HomeMy WebLinkAbout08/10/2011 PLANNING Committee MeetingMINUTES
PLANNING COMMITTEE
August 10, 2011
A meeting of the Planning Committee of the Council of the County of Kauai,
State of Hawaii, was called to order by Nadine K. Nakamura, Chair, at the Council
Chambers, 3371-A Wilcox Road, Lihu`e, Kauai, on Wednesday, August 10, 2011,
at 9:35 a.m., after which the following members answered the call of the roll:
Honorable Tim Bynum
Honorable Dickie Chang
Honorable KipuKai Kuali`i
Honorable Nadine K. Nakamura
Honorable Mel Rapozo
Honorable JoAnn A. Yukimura
Honorable Jay Furfaro
There being no objections, the rules were suspended to take public testimony.
There being no one present to give testimony at this time, the meeting was recessed
at 9:35 a.m..
The Committee reconvened at 9:36 a.m., and proceeded as follows:
Bill No. 2410 A BILL FOR AN ORDINANCE TO AMEND CHAPTER 8,
KAUAI COUNTY CODE, 1987, AS AMENDED, RELATING TO
THE PERMITTING PROCESS FOR TRANSIENT
ACCOMMODATION UNITS
[This item was deferred.]
Chair Nakamura: Today we would like to start off with a
presentation from the Planning Department to explain Bill No. 2410 and we have
Director Mike Dahilig and Marie Williams who have a PowerPoint presentation.
There being no objections, the rules were suspended.
MICHAEL DAHILIG, DIRECTOR OF PLANNING: Good morning Chair,
members of the Council, Mike Dahilig, Director of Planning. We have prepared for
you a PowerPoint presentation on Bill No. 2410 as it relates to implementing
Section 3.I9 of the Kauai County Charter with respect to transient
accommodations. Marie Williams will be providing the presentation on behalf of
the department and before she starts I just wanted to publicly thank her for her
work, as well as Ian Jung's work on this matter, because it is a pretty complex Bill
and it's a pretty complex issue. They have spent a lot of sweat equity on this so I
just wanted to thank them.
MARIE WILLIAMS, PLANNER: Good morning Councilmembers, Chair
Furfaro and Committee Chair Nakamura. We are here today to go over draft Bill
No. 2410. Today I'll be discussing the background of the Bill as well as the original
draft Bill -2386 and go into the components of 2410 and then look at some potential
growth scenarios as well.
Let's start with the General Plan since it is the basis for Charter amendment
Section 3.19 which we are trying to implement through this Bill. Charter
Section 14.06 describes what our General Plan is and I won't read the whole section
but in summary the General Plan is a policy document that shall guide all Council
action concerning land use, development,. urban renewable programs and capital
improvements.
When it comes to the General Plan's policy regarding resort development, we
need to turn to section 4.2.8.1 of the General Plan and the policy is very clear, it
reads that we will encourage and support resort development on lands planned and
zoned for resort use, primarily at Princeville, Kapa`a-Wailua, and Po`ipu which are
our visitor destination areas, the VDA. And as for implementing actions, there
were none listed in this section. The Charter amendment also refers to what is
called the Planning Growth Range of the General Plan which is a set of four (4)
different projections for our resident population, our visitor population, our total
population which is the sum of our resident and visitor populations and then total
jobs as well. I just want to be clear that our General Pian is pretty explicit about
what these projections are meant to be for and it states that the Kauai 2020
projections are not intended to be targets or limits for growth. They are intended to
be guideposts against which to measure actual growth and impacts.
Now let's get into the history of Charter section 3.19. In 2008, .the coalition
for responsible government, they got enough signatures for the Charter amendment
petition and they also had a media campaign and what you see there is one of their
ads from the Garden Island Newspaper. That election in 2008, the Charter
amendment successfully passed with fifty-one percent (51%) of the vote and then in
the intervening years the implementation options provided by what is now Charter
amendment section 3.19 were studied. And then last year in November, Council
referred draft Bill 2386 to the Planning Commission. This year Planning
Commission has been working on draft Bill 2386, our first public hearing and staff
report was presented in February. On February 22, the Planning Commission held
an informational workshop and panel discussion and was continued by the public
hearing on March 22, then on May 24 the Planning Commission recommended
approval with the Planning Department's amendments to draft Bill 2386 which is
now currently draft Bill 2410. This is what the original draft Bill Iooks like and I'll
briefly touch on it but it, that is proposed a permitting growth rate cap on transient
accommodation units and I'll just call them TAUS from now. By requiring
applicants to obtain a TAU certificate, the number of available certificates would be
one point five percent (1.5%) of baseline that counted not only our existing TAU
inventory, but TAU lots or potential TAUS as well. The yearly lottery would
allocate TAU certificates that would be held at the Planning Commission.
The bill in its current form looks like this and it is a little complex. So I will
take you through the process and also show you why certain changes were made.
The main components I want to focus on is the definition of "TAU," the
requirements for applicability and exemptions, and then how we're going to
determine our availability of certificates and then the allocation process, as well. So
one (1) of the first things we had to do was to define what a "TAU" is. This meant
reconciling the definition for "TAU" in the Charter amendment, and what the
definition is in our CZO. There are many types of TAUS, from hotels, to apartments
vacation rentals. This definition includes them all, without including a second
home in the VDA or long-term rental, which should not be considered TAUS and
that was a problem with the original draft Bill 2386. And for the ease of
accounting, in the current Bill we define the "transient accommodation unit
inventory" as the State visitor plan inventory, which is the official census of resort
development for Hawaii. So what permits now apply to this growth rate cap?
Section 8-28.2 of the draft Bill outlined the applicability requirements and these are
really based on Charter section 3.19, Section (a). Applicable are zoning use
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variances and subdivision approvals that would allow the development of more than
one (1) TAU on the lot, that is entitled to more than one plumbing unit. The
original draft Bill simply tied the growth rate cap to permits for mare than one {l)
TAU, which would have created a loophole where applicants might develop several
TAUS on a single lot by coming in for a permit for a single TAU one (1) at a time.
We wanted to prevent that from happening, which is why the full TAU potential of
the lot will be examined. And to illustrate this point, here are some examples, say
an applicant wants to subdivide a parcel within the VDA that has density for ten
(10) TAUS. Yes, they apply, because obviously. the parcel they are seeking
subdivision approval has ten (10) potential TAUS. Example number two (2), an
applicant wants to build a TVR, on the parcel within the VDA but there is also the
potential for an additional dwelling unit that might be used for a TVR,. Under the
Bill, that would apply, because there are two (2) TAUS that could be added. And
then finally, somebody .wants to build amulti-family building outside of the VDA,
because it's outside the VDA and it will not be used for resort purposes, we know it
won't apply and therefore, we wouldn't subject them to the requirements of the bill.
Before we get into exemptions, let's under the difference between exempt
projects and non-applicable projects. There are projects that already received all
their permits from the planning department, but may not be constructed yet and
these projects do not apply to the growth rate cap, because we cannot make them
come back to the Planning Department to get another applicable permit. We can't
make them get another zoning permit, for example. And here are two (2)...
therefore, they don't have to come in and apply for an exemption. Here are two (2)
examples, say there is a lot that was part of a subdivision, prior to December 4,
2008 and it's located within the VDA and the lot is restricted to one (1} home.
Well, even though they will be developing a TAU, you can see that we know that the
permit will not be for more than one (1) TAU and therefore, it is not apply. They do
not need a TAU certificate. The second example there is an apartment/hotel that
has no building permits, but they received their final class four (4) zoning permit
from the Planning Commission before the effective date of Charter amendment
section 3.19. They did not need another applicable permit and can move forward..
pursuant to the conditions of their existing class four (4) permit and therefore they
wouldn't have to come in and apply for an exemption.
So what are the exemption requirements? Well, I just want to be clear there
was no guidance provided on this matter in Charter section 3.19. So we really had
to rely on our County Attorney's. Office to develop language that was fair and
defensible, as well. The current draft Bill recognizes development projects that
have begun construction and have fulfilled or started to fulfill conditions of their
zoning approvals. This. is what the process would look like, that first of all they have
to be an existing resort project and would need FDA ordinance under a zoning to be
approved before the effective date of Charter section 3.19. They would have had to
complete improvements pursuant to the VDA or zoning ordinance and then they
will have to prove that substantial sums were spent, and then they will have to take
the initiative to apply to the Planning Director within one (1) year of the ordinance.
That is the window and then it will close. That is how somebody could successfully
be exempt from the growth rate cap.
There are two (2) key definitions in our exemption requirements and the first
is an existing resort project. To be an existing resort project, it means one (I) or
more parcels that were approved and established prior to December 5, 2008,
pursuant to an ordinance and located in zoning districts that were also approved
and established prior to December 5, 2008. The other key definition is "substantial
sum," and defines this as an amount including cost associated with architectural
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and engineering and professional services but not for planning and permitting,
exceeding twenty percent (20%) of the real property assessment of the land value for
the entire existing resort project for the 2008-2009 tax years as determined by our
Department of Finance. Again, this is something that the County Attorney's Office
spent a lot of time working on with us. Now moving on how we will determine how
many TAU certificates are available prospectively. If you remember the flow chart
and on January 31 of the first year of our allocation cycle, the Planning Commission
would adopt a number of TAU certificates that are available for perspective clients
for the next five (5) years. Let's call the number (n) and (n) would be determined by
taking our TAU inventory in the base year,
which is simply the year prior to the start of the cycle, and multiplying that by
seven point seven, three percent (7.73%), which is one point five percent (1.5%)
compounded over five (5) years. Although this wouldn't apply to our first cycle and
future cycles we would add to this number any lapse or unallocated certificates from
the previous cycles. And moreover, if we have excess growth and I will get into that
in a moment we'll take up to twenty percent (20%) of this number and use it to
account for the excess growth and let me get into that right now. First of all, let's
try to understand why there might be excess growth. Well, excess growth will really
be any inventory growth between two (2) base years beyond what is equivalent to
the one point five percent (1.5%) annual rate of growth and this will come from our
backlog of non-applicable and exempt projects. It could come from TVR,
registrations, from other permits that might not apply, such as maybe a
conservation district use permit, or even a project on land, not under the county
jurisdiction like the Department of Hawaiian Homelands, for example.
How will we deal with the excess growth if it comes about? We're proposing
that we allocate up to twenty percent (20%) of the available certificates to account
for this. This is what it would look like. Here is our first cycle in the green and (b) is
the base year. And the yellow triangle represents our TAU certificate allocation.
Let's say when we come to our next cycle and we look at the new base year, and we
find that actual growth has exceeded what was equivalent to one point five percent
(1.5%) average annual growth over that period, which is represented in the orange
box, that's the excess growth. We are proposing that we do something with the
perspective allocation and I will show you what that is. Here is the excess growth
and the blue boxes represent our new cycle and again, the yellow is our allocation of
certificates. We will take a portion of the available certificates up to twenty percent
(20%), and use it to apply to our excess growth and we will keep doing that until we
pay down this excess growth, so to speak. And then only eighty percent (80%) of
what would otherwise be available to applicants will be available. So now that you
understand the components of the process, let me go over it. First of all, I want to
explain why we're going with the five (5) year allocation cycle. This was a
recommendation from the Planning Commission where they weren't too happy with
the idea of having to conduct an annual lottery and have to entertain having to
aggregate for a single applicant. It seems like something that would be confusing
and not necessarily fair as well. So the thought of going to a five (5) year cycle
means that the Planning Commission would only have to deal with the issue of
certificates and allocating them once every five (5) years. It would sort of be the
better way to administer a program such as this. Also remove the luck factor of a
lottery, as you see in the cycle that after Commission adopts the number of TAU
certificates that would be available, then we would allow applications for use
permits, zoning permits, variances and subdivision approvals for more than one
TAU to come in and they could get also their TAU certificate. And these requests
would be accepted on a first come first served basis. Now that I described how the
system works, let's look at long-term impact of the system. To do so, we have to first
understand our backlog of units that either do not apply or might be exempt from
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the program. Based on our records we estimate that there are approximately four
thousand six hundred and fifty (4,650) potential TAUS that are either not applicable
or might qualify as an existing resort project, and thus apply for an exemption.
Here is a list of some of the projects and the TAUS that are permitted through the
permit shown there. To illustrate this sense, I know that it's sometimes easier to see
them on the map, here is our Princeville VDA and you see the three (3) projects
there that are potential projects. And east Kauai as well and finally our Po`ipu
visitor destination area. You can see that this is where most of our potential growth
will be, there are a lot of projects in this area.
Now let's go through some scenarios, and first let's look at what I call "the
perfect world" scenario because this is where our inventory growth equals our
permitting rate, which would be the case if we started from scratch. If we had
started this program say forty (40) years ago, for example. What it would look like
is that we take an allocation cycle and determine how many certificates are
available and at the end of the cycle we find that growth has been exactly what is
equal to our permitting rate. We move forward and under this scenario, our draft
TAU certificate allocation program works perfectly, of course. We just move forward
that way. And then I also wanted to present aloes-growth scenario because that is
where we are in, our inventory growth has been pretty stagnant over the past years
and we would take our cycle and again develop the number of TAU certificates that
we can allocate. Then when we come to the next base year, we find our inventory
growth has gone below what was the permitting rate. -You can see the gap there.
We just move forward using the actual inventory as our new base year. And the
allocation would be slightly smaller. Now this is our rapid-growth scenario and
there are many assumptions that you have to make with this. One (1) assumption
is if we assume that say fifty percent (50%) of our backlog comes on line in five (5)
years, which has never happened before, but you know, we're just going to take an
extreme scenario to illustrate what this proposed program would look like. So
between our first base year and our second base year, we find that growth has been..
very high. The orange box represents the inventory growth. Again, when we're:
developing our prospective TAU certificate allocation for the next cycle, we would.
immediately implement our system where we reduce the future allocation by twenty
percent (20%), use that twenty percent (20%) to start paying off the excess growth,
and then allowing only eighty percent (80%) of what would otherwise be available
for prospective applicants. We would just have to keep doing this until the entire
orange box is dealt with. Depending on how rapid the growth is, it could take a few
cycles to get through that.
In summary, we feel that 2410 really does accomplish two (2) important
things. First of all, it provides a system to deal with growth driven by our backlog of
permitted and exempt projects and then it helps us to move forward as well and
avoid a moratorium and provide at least some TAU certificates to prospective
applicants over the next several cycles. That is the end of the presentation. Thank
you.
Chair Nakamura: Thank you Mike and Marie, Ian Jung and
Planning Commission for all of the work and thought to get us to this point. We
know that the Planning Commission held several workshops, there was a lot of
input along the way and this is still a work in progress but I wanted to thank you
for getting us to this point. What I wanted to do now is to open up for questions
from the Councilmembers and then once we get through that process, then I wanted
to open it up for public testimony.
Mr. Rapozo: I just have one (1) question. On your rapid
growth scenario, you talk about fifty percent (50%) of backlog comes online in five
(5) years, do we know what that rate is right now? The actual projects coming
online versus our .inventory or measured against, let's say if we have forty-six
hundred, obviously ten percent (10%) would be four hundred sixty (460), five
percent (5%) would be two hundred thirty (230). So do we know that number?
What percentage of projects, today, actually becomes reality annually off of the
inventory number?
Ms. Williams: Historically our visitor plan inventory
growth rate has run from about on average is between two point five (2.5) to three
percent (3%), but over the past few years because much of this growth is driven by
the market, it has slowed down. But then if there's another... if the market
suddenly becomes very busy again, some of these projects that do have entitlements
could come online pretty rapidly but right now from... it looks like growth is slow
and will continue to be slow_
Mr. Rapozo: Well yeah according to the morning news
this morning, it's going to be slow but I think fifty percent (50%), is that a realistic
number? I guess my concern is the people watching this right now look at fifty
percent (50%) and say wow it could be really horrible but really what's the
possibility of twenty-three hundred (2,300} units coming to fruition in the next
five (5) years, I think that is the question. I kind of wanted to look at what's the
realistic expectation for me as a Councilmember who's got to analyze this, really
what should I be looking at and maybe it's for an economist to answer but I just.
think fifty percent (50%) is a stretch and I understand, I think you mentioned that
but is it about two percent (2%) right now? How many projects came into fruition in
the last year and what we anticipate in the next year? I guess is really what I'm
trying to figure out.
Ms. Williams: You're right. That was the absolute worst
case scenario and we know it's not realistic. But at the same time we wanted to
provide a scenario because we just wanted to show how our program would work if
something that has never happened before, did happen. Realistically there is a lot
of movement in our inventory. Last year we saw in our inventory, we saw quite a
few projects leave our inventory as well and because so much of Kaua`i's visitor
inventory are Time Shares and TVR.s and what happens with those, you know it can
change every single year. It's hard to predict. If our inventory was all hotels, it
would be quite simple because those are stable but we might have to do a little bit
more of an analysis on that to determine a realistic number on what will come
online in the next few years.
Mr. Rapozo: Two (2) to three percent (3%) is probably a
fair estimate?
Ms_ Williams: Yeah, that's been our historic rate over the
past, since 1960.
Mr. Rapozo: Okay. Thank you very much and that was a
great presentation. I think for the lay person, it was easy to follow. Thank you.
Chair Nakamura: Just as a follow up to your question
Councilmember Rapozo, were you looking at the number of building permits
approved over the past year or planning permits? I don't think there were any
planning permits approved over the past year. I'm not sure whether there were any
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building permits issued for transient accommodation units and that information we
should be able to get. -
Mr. Rapozo: I'm actually looking at how many units are
we turning, how many units. are we producing, not permitting... but actually... as
the list that you showed, we've got quite a few projects that may never get built.
Chair Nakamura:
Right.
Mr. Rapozo: It just may never get built, I think Coco
Palms is one of them, I'm wondering if that will ever happen but that ties up three
hundred three (303) units of inventory_ My question is, out of the forty-six hundred
units that have been so called in the inventory, how many we anticipate actually
opening the doors, is what I'm saying. Because I think if you look at some of these
projects even some of the projects that are actively moving, even if the economy
turned around tomorrow morning and. everything went, all of a sudden everything
bad went good, some of the bigger projects still would- take fifteen (15), twenty (20)
years to completely build out. I think that's what we got to understand is that it's
not that simple to turn these projects around and some of them, like I said to reach
that build out, will be twenty (20), twenty-five {25) years so that's kind of the
direction I'm heading, I want to know what that number is because a permit is a
permit. A permit doesn't affect traffic, a permit doesn't affect an infrastructure, it's
when that permit gets actually active and the building is there and the units
become available and I'm thinking that's kind of the number I'm really more
interested in as we move forward.
Chair Nakamura: So maybe occupancy permits for transient.
accommodations?
Mr. Dahilig: It's something we can delve in further with
the Building Division to check the number of COs that maybe were triggered as a
consequence of our permits and maybe we can try to get that number for you.
Chair Nakamura: We're also hearing that market absorption
rates are low with some projects. One (1} project being sold or one (1} unit being
sold in one (1) year.
Mr. Dahilig: Anecdotally we have heard of market
absorption being as low as one (1) a year and that's not mentioning who that is but
it is from a financial standpoint which we don't really get into, but anecdotally we
can look at from trying to answer Councilmember Rapozo types of questions that
are on the head in terms of where we were looking at. What is the realistic build
out of this four thousand something unit backlog and it's really a two function test
essentially? When we get tickles from developers from a permitting standpoint,
regardless of whether the economy is good or bad, there's always going to be
inquiries that come in and they usually use this period of time to take care of all the
entitlements so that once the capital flushes into the market, they're going to
essentially -pull the building. permits and get their certificate of occupancy. As
Marie mentioned the historical average is two point five (2.5) to three percent (3%)
however we're in usual times with market capitalization and whether .developers
can actually get the capital to go vertical on the projects. What we'll do is take a
look at COs and see if whether COs have been given for these types o£.. for what's
on our list.
Chair Nakamura: Any other questions Councilmember Rapozo?
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Mr. Rapozo:
Chair Nakamura:
Mr. Furfaro:
Committee.
Chair Nakamura:
That's all I have.
Anyone else? Chair Furfaro.
I can wait because I'm not a member of your
Sure.
Mr. Furfaro: Marie, for the purpose of not confusing the
public here on the vote, you should point out that the fifty-one percent (51%) vote
that you have here, was actually fifty-one point two percent (51.2%) of the potential
votes. Because there was the possibility of twenty-seven thousand five hundred and
ten people casting a ballot but five thousand five hundred (5,500) chose not to vote
either way, so your fifty-one percent (51%) reflects fifty-one percent (51%) of the
potential votes. The media has been reporting as well as the Charter Association
that it passed by sixty-four point one percent (64.1%) and that is correct for actual
votes cast. But your fifty-one percent (51%) represents only fifty-one percent (51%)
of the potential votes. Are you following me there?
Ms. Williams:
Mr. Furfaro:
Chair Nakamura:
Ms. Yukimura:
Chair Nakamura:
Yes. Thank you for clarifying that.
Thank you.
Thank you. Any other questions?
Yes.
Councilmember Yukimura.
Ms. Yukimura: Thank you. Marie and Mike that was an
excellent presentation, very clear, thank you very much. Just a couple of
preliminary questions, we're using as a basis of existing the State planned
inventory, DBEDT's inventory, and that's proven to be fairly accurate right?
Ms. Williams: Yes. I'll just tell you a little bit about it, it's
something they've been doing on an annual basis since I think 1960 and they
actually every year consult not only the trade industries, the hotel association, the
Time Share Association but they contact all the Counties Planning Departments as
well and actually send out surveys, they contact the properties. Recently they've
been adding an Internet search into their efforts as well, so it's an exhaustive effort
and we feel that it's the most accurate that there is.
Ms. Yukimura: That's excellent to use something that's
existing and accurate. In terms of your criteria for exempt properties, is there a
possibility of putting that on the screen again without turning off the lights? And
while we're at it, I mean the exempt you said include the existing, they include
those with VDA and zoning before 2008 and then completed improvements, is there
a timeframe on that? Does the improvements have to be completed before they
apply or before 2008 deadline?
Ms. Williams: Yes I believe the substantial sums have to be
spent before 2008, December 5, 2008.
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Ms. Yukimura: Okay and the previous criteria which were
completed... okay they're actually the same right? One, they have to have
completed, improvements and two (2), that has to have resulted in an expenditure
that's twenty percent (20%) of the real property in the amount, at least twenty
percent (20%) of the real property assessment, is that right?
Ms. Williams: Yes.
Ms. Yukimura: Can you explain how you came to that
criteria?
Mr. Dahilig: The twenty percent (20%) number is based
on, when we took a look at cases that involved investment backed expectations and
substantial sums and the vesting of rights, the numbers are alI over the place.
There isn't a threshold that says (x) amount is what you need in order to vest but
given the need to put this into some type of Legislation and understanding and
taking a look at generally where these amounts that were spent by, we proposed a
number of twenty percent (20%) as being a conservative number. Some actions for
example have been as low as a couple a hundred thousand dollars on Engineering
and Architectural fees that a Judge has found vest to a permit. Keeping that in
mind but at the same time wanting to make sure that we propose something
conservative, we thought the twenty percent (20%) would be a realistic threshold for
expenditures.
Ms. Nakamura: Okay, thank you. And then your last
requirement which is applied to the Planning Director within one (1) year of the
ordinance, that's for the first five (5) year allocation, is that... oh wait excuse me,
this is not an allocation, this is to be exempt.
Ms. Williams: This is to be exempt from the entire
certificate allocation program.
Ms. Yukimura: Right_
Ms. Williams: And that's the only window we're providing
for that exemption. It closes completely forever upon one (1) year.
Ms. Yukimura: Okay, good_ Is there an appeal process to
that?
Ms. Williams:
Commission if they are...
Ms. Yukimura:
decision?
Ms. Williams:
Yes they can appeal to the Planning
Because that's going to be a Director
Yes.
Ms. Yukimura: Okay. On the allocation, you're talking
about the request for certificates being on the first come first serve basis, is that
correct?
Ms. Williams: That's correct.
Ms. Yukimura: Okay, are there any criteria of readiness?
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Ms. Williams: Yes, they have to... when they submit a
request for a TAU certificate, it has to be accompanied with a complete application
for the zoning use subdivision or variance and moreover once a TAU certificate is
issued to the applicant, it will lapse after a period of four (4) years so they have to
be ready, not only to apply but also to build within... on the next four (4) years once
they get their approval.
