Public Power, Private Gain: Hawaii

Overview

 

Hawaii was the site of the notorious Midkiff condemnations in 1984. Hawaii had unusual land ownership patterns stemming from its former monarchical political structure. Much of the land was owned by a few land trusts, and people then owned the residences on the land and held long-term leases to the land itself. The Hawaii legislature decided to break up this quasi-feudal system of ownership by condemning the underlying land and then transferring it to the long-term leaseholders.176 In 1984, the U.S. Supreme Court upheld the condemnations.177 Although the supposed purpose of the legislation was to promote owner-occupied housing and diversify land ownership,178 the condemnations produced such a large windfall for the private beneficiaries that they could not resist cashing in. One of the main results of the condemnations was the widespread transfer of land to foreign investors.179

 

Lately, things have been relatively quiet on the condemnation front in Hawaii. There is only one major ongoing condemnation for a private party—this time, a resort hotel. Meanwhile, the Governor has been trying to restrict the eminent domain power so that it can no longer be used simply for private businesses. So far, however, the legislature has balked at placing limits on government power.

Legislative Actions

 

In response to the Honolulu City Council’s attempt to condemn four parcels of prime beachfront land in Waikiki for a hotel expansion in 2001 (see below), Governor Ben Cayetano introduced a bill before the state legislature to clarify the definition of “public purpose” for condemnation of private property. Under the state’s current scheme, counties are left to decide for themselves what constitutes a valid public purpose. Senate Bill 2748, if it had passed, would have specified the circumstances in which eminent domain may be used. The bill spelled out in strong language that private property may not be taken from one private owner for the benefit of another private party, while leaving in place the limited exception from the Midkiff case for the leasehold conversion of condominium property. S.B. 2748 passed in the Hawaii Senate on March 5, 2002,180 but it died in the House.

 

 

Private Use Condemnations

 

Honolulu

In a classic example of eminent domain abuse by a local government, the Honolulu City Council pressured five property owners to sell their beachfront land in Waikiki to Outrigger Hotels, for expansion of the hotel chain’s Ohana Reef Lanai resort.181 The proposed 7.9-acre expansion is part of the $300-million Waikiki Beach Walk redevelopment project, which City leaders claim will attract more visitors to Waikiki and spur other development in the area. These same leaders apparently do not believe that Outrigger should have to negotiate for the land on the open market, so they have thrown their muscle behind the project.

 

On February 20, 2002 the Honolulu City Council approved a resolution allowing it to condemn the properties.182 The City Council Chairman, Jon Yoshimura, explained that filing condemnation actions against the owners would “encourage the parties to negotiate.” Getting sued is not what most people would call a friendly negotiating overture. The owners objected that it was neither “necessary or appropriate for the City to condemn the properties and then turn around and sell them to Outrigger.”183

 

Hawaii Governor Ben Cayetano publicly lashed out against the plan, saying that the City Council’s actions are insensitive to fundamental American values. According to Gov. Cayetano, “This isn’t Russia or someplace like that where you can just take people’s land. Where is the public interest, the public purpose? It’s not like hotel developments are rare in this state.” The governor introduced an unsuccessful bill in the Hawaii legislature that would have prevented these types of private use takings from going forward by restricting counties’ eminent domain powers.184 Eventually, with the eminent domain actions pending, the owners reached settlements with the hotel chain.185

 

*These numbers were compiled from news sources. Many cases go unreported, and news reports often do not specify the number of properties against which condemnations were filed or threatened.

†Hawaii State Judiciary’s Administrative Office of the Courts (includes condemnations for traditional public uses).

176 See Hawaii Land Reform Act of 1967, Haw. Rev. Stat. § 516 (1977).

177 See Hawaii Housing Authority v. Midkiff, 467 U.S. 229, 245 (1984).

178 Id. at 233.

179 Gideon Kanner, “Do Gooders’ Designs Twist Takings Clause,” The National Law Journal, Jan. 8, 1996, at A19.

180 See S.B. 2748, 21st Sess. (Haw. 2002).

181 “Property Owners Oppose City Condemnation Plan,” AP Wire, Nov. 13, 2001.

182 “City Council Approves Outrigger Land Condemnation for Waikiki Expansion,” AP Wire, Feb. 20, 2002.

183 Bruce Dunford, “Governor Condemns Council’s Condemnation for Outrigger Expansion,” AP Wire, Feb. 1, 2002; “Property Owners Oppose City Condemnation Plan,” AP Wire, Nov. 13, 2001.

184 Bruce Dunford, “Senate Committee’s Bill Could Thwart Outrigger’s Waikiki Expansion,” AP Wire, Feb. 26, 2002; Bruce Dunford, “Governor Condemns Council’s Condemnation for Outrigger Expansion,” AP Wire, Feb. 1, 2002.

185 “Outrigger Reaches Agreement with Property Owners,” AP Wire, Aug. 16, 2002.