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HomeMy WebLinkAboutCOM 0117.003 2008-2010 KENNETH G. GOODENOW tv o: N RODNEY OSHIRO County Clerk ip0± Deputy County Clerk y6i;wt Mauling Address: j-"j- t (Former County Building r •o:'N~'~ Business Address: 25 Aupuni Street 333 Kilauea Avenue, Second Floor Hilo, Hawai'i 96720 Ben Franklin Building County Of Hawai'l Hilo, I-lawai'i 96720 Office of the County Clerk Telephone: (808) 961-8255 Facsimile: (808) 961-8912 °o co i) w To: J Yoshimoto, Chair and Members of the Hawaii County Council From: Kenneth Goodenow, County Clerk, \J 5L "N v Date: March 10, 2009 Re: Documents Made Public by the Council on February 19, 2009 At a meeting of the County Council held on February 19, 2009, the Council voted unanimously to take public the following documents: 1) An e-mail dated January 22, 2009, sent by Corporation Counsel Lincoln S.T. Ashida to Council members regarding Impact Fees and Fair Share; 2) An e-mail dated January 22, 2009, sent by Corporation Counsel Lincoln s. r. Ashida to Council members and others regarding the e-mail listed as "I " above; and 3) An eight-page handout presented by Deputy Corporation Counsel Amy G. Self to Council members during an executive session of the County Council held on February 4, 2009. These three documents are attached to this communication, which will be processed and assigned an appropriate communication number. KG Enclosures Comm. No. + 3 Ref. To: Ref. Date viAn. Serving the Interests of the People of Our Island Hawai'i County is an Equal Opportunity Provider and Employer Page 1 of 3 Goodenow, Kenneth From: Ashida, Lincoln Sent: Thursday, January 22, 2009 9:05 AM To: Yoshimoto, J; Hoffmann, Pete; Yagong, Dominic; Ikeda, Donald; Onishi, Dennis; Naeole, Emily; Enriques, Guy; Greenwell, Kelly; Ford, Brenda Cc: Rodillas, Martha; Self, Amy; Takase, Gerald; Garson, Kathy; Kamelamela, Joseph; Hookano, Levi; Goodenow, Kenneth; Yamada, Glynis; Murashige, Laura Subject: RE: Impact Fees and Fair Share PRIVILEGED AND CONFIDENTIAL COMMUNICATION ATTORNEY-CLIENT COMMUNICATION. NOT A PUBLIC RECORD Council Members, Correction to the below, former County Clerk Casey Jarman disagreed with our position, not the present Clerk Mr. Goodenow. My apologies to Mr. Goodenow and the Council for this misstatement. Lincoln Lincoln S. T. Ashida Corporation Counsel County of Hawaii From: Ashida, Lincoln Sent: Thursday, January 22, 2009 7:48 AM To: Yoshimoto, J; Hoffmann, Pete; Yagong, Dominic; Ikeda, Donald; Onishi, Dennis; Naeole, Emily; Enriques, Guy; Greenwell, Kelly; Ford, Brenda Cc: Rodillas, Martha; Self, Amy; Takase, Gerald; Garson, Kathy; Kamelamela, Joseph; Hookano, Levi; Goodenow, Kenneth; Yamada, Glynis; Murashige, Laura Subject: Impact Fees and Fair Share PRIVILEGED AND CONFIDENTIAL COMMUNICATION ATTORNEY-CLIENT COMMUNICATION NOT A PUBLIC RECORD Council Members, There has been recent discussion and comment by some Council members at recent meetings concerning the legality of the County's fair share program. It was suggested by some that Third Circuit Court Judge Ronald Ibarra ordered the County's fair share program illegal. This is not correct. Judge Ibarra ruled the County's fair share assessment provisions of the Development Agreement (between the County and Oceanside) were illegal. The following is the conclusion of law that some feel concluded the entire fair share program 2/20/2009 Page 2 of 3 was declared illegal: Count 2: (Declaratory Judgment That Development Agreement is Illegal) The condemnation and fair share assessment provisions of the Development Agreement are declared illegal. Judgment is hereby ordered to be entered in favor of C&J Coupe Family Limited Partnership and against County of Hawaii and 1250 Oceanside Partners because County Resolution 266-06 illegally delegated the County's power of condemnation through the Development Agreement to a private party, 1250 Oceanside Partners. You must read the entire order, including all findings of fact to understand the extent of the above conclusion. Judge Ibarra in essence found the Development Agreement invalid for a number of reasons, including the impermissible delegation of the condemnation power by the County (authorized in good faith by a previous Council). To read the above finding to conclude the Judge found the County's fair share assessment illegal would be tantamount to reading the finding to also conclude the Judge found the County's condemnation powers illegal, since the finding simply says, "The condemnation and fair share assessment provisions of the Development Agreement are declared illegal." Clearly this is not what the Court intended nor did. Judge Ibarra could very well have ordered the County's fair share assessment (as applied to any set of circumstances even beyond the present Development Agreement) to be invalid and illegal, but he did not do so. This is why the language in the findings and order specifically state "The condemnation and 'fair share' assessment