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                                                             Electronically Filed
                                                             Supreme Court
                                                             SCAP-13-0000091
                                                             25-NOV-2014
                                                             09:52 AM




           IN THE SUPREME COURT OF THE STATE OF HAWAI#I

                               ---o0o---


                 DW AINA LE#A DEVELOPMENT, LLC,
          Respondent/Co-Petitioner-Appellant-Appellee,

                                   vs.

                     BRIDGE AINA LE#A, LLC.,
          Respondent/Co-Petitioner-Appellant-Appellee,

                                   and

               STATE OF HAWAI#I LAND USE COMMISSION,
                  Petitioner/Appellee-Appellant,

                                   and

               STATE OF HAWAI#I OFFICE OF PLANNING,
                COUNTY OF HAWAII PLANNING AGENCY,
                      Respondents/Appellees,
                       (CIV. NO. 11-1-112K)

----------------------------------------------------------------

                       BRIDGE AINA LE#A, LLC.,
                   Respondent/Appellant-Appellee,

                                   vs.

               STATE OF HAWAI#I LAND USE COMMISSION,
                  Respondent/Appellee-Appellant,
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                                    and

    STATE OF HAWAI#I OFFICE OF PLANNING and COUNTY OF HAWAI#I,
                      Respondents/Appellees,

                                    and

                   DW AINA LE#A DEVELOPMENT, LLC.,
                   Respondent/Appellee-Appellant.
                       (CIV. NO. 11-1-0969-05)


                             SCAP-13-0000091

        APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT
     (CAAP-13-0000091; CIV. NOS. 11-1-112K and 11-1-0969-05)

                            NOVEMBER 25, 2014

     RECKTENWALD, C.J., NAKAYAMA, MCKENNA, AND POLLACK, JJ.,
      AND CIRCUIT JUDGE LEE, IN PLACE OF ACOBA, J., RECUSED

              OPINION OF THE COURT BY RECKTENWALD, C.J.

           This appeal turns on whether the Land Use Commission

(the LUC) properly reverted land to its former land use

classification pursuant to Hawai#i Revised Statutes § 205-4(g)

(2001 & Supp. 2007).     We hold that the LUC erred in reverting the

land without complying with the requirements of HRS § 205-4

because the land owners had substantially commenced use of the

land in accordance with the representations they had made to the

Commission.

           The instant dispute concerns the classification of land

in Waikoloa on Hawai#i Island.       In 1989, the land was

reclassified from agricultural to urban, in order to allow for

the development of a residential community.          The reclassification

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was made subject to numerous conditions, including a condition

that at least sixty percent of the residential units be

affordable.    Over time, the land changed hands several times and

the LUC granted requests to amend the affordable housing

condition.

           By 2005, the condition required the landowner, Bridge

Aina Le#a, LLC (Bridge), to construct no fewer than 385

affordable units, i.e., twenty percent of the total units to be

constructed.   It further required Bridge to provide certificates

of occupancy for all of these units within five years, and submit

a joint venture agreement and mass grading contract within a

year.

           In December 2008, the LUC issued an order to show cause

(OSC) why the land should not revert to its former agricultural

land use classification.      The LUC stated that it had reason to

believe that Bridge and its predecessors in interest had “failed

to perform according to the conditions imposed and to the

representations and commitments made to [the LUC] in obtaining

reclassification of the Subject Area and in obtaining amendments

to conditions of reclassification.”        Soon thereafter, Bridge

informed the LUC that it intended to assign its interest in the

land to DW Aina Le#a Development, LLC (DW) through an installment

sale.   DW subsequently invested more than $20 million in

developing the site.     Nevertheless, after proceedings over the


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course of several years, the LUC issued an order reverting the

land to the agricultural use district.         Bridge and DW each sought

judicial review of the LUC’s decision and order, and their cases

were consolidated in the circuit court.

           The circuit court reversed and vacated the LUC’s

decision and order.     The circuit court concluded that the LUC:

(1) exceeded its statutory authority and violated HRS chapter

205; (2) violated HRS §§ 205-4(h), 205-17, and 205-4(g); (3)

violated HRS chapters 91 and 205 and Hawai#i Administrative Rules

(HAR) chapter 15; and (4) violated Bridge’s and DW’s due process

and equal protection rights.

