HI Supreme Court Holds Evidence was Insufficient to Support Determination that Variance was Necessary to “Maintain Economic Viability”

The Honolulu City Council designated the Waikiki Special District “to guide carefully Waikiki’s future and protect its unique Hawaiian identity.” Within the Waikiki Special District (WSD), the City Council desired to step back buildings from the shoreline in order to optimize “the sense of open space and public enjoyment along the beach.” To that effect, the City Council established the minimum setbacks that applied to all zoning lots along the shoreline within the WSD. Kyo-ya Hotels & Resorts LP was the fee-simple owner of the Moana Surfrider hotel complex, which contained three hotel buildings -the Surfrider Tower, the Banyan Wing, and the Diamond Head Tower (DHT) – on a combined zoning lot located on Kaldkaua Avenue along the Waikiki shoreline. On March 19, 2010, Kyo-ya submitted a variance application to the Department of Planning and Permitting requesting that the Project be allowed to encroach into the Coastal Height Setback. the Director granted partial approval of Kyo-ya’s variance application to allow the Project to encroach approximately 74 percent into the Coastal Height Setback conditioned on the submission of revised plans “which show the Project shall comply with the 1–to–1 (45–degree angle) coastal height setback as measured from … (the approximate beach width intended in the [1965 Beach Agreement]).”

Surfrider Foundation, Hawaii’s Thousand Friends, Ka Iwi Coalition, and KAHEA—The Hawaiian Environmental Alliance (collectively Surfrider) filed a petition to the Zoning Board of Appeals challenging the Director’s findings and conclusion that Kyo-ya’s request for a variance from the Coastal Height Setback met the requirements for issuance of a variance as set forth by the City Charter. The ZBA denied Surfrider’s appeal of the Director’s Decision, and the Circuit Court affirmed. At the outset the court noted that the Director court grant a variance from a provision of the Land Use Ordinance of the City and County of Honolulu (LUO) on the grounds of unnecessary hardship if the three requirements set forth in RCCCH § 6–1517 were satisfied: the applicant would be deprived of the reasonable use of such land or building if the provisions of the zoning code were strictly applicable; the request of the applicant is due to unique circumstances and not the general conditions in the neighborhood; and the request, if approved, would not alter the essential character of the neighborhood nor be contrary to the intent and purpose of the zoning ordinance.

The Director based his conclusion that Kyo-ya would be deprived of a “reasonable use” if the Coastal Height Setback was strictly applied in part on his finding that the Project “is necessary to maintain economic viability.” However, there was no financial data in the record to support this finding; instead, it appeared as though the Director merely recited statements Kyo-ya made in its variance application. Additionally, even assuming there was evidence establishing that the existing DHT was not economically viable due to its aging structure and “substandard accommodations,” renovation and or replacement of a nonconforming building subject to certain conditions was expressly authorized by the LUO. Not only did the court fail to find any evidence necessitating a variance to maintain economic viability, but the court further found that the applicant for a variance was not deprived of the reasonable use of its land or buildings simply because the applicant had not been able to utilize the maximum potential density of the site.

Next the court found that because the setbacks, shoreline, 1965 Beach Agreement, and Beach Maintenance Project were not attributes of the parcel, but rather are external conditions present in the neighborhood, the Director’s findings that these conditions were “unique” attributes of Kyo-ya’s property were clearly erroneous. Furthermore, the Director’s finding of a “large number of nonconforming uses and structures” in the area was not a valid basis for granting another nonconforming use, since the proper remedy would have been to seek an amendment to the zoning ordinance, not a variance. Because none of the requirements for a variance were met, the circuit court’s judgment, the ZBA Order, and the Director’s Decision were reversed.

Surfrider Foundation v Zoning Board of Appeals of City and County of Honolulu, 2015 WL 5597179 (HI 9/23/2015)