provisions of the Development Agreement are declared illegal." The Court could have legally found and concluded as. a matter of law that "The County's 'fair share' assessments are illegal and violate HRS Section 46-141." Had the Court said that, no question the County's fair share assessment process would be deemed invalid. But that is not the case. Now, does that mean we don't need an impact fee ordinance? No, we are not saying that. In fact, our Land Management Division of our office reports that although there is enabling legislation promulgated by the State in HRS, the only county to adopt an impact fee ordinance is the City and County of Honolulu, but even then it was limited to the District of Ewa. In fact, it has been suggested that this ordinance was driven by developers who realized their payments under the impact fee ordinance was less than what it would be under a fair share assessment. Our Land Management Division understands the State Legislature needs to make comprehensive changes to the enabling statute for impact fees to make it workable. But in the absence of an impact fee ordinance, the fair share assessment is a mechanism that ensures that the County obtain certain public benefits from developers through mutual negotiation and agreement. To conclude generally that the County's fair share assessments are invalid in all cases is not supported by Judge Ibarra's order, and further burdens our County's resources in not having developers provide their "fair share." The bottom line is the mutually beneficial fair share assessment benefits our County and our taxpayers. In fact, both Maui County and the City and County of Honolulu have developers sign a unilateral agreement ("UK) for their fair share of the impact of the development. Thus the practice in our County (note that in 2003 the Council passed an ordinance which established the authority to collect fair share contributions) is consistent with what occurs in both Maui and Oahu. 2/20/2009 Page 3 of 3 1 am informed both Mr. Goodenow and Mr. Hookano may disagree with the above and believe Judge Ibarra invalidated the County's fair share assessment. I respect both gentlemen and fully recognize and respect their opinions, and understand their concern after reading the Judge's findings and order. I welcome their comments and thoughts so the Council may have a balanced understanding of the legal issues and concerns. We simply wanted to set forth in writing the position of our office with respect to the existing fair share ordinance and Judge Ibarra's order so the Council understands exactly where we are coming from. If you have any questions, please let us know. I am respectfully asking Glynis and Laura to number this communication and distribute to all Council members so there can be meaningful discussion before the Council tomorrow. Thank you, Lincoln Lincoln S. T. Ashida Corporation Counsel County of Hawaii 2/20/2009 I Outline for Zoning, Conditional Rezoning and Fair Share Contributions 1. Counties' Zoning Powers The counties derive their zoning powers from Hawaii Revised Statutes ("HRS") section 46-4(a), referred to as the Zoning Enabling Act. The following excerpts from HRS § 46-4(a) demonstrate the broad powers conferred by the legislature on the counties: "Zoning in all counties shall be accomplished within the framework of a long-range, comprehensive general plan prepared or being prepared to guide the overall future development of the county. Zoning shall be one of the tools available to the county to put the general plan into effect in an orderly manner. Zoning in the counties of Hawaii, Maui, and Kauai means the establishment of districts of such number, shape, and area, and the adoption of regulations for each district to carry out the purposes of this section. In establishing or regulating the districts, full consideration shall be given to all available data as to soil classification and physical use capabilities of the land to allow and encourage the most beneficial use of the land consonant with good zoning practices. The zoning power granted herein shall be exercised by ordinance which may relate to: (12) Other regulations the boards or city council find necessary and proper to permit and encourage the orderly development of land resources within their iurisdictions. The powers granted herein shall be liberally construed in favor of the countv exercising them, and in such a manner as to promote the orderly development of each county or city and county in accordance with a long-range, comprehensive general plan to ensure the greatest benefit for the State as a whole. This section shall not be construed to limit or repeal any powers of any county to achieve these ends through zoning and building regulations, except insofar as forest and water reserve zones are concerned and as provided in subsections (c) and (d)." (emphasis added). However, the counties' zoning powers are subject to the following liabilities and limitations found in HRS § 46-1.5(13), which provides: 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 of any state statute where the statute does not disclose an express or implied intent that the statute shall be exclusive or uniform throughout the State." This means that if a county ordinance conflicts with a Hawaii statute that is of statewide concern, the county ordinance is invalid because it violates article VIII, section 6 of the Hawaii Constitution and HRS 50-15, the state's supremacy provisions.