HI Supreme Court Holds Union’s Due Process Rights Were Violated By Planning Director’s Removal of Conditions Without Notice

This post was authored by Matthew Loeser, Esq.

This case arose from the City and County of Honolulu Department of Planning and Permitting’s (“DPP”) approval of two Waikiki Special District (WSD) permits for PACREP 2 and its affiliate PACREP, to develop a condo/hotel at 2121 Kūhiō Avenue and 2139 Kūhiō Avenue. When the Director of the DPP approved PACREP’s application for a WSD permit at 2121 Kūhiō Avenue in March 2013, he included several restrictive covenant conditions in the permit to ensure compliance with the Land Use Ordinance (“LUO”) should any hotel unit be converted to a residential unit. The Director placed these conditions in the 2121 Kūhiō Permit at the urging of Appellant Unite Here! Local 5, a union representing hotel and restaurant employees, which had raised several concerns regarding the use of the condo-hotel. Neither PACREP nor Local 5 appealed the 2121 Kūhiō Permit.

In 2014, PACREP 2 applied for a WSD permit for the second phase of the condo-hotel project at 2139 Kūhiō Avenue. While the Director approved the permit in July 2014, he did not include the same restrictive covenant conditions that had previously been placed in the 2121 Kūhiō Permit. Local 5 appealed the 2139 Kūhiō Permit to the Zoning Board of Appeals (“ZBA”), and contended that the Director had abused his discretion when he approved the 2139 Kūhiō Permit without these conditions. The ZBA held that it did not have jurisdiction to address director’s modification of special district permit, and the Circuit Court affirmed.

On appeal, Local 5 claimed that the Director’s purported modification of the 2121 Kūhiō Permit was improper because it was not a proper modification under ROH § 21-2.20(k), and the Director’s September 6 Letter modifying the 2121 Kūhiō Permit prejudiced Local 5’s substantial rights. The record reflected that Local 5 actively participated in the public hearing process for the 2121 Kūhiō Permit. As such, while Local 5 was not formally notified by the DPP that the Director had approved the 2121 Kūhiō Permit, it was aware that the 2121 Kūhiō Permit had been approved with the conditions for which it had advocated. Notwithstanding this, since the permitting authority knew the importance of the conditions to Local 5, the court found Local 5 was entitled to heightened procedural protections regarding subsequent decisions to modify that permit. Therefore the court remanded this issue to the ZBA to decide whether the Director’s September 6 Letter was a proper modification of the 2121 Kūhiō Permit.

Local 5 next alleged that the circuit court erred when it affirmed the ZBA’s decision to affirm the approval of the 2139 Kūhiō Permit. Specifically, it claimed that the circuit court’s affirmance of the 2139 Kūhiō Permit without conditions was arbitrary, capricious, and an abuse of discretion. Here, both the 2121 Kūhiō tower and the 2139 Kūhiō tower were operated as a single condo-hotel. Moreover, both PACREP 2 and the DPP acknowledged that the 2139 Kūhiō project was intended to be operated jointly with the 2121 Kūhiō project as one condo-hotel. Since the decision to approve the 2139 Kūhiō Permit was based, in part, upon the Director’s removal of the restrictive covenant conditions from the 2121 Kūhiō Permit, the court remanded this issue to the ZBA to determine whether that modification was proper under the LUO. The court further held that, pursuant to HRS § 91-14(g), the ZBA’s decision to approve the Director’s approval of the 2139 Kūhiō Permit must similarly be vacated and remanded to the ZBA to decide whether the Director abused his discretion by approving the permit without those conditions.

Unite Here! Local 5 v. Department of Planning and Permitting, 454 P.3d 394 (2019)