Mr. Dahilig: I just want to add that the reason for these
time .limits is an attempt to prevent people from squatting on certificates.
Ms. Yukimura: Yes.
Mr. Dahilig: From a market standpoint you can squat on
seven hundred something certificates and no one can get it and decide not to build
for three (3) years and so that's why this mechanism is in place.
Ms. Yukimura: That's excellent that you thought that part
out and you know it reflects on what Councilmember Rapozo was concerned about,
in terms of Coco Palms having an allocation of so many units and then nothing
happening for years which would be wrong to the development community which is
ready to build. My last question is in the General Plan which is the basis of all of
this, we're presuming that the impacts of growth in terms of infrastructure have
been thought through, so we're all saying okay we want to achieve these goals and
it'll be great if we achieve these goals but I'm concerned as part of the planning
process as if we do achieve these levels of growth then what happens to our roads
and our sewers and our water and sometimes they become limitations of growth as
well and the whole purpose of the General Plan was to coordinate that relationship.
Where are we on that in terms of this growth that we are projecting if it happens?
Mr. Dahilig: Let me see if I can answer it this way...
when the process starts, the certificate allocation is only held in abeyance until the
subdivision approval or the variance or the zoning permit is actually approved.
Usually through that entitlement process through one of those four (4) approvals,
we already at that point can start levying actions_ We do that as a matter of
consistency of the General Plan whether if there is projecting growth and there's a
need to expand the road or expand the bikepath at a certain area that we can
include that as part of the permitting process if this is a TAU type of resort or
expansion of a school or as you know an implementation of the housing
requirements. That comes as a consequence of the permitting approval and so as
we do with every permit, we look for consistency with the General Plan and we look
at it on a multilayer basis with respect to social economic issues as well as
connectivity issues and those types of things.
Ms. Yukimura: Okay but if you don't have a really good plan
for transportation islandwide then how do you identify what the requirements are
for someone who wants to grow?
Mr. Dahilig: As we embark on the next General Plan
process, we're cognizant of the changing demands for different types of connectivity
and different types of approaches for infrastructure. As part of we're studying is
taking a look at three (3) technical studies that will help lay the foundation for
eventual General Plan. As well as our intent to try to partner and cooperate as
much with the Transportation Agency's plan that they are embarking .right now
with Jim- Charlier and those types of approaches or policy recommendations that
10
will come as a consequence of the Transportation Agency plan will naturally flow
into the General Plan once it starts and we do that as a matter of consistency.
Because it wouldn't make sense for us to have separated Transportation plan as
part of the General Plan and yet we're approving on the other side of the County
another plan.
Ms. Yukimura: Okay, so what about the exempt growth?
We're assured that there is sufficient infrastructure for that exempt growth?
Mr. Dahilig: The exempt growth is a consequence of and I
can only speak anecdotally because not knowing specifically which each and every
permit that has exactions and what was levied by the County to accommodate for
mare demand on the infrastructure but usually as a consequence of the permitting
process, the necessary infrastructure to accommodate three hundred (300) TAUS as
coming online for project (x) would have been offset by demands on the developer to
widen roads or contribute to expanding the sewer treatment plant, etc_.. I can't
speak to specific instances but usually that is the process that these exempt projects
have gone through already with respect to approvals and that judgment was made
back in before 2008.
Ms. Yukimura: Okay well that's the end of my questions. I
just want to say that I can say that the exempt growth never took, there were never
conditions about the main highway system of the island and so there's a big gap of
what we've approved and what the Transportation consequences of that are. Thank
you very much.
Chair Nakamura: Councilmember Bynum.
Mr. Bynum: Good morning. I also want to focus on the
exemption requirements and so on this chart here it's this and this and this... all of
these elements have to be met?
Ms. Williams: That's correct.
Mr. Bynum: And what is the last discretionary permit?
Ms. Williams: It's usually is the class four (4) zoning permit
but it's .usually applied for a bundle where they might get several other necessary
permits...
Mr. Bynum: And so in your chart where it says class four
(4) on those projects, that's often the last discretionary permit?
Ms. Williams: Yes.
Mr. Bynum: So you have to have the last discretionary
permit and demonstrate substantial sum?
Ms. Williams: No. I will go back to the slide that and it's
confusing but to distinguish between what is exempt and non-applicable you can see
here that if a project doesn't require another discretionary permit, they therefore
don't need to apply for an exemption. They can move forward pursuant to the
conditions of their permit. It's only when a project still needs one of these
applicable permits that they would have to apply to be exempt from this certificate
allocation program.
11
1VIr. Bynum: And that's the answer I wanted to hear_ And
so it really is this scenario or this scenario, not hand... and that's a very significant
difference .yeah?
Ms. Williams: Yes.
Mr. Bynum: Have I got that right?
Ms. Williams: Yeah I...
Mr. Dahilig: I guess when we looked at the exemption,
okay, when we looked at the gamut of projects that are out there and we determine
whether they are vested or not, there are two (2) elements that we look at. One (1)
is the last discretionary rule, which is something that Hawaii abides by with
respect to entitlements and then there's the investment backed expectations rule,
which follows along the lines of zoning estoppels and inequity. When we look at the
class four (4) permits, the class four (4) permits are an indicator that they run the
gamut through the approvals and they finally gotten their last approval. As far as
our understanding, under Hawaii State law, that is it, that's all they need to vest
their rights.
Mr. Bynum: Right_
Mr. Dahilig: But on the other hand, there are approvals
that midstream require expenditures and if those expenditures happen as a
consequence of a midstream approval but yet they haven't achieved their class four
(4) approval yet, that's when we get into this realm of investment backed
expectations and expenditures of substantial sums_ That addresses the other
elements and so Councilmember, there's two (2) ways to get to the apple but you
don't need both.
Mr. Bynum: Right. And I wanted that clarification
because it would appear that you have to do both and depending on the individual
circumstances and so I want to focus on that with my follow up questions because
you have a chart here. The chart shows many of these have the class four (4) zoning
and that's pretty clear, that's pretty cut and dry, you either have the permit or you
don't. If you're accurate that the Hawaii legal criteria is if you have the last
discretionary permit, you've met the criteria and we don't have any legal
justification to limit or even pace that growth, right?
Mr. Dahilig: Well I do want to add two (2) caveats to that.
The first one (1) is that these class four (4) zoning permits were approved with the
understanding that certain exactions were going to be given.
Mr. Bynum: That's my next question, so go ahead.
Mr. Dahilig: And then also that there's a certain
characteristic to the property. If the project strays outside of what they were
permitted for originally, then we have to make a call whether it's enough of a
change to require a new permit_
Mr. Bynum: Right.
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Mr. Dahilig: And that comes with the consequence of the
department's review if they want to came in and either change -the footprints,
change the entry way, change the density, etc..., so that's one thing. The second
thing is that some of these projects have had their SMA permit lapse and so if the
SMA permit does lapse, they're still under State law are required to come in and
request another SMA permit and it's really a consequence of the permits generally
having a two (2) year expiration date unless otherwise stated. That can come into
the process and because the 205(a) special management area requirements are a
layer of what our County permitting requirements are, there will be an evaluation
of whether it needs a form, if there's views that are obstructed, access to the
shoreline, these types of things... those things could come into play as a
consequence of the SMA permitting process on top of the class four (4) zoning
permit process. So that could change the character of a project as well.
Mr. Bynum: So I want to get a little bit systematic about
your answer because you anticipated where I was going with this. If there's a class
four (4) zoning permit, the legal interpretation is that under Hawaii decisions, it
meets the criteria, we don't have the legal authority to say no or to limit or even
pace when that development occurs because the County has said, hey you meet
these conditions, you're good to go, right?
Mr. Dahilig: I can't make an opinion on that but what I
can say is that generally that is the rule of thumb from a departmental standpoint
we abide by.
Mr. Bynum: Right or if we adopt this ordinance that will
be the criteria right? So focusing on that class four (4) zoning permits, they often
have conditions?
Mr. Dahilig: Correct.
Mr. Bynum: Including performance conditions, you will
build by (x) date?
Mr. Dahilig: Correct.
Mr. Bynum: Doesn't there need to be an individual
analysis of each of these projects on whether they're class four (4) zoning permit,
whether those conditions have been met?
Mr. Dahilig: Certainly.
Mr. Bynum: So it's possible that a project who hadn't met
the conditions would lose that permit and then they would go back into the TAU
program right? If they wanted to proceed.
Mr. Dahilig: It is possible, yes but I guess I would...
maybe... if there's particular legal liabilities or circumstances that could cause
liability with the County, maybe that question is better left vetted out by the
County Attorney's Office.
Mr. Bynum: But class four (4} zoning permits have
conditions?
Mr. Dahilig: Yes they do.
13
Mr= Bynum: And if you don't meet those conditions,
what's the consequence?
Mr. Dahilig: The consequence is modification or
revocation of the permit by the Planning Commission.
Mr. Bynum: In the other condition that could change that
is if there was a substantial change?
Mr. Dahilig: Correct.
Mr. Bynum: If somebody says that they were going to
build (x) but I want to have more units, I want to have less units or I want to not
include this element or change this element, there could be a judgment from the
Planning Commission that that was substantial?
Mr. Dahilig: Generally it starts at the Departmental level
where we have to advise whether it's enough of a change to say that this is not the
project you came in and was permitted for. Therefore from that standpoint that line
of question would lead to it.
Mr. Bynum: So wouldn't there need to be a project by
project analysis of whether those conditions are currently current and whether the
project can proceed?
Mr. Dahilig: Certainly we can take a look at that.
Mr. Bynum: The other area is substantial investment
right? And if I read this correct and I think I got it right, this Bill proposes that
that standard be twenty percent (20%) of expenditures... twenty percent (20%)
based on the land value in 2008, 2009?
Mr. Dahilig: Correct.
Mr. Bynum: Wouldn't it be difficult to determine what
those costs were and what portion was architectural and engineering versus what
part was for planning and permitting, they get pretty integrated in the process.
Mr. Dahilig: That's why the Legislation have the
Planning Department essentially act as the accountant to determine okay what is
an architectural plan versus what is a plan drawn up strictly for permitting
requirements only. The number of Bills that could come in and there could be a
range of types of expenditures that it's hard to characterize but generally when we
look at architectural and engineering costs, we look at whether those cost and again
I wouldn't want to be held to this should the Legislation actually pass but my
thinking would be is .when we look at whether these expenditures were as a
consequence of actually putting infrastructure in the ground versus coming up with
a primarily engineering report as part of an environmental impact statement.
Those are the types of evaluations we'd have to go on a case by case basis on a bill
by bill basis to determine whether it would qualify. as meeting the standard in the
ordinance as proposed.
Mr. Bynum: So the other substantial that I think in your
testimony here, you said there's not a real clear guideline on that; there are some
14
cases that show pretty minimal investment and the Court ruled that that was
enough. There's other Court cases where there was a lot more investment and the
Court still ruled that it wasn't, it did allocate or constitute vested right, right?
Mr. Dahilig: Correct.
Mr. Bynum: You characterized the provisions in this Bill
as conservative, what is that mean, conservative?
Mr. Dahilig: Conservative based on the Hawaii cases that
we know, the Hawaii case that we know specifically there's one on the low side.- We
look at it from that standpoint and we're also looking at whether there was genuine
investment to actually put something in the ground, putting in a planter box and I
would have a hard time believing that that should vest somebody's rights for a
million dollar project but we feel that twenty percent (20%) of the land value shows
a serious effort that they were relying on the approvals -and the exactions of the
approvals and it's a number that really is a judgment call.
Mr. Bynum: I still don't understand . the word
conservative in that scenario, to make it easier to meet the criteria?
Mr. Dahilig: We believe it's a high threshold.
Mr. Bynum: A high threshold?
Mr. Dahilig: Yes.
Mr. Bynum: Okay. But it's possible somebody could meet
that threshold with just planning and permitting costs and never had done
anything physically with the property, is that correct?
Mr. Dahilig: I wouldn't want to rule out anything. I guess
anything could be possible especially if you're looking at it from a 343 standpoint if
they're going through a lengthy environmental impact statement process. But at
that point environmental impact statement costs are speculative because here
you're really only trying to say this is our environmental disclosure, this is what is
going to happen and you're not really getting into a line of putting in a pipe in the
ground, at those types of things. We think of planning and permitting as
speculative cost whereas architectural and engineering cost or stuff that you
already putting stuff in the ground.
Mr. Bynum: Yeah I got those mixed up; I said you could
meet the twenty percent (20%) threshold on just the allowable architecture -and
engineering professional services without having physically done anything?
Mr. Dahilig: It's possible.
Mr. Bynum: It's possible?
Mr. Dahilig: It's possible.
Mr. Bynum: But you feel like that twenty percent (20%) is
a high threshold?
15
Mr. Dahilig: It's also based, it's a high threshold and it's
also based on that what we understand in some circumstances, nothing had to be
put in the ground but sums were spent.
Mr. Bynum: I'm sorry?
Mr. Dahilig: Nothing was actually put in the ground but
plans were drawn up to put stuff in the ground and that was enough. Again the
threshold is all over, there is no bright line that we can find, there are judgments
that are all over the place from a case by case basis but for the purposes of this
Legislation, the bright Line rule is based off of what we see out there.
Mr. Bynum: Yeah there is no bright line, I understand
that but this ordinance if it passes in this form would establish that right?
Mr. Dahilig: Exactly.
Mr. Bynum: And then it would be an interruption about
what costs fall into which category and you would have to rely on an individual to
provide those costs to you right?
Mr. Dahilig: Right.
Mr. Bynum: And so the department would in essence do
have to do an investigation of what seem logical, reasonable and make a
determination and if that determination was, any appeal of that would go before the
Commission?
Mr. Dahilig: That's correct.
Mr. Bynum: From either side. If you said no you haven't
met this threshold, then the appeal could come from potentially from the developer
or if the department's determination was oh yes they met that threshold, could that
be challenged by citizens groups or others?
Mr. Dahilig: Under the rules of practice and procedure of
the Planning Commission and in terms of who is entitled to actually challenge a
decision of the Planning Director or the Commission, I may want to have the
County Attorney provide some guidance to the Council on that. But what we look
at is under the rules for revocation or modification, anybody can file. Any person
can file. Whether they have the standing or not, that gets into an area that maybe
is better left for the attorneys to address but any person can file.
Mr. Bynum: For me to summarize the dialogue, two (2)
ways of exemption, one (1) to have the discretionary permit and the other is to
spend sums of whatever criteria we determine in this bill.
Mr. Dahilig: Correct.
Mr. Bynum: And on the last discretionary permit, in my
mind, you would have to make sure that that permit was still valid, and that the
conditions were met and there hadn't been substantial change?
Mr. Dahilig: Yes.
16
Mr. Bynum:
trying to determine whether that
determination are subject to appeal?
Mr. Dahilig:
Mr. Bynum:
Chair Nakamura:
questions? Councilmember Kuali`i.
And the other side would involve the staff
twenty percent (20%} threshold and any
Correct.
Thank you very much.
Are there any other Councilmembers with
Mr. Kuali`i: Aloha and mahalo, Mike and Marie. I had a
couple of questions on the PowerPoint. The slide- that is on the applicability
examples, right there. The second example, you talked about if there might be an
ADU as a second unit, so they are applying to do a TVR, it's the first one (1) and
they might have a second one (1}. If they did the reverse and they applied to build a
second
home. or a single home residence first and then they might later come and apply for
a TVR, would they then not be applicable, because it's no more than one (1)? It's
just the possibility of one (1), you are not getting to the possibility of two (2).
Mr. Dahilig: When an applicant comes before the
Planning Department for a class one (1) permit, since the inception of the
ordinance, sorry the Charter amendment, I'm sorry. They are required to make a
declaration whether the project or the unit that they are applying for is going to be
used as a transient accommodation unit.
Mr. Kuali`i:
So the first one, they are saying not.
Mr. Dahilig: So if they check off the box and say no, then
that is falling out already.
Mr. Kuali`i: It's not applicable. Even though later their
ability to produce a second unit, which they would then choose to make as a TVR,,
it's only one (1)?
Mr. Dahilig:
Mr. Kuali`i:
It's only one (1).
So it doesn't apply.
Mr. Dahilig: And we would rely on their earlier
representation for the first unit that it is not a TAU. That therefore, there would
only be one (1) potential TAU on the lot if their density was for two (2) or if they
wanted to convert the first house into a TAU, then at that point, we would kick
everything over to the new process.
Mr. Kuali`i: Right. Then in the very beginning you had
a slide on the General Plan, I'm just curious as to the two (2) policy statements
where it says encourage and support resort development on lands planned
and zoned for resort use, primarily at Princeville, Kapa`a,
Wailua and Po`ipu which are the VDAs right? So it's primarily so where else?
The next policy says planned for limited number of visitor accommodations on the
west side to be provided in residential and in style buildings, so I assume that sort
of answers the where else and that's the Kapalawai?
17
Ms. Williams: We also have VDA in Lihu`e as well, and our
General Plan does include an appendix that -has a listing- of those specific
projects that are so-called planned and zoned for resort use as well.
But mostly, it essentially is describing our visitor destination area and those
three (3) locations are our main visitor destination areas that you might find
pockets such as in Libu`e and I believe on the west side, as well. We have some
VDA as well.
Mr. Kuali`i: So in that bullet you say limited number, is
there a number, what that number is?
Ms. Williams: I don't believe a specific number was
identified in the General Plan.
Mr. Kuali`i: Then on the other slide with all the growth
scenarios, and that basically highlights the three (3) VDAs you were talking
about and then the only development that is not in one of the three (3) VDAs is
before those maps, the whole listing? But the only development that is
not in the VDA is that west side, Kapalawai? It has two hundred and fifty (250)
units?
Ms. Williams: Yes. I will have to check on whether or not
that is in the VDA, but it is currently, it does have its final discretionary permit,
Kapalawai.
Mr. Kuali`i: Can you go through that listing there? Now
that is showing four thousand six hundred and fifty (4,650) units, and you talked
about how they either do not apply or they might qualify for exemption, and then I
think Mike talked about the certificate having a time limit to prevent squatting
on the certificate. Don't the permits also have time limits and so if you were
cleaning out this list as far as, I mean you could project forward that if a certain
project doesn't develop by a certain time, their permits would expire. If they did,
they would have to come back through this whole process, correct?
Mr. Dahilig: Most of these permits do not have an
expiration date, I could be mistaken, there may be one (1) or two (2) but generally
there have not been expiration dates. As Councilmember Bynum alluded to
through his questioning, there are conditions within the permits that a lot of times
are on a timing basis. For instance, you are to put in a road by 2013 and put in the
sewer by 2016 and build the school by 2024 and if those thresholds aren't met, then
that could be cause for the permit to be in trouble and the Commission could look at
revoking the permits.
Mr. Kuali`i: And then on your cycle for the application on
the allocation process you said the request for TAU certificates would be accepted
on a first come first served basis. That seem like it is potentially could be chaotic
and people may be camping out. So I'm wondering how far in advance would
applicants be allowed to apply and are you going to have some kind of
wait-list for future years or periods, they are apply for the five-year cycle?
Ms. Williams: They wouldn't be allowed to
apply in advance. They would have after and this would all occur in the first few
months of our five-year allocation cycle. But after January 31, the first business day
after Commission adopts a number of certificates that will be available, that
business day is when the Planning Department will begin accepting not only
18
requests for TAU certificates, but the complete application, as well.
It's true that there could be a line, and I imagine we would have to develop rules to
guide, to make that organized.
Mr. Dahilig: Just to add, your question begs along the line
the lottery process was an initial proposal in 2386. As we know 4th of July camping
permits come around a lot of people bring their coolers and chairs and the radios
and they sit outside and they wait to get the camping permits for that 4th of July
weekend and we wanted to avoid that kind of scenario. But given the larger
amount now of units available at one (1} time, versus the earlier scenario which was
a smaller amount, that we think there may be less of a rush to the door to get in
line first and rather proceed as if you are filing a normal permit.
Mr. Kuali`i: I think my last question has to do with
banking and paying down and allocation, so those projects that are exempt, or those
developments that have been pre-approved and all have the permits in process and
they just haven't built, they have the right to build, right? So their ability to build
is determined by the market so the market got really good, and they built a lot, then
your system's ability to account for that is unlimited? They are pre-approved and if
they built it all out next year or in the next two (2) or three (3) years, you would
create a debt account, to count against the growth rate and you would just pay it
over time, whether it's the next five (5) years, ten (10) years or even twenty (20)
years, right?
Ms. Williams: That's correct. That is how it would work.
Mr. Kuali`i: That is why you did that fifty percent (50%)
example even though it's extreme to show that the right to build and they would
and you would account for it against the growth rate by creating that debt and
paying it aff over time. But you are limiting that only
to twenty percent (20%) to still allow for new growth, other growth?
Ms. Willliams: That's correct. To avoid a moratorium and to
allow for some prospective growth.
Mr. Kuali`i: It's interesting because it's not only about
the pace of growth but the total allowed growth and where we end up.
If these .projects. are already pre-approved and it's the economy that has held them
back from developing, it's already sort of accounted for in the community and in the
landscape, you know? So whether they completed it next year or took ten (10) to
twenty (20) years, the fact that they are pre-approved and perhaps take into
account that they are in the VDA, that's another important point. I think to a
certain degree it will be the market that determines, I hope, it gets better and it's
good for everyone with jobs. Thank you. This is a really good presentation. I
learned a lot and I think our citizens learned, too. Thank you.
Ms. Williams: Councilmember Rapozo has another
question.
Mr. Rapozo: Thank you. I think it was talked about the
floodgates would be open and everybody is going to come in and apply for their
exemption. Is your current staff enough to accommodate that work flow and
get these things done within sixty (60) days? I'm kind of hesitant with the sixty (60)
day automatic approval, because I have a feeling it might take longer time and I
don't want us to see us approving exemptions without being properly vetted through
19
the process. Is that something that you feel will be sufficient? Is there a need to
put some kind of safety net in that section, so that if it's longer than sixty (60) days,
then something happens before an automatic approval? You need to be realistic
with us and tell us if sixty (60) days is sufficient?
Mr. Dahilig: Thank you for the question. I wauld hesitate
to say that we do and maybe what is the best course for me is to check with my staff
to already lay out what the potential is for the floodgates to come in and
whether we are equipped. At this point, I can't provide you an answer, because
maybe I should talk to my staff first.
Mr. Rapozo: That is one of the questions, Madame Chair
that we need to clarify and if I may, I have just a couple more. Going back to the
growth scenario Mr. Bynum talked about, I would ask that we be provided with a
breakdown for each of those projects with each entitlement type and whether or not
they are in compliance as of this date. I think that is important for us that are
important. I want to know how many of these projects actually are in compliance
with the permit and if any of them are not in compliance and some of the conditions
have not been met by their deadlines, I would like to know what the Planning
Department's direction is as far as that specific permit. The other thing is the
allowable costs and I think the twenty percent (20%) is a fair number. I think and
you made reference to it but it's really a case law that -tells us that it can
be less, and I believe that the twenty percent (20%} is safe. The question is what
would be considered? I think that definition in the section right now is too broad
and we need to tighten that up with specific types of allowable expenditures. It's
not going to be a problem for the projects that already laid down road and
infrastructure, hard infrastructure, but I think with the cost of architectural and
what was the other term? Whatever it was...
Mr. Bynum: Engineering.
Mr. Rapozo: Engineering... Those rally up pretty quick.
The last question for you folks today, as we talked a lot about the TVR,s and second
units and first units but this Bill, and I will try to read the definition and it's not
real clear of the TAU, doesn't it only apply to the VDA? Am I correct? As I read the
definition today, TAU means any and all of the following, but there is item (e),
transient vacation rental, if someone wanted to build a transient vacation rental
outside of the VDA...
Mr. Bynum:
Mr. Furfaro:
law.
Mr. Rapozo:
through now_
Mr. Dahilig:
definitions would only apply.
Chair Nakamura:
They cannot, it's against the law.
I hope you say they cannot, it's against the
I'm seeing a ton of applications coming
The function of the VDA ordinance, these
Would you speak into the mic_
Mr. Dahilig: I'm sorry. These definitions would only
apply prospectively. So anyone wanting to build something new, whether it is a
TVR, or resort project, this is what we would determine whether it falls into the new
20
category of permitting. The permits that are coming through right now are
consequence of ordinance 904 which deals with grandfathering issues and parallels,
but doesn't cross into what I would say the 3.19 issues.
Mr. Rapozo: Is there a possibility of any project outside of
the VDA? They're not going to be covered by this ordinance, correct?
Mr. Dahilig: I would say the only circumstances would be
if the Council was to...
Mr. Rapozo: You'd have to basically, if somebody wants to
change the zoning to resort, that would kick in?
Mr. Dahilig: Exactly, yes.
Mr. Rapozo: And obviously multi-family TVR,s are illegal
outside of the VDA anyway. Thank you.
Mr. Furfaro: Madame Chair, I have something.
Chair Nakamura: Sure.
Mr. Furfaro: Mike, I want to make sure, since I didn't
hear the answer, that's correct, this Bill only deals with the current visitor
accommodation areas. I want to revisit your earlier statement, you are dealing with
bill 904 right now on those that earlier implied that they met the criteria for being
grandfathered outside of the VDA?
Mr. Dahilig:
Mr. Furfaro:
Chair Nakamura:
Ms. Yukimura:
TAUS that are grandfathered are
processing them, you don't know ye
existing category, right?
That's correct, Chair.
Thank you_
Councilmember Yukimura.
Thank you. Just to finish that, however
counted as existing and because you are
t how many are going to be counted in the
Ms. Williams: I would imagine that most of those are
already on our existing visitor plan inventory and have been counted, since
that is one of the requirements that they had to be existing. So they should already
be part of our baseline that we use to determine our allocated TAU certificates.
That is how they would be counted.
Ms. Yukimura: On the other hand, some of them may be
counted as existing but may not achieve grandfathered status because they may be
existing after the deadline for grandfathering, right? So they might fall out?
Ms. Williams:
Yes. You are right about that.
Ms. Yukimura: Okay. My next question is somewhat
operational and yet as we're finding out they can make a big difference in terms of
what the numbers are. So in the submittals in terms of expenditures, are you
asking that these be submitted under penalty of perjury?
21
Mr. Dahilig: Certainly, I understand where you are
coming from Councilmember and certainly if the Council wanted to... certainly, as a
sworn affidavit is a requirement that the Council would like to see as accompanying
the submittal to the department because I know that's not in there right now. But
certainly that would achieve that layer of protection from perjury.
Ms. Yukimura: Yeah it's a backup to your accounting review
you are going to do, but if there is no real emphasis on accuracy, you could have
people telling their architects to put it in one (1) category rather than another to
just boost up the expenditure lines. There are going to be cases where I think they
will be so far over the line that there will be no question. But where it's possibly
close, then you just want honesty and accuracy. I hope you are doing that with the
TVRs area as well?
Mr. Dahilig: Certainly am.
Ms. Yukimura: Thank you. I think that is all I have right
now. Thank you.
Chair Nakamura: Okay. Are there any other questions? I'm
going to ask one question, can we go to the slide with the list of potentially exempt
projects. So assuming a healthy economy and a one point five (1.5) per year growth
rate, how long would it take to build out these four thousand six hundred fifty
(4,650) units?
Ms. Williams: Well, at this point any timeframe that we
give, I would be speculating and I know that some of these projects, they are going
to be developed in phases and it could take up to twenty (20) years or more for the
final phase to be completed, if they go on schedule. So I would say that the build
out, the final build out for this list will most likely be twenty (20) or thirty (30)
years.
Chair Nakamura: We have a list now of some items that we
would like some follow-up on. So I just want to make sure that we're clear about
what we're asking for. The first one (1} is the occupancy permits and I think maybe
if we look at 2009-2010, that would probably be adequate. Does that seem
reasonable to you?
Mr. Dahilig: We can provide that.
Chair Nakamura: Then questions about whether these existing
projects are in compliance with zoning and other conditions of approval. Is .that
something that is also readily available or will that take some time to analyze?
Mr. Dahilig: It will take some time to analyze. What I
would suggest though is that rather than making a call whether they are in
violation of the permit or not is flagging zoning permits that have conditions that I
guess precede today's date. I would not want to pass judgment because that is a call
that the Planning Commission needs to be making on if there is a violation
necessitating modification or revocation. We could flag it and show where there are
conditions that have requirements that precede today's date and approach that way.
22
Chair Nakamura: Okay. So we're going to flag the permits with
those conditions of deadlines and we're saying that there aren't too many of those
out there, that putting at the deadlines on these approvals is more recent?
Mr. Dahilig: I would hate to generalize, given the variety
of projects and not specifically point out one (1) project over another.
Ms. Yukimura: Chair?
Chair Nakamura: Yes.
Ms. Yukimura: Can I ask a .question regarding this
particular point? Is the deadline today or is the deadline 2008 that the permits
were supposed to be viable?
Mr. Dahilig: What I'll do is I'll provide both dates then.
Ms. Yukimura: But it's almost a legal and certainly policy
decision that we need to be clear about in the law.
Mr. Dahilig: I understand. Looking at whether the
revocation or modification is possible, which I think is what is being alluded to,
unless I'm mistaken. For instance, if there was a condition that required to be met
in the permit for a road to be built in 2010, but the road wasn't built in 2010, would
the Council want to see whether there is grounds for revocation of the permit or
not? So I mean that is why I suggest that the period between 08 and now could also
necessitate, could be flagged and something that you would... that is in my
explanation why I would say that.
Chair Nakamura: Councilmember Kuali`i.
Mr. Kuali`i: Looking at this list, Marie, you said earlier
that last year we saw quite a few projects leave our inventory. So how many and
what were the reason and do you anticipate any more of that this year?
Ms. Williams: I believe .that last year our inventory was
nine thousand and four hundred (9,400) visitor units and I don't have them off the
top of my -head and we can definitely get those specific projects to you. It's quite
easy to do, because DBEDT plan does identify that in their yearly report. So we can
easily get that to you.
Chair Nakamura: I think the final follow-up I have here has to
do with Councilmember Rapozo's question about adequate staffing and is sixty (60)
days adequate to process the exemption requests and TAU requests? So that would
be the third follow up I have in my list.
Ms. Yukimura: I have two (2) more questions.
Chair Nakamura: Councilmember Yukimura.
Ms. Yukimura: Thank you. If you add up the existing, the
exempt, and the growth scenarios that eventually build out, what is that number?
Ms. Williams: If we add the total number of everything in
this table to our existing inventory?
23
Ms_ Yukimura: Yes. Existing and exempt..
Ms. Williams: And exempt? Well, .since nothing is exempt
right now, it would most likely be drawn from that list. I believe our existing
inventory as of last year was nine thousand four hundred (9,400), around that
number, plus...
Mr. Furfaro: Nine thousand four hundred twenty-seven
(9,427).
Ms. Williams: Thank you, nine thousand four hundred and
twenty-seven (9,427) plus four thousand six hundred and fifty (4,650) and that
number is fourteen thousand and seventy-seven (14,077). And again, that is
assuming a hundred percent (100%) build out of that number. What our General
Plan does to determine if the project within the VDA will be one built out and
percentage will be used as an actual TAU, they use sixty-five percent (65%) for a
multi-family building- and thirty-five percent (35%) for a subdivision, simply
because many of these homes are used as a primary residence, a second home, a
long-term rental and once you incorporate that percentage, that might be a more
accurate number of our build out as is. We can get that to you.
Ms. Yukimura: And that would be of the four thousand six
hundred (4,600), not the ninety-four (94) that are certified visitor units?
Ms. Williams: They are in visitor inventory.
Ms. Yukimura: Right, okay. So what made Planning choose
the twenty percent (20%} as the level over excess growth? What was the reason for
choosing twenty percent (20%)?
Ms. Williams: Oh, to apply for the excess growth?
Ms. Yukimura: To apply into the next scenario?
Ms. Williams: Okay, well we looked at the average number
of units in a resort project and it ranged from and the average, if I remember
correctly, is about a hundred and fifty (150). So we wanted to accommodate
some of these projects, some of these, whether it's a three hundred (300) unit
project or one hundred and fifty (150) unit project, accommodating two (2) or three
(3) of them every five (5) years, we thought that was a reasonable amount of
projects that could be allowed, if we only would allow eighty percent (80%) of the
allocation to prospective applicants.
Ms. Yukimura: When you say you looked at average units in
a resort project, so and what was that, about three hundred (300), you said?
Ms. Williams: I'm sorry, T don't remember the exact
number, but even looking at this list, you can see it runs from actually over one
hundred fifty (150), it will probably be three hundred (300) that is the average.
Ms. Yukimura: Okay and you were looking to accommodate
that on a yearly basis?
24
Ms. Williams:
year cycle:
Ms. Yukimura:
Chair Nakamura:
Councilmember Bynum.
It wouldn't be a yearly basis, but the five-
Thank you very much.
Why don't we have one (1) more question?
Mr. Bynum: In the exemption requirements, replying to
the Planning Director within one (1) year of the ordinance, so this entire list has to
do an application and you have to make a determination, specifically if they are
exempt or not within one (1) year, are that correct?
Mr. Dahilig: Again not specifically pointing out projects
over other projects. Those that would say that they have the last discretionary rule,
those would be the guys coming into my Department.
Mr. Bynum: I will follow-up on that
later.
Chair Nakamura: Let's take a recess.
Mr. Rapozo: Can I just, because we still have about
three (3) minutes and seventeen (17) seconds left. I think I want to be clear and I
think you covered it earlier is some projects are not applicable. They don't apply to
this ordinance so there is no application for exemption or anything. If they meet
those conditions that typically is that class four (4) zoning and there is no more
discretionary permitting, they don't have to apply for an exemption. They're
excluded from the ordinance. They're not applicable? That is how it's written today?
Mr. Dahilig: Right.
Mr. Rapozo: The ones that don't or they have some
outstanding conditions or they haven't been given their final permits, they need to
come in and apply for an exemption basically showing their twenty percent (20%)
contribution or expenditure?
Mr. Dahilig: That's correct.
Mr. Rapozo: So I want to make sure that is clear that
there's anon-applicability to projects that have met and secured their permits and
haven't been built?
Mr. Dahilig:
Mr. Rapozo:
Correct.
Okay, thank you.
There being no objections, the Committee recessed at 11:11 a.m.
The Committee reconvened at 11:28 a.m., and proceeded as follows:
Chair Nakamura: Councilmember Yukimura.
25
Ms. Yukimura: My question is instead of a first come first
serve basis, .could we not require or could we not have a process that would choose
the best to go first that is set up some criteria for what we want out of resorts and
show that those that are energy efficient, have a good track record in the past
(inaudible) transient stops or have figured out transportation, there's a whole
number of criteria that show good quality and good planning in a way of bonus
points or something like that. And I'm thinking that this happened in Davis,
California in terms of residential development, they had allocations and they chose
among the applications based on the best developments, the best development
proposals.
Mr. Dahilig: Thanks for your question. I certainly
understand the desire to want to have the best planned projects be the guys that
are let through the gates first, but the way the Bill is currently written, the
interface of the certificate with the permit approvals necessitates action by the
Department and the Planning Commission along a certain time: For example, we
couldn't just pull the applications, take a look and then say okay (a}, (b) and (c) go
because of the pairing and there's a reason why we do the pairing again is to gage
seriousness of development and not allow squatting. Beyond in terms of what the
best projects are... to avoid matters where decisions could be viewed as arbitrary
and capricious, we would need a gamut of standards of which to judge by so that
there is some level of evaluation and transparency. There could be a lengthy
discussion on what exactly those are but those types of standards would also be
folded into how these allocations would be done and along with a change in how we
approach this issue of squatting.
Ms. Yukimura: I mean I suppose this would be useful only if
you have like you say, people standing by the door, I mean you know standing in
line at the door.
Mr. Dahilig: That's correct.
Ms. Yukimura: But I would assume that we have to have
some standards at some point, that's one of our long range goals and so instead of
constantly just doing crisis management, if we could somehow as we address this
and this is a crisis. I mean, it's due to a breakdown of our regular planning process
that we had this intervention from citizens in a very unusual planning mode, right?
If you even call it a planning mode, it might just be in response to breakdown in
planning. I really commend you for the way you have looked at this very complex
crisis, and tried to give some order and fairness to it all. And keep it along the lines
of good planning and maybe just take that effort a step further and see if there
aren't some general criteria, if you come to the situation you have people standing
in line at the door.
Mr. Dahilig: Okay.
Ms. Yukimura: Because to the certain extent, just who got
there first early in the morning isn't best criteria either, you know what I mean?
Mr. Dahilig: I certainly understand_
Ms. Yukimura: Thank you.
Chair Nakamura: Chair Furfaro.
26
Mr. Furfaro: Thank you Chairwoman. Along those lines
is the thought about best project/best value and even to the point that some of them
may consider through an affidavit in their application to initiate reducing the
project's density on their own initiative.
Mr. Dahilig: This would be for prospective projects?
Mr. Furfaro: Yes.
Mr. Dahilig: Certainly, if that is a policy judgment that
the Council would like to see as a consequence of prospective action on new
applications, it is certainly something that deserves merit and we could certainly
look at. What I would ask though, if that was the case, we would need standards
for evaluation that does not lead to our department being in a position of making
arbitrary and capricious decision.
Mr. Furfaro: Yes and obviously those standards can also
be compared to the American Hotel and. Motel Association, where reduced density
generate a higher average rates and those average rates can contribute bigger
portion to the transient accommodation tax and those types of things in a voluntary
basis to build, but reduce density.
Mr. Dahilig: Okay.
Mr. Furfaro: I only share that because Councilmember
Yukimura brought the idea up.
Mr. Dahilig: Okay.
Mr. Furfaro: That we're going through so many
renovations right now, the product on Kauai between Hyatt and Marriott and so
forth, they have all re-invested in their projects. So we have a lower inventory,
but of a much higher quality. Thank you Chairwoman.
Chair Nakamura: Any further questions? Councilmember
Kuali`i.
Mr. Kuali`i: I noticed one of the slides which were on the
why might there be excess growth and one of the bullets was the DHHI~ projects.
What do you mean by DHHL projects?
Ms. Williams: I think in the past that the Department of
Hawaiian Homelands, as you may know that they own certain vacant parcels on
Kauai and that they have solicited interest in the past to develop those project as
resort projects and I don't think anything is active right now, but in the
future as we look long-term it is feasible that those projects could have an interest
in developing that land as resort. The Department of Hawaiian Homelands could
choose to even if this Bill is implemented.
Mr. Kuali`i: So you are just trying to account for any and
all resort-type development to count it against the growth rate?
Ms. Williams: That's correct.
27
Mr. Kuali`i: The other thing is and I think you sort of
answered it to Councilmember Yukimura's .question, but I don't know that I was
clear on it. You know the bank and this paying it down? If there is so much pre-
approved development and ultimately it's all going to come online, and we don't
necessarily know how long it takes, because it depends on the market, but we do
want to account for it against the growth, the allowed growth over time. If we allow
it to build up as a debt and pay it over a long period of time and we only
account for it at a twenty percent (20%) rate, wouldn't we over a long period of time,
wouldn't that eighty percent (80%) potentially get us to a point of more development
than we really want? I mean, why wouldn't we try to pay down that debt mare, you
know? Like forty percent (40%) and still have sixty percent (60%) available
for new growth beyond this four thousand (4,000), whatever. There is a lot of
growth that is going to happen that is in the pipeline, that is tied to all of those
projects you have shown and in the VDAs, so the new growth, I mean, I would think
we have to give priority to the old growth and pay down our debt, you know? And
not over the next forty (40), fifty (50) years, but hopefully over the. next twenty
(20), just at a rate higher than twenty percent (20%). So is there a higher rate we
could do and still be legally permissive to new development, if you will? How did
you come up with the twenty percent (20%) and allowing eighty percent (80%)
towards the (inaudible) eighty percent (80%) of the one point five percent (1.5%)
growth?
Ms. Williams: The number of twenty percent (20%) was a
policy call and you are absolutely right, it could be increased to thirty
(30) or forty (40) or fifty percent (50%), if you feel that is a more appropriate number
and it would, of course, result in a payoff period that is shorter. That's true.
Mr. Kuali`i: So when and how is that policy established?
Or it's to be established?
Mr. Dahilig: I guess the slide that Marie had with respect
to what could cause growth beyond the seven point seven (7.7) scenario, this
mechanism was a proposal to accommodate for, say DHHL, because they don't have
to comply with County zoning requirements and they can build whatever they want
but say they want to...
Mr: Kuali`i: But they do have a primary mission to put
families in homes?
Mr. Dahilig: Yes. Not making any judgment call, but for
the example that they decide to put in a thousand TAUs somewhere on the island.
It increases it definitely beyond the seven point seven (7.7) projected increase. This
mechanism was meant as a consequence to try to drop the growth rate and a means
to balance out these things that this ordinance will not have any jurisdiction or
control over. Included in that bunch is single family transient vacation rental
within the visitor destination area that is on lots that are allowed one unit. There
is going to be that natural growth as well.
Mr. Kuali`i: But knowing that we already have all of this
development in the pipeline, is twenty percent (20%) dropping the growth rate
enough to allow for that? Overall, it's really about where we end up or is it about
the pace at which we get there? Maybe it's both, because if it's all happening at
once, it could be kind of chaotic, like the dust bowl in Po`ipu was for a while there.
28
Mr. Dahilig: I guess I would say that two (2} questions
need to be asked. First off, does the backlog need to be addressed with some type of
accommodating service, like a debt service or however you want to characterize it?
Then if yes, then what is a realistic percentage to bring down-the rate of growth?
Those are questions that we think twenty percent (20%) and again the twenty
percent (20%} number is really driven more from things that we do not have control
over scenario. But if we wanted to now treat the four thousand (4,000) units as
something that we want to amortize over time, then certainly twenty percent (20%)
or thirty percent (30%) or how long it takes to pay down the number is up for
discussion.
I think what I would say from an operational standpoint and also having a
hand when the legislation first was coming out, was that the concern was if you
take an average resort project and you bring down the allocation too much, are you
going to be in a position to not to allow one hotel every five (5) years? And let's say
the allocation is six hundred (600) and the policy call is to pay off that fifty percent
(50%) of the six hundred (600) and the resort comes in at three hundred and fifty
(350) units, one resort in a five-year time span. Then it goes beyond the ability of
my department to start the permitting process and it would be kicked to the
Council. So what" I was suggesting to the Council is if there is a desire to frame
some type of debt service that it just keep in mind that that having the ability to
permit one (1) hotel project every five (5) years may be something to consider and
what is lopped off the top of the allocation for debt service?
Mr. Kuali`i: So based on the numbers now, the estimated,
weren't you talking about seven hundred and twelve (712) units per year or is that
for five (5) years of the?
Ms. Williams: That would be for the first cycles.
Mr. Kuali`i: Which is five (5) years.
Ms. Williams: Number of available TAUS certificates and:of
course through the compounding growth rate or through growth rate in our base
which is our TAU inventory, that number would probably get larger unless our TAU
inventory decreases and some years it does. So it would start off probably with a
number that is close to seven hundred (700).
Mr. Kuali`i: So it's not a matter of whether we could, it
would be possible to have a hotel every five (5) years; it's a matter of how big a hotel
you would want every five (5) years? I mean if the seven hundred twelve (712)
number, you took twenty percent (20%) off of that and it's a hundred and forty-six
(146), you still would have five hundred and sixty-six (566). It's all relative as far as
how many units you need to build a green, sustainable, good hotel near...
Mr. Dahilig: It's certainly a recommendation on my part,
it's a policy call.
Mr. Kuali`i: .Okay, thank you.
Chair Nakamura: Councilmember Yukimura.
Ms. Nakamura: We're going by certain parameters, we have
quite a few givens, and nobody's asking is it good to have a hotel every five (5) years
in terms of infrastructure adequacy and occupancy and visitor satisfaction? I mean,
29
Council Chair Furfaro, you know, really reminds us that you have too much growth
and then that affects occupancies in our hotels. And below a certain limit, .hotels
can't even break even. So if you can get the eighty-five (85), ninety percent (90%)
occupancies, you can have prospering hotels, workers who are working full-time
without having to worry about cut hours and so forth. So there are all kinds of
implications and our General Plan was done, I'm not sure -that it was done with all
of those thoughts that said, this is the growth rate we want that is going to be
manageable in terms of our infrastructure and going to give us good occupancy in
our hotels, which is kind of our ultimate goals and a thriving good reputation for
Kauai that ensures a sustained and prosperous visitor industry. I'm guessing that
we get to ask those basic questions at the next General Plan. This process that
we're dealing with this morning sort of ends or could change at next General Plan
level. So can you just tell us when that is? What is the timetable for that? That
could tell us how long this system is going to be in place.
Mr. Dahilig: Well, the General Plan from a technical
study-standpoint is on the move now and what we project is completion of the study,
because of the varying nature of what we're requesting, between twelve (12) to
eighteen (18) months is what we're hoping that we can start seeing drafts where we
can start launching the full General Plan. What we're looking at potentially is three
(3) to four (4), five (5) year horizon when you would actually see something that
would come for approval. The process is starting now. Once those things start, it
would probably be another two (2) to three (3) years after the technical studies are
done to actually integrate everything and do all the community meetings and notice
requirements and those types of things.
Ms. Yukimura: I hope that in this process for the next
General Plan, we will learn from our experience with the General Plan that is in
place now and I will send follow-up questions separate from this particular Bill.
But in terms of how we could do a general plan process that actually achieves the
goals we're trying to achieve here, we couldn't somehow through the general plan
process?
Mr_ Dahilig: Certainly.
Ms. Yukimura: Thank you very much.
Chair Nakamura: Councilmember Rapozo.
Mr. Rapozo: Thank you. And I would guess that very few
projects will be built between now and then. Reality is hitting me as we speak. My
question is and I didn't really notice until the presentation that the General
Plan talks about supporting and encouraging resort management on lands planned
for resort use. Doesn't this ordinance pretty much contradict that to some extent?
Because as I'm hearing the discussion around the table and until we get a new
General Plan, this is the guideline that we follow. But it doesn't sound like we're
being too supportive or encouraging of resort development in areas that are zoned
as such.
Mr. Dahilig: The department has always taken the
position that the Charter amendment contradicts the intent of the General Plan
and it's something that we have always been consistent on. Because of the
statement you just made, Councilmember, and also, the fact that when you look at
the General Plan language and planning growth range and you look at what the
Charter amendment is written, the Charter amendment refers to units. The
30
General Plan refers to visitor population. So already from the- get-go, there is that
contradiction, but because charter amendment supersedes the supreme law of the
county, this effort is meant to try to comport what is the General Plan language
with what is the supreme law of the Council.
Mr. Rapozo: Okay and I apologize, because I wasn't here
when this all came about. Like I said, it didn't hit me until today. The market will
determine what happens in that industry. It's not going to be that table. We can
make the best Bill/ordinance, but at the end of day, the market will determine and
not the number set by this county and that is one of the concerns that we have got
to look at is number one (1), whether or not the Charter supersedes the General
Plan. I think the General Plan does deserve some respect as well. And it's a battle
that I'm dealing with right now. Obviously we have to do what the Charter tells us
we have to do, but we must also keep in mind what mind what the General Plan
that many, many people participated in and yes, it may be old, but until we get a
new one (1}, I think we need to give that document as much respect as we give the
Charter.
Mr. Dahilig:
Mr. Rapozo:
Chair Nakamura:
Certainly.
Thank you.
Chair Furfaro.
Mr. Furfaro: Mike, I just want to go back and revisit our
last budget session.
Mr. Dahilig: Yes.
Mr. Furfaro: And make sure we're all copacetic on this
new General Plan. The Planning Department requested one point two (1.2) million
dollars from this Council for the General Plan.
Mr. Dahilig:
Correct.
Mr. Furfaro: We agreed on six hundred thousand
(600,000) this year and six hundred thousand (600,000) next year, but with the
money we approved it was going to cover what we refer to as the three (3) technical
reports that you requested to gather data.
Mr. Dahilig: That's correct.
Mr. Furfaro: And you have entered into those contracts?
Mr. Dahilig: We have placed the items on an RFQ list for
professional services and we believe that the list is coming shortly, the close was on
Monday. So they went out at the beginning of the fiscal year.
Mr. Furfaro: So we're just six (6) weeks into the new
budget. So you are moving along, that direction hasn't changed and we would
hopefully have this research and technical information ready for next year?
Mr. Dahilig: Yes Chair.
Mr. Furfaro: Thank you.
31
Chair. Nakamura: Thank you for clarifying the timeline there.
Any further questions for Mike or Marie? So thank you very much for .your
responses, and what we're going to do now is open it up to the public for testimony.
Do we have a list of people who signed up? Would anyone like to testify on this Bill?
Can you raise your hand if you want to testify, so we know. We have a couple.. Ken
Taylor followed by Carl Imparato. Ken, you're not going to? Okay Carl can you
come up?
CARL IMPARATO: Aloha Councilmembers, my name is Carl
Imparato. I don't have too many comments and first of all I would like to recognize
all the work that has been done to get us to this point and result in Bill 2410 being
much improved over Bill 2386. Bill 2410 lays out a good framework to address the
problems before us. But there are still a number of very important details that need
either elaboration or modification. The most important of them, first of all, is a
tighter definition of the projects that would be exempted from the process. What we
have heard today is that the standard that is being proposed is a standard that says
you are either non-applicable or exempt if you meet an "or" criterion or if you have
your last permits or you have spent substantial sums. My understanding of the
vesting criterion and zoning estoppels criterion is a requirement-you must have
your last discretionary permits and have spent substantial sums. That makes a
difference, whether you have an "or" or an "and" criterion. There was on the list that
got
their permit in 1990, almost twenty (20) years and I know that project doesn't even
have an SMA permit. To say that project basically moves forward under this
criteria is a concern. You need to look at the definition of projects that would be
exempted closely.
Second key issue is a need to pay off the bubble of the backlog, that four
thousand (4,000) plus approved, but not yet built units at a rate that is far more
credible than twenty percent (20%) of the budget. For example, if just three
thousand (3,000) of that backlog was paid off at twenty percent (20%) criterion, that
is one hundred forty (140) units every five (5) years and divide three thousand
(3,000) by a hundred fifty (150), it's twenty (20) cycles, it's a hundred (100) years.
Over that hundred (100) year period you continue to approve projects by using
eighty percent (80%) of your certificates. So that is a concern that if we really want
to crediblely address this issue, we need to maybe up that criterion or that payoff
criterion. As an aside, I do want to mention that of the four thousand (4,000) plus
units approved on that table, probably three thousand (3,000) of them haven't been
built yet and when earlier on someone spoke to the question of whether we have
tied approval of the projects to the infrastructure, I think the answer is a definite
no. We have 3,000 units that haven't been built and we already have major
infrastructure problems out there. Of those three thousand (3,000) we'd have
nothing to say about coming online I think will make it pretty clear we haven't
linked the two.
There are a few other technical problems that we laid out last week and they
are still here. The rapid-growth scenario, while it may or may not occur, we need to
be prepared for it. Five (5) years ago, nobody thought we would be in the position
that we are in today and five (5) years from now, who knows where we'll be? So we
need a proposal that deals with the possibility that that four thousand (4,000) or
three thousand (3,000) units is going to come online in the next five (5), ten (10) or
fifteen (15) years and we shouldn't again merrily be approving more and more at
the eighty percent (80%) rate in terms of the TAU certificates. There are a few
other issues that I don't believe that the language necessarily does what the Bill
32
purports to do but hopefully we can clean those things up. In summary, I believe the
way it's drafted now, I believe. 2410- does not comply with Charter. It has though
complied with the Charter with all scenarios, not just slow growth but also rapid
growth scenarios. I hope we'll be able to work collaboratively_ There has been a lot
of good work done and I hope we can work collaboratively to resolve these issues,
and come up with a Bill that does comply with the Charter amendment and the will
of the people. Thank you all for your time.
Chair Nakamura: Thank you, questions for Carl?
Ms. Yukimura: I do.
Chair Nakamura: Councilmember Yukimura.
Ms. Yukimura: Thank you for your testimony. Is it your
thought that the fifty percent (50%) scenario or the high-grow scenario, that the Bill
does not address the high-growth scenario?
Mr. Imparato: When you say the high-growth scenario, I'm
not sure?
Ms. Yukimura: The fifty percent (50%).
Chair Nakamura: The rapid-growth scenario.
Mr. Imparato: Oh, the rapid-growth scenario. The Bill has a
mechanism to deal with it, but on such a slow, slow rate of complying with it,
because it basically holds back so few certificates. Ironically, because if you have a
big bubble of construction in a five-year period, that increases the number of TAUS
that are in the inventory by such a large amount. Let's say you have an excess of
three thousand (3,000) units and it all gets built at once. Now when you look at the
next cycle of allocation, instead of having seven hundred (700) TAU certificates
based on nine thousand (9,000) units you are going to have mne hundred (900) TAU
certificates in the cycle based on twelve (12} or thirteen thousand (13,000) units. So
the irony is that sort of the way the language is drafted- and I view this as a
technicality that needs to be addressed and not anything in bad faith.
The way the bill is drafted on high-growth scenario, you say the worst the growth is
in terms of exceeding the target, and then the more you are going to basically feed
it.
Ms. Yukimura: Okay so your dissatisfaction with the way
Bill 2410 works out in the rapid-growth scenario would be addressed by a higher
payoff percentage? That is where we would apply the percentage of excess growth
to the next cycle? You would like it to be forty (40) or fifty percent (50%) instead of
twenty (20)?
Mr. Imparato: I think raising that number to something
that is more credible, at least fifty percent (50%) deals with a lot of the problems. It
deals with a number of issues. One is paying off the excess growth at a reasonable
time horizon. The second thing is to the extent that you have a mechanism, when
there is an excess, we plan to pay it off. Not in our great-grandchildren's time, but
sooner. To the extent that you have that, maybe you don't have to be as tight in
determining what are the exempt projects. If a few more horses get out of the barn
because of a liberal criterion, you say we might have let a little too much out now,
but we have a mechanism for catching up with it down the road. That is why I
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believe a criterion of holding back at least fifty percent (50%) makes sense on a
number of grounds. The last thing I would like to say on the fifty percent (50%)
number is that if we're talking about in the first cycle having possibly over seven
hundred (700) certificates, holding back fifty percent (50%) leaves three hundred
fifty (350) and that is larger than virtually any conceivable hotel project we have
seen before us. It's a reasonable number..
Ms. Yukimura:
Chair Nakamura:
Councilmember Chang?
Mr. Chang:
reading from your notes?
Okay. Thank you very much.
Any other questions for Carl?
Was that a written testimony or were you
Mr. Imparato: I'm just reading from notes that I have taken
in response to...
Mr. Chang: Would you mind if we get a copy?
Mr.Imparato: What I could do is actually... it's severely
scrolled out but I will type it up and send it to your County Clerk.
Mr. Chang:
Chair Nakamura:
Mr. Imparato:
Chair Nakamura:
time? Mr. Mickens.
Thank you_
Any further questions? Thank you, Carl.
Thank you all.
Would anyone else like to testify at this
GLENN MICKENS: Thank you, Nadine. For the record Glenn
Mickens and you have a copy of my testimony. First I would like to thank Mike and
Marie for their fine presentation. I thought they did an excellent job. I have been
given... and you have a copy of this and also you have a copy of Walter Lewis last
thing. I believe he sent it to you, right; Nadine?
Chair Nakamura: Yes. He did.
Mr. Mickens: I have been given the testimony that Walter
Lewis has proposes a wise way for the Council to avoid another incident of ready,
fire, aim and notes that we don't have all the necessary information at this time
about the existing resort projects that the Bill seeks to exempt from the application
of the bill and makes the intelligent success that it should be obtained before
enactment. It seems obvious that the Council would like to transfer the authority to
process approvals of transient accommodation units to the Planning Commission as
a charter amendment adopted in 2008 allows. That can be done, but there is
no urgency. Despite the Planning Commission's outrageous disregard of the
guidelines, in the 2000 General Plan for transient accommodation unit growth it's
understandable that the Council may wish to give protection for landowners who
invested in proposed projects, but that protection should not be given through
exemptions as provided in Bill 2410 as it now reads which could violate the
materials of the Charter. Let's pause and identify the scope and nature of the
problem that the preliminary approval the Planning Commission has
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bestowed and we'll be able to craft the Bill that will conform to the Charter and
provide suitable assurances to the developers -who are currently proposed- to be
awarded exemptions. We expect that developers will be objecting to the deferral, but
you are reminded that your duty is not to a few owners who have never been
adversely affected but to the citizen of the county who adopted the Charter
amendment in 2008 and who expected that the Council could not let its provisions
be violated. I wanted to say that I fully agree with JoAnn that owners' rights
cannot be taken away by Charter or any other means. But as she pointed out
before we over develop this island, what has been put in place to address our
infrastructure, our roads, our water, our solid waste, etc., as one (1) example. Look
at the Waipouli Beach Resort across from Safeway which was mandated to build an
access road to alleviate traffic. That two hundred (200) foot road has not mitigated
anything and has made getting out of Safeway a nightmare. Is this an example of
what kinds of conditions we will put in future developments in Bill 2410? I think
all these things have to be looked at but I'm as concerned as JoAnn is and I'm sure
that all you Councilmembers are that the infrastructure... you're saying that the
developer has put infrastructure in place and certain places, that gives them the
right now to go ahead and build their project; if they've met those particular
conditions. I'm not sure that they should have the right to come back in and go
after permits again. If they were given those permits and within an eliminated
time... four (4) years, five (5) years, they have done no development. Even if they
put those things in there, I think that would be a protection for our island. That's
my testimony.
Chair Nakamura: Thank you Mr. Mickens. Are there any
questions for Mr. Mickens? Okay, thank you. Would anyone else like to testify at
this time?
JOE ROSA: Good afternoon members of the Council. For
the record Joe Rosa. I've heard all this talk about development, resort and all that.
First things first, one of the biggest problems they say is traffic, traffic... the County
cannot build the infrastructure that is needed, it is something that should be
worked out with the State Department of Transportation. In 1950, the highway
structure plan for this island was planned around this Lihu`e area and throughout
the island. In thirty-six (36) years that I worked, it took them thirty-six (36} years
to build Kapule Highway which was never finished and completed. It should have
gone right across to Nawiliwili Road and reach the Kukui Grove area, so that people
going to the airport from the Westside didn't have to come through Lihu`e Town and
add to all this traffic congestion. That's the problem that we have here, look ahead
and think about it. Civil Defense say that we have adequate transportation to get
evacuation... hell no, there's none of it because everything is one (1) way in and one
(1) way out. We need access alternate routes. Anything happens, people living in
the Kapa`a-Wailua area to go home, they got to go mauai. DOT had plans mauka
(inaudible) that would include a new Wailua Bridge, up mauka. All those kinds of
things haven't been even scratched yet and you talk about development, tourism...
get your .highway structure fixed, work with DOT, I don't see anybody from DOT
come around here. When they had a tsunami alert, the Po`ipu area was (inaudible)
Koloa Town because all of the resort areas there, the hotels, the tourist and
everything... all comes into the Koloa, all coming through the tree tunnel, no other
alternate routes. Development (inaudible) or any place we travel by way of
transportation, you don't have good transportation, there's no movement, there's
traffic jams, everything. Not -only is talk about development, I've never heard of a
development being turned down because of the transportation problem. They just
figure well we'll develop the highways later but you got to get those highways first
so that you don't have that congestion when all that tourist start coming in. That
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would create jobs, I know JoAnn mentioned the hotel development would create jobs
with people and so did other Councilmembers but a highway would take at least
two (2), three (3) years of work also. In 1950 the structure of the island area was
planned. In sixty-one (61) years I have seen nothing change around the Lihu`e area.
Sixty-one (61) years may I remind you, check the Kapaia Bridge and see what is
completed. We need more infrastructure and with mauka infrastructure, the State
D.O.T. had great roads to come into Lihu`e town from the mauka (inaudible) the
entrance there Hardy Street intersection, (inaudible) Street at Isenberg tract
there.. _
Chair Nakamura: Mr. Rosa three (3) minutes, three (3)
additional minutes.
Mr. Rosa: Yes I know it's up but- I'll take my additional
three (3) if I may. Those are the kinds of things like I say... look into working
with the D.O.T., get D.O.T. members, Mr, Ray McCormick, I talked to him about it
and said you know more about the highway system on Kauai than I know.