           On appeal, the LUC raises three arguments.           First, the

LUC argues that HRS § 205-4(g) expressly authorizes it to issue

an OSC why reclassified land should not revert to its former land

use classification.     Second, the LUC argues that the circuit

court erred in denying its motion to strike certain documents

from other LUC cases, which had been included in the record on

appeal.   Third, the LUC argues that the circuit court erred in

considering Bridge’s and DW’s constitutional arguments, and that

those arguments were unfounded.

           We hold that the LUC erred in reverting the property

without complying with the requirements of HRS § 205-4 that are

generally applicable when land use boundaries are changed.             See

infra at 64-65.    Once the LUC issues an OSC, the procedures it


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must follow before reverting land depend upon whether the

petitioner has substantially commenced use of the land.            Once use

of the land has substantially commenced, the LUC is bound by the

requirements of HRS § 205-4.       Here, by the time the LUC reverted

the property to the agricultural land use district, Bridge and DW

had substantially commenced use of the land in accordance with

their representations.      Specifically, they had constructed

sixteen townhouses on the property, commenced construction of

numerous other townhouses, and graded the site for additional

townhouses and roads.     At that point, more than $20 million had

been spent on the project.      Although Bridge and DW had

substantially commenced use of the land, the LUC failed to comply

with the requirements of HRS § 205-4.         The circuit court

therefore correctly concluded that the LUC erred in reverting the

property.

            The circuit court erred, however, in denying the LUC’s

motion to strike.    The disputed documents are portions of dockets

from other cases in the LUC.       Because these documents were not

part of the administrative record, and neither Bridge nor DW

sought to supplement the record in the circuit court, these

documents should not have been included in the record on appeal.

            The circuit court also erred in concluding that

Bridge’s and DW’s procedural and substantive due process rights

and equal protection rights were violated.          With respect to


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procedural due process, both Bridge and DW had notice of the OSC

and that the LUC might revert the property.            They also each had a

meaningful opportunity to be heard on the proposed reversion.

With regard to substantive due process, the LUC’s reversion was

not “clearly arbitrary and unreasonable,” given the project’s

long history, the various representations made to the LUC, and

the petitioners’ failure to meet deadlines.            With respect to

Bridge’s and DW’s equal protection arguments, the record does not

establish that the LUC’s imposition of a condition and subsequent

reversion of the property constituted a violation of the

petitioners’ equal protection rights.

             We therefore affirm the circuit court’s second amended

judgment in part because the LUC failed to comply with the

requirements of HRS § 205-4.         We vacate the second amended

judgment to the extent it is based on the circuit court’s

conclusion that the LUC violated Bridge’s and DW’s constitutional

rights.

                               I.   Background

             The following factual background is taken from the

record on appeal.

A.     Land Use Commission proceedings

             This appeal arises out of a dispute over the

classification of approximately 1,060 acres of land in Waikoloa.

In 1989, the LUC granted a petition to reclassify the land from


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the agricultural to the urban land use district to allow for the

development of a residential community.         The original proposal,

submitted by Signal Puako Corporation (Signal), included

approximately 2,760 residential units.         Signal offered to provide

thirty percent of the units at prices which families with an

income range of 80-120% of the County of Hawaii’s median income

could afford.

           On January 17, 1989, the LUC reclassified the land

subject to eleven conditions, including the following relevant

condition related to the affordable housing units:
           1. Petitioner shall provide housing opportunities for low,
           low-moderate, and moderate income Hawaii residents by
           offering for sale at least thirty percent (30%) of the units
           at prices which families with an income range up to one
           hundred twenty percent (120%) of the County of Hawaii’s
           median income can afford, and thirty percent (30%) of the
           units at prices which families with an income range of one
           hundred twenty to one hundred forty percent (120-140%) of
           the County of Hawaii’s median income can afford.

                 This condition may be fulfilled through projects under
           such terms as may be mutually agreeable between the
           Petitioner and the Housing Finance and Development
           Corporation of the State of Hawaii. This condition may also
           be fulfilled, with the approval of the Housing Finance and
           Development Corporation, through construction of rental
           units to be made available at rents which families in the
           specified income ranges can afford.

                 This affordable housing requirement shall be
           implemented concurrently with the completion of the market
           units for the residential project. The determination of
           median income, as that term is used in this condition, shall
           be based on median income figures that exist at the time
           that this condition must be implemented.

           In 1991, Puako Hawaii Properