The Ferris Trust owned a parcel of land on the island of Kaua’I, located on land designated by the County of Kaua’i as an agriculture district, which restricted use of the land to approved agricultural purposes and provided for a special tax assessment privilege. The Property contained a single-family dwelling constructed in 2000. The Ferris Trust began renting the dwelling to vacationers in 2003 under the business name “Retreat at Hale Luana & Plantation.” In 2008, Defendant–Appellee/Appellee County of Kaua’I adopted Ordinance Number 864, which amended the County’s CZO, Kaua’i County Code 1987 (KCC) Chapter 8, and prohibited new transient vacation rentals (TVRs) outside land designated as a Visitor Destination Area, and required the registration of lawfully existing TVRs within six months after the enactment of the amended ordinance. Ordinance 864 § 8–17.10 allowed “the owner, operator or proprietor of any single-family transient vacation rental” operating outside of a Visitor Destination Area to obtain a nonconforming use certificate to continue operating their TVR. In 2010, the County adopted Ordinance Number 904, amending the CZO, and targeting the grandfathering provision established by Ordinance 864. On appeal, the Ferris Trust contended the circuit court erred in upholding the interpretation of the ordinance requiring an applicant for a nonconforming use certificate to have authorization from at least a 75% interest of the equitable and legal title of the lot.
On appeal, the Ferris Trust argues that the Planning Commission erred in interpreting the term “applicant” in KCC § 8–17.103 as having the same meaning as “applicant” in the definitions provision of the CZO. The CZO defined applicant as “any person having a controlling interest (seventy-five percent (75%) or more of the equitable and legal title) of a lot.” The Ferris Trust argued that “applicant” under KCC § 8–1.5 was not intended to limit the word “applicant” as used in KCC § 8–17.10, but rather to “provide a process to identify and register those single-family transient vacation rentals as nonconforming uses which have been in lawful use prior to the effective date of the ordinance [which specifically banned such rentals outside of Visitor Destination Areas] and to allow them to continue subject to obtaining a nonconforming use certificate as provided by this Section.” The court found this purpose was consistent with the requirements of HRS § 46–4(a) as well as the constitutional protection provided to property owners with vested rights to pre-existing lawful uses of their property, since people with less than a seventy-five percent ownership interest may be able to establish vested rights to prior lawful nonconforming uses.
The court reasoned that precluding such people from even applying for a nonconforming use certificate would be inconsistent with the purpose of the ordinance to “identify those engaged in the prior lawful use of their property as a transient vacation rental and to allow them to apply to continue that use.” Conversely, the court found that rejecting this interpretation would give all those who could potentially establish a vested right to continue using their property as a transient vacation rental the opportunity to apply for, and demonstrate their entitlement to, a nonconforming use certificate. Despite the Ferris Trust failing to satisfy the definition of “owner” under KCC § 8–1.5,5 it fell within the ordinary meaning of “operator” and “proprietor” based on its operation of its TVR business prior to March 7, 2008. Accordingly, the Planning Department was not permitted to refuse to consider or process the Ferris Trust’s application for a nonconforming use certificate on the basis that the Ferris Trust did not have a 75% or more controlling interest in the equitable and legal title of the lot. The court therefore held that the circuit court’s decision to uphold the Planning Department’s refusal to accept the Ferris Trust’s application for a nonconforming use certificate under KCC § 8–17.10 was erroneous.
Robert D. Ferris Trust v Planning Commission of the County of Kau’ai, 138 Hawai’i 307 (HI App. 8/9/16)