I say Ray, I worked in 1960, when things were on the planning board already, but
nothing has been done except Kapule Highway which is totally incomplete. We had
a totally beautiful infrastructure planned. Wouldn't have been bothered with this
problem here and also in Kapa`a, that infrastructure would have killed all of these
problems here that we had in Kapa`a and Lihu`e. I know when we did Kapule
Highway, it's a problem, but it's caught up with it. Get the State and D.O.T., get
Ron Kouchi, get Tokioka, Morikawa, our State Legislators and say what are you
doing for Kauai? We need gas tax money for new highways and not just
resurfacing. Where is the tax money we pay for gas? Those are the kind of things to
look for and I will leave with you with those thoughts. I hope you can look into it
and get some action. Thank you very much.
Chair Nakamura: Thank you, Mr. Rosa. Are there any
questions for Mr. Rosa? Would anyone else like to testify?
DAVE ARAKAWA: Good afternoon Chair Nakamura, Vice Chair
Yukimura and members of the Planning Committee and members of the Council.
Dave Arakawa here on behalf of Land Use Research Foundation. At the outset we
would like to thank you as a Council for your patience and thoughtful questions
with respect to this matter and thank the Planning Director, Mr. Dahilig and
Planner Williams and council for working so hard on these tough issues. Our
testimony has four basic issues; I will just go quickly through them. And
Councilmember Rapozo mentioned the first one about the Charter amendment
contradicting the intent and process of the General Plan and so did Mr. Dahilig and
Ms. Williams. That is very important the character of the government action of the
Charter amendment was inconsistent with the Kauai General Plan. That is
important in any legal review of this matter, the character of action being
considered, the character of the Charter amendment. It contradicted or was in
violation of the (inaudible) plan. Second, this was an important part. People might
talk about the charter amendment and vote, but the law is when there is a finding
of vested rights and vested estoppel, it trumps any vote on Charter questions or any
vote by the populous and that was proven out in the Sandy Beach case that I
handled as Corporation Counsel in Honolulu. There was a popular vote in that and
the court overturned it. Third, we know it was a hard job, but we commend you
folks, the Council and Planning Department and Corporation Counsel with respect
to addressing non-applicable projects and exemptions. It looks like to a large part
that they are based on fairness, equity and principles. Probably you folks might
want to take a closer look at the definition and what constitutes
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"substantial sums of money," and/or the type of projects, shoreline management
areas were mentioned but just take another look at that. I'm sure the legal review
will take another look at that and the planning department review. Last, we didn't
think we'd have to mention it, but it came up. It looks like this version sticks with
non-applicable, very simple. Non-applicable means "non-applicable," exempt means
"exempt." so that seems very simple to understand and very simple to implement.
And that is about it. I was going to say when you look in the dictionary under
"exempt," it doesn't say "stand in line" when you look at the dictionary for "non-
applicable," it doesn't say "stand in line" So we think this Bill is applicable in the
State of Hawaii.
Chair Nakamura: Thank you Mr. Arakawa. Are there any
questions? Councilmember Yukimura.
Ms. Yukimura: Yes, I wanted to ask a question about your
first statement that the Charter violated the General Plan.
Mr. Arakawa: It contradicts:
Ms. Yukimura: Or it contradicts the General Plan, but to the
extent that it does not affect vested rights, it properly shapes or modifies the
General Plan, does it not?
Mr. Arakawa:
If it does not violate the vested rights.
Ms. Yukimura: To the extent that you steer clear of the
vested rights issue, it actually modified the intention of the General Plan, which
said allow all the development that is zoned- for. all the resort development that is
zoned for was the General Plan goal? And it seems that the charter amendment,
which was through the vote of the people said no, we're not sure we want all the
development that was zoned for, and we're here having to determine that place
where we don't infringe on vested rights but we still honor the intent that perhaps
not all the zoning should be allowed.
Mr. Arakawa: You know I get a lot of that. I forgot what the
question was, I don't know if it was a question or history, but I got the first part of
the question and that is that if you take care o£.. legally take care of the non-
applicable projects and exempt projects does the Charter amendment work? Should
that one point five percent (1.5%) be implemented? We would say yes, it should be,
but first you have to take care of the non-applicable and exempt projects and can
this process be implemented through that Charter amendment? The answer is yes.
I would say so.
Ms. Yukimura: And when you say exempt...
Mr. Arakawa: Even if it is not consistent with the intent
and the process of the General Plan.
Ms. Yukimura: Because actually the intent of the people of
Kauai for the general planning process now becomes something different based on
the vote to the extent that it doesn't affect vested rights, but let me ask you in your
use of the words "exempt" and "non-applicable," you are holding those words as
equivalent to "vested rights or zoning estoppels?"
Mr. Arakawa: Yes.
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Ms. Yukimura: Okay.. That way I understand what you are
saying. Thank you very much.
Mr. Arakawa: But going forward, like you said, yes you can
apply that one point five (1.5).
Chair Nakamura: Any further questions? Thank you. I have a
question. In your testimony you said something about taking another look at the
definition of "substantial construction," and I was just wondering right now
the Bill uses the twenty percent (20%); do you have concerns about the definition in
the current Bill?
Mr. Arakawa: With respect to that, yes. We have major
concerns, but we do think. that the more the Planning Department and Corporation
Counsel take a look at case law and what is out there and take a look at how
developments are actually done, it's hard to put... if you buy a piece of property for
a hundred (100) million, it's hard before you get your final building permit to put
twenty percent (20%) of that into the ground. It's a good thing that they are
considering architecture and engineering costs, but I think Mr. Dahilig raised the
issues of EIS and there are million-dollar EIS out there being done right now. Is
that considered, is it not? So I think you folks as the Council and the Planning
Department and Corp Counsel are looking at that issue seriously enough. We know
you folks are concerned about it and looking at it seriously enough that twenty
percent (20%) was a good starting point but we think there need to be more input
and more information given to you folks, all of you folks on how a development
works. Would somebody put in twenty percent (20%) of a hundred (100) million
dollars or whatever it is, or a billion dollars or whatever it is, when they don't
have any assurances?
Chair Nakamura: Is your opinion that the definition should
also include planning and permitting cost?
Mr. Arakawa: That's one of our positions, yes.
Chair Nakamura: If you have any specific recommendations,
and because of your knowledge of this subject matter, it would be helpful to have
that in writing.
Mr. Arakawa: We can submit some information on case law
and in that Sandy Beach case, it was two hundred thousand in soft cost and
planning cost but I respect Kauai is different from Honolulu, so you don't have to
follow what Oahu does. You do what you feel is right.
Chair Nakamura: It feels like there is a real range out there
and it would be good to get your take on this.
Mr_ Arakawa: We will submit our information. But your
Planning Department, Corp Counsel and you folks are doing a good job in looking at
these issues seriously.
Chair Nakamura: Councilmember Rapozo?
Mr. Rapozo: Thank you. So you said you were a Corporate
Counsel for Sandy Beach?
38
Mr. Arakawa: I was Corporate Counsel during Sandy
Beach. We hired an outside attorney to handle it.
Mr. Rapozo: What was the value of the project at the time
that the two hundred thousand dollars ($200,000) was determined by the court to be
substantial? Just rough numbers, was it like a lot less than twenty percent (20%)?
Mr. Arakawa: The value of the project?
Mr. Rapozo: Was the value of the project bigger than $1
million?
Mr. Arakawa: Yes, of course. What happened was that T
have the articles right here, the articles from that time but it was to the tune of fifty
to seventy million dollars in damages that we had to pay or we had to exchange.
Fifty to seventy million dollars based on two hundred thousand dollars in cost
expended. That was a huge...
Mr. Rapozo: Well I'm just trying to figure out the
percentage that the Court ruled was sufficient.
Mr. Arakawa: Two hundred thousand.
Mr. Rapozo: .Right but that was... what was the value or
assessed value of that project?
Mr. Arakawa: I can check on it. I know the settlement
package was between sixty million to seventy million dollars that we had to settle
with Kamehameha Schools and the developer.
Mr. Rapozo: Well I understand that these types of cases
are very, very expensive when you're talking about owner's rights but the other
question as it pertains to that same issue; what about a performance bond or some
kind of bond that is required to be placed on that permit application? Basically,
that's your commitment, your developer commitment said hey I'm going to build,
I'm not just going to bring up an invoice that I paid two hundred thousand dollars
for an EIS but no, here's my performance bond, I put up my money here's a_bond, if
I don't complete and fail, the bond kicks in, you get your money, I lose my permit
and the next guy in line gets... I mean you want to show a serious commitment to
project.
Mr. Arakawa: Often times in projects as large as this and
that's why we should bring perhaps experts would help, they took out loans to
purchase the property, so there thousands of dollars in interest, hundreds of
thousands of dollars of interest a week just in interest on the purchase of the
property. That's a huge commitment right there and with respect to that I can
understand your concern, the market like you said, the market dictates when
projects go forward and stall to a certain extent and they're seeing it at the State
Land Use Commission where people have to come in and say look we didn't meet
our schedule, it's because the market went down and so the State Land Use
Commission say, okay we'll give you an extension. I'm not familiar with how Kauai
County do it but I know on Oahu as an attorney for developers, we'd have to come
in and- say look we didn't hit our deadlines on our SMA, we didn't hit our deadlines
on our zoning and it's because of this... (x), (y}, (z) and they'll say, okay we
39
understand the whole industry is like that and we'll give you an extension. I think
if there's a good back and forth between the developer and the County Council or
the Planning Department, that's good but when somebody just in your face
disregards the Council or disregards the Planning Department, you folks have the
authority to do what you need to do to revoke permits. I think almost every permit
has that condition in it that they can have their approval revoked if they...
Mr. Rapozo: But you know I would and I don't know this
but I would bet twenty bucks right now that we never revoked a permit. Just look
at the chart that was put on the PowerPoint. Like one of the testifiers said, back to
1990. So there's some concerns about that and I think this is without limit on
exemptions, this is like when everything is a go... add in that, all of a sudden it
changes things. Guys will have to hang on to their exemptions and that's what I'm
afraid of, is you're going to have people hang on to an exemption or permit that
somebody else could be ready to build on and that is I think what I want to stray
away from.
Mr. Arakawa: You raised an excellent point and it happens
through all strata of society. Tutu, grandma, grandpa holding on to the property
wants to subdivide it someday for the grandkids like that, now is not the right time,
no money to buy house. The grandchild Iost a job so got to delay, right? So we're
talking about developers now but it happens to everyday people where they have to
delay their plans and say Planning Department, we promised we'd be building this,
we promised we'd be subdividing it for our grandchildren, but you know what, no
can right now. So it happens, the economy affects not only hotel developers but
everyday people, grandparents... the whole bit yeah so I think you folks have the
authority and discretion as does the County Planning Department in certain
situations to say yes we revoke your permit or revoke your approval, you haven't
given us good enough reason. So I think that's a huge power you folks got, huge
power. At the State Land Use Commission, they exercised it on bridge Analea.
Chair Nakamura: Are you done?
Mr. Rapozo: I'm done.
Chair Nakamura: One (1) final question and then I think we're
going to adjourn this Committee.
Ms. Yukimura: So the Sandy Beach decision was not a
Hawaii Supreme Court decision was it?
Mr. Arakawa: Circuit Court decision by Judge Makena.
Ms. Yukimura: So you will I presume you have cites from
elsewhere that support your thoughts about this percentage of expenditure that
you'll provide?
Mr. Arakawa: Yes.
Ms. Yukimura: Okay.
Mr. Arakawa: And again, it's up to you folks. I'll submit
the information but I respect Kauai County and what you folks decide.
Ms. Yukimura: Okay, thank you.
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Chair Nakamura: - Thank you Mr. Arakawa. Any further public
testimony? If not, I would like to thank all of you for coming here, Councilmembers
for all of the good questions, and Planning Department for the great presentation,
and we'll again take up this matter in two (2) weeks. August 24, 2011 is the next
Planning Committee meeting and we'll take it from there.
The meeting was called back to order, and proceeded as follows:
Upon motion duly made by Mr. Rapozo, seconded by Ms. Yukimura, and
unanimously carried, Bill No. 2410 was deferred.
There being no further business, the meeting was adjourned at 12:27 p.m
Respectfully submitted,
Darrellyne M. imao
Council Services Assistant II
APPROVED at the Committee Meeting held on September 28, 2011:
~~G~G~~ ~ ! ~ -
NADINE K. NAKAMURA
CHAIR, PLANNING COMMITTEE
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