguity. Proposed Section 23A-1~6 Duplicates fihe Surety Borading F2eguire~oent Cf State Condorr~iniurn t_aw (sects®n 514A-40 (3), HRS) It appears there is county and state overlap in this area. Section 514A-40 (3), HRS, requires the developer to obtain a performance bond issued by a surety company of not less than one hundred percent of the costs of construction. A sampling of developer's construction contracts indicate that where applicable, the infrastructure costs are included in the costs of construction. Proposed section 23A-14 duplicates the state condominium law on bonding. We recommend eliminating any duplicate regulation in this area. 11Ar. Christopher Yuen April 19, 2002 Page 8 Prop®sed Section 23A-17 No Change In Condominium After Approval 13oes Not Appeal To Reco~ize 'That 1'he S#ate Statute Allows A Certain percentage ®f the ®wners t® Make Changes T® The leclaration And Bylaws ®f 'The Coradominlairra The following sections of the State Condominium Law allow for the following changes: Section 514A-11(11), HRS Allows for the declaration (including the condominium map) to be amended by a vote or written consent of 75°/® of all a artment owners Section 514A-13(d)(1), HRS Allows the board of directors, upon approval of the owners of 75°/® of the common interests, to change the use of the common elements;, this could mean changing from a common_driveway to a swimming pool and vice versa. Section 514A-14, HRS Allows the owners to change the designation of parking stalls {which are indicated on a condominium map) signed and approved by the lessor (for leasehold projects) and the owners (and their respective " mort a es Proposed section 23A-17, requires that no changes be made after the approval of the map without the approval of the director for the boundaries of the limited common elements or their assignment to apartments, or to the boundaries of the common elements. The proposed " section appears to run contrary to the intent of the cited state statutes. F~erhaps the proposed section could be redrafted to clearly differentiate between the changes permitted by the State Condominium Law, and those changes which the county has jurisdiction over. Proposed Section 23A-101=xerriptions Appear To Nullify 1`he Intent ~f The State Statutes Proposed section 23A-20(a) appears to conflict with and or exceed the state daw requiring the developer to declare that the condominium property regime project was created in compliance with all zoning and building ordinances and codes, and a!I other permitting regeairernents (514A- 1.6, 514A-13; 514A-40(a), MRS). Proposed section 23A-20(a) requires the director to certify compliance with all county laws for new projects prior to construction. However, sections 514A-1.6, 514A-13, 514A-40(a), HRS, require the developer to declare that the project is in compliance, not the director. Proposed section 23A-20(b) appears to be in conflict with the state laws (sections 514A-1.6, 514A-13, 594A-40(b), MRS) which require the appropriate county official to sign a statement that the project is !n compliance with all zoning and building ordinances and codes applicable to the project at the tune of construction. I~roposed section 23A-20(b), in requiring the declaration to be filed with the Sureau of Conveyances no later than one year after the effective date of the ordinance, appears to nullify and conflict with sections 514A-1.6, 514A-13, 514A-40(b), 46-4(a), and 205-8,B~~S. Sections 514A-1.6, 514A-13, 514A-40(b), HRS, allow for the conversion of legal nonconforming structures to condominium property regime status without placing a time period for such. _ _ Mr. Christopher Yuen April 19, 2002 Page 9 Section 46-4(a) allows for the phasing out and amortization of legal nonconforming uses in certain areas except for any existing building or premises used for residential (single family or duplex) or agricultural uses. Proposed section 23A-20(b), is in opposite, and proposed section 23A-20(b), places a one year period for the filing of a declaration converting existing legal nonconforming structures. We repeat the discussion here of section 514A-~40(b), hIRS, and section 46-4(a), hIRS, which requires the county offiicial to sign a statement of compliance at the time the converted structures were built. Which discussion is set forth starting on page 4. Proposed Section 23x4-21 Incorrectly Applies Rollback'faxesa As previously discussed, Chapter 514A, HRS, is not a land use vehicle; it is simply an ownership, consumer protection statute, and a governance statute. 'Thus, the rollback taxes apply to subdivisions and not to condominiums. ltecorryrraendatlons: In closing, the Commission extends an offer to assist the County of Hawaii in another redraft of the proposed ordinance that will: provide county regulation limited to land use issues; supplement Chapter 514A with provisions that are not in conflict with Chapter 514A and other applicable State Statutes as discussed herein; and not inadvertently defeat the purpose of the State Condominium Law and other applicable State Statutes as discussed herein. Should you have any further questions, please call me at 586-2646 or write to me at the address above. Very truly yours, Mitchell Imanaka, Chair Condominium Review Committer 13y: • thia M.. L. ee Senior Condominiu Specialist osoao~.aawaaa coun4y Prop~asea o~aa