Real Estate & Property Law

Transcript of Arguments in Maui Affordable Housing Exaction Case

By Robert Thomas (inversecondemnation.com)

The transcript of the June 2, 2008 arguments in the federal lawsuit challenging Maui's affordable ("workforce") housing exaction have been released. That hearing resulted in a lengthy opinion by the District Court holding that the plaintiff's Nollan/Dolan claims were not ripe, and a recent order holding that the facial due process and equal protection claims should be dismissed.

The most interesting part of the hearing was when the county admitted the motivation for the 40-50% exaction was to not give all infrastructure away to "millionaires from the Mainland," or even "millionaires on Maui."  The court, as one might expect, had a bit of difficulty with that reasoning:

MS. D'ENBEAU: And this is for people, good solid middle income people who find themselves priced out of the market on Maui. So the county council in its wisdom decided, All right, since we have limited water, we have limited roads, we have limited infrastructure, let's not give it all away to these millionaires from the Mainland who are coming. And it doesn't matter if they're from the Mainland, I guess they could be millionaires on Maui.

THE COURT: That was a really bad thing to say because I've declared a statute unconstitutional in this state that was aimed specifically at people coming from the Mainland.   [The decision the court is referring to is Walsh v. City and County of Honolulu, 460 F. Supp. 2d 1207 (D. Haw. 2006), where a state statute which imposed a pre-employment residency requirement for public employment was declared unconstitutional.  More here.]

MS. D'ENBEAU: Right. And I apologize for that. That was a bad remark.

THE COURT: That was a really bad thing to say.

MS. D'ENBEAU: Yes, it was.

THE COURT: But it may well have been what motivated this ordinance.

MS. D'ENBEAU: I don't think it's necessarily. I think the thing about, if I could bring -- now that I've -- now that I've stepped into those treacherous waters of the Mainland. I think one of the important things to realize is that various states have various requirements for when your property interest vests and when something is ripe. And in Hawaii it isn't even enough to have a building permit, it's not enough to -- you have to have your final discretionary approval. 

So developers, of course, are on notice of this information. And the developers in this case didn't purchase the property until 2006. So they knew full well that the county council was considering an ordinance for this workforce housing. And that ordinance at some points was discussed at 80 percent. So, they're looking at the property and deciding to invest in it -- I think in terms of the Penn Central standards anyway, their investment backed expectations -- depends on the same way the Nukolii people had to know that the referendum had been certified. You know, you have to look and make your own investment based decisions. And so, in that case if you were looking at a Penn Central standard but they would have to be able to show all of that. So, even though -- you know, the fundamental argument is they're not there yet because they don't have their final discretionary approval. So we don't know what their project will look like at --

Transcript at 25-26.  As detailed here, both parties have moved for summary judgment on other issues, with a hearing scheduled for late September.

Full post as published by inversecondemnation on September 14, 2008 (boomark / email).