[ One example of a land use statute that is of statewide concern is HRS § 205 regarding the limitations on agriculture land. 2. Zoning and Rezoning Ordinances are Legislative Acts The Hawaii Supreme court has held that a zoning or rezoning by ordinance is a legislative function by the county council and is subject to the deference given legislative acts.2 In other words, a zoning or rezoning ordinance passed, by the county council is presumed valid by the courts. Accordingly, the challenger of the zoning or rezoning ordinance has the burden of showing that it is arbitrary, unreasonable or invalid.3 Therefore, as long as a county zoning or rezoning ordinance falls within the broad powers of HRS § 46-4(a) and does not conflict with a Hawaii statute that is of statewide concern, it is presumed valid.4 3. Conditional Rezoning Conditional rezoning, as described by the New York Court of Appeals, is: "a means of achieving some degree of flexibility in land-use control by minimizing the potentially deleterious effect of a zoning change on neighboring properties; reasonably conceived conditions harmonize the landowner's need for rezoning with the public interest and certainly fall within the spirit of the enabling legislation."s An increasing number of state court decisions either expressly hold or strongly indicate that local legislative bodies possess the authority to rezone with site-specific conditions, even in the absence of express statutory authority." 6 In general, "state courts uphold conditional rezoning so long as the rezoning: (1) promotes the general welfare and not merely private interests; (2) the rezoning does not otherwise constitute illegal spot zoning; (3) the conditions imposed are reasonable and not otherwise illegal; and (4) there is no express agreement bargaining away a municipality's future use of the police power." 7 The following cases exemplify these principles: 'Save Sunset Beach Coalition v. City and County of Honolulu, 102 Hawaii 465, 78 P.3d 1(2003). 2 Id. 7 id. 4 Id. 5 Collard v. Incorporated Village of Flower Hill, 421 N.E.2d 818, 822 (1981). 6 See 3 Rathkopfs The Law of Zoning and Planning 44:4 and 44:12 (4" ed.) (courts in the following states have either expressly upheld or strongly indicated support for conditional rezoning: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, D.C., Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Washington and Wisconsin). '3 Rathkopfs The Law of Zoning and Planning § 44:12 (4a' ed.) I I II I (a) Cross v. Hall County, 235 S.E.2d 379 (GA. 1977) (conditional rezoning ordinance upheld where rezoning was conditioned upon the applicant agreeing to resurface the road leading to the property and condition was deemed a proper exercise of the police power in order to ameliorate anticipated effects from the zoning change). (b) Scrutton V. County of Sacramento, 79 Ca1.Rptr. 872 (Cal.App. 1969) (court held that as a general matter, where a state constitution or statute confers upon a municipality the authority to adopt zoning regulations, the reasonable exercise of such police power includes the imposition of conditions for the well-being of surrounding landowners or in order to promote community development and serve the general welfare). (c) Transamerica Title Insurance Co. v. City of Tucson, 533 P.2d 693 (Ariz.App. 1975) (Court held that the city may, through its legislative power, require conditions which promote public convenience, safety, health, and welfare in order to safeguard the public interest. However, based on these principles, the court struck down a condition requiring dedication of lands on properties owned by the developer but not the subject of the rezoning application.). The cases cited above clearly stand for the proposition that as a matter of legislative authority and police power, municipalities may impose reasonable conditions to rezoning ordinances so long as such conditions bear a reasonable relationship with the anticipated increases in infrastructure needs which are directly attributable to or created by the proposed development. On the other hand, a few state court decisions expressly hold or strongly indicate that local legislative bodies within their jurisdictions do not have authority to enact a rezoning ordinance with site-specific conditions under the states' zoning enabling statute and that such a practice violates the statutory requirement of uniformity for zoning restrictions within a zoning classification! One example of such a decision is where