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"Hardship With Variances" - How the Kyo-ya decision will alter the permitting approach for Hawaii developments

September 23, 2015 | Share

LAND USE: Hawaii Supreme Court Signals in Surfrider Foundation (Kyo-Ya) that Standard for Variances Will Be More Strictly Enforced, Increasing the Burden on Applicants to Show Hardship and Creating Uncertainty for Developers

Takeaways

The Hawaii Supreme Court is unlikely to allow significant changes in land use by way of a variance. While it may be possible to distinguish other types of variances going forward on the basis that the coastal height setback is of greater significance and requires greater protection that numerous other provisions in the land use ordinance, it is likely that all future variance requests will receive greater scrutiny. This creates uncertainty for applicants whose requests for variances are granted by the Director as to whether the variance might be reversed on appeal. As such, the burden on applicants to show hardship in their variance applications, through data and other evidence, has been increased.

The Hawaii Supreme Court’s decision in Surfrider Foundation v. City and County of Honolulu Zoning Board of Appeals, SCAP-13-0005781 (Sept. 23, 2015) suggests that developers will have greater uncertainty and a higher burden when it comes to showing hardship for purposes of obtaining a variance from county land use ordinances.

In that case, the Court found that the Director of the City and County of Honolulu Department of Permitting and Planning improperly granted a variance to Kyo-Ya Hotels & Resorts LP, the owner of the Moana Surfrider hotel complex in the Waikiki Special District.  The variance would have allowed Kyo-Ya’s proposed 26-story hotel and residential tower – and a 74% encroachment into the coastal height setback along the Waikiki shoreline.

Pursuant to the Revised Charter of the City and County of Honolulu, a party may be granted a variance on the basis of unnecessary hardship by demonstrating that all of the following requirements have been met:

  1. Deprivation of the reasonable use of the property otherwise;
  2. Unique circumstances, and not the general circumstances of the neighborhood, have caused the request (so as not to call into question the reasonableness of the neighborhood zoning); and
  3. Approval of the request will not alter the essential character of the neighborhood or be contrary to the intent and purpose of the zoning ordinance.

The Supreme Court determined that none of those requirements were met by Kyo-Ya.

First, Kyo-Ya established only that, absent the variance, it would be deprived of a reasonable use of its property, not all reasonable use. Even if Kyo-Ya showed that the existing tower was extremely dated and would continue to decline if not allowed to be redeveloped, other alternatives existed, including replacement or renovation of the existing nonconforming tower, (as expressly allowed by the land use ordinance, subject to certain conditions), construction of a compliant building design, or a building design with a greater degree of compliance with the coastal height setback.

Other factors relied upon by the Director in finding that the variance was necessary for the “economic viability” of the property were also rejected by the Court. The Court found that the variance was not required for Kyo-Ya to develop in accordance with its Planned Development – Resort (PD-R) permit, as a PD-R permit cannot supersede the coastal setback requirement. And, the Court stated that a variance must be based on the certified shoreline at the time of the application - a private agreement to extend the shoreline 180 feet, which project was never undertaken, and the State of Hawaii’s planned Waikiki Beach Maintenance Project, expected to extend the beach by 40 feet, were irrelevant.

As to the second requirement, the Court found that narrowness of a lot is not in itself a unique circumstance where, as here, there were alternative building designs and options available that did not require a 74% encroachment into the coastal setback; and external conditions, e.g., a buildable area reduced by setback requirements or a shoreline subject to drastic change by artificial means, do not constitute unique attributes of a parcel.

Finally, the Court found that there are nonconforming properties in the Waikiki Special District that were built prior to the enactment of the special district in 1976 does not provide a basis for further nonconformance. The intent and purpose of the Waikiki Special District and the land use ordinance is to reduce nonconforming uses over time and preserve Waikiki’s Hawaiian sense of place, which is uniquely preserved by the coastal setback (by its direct impact on lateral access along the beach, the public’s enjoyment of coastal resources, and the sense of open space and perception of crowding). The importance of complying with the intent and purpose of the zoning ordinance is magnified where the size of the variance is so great.

Kyo-Ya submitted its variance application on March 19, 2010. Over five years later, and after numerous appeals, they are being sent back to the drawing board following the Court’s decision.


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