ICA Holds that Denial of SMA Permit Assessment is Ripe for Takings Claim without First Pursuing Plan Amendment

In Leone v. County of Maui, 128 Haw. 183 (2012), cert. denied, Appellants purchased property at Palauea Beach in Makena, Maui.

Palauea Beach Facing South

The 1998 Kihei-Makena Community Plan (Community Plan) assigned the beach lots a "park" land use designation, which does not permit the construction of single-family residences.  The Palauea Beach lots are also located in a "special management area" (SMA) under the Hawaii Coastal Zone Management Act (CZMA).  See HRS § 205A-22. Consequently, prior to building Appellants' desired single-family residences, they first needed to seek a Community Plan amendment from "park" to "residential."

A Community Plan amendment is a legislative process that involves review of the proposal by the County Planning Commission and adoption by the County Council. However, the County Planning Commission refused to accept the requisite environmental assessment, which the court found was part of a “deliberate strategy to preserve the status quo.”

Appellants nevertheless filed SMA assessment applications with the County Planning Department. Predictably, the Director rejected Appellants' applications, because the proposed use was inconsistent with the properties' "park" designation in the Community Plan. Appellants then filed inverse condemnation claims under article I, § 20 of the Hawaii Constitution and the Fifth and Fourteenth Amendments to the United States Constitution, alleging that Maui County had engaged in regulatory takings by depriving their properties of any economically viable use.

The Circuit Court dismissed all claims in both cases for lack of subject matter jurisdiction on ripeness grounds. It concluded that the claims were unripe for adjudication, because Appellants failed to exhaust administrative remedies, namely: (1) appealing the Director's decision to the Planning Commission; (2) waiving assessment procedure and submitting an SMA permit application; and (3) seeking an amendment to the Community Plan to change the properties' designation from "park" to "residential."

Appellants timely filed notices of appeal to Hawaii’s Intermediate Court of Appeals (ICA). Upon review, the ICA opined the following:

• Appellants are not required to appeal the Director's decision that their assessment application could not be processed because "[t]he proposed Single-Family dwelling is inconsistent with the Community Plan." The Director's decision satisfied the finality requirement for ripeness by setting forth a definitive position regarding how Maui County will apply the regulations at issue to the particular land in question.
• Appellants are not required to seek a change in the applicable law, i.e., the Community Plan, in order to satisfy the ripeness requirement for their takings claims. Citing Williamson Cnty. Reg'l Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172, 186 (1985), the ICA reasoned that the taking was ripe in this case, because the Director reached a final decision regarding the application of the SMA regulation to the property at issue. Unlike in Williamson, the Appellants did not have a variance process to pursue.  The Court did not agree with the County's argument that an amendment to a Community Plan is like the variance process in Williamson.  In Williamson, the court held that the takings claims were unripe, because the respondent failed to seek available variances, and thus the decision was not final

In conclusion, the ICA held that the Circuit Court erred in its determination that it lacked subject matter jurisdiction, because Appellants' claims were not ripe for adjudication. The ICA vacated the Circuit Court's order and remanded the case for for further proceedings.