the Court of Appeals of Connecticut held in Bartsch v. Planning & Zoning Commission that a conditional rezoning ordinance was invalid because rezoning ordinance in question conditioned approval of the rezoning upon the placement on the town land records of a restrictive covenant limiting the use of the premises to a medical office building and such restriction was perpetual in nature and ran with the land.9 In so holding, the court stated that the condition was a blatant violation of the strict requirement of the town's zoning regulations that zoning regulations be uniform for each class of or kind of buildings, structures or use of land throughout each district and it created a nonamendable regulation or use classification precluding future changes pursuant to the town's zoning regulations.10 s See 3 Rathkopfs The Law of Zoning and Planning § 44:3 (4°' ed.) (citations omitted). s See Bartsch v. Planning & Zoning Com'n of Town of Trumbull, 506 A.2d 1093 (1986). ° See id I ~ I Similar to the growing trend across the country, the Counties of Hawaii and Maui and the City and County of Honolulu use conditional rezoning as a means of mitigating the impacts of development on the communities. In doing so, the counties rely on the general legislative authority in the exercise of police powers and FIRS § 464(a), which provides that the zoning power granted to the counties shall be exercised by ordinance and may relate to: "(12) Other regulations the boards or city council find necessary and proper to permit and encourage the orderly development of land resources within their jurisdictions." HRS § 46-4 also provides in pertinent part that "[t]he powers granted herein shall be liberally construed in favor of the county exercising them, and in such a manner as to promote the orderly development of each county or city and county in accordance with a long-range, comprehensive general plan to ensure the greatest benefit for the State as a whole." In addition, the Hawaii County Council passed Ordinance No. 96-160 in 1996 to allow conditional zoning.' Section 25-2-44, Hawai'i County Code ("HCC"), authorizes the council to impose conditions on an application for a rezoning, provided that the council finds that the conditions are: (1) Necessary to prevent circumstances which may be adverse to the public health, safety and welfare; or (2) Reasonably conceived to fulfill needs directly emanating from the land use proposed with respect to: (A) Protection of the public from the potentially deleterious effects of the proposed use, or (B) Fulfillment of the need for public service demands created by the proposed use. ...12 Such rezonings must also be consistent with the General Plan. 13 Thus, in addition to the general legislative authority to impose reasonable conditions on zoning, there is also specific, express, or implied enabling authority in the statutory and code provisions cited above. Although there is no Hawai'i case law directly on point concerning the authority to impose such conditions, "we believe that such conditions would be upheld. "14 In " See Hawaii County Code 1983 (2005 Edition, as amended) § 25-2-44. 12 Hawaii County Code 1983 .(2005 Edition, as amended) § 25-244. " Hawaii County General Plan February 2005 at 144. " Quoting legal memorandum regarding Propriety of Rezoning Conditions Requiring Off-Site Improvements, dated September 17, 1985, signed by Ronald Ibarra, Corporation Counsel. I Perry v. Planning Commission of County of Hawaii, the Supreme Court of Hawaii held that, at least in the matter of special permit applications, the planning commission may impose protective restrictions on the grant and approval of the special permit. The Court held that such a condition is analogous to conditional rezoning, and, generally, such conditional actions will be "upheld when the conditions are imposed for the protection [or] benefit of neighbors to ameliorate the effects of a zoning change."15 Based on all of the foregoing, we believe, as did Ronald Ibarra in his September 17, 1985 legal opinion, that the conditions imposed by the county council on rezonings will be upheld if challenged in court, so long as such conditions comply with the requirements of Section 25-2-44, HCC. However, it is ultimately up to the courts to determine the validity of such conditions, which will be determined by the facts. 4. Fair Share or In Lieu of Fair Share Conditions of Rezoning Section 2-162.1, HCC, which was adopted by the county council in 2003 after an impact fee ordinance failed to pass, establishes the authority to collect fair share contributions. As a condition of a rezoning ordinance, the County Council may require applicants to make a fair share contribution to mitigate the potential regional impacts of the development with respect to parks and recreation, fire, police, solid waste disposal facilities, and roads. The County Council determines whether the fair share contribution is made as cash, land, facilities, or any combination thereof. The value of the contributions is based on the cost of public facilities per developed unit. In lieu of paying the fair share contribution in cash, the applicant may contribute land and/or construct improvements/facilities related to parks and recreation, fire police, solid waste disposal facilities, and roads within the region impacted by the proposed development, subject to the review and recommendation of the Planning Director, upon consultation with the appropriate agencies and approval of the County Council. Like any exaction or condition of a rezoning ordinance, fair share contributions must have a rational nexus to the impact caused by the development. In other words, the expenditure must benefit the fee-paying development and be directly related to the impact caused by the fee-paying development. Moreover, the expenditure should not duplicate the services paid by the development through other means, such as property taxes. An eligible project for fair share, therefore, should meet the following criteria: a. Capital improvement (not services that are funded by property taxes as part of the County operational budget); b. New construction (not major repairs or renovations that correct existing deficiencies); c. Located in the judicial district in which the fair share was collected (to benefit the fee-paying development); I s Perry v. Planning Commission of County of Hawaii, 62 Haw. 666, 681-682, 619 P.2d 95, 105-106 (1980) (citing the Scrutton and Cross cases previously mentioned). d. Regional benefit (not limited to a single neighborhood or community). The validity of fair share or any other condition imposed by the county council on a rezoning ordinance will depend on whether a rational nexus has been established, the criteria for which is essentially outlined in section 25-2-44, HCC. To determine whether the condition imposed is reasonable or rational to fulfill the need for public service demands created by the proposed use, the county council should review the recommendations provided by the Planning Director and Planning Commission. Because the Hawaii Supreme Court has held that rezoning ordinances are legislative actions, any rezoning ordinance passed by the county council is presumed valid by the court. Anyone who challenges such a rezoning ordinance has the difficult burden of proving that the rezoning ordinance is arbitrary, unreasonable or invalid. As mentioned previously, however, it is ultimately a decision that must be made by the courts. 5. Judge Ibarra Did Not Find Fair Share Contributions as Conditions of Rezoning Illegal in the Coupe Case There has been much discussion in the local newspapers regarding Third Circuit Court Judge Ronald Ibarra's Findings of Fact, Conclusions of Law and Decision and Order in the case County of Hawaii v. Robert Nigel Richards, et al. (or commonly referred to as "the Coupe case"). As indicated by Corporation Counsel Lincoln Ashida in his legal opinion emailed to the county council on January 22, 2009, Judge Ibarra did not order the County's fair share contributions illegal. In fact, the issue of the County's power to impose fair share contributions as conditions of rezoning ordinances in general was not even before the court in the Coupe case. I To understand exactly what the court concluded and ordered, it is necessary to read the Findings of Fact, Conclusions of Law and Decision and Order in its entirety. In doing so, you will find that all of the Findings of Fact with regard to fair share are based on the development agreement and not fair share in general. A court's conclusions of law and order are derived from its findings of fact. A court cannot arrive at conclusions of law that are unsupported by its findings of fact. The court in the Coupe case found in part that the fair share assessments as used in the development agreement were illegal because they were being imposed on private property owners who had not participated in the negotiations for this thirty-year "fair share" allocation in the development agreement.16 In other words, unlike the legislative process under section 25-2-44, HCC, which authorizes the county council to impose conditions on rezoning ordinances, the fair share condition in the development agreement was being imposed on landowners who had not even applied for a rezoning of their properties. Based on all of the Findings of Fact and Conclusions of Law, the court rightfully ruled that "the `fair share' assessment provisions in the Development Agreement are illegal." 17 6 See County of Hawaii v. Robert Nigel Richards, et al (Coupe case), First Amended Findings of Fact, Conclusions of Law, and Order, Finding of Fact No. 50. See id at Conclusions of Law Nos. 2 and 3. I I Moreover, the important question to ask is how could Judge Ibarra conclude or order that the county council's practice of imposing fair share conditions on rezoning ordinances is illegal when that issue was never before the court. 6. The Impact Fee Statute Did Not Invalidate the Council's Power to Impose Conditions on Rezonine Ordinances There is no indication in the legislative history of HRS § 46-141 et seq. (Act 282 relating to Impact Fee Authorization) that the state legislature intended to invalidate the conditional rezoning practices of our County and that of Maui County and the City and County of Honolulu. In the purpose section of Act 282, the legislature found the following: ' "The legislature finds that development and construction for residential, commercial, industrial, hotel,. and other purposes have placed a significant burden upon existing public facilities. The legislature further finds that present and future development Aril place severe burdens upon existing public facilities, resulting in a substantial and detrimental impact upon the quality of life, health, and general welfare of our population. The legislature recognizes that in order to maintain an acceptable capacity of public services and to preserve the quality of life in the region, some counties have adopted impact fee ordinances that establish a system of financing the development of public facilities by assessing, on a pro rata basis, the reasonably anticipated costs of developments and improvements. The legislature finds that the imposition of an impact fee to provide for public facilities and services required by such development is both fair and reasonable. In response to county interest in impact fee legislation, the legislature finds that there is a need to establish general guidelines and provisions for adoption of impact fee ordinances and assessment of impact fees. The purpose of this Act is to set forth general guidelines for the adoption of impact fee ordinances and to establish uniform general provisions for county impact fee ordinances adopted after the effective date ofthe Act."t8 So, clearly the legislature's purpose in passing Act 282 was to set guidelines for counties wishing to pass impact fee ordinances, but not to prohibit other types of development exactions such as conditional rezoning. Further evidence of this is found in HRS § 46- 148 ("Transitions"), which provides: "Any county requiring impact fees or imposing development exactions, in order to fund public facilities, shall incorporate fee requirements into their broader system of development and land use regulations in such a manner that developments, either collectively or individually, are not "Act 282, § 1, 16'h Leg., Reg. Sess. (1992). I required to pay or otherwise contribute more than a proportionate share of public facility capital improvements." (Emphasis added). A plain reading of the above section of the impact fee statute, combined with the lack of evidence in the legislative history as discussed above, evidences that the, legislature did not intend to prohibit the counties from imposing other types of development exactions, thus the language "or imposing development exactions," but rather the development exactions imposed by counties must not be more than a proportionate share of the public facility capital improvements, which, at least for Hawaii County, is incorporated into sections 25-2-44 and 2-162.1, HCC. On the other hand, it could be argued that because the County's formula determining the fair share contributions per single family residential is set forth in a policy memo rather than in the county code, it may not in compliance with HRS § 46- 148. For example, the formula for determining the amount of land required for parks is set forth in Chapter 8, HCC. The county council could amend the County Code to j include the fair share formula, if it so chooses. However, with respect to the validity of the County's present system, it is ultimately up to the courts to make such a determination. 7. Fair Share Conditions on Rezoning v. Impact Fees There are pros and cons for both fair share conditions on rezoning and impact fees. It is up to the council to decide whether to continue with the current system of fair share conditions on rezoning or to pass an impact fee ordinance. As previously explained, the current system provides more flexibility for land-use control by minimizing the potentially deleterious effect of a zoning change on neighboring properties and the community (i.e., fair share contributions can be made as cash, land, facilities, or any combination thereof); whereas, impact fees are only made as cash but eliminate the challenge of determining whether the conditions have a rational nexus to the impact caused by the development. As your legal counsel, it is not our intent to advocate for one over the other, but to hopefully provid you with enough information to make an informed decision. However, if the council should decide that it prefers impact fees over the fair share conditions of rezoning, we recommend that the council pass the impact fee ordinance prior to rescinding fair share. To do otherwise would burden our County's resources in not having developers provide their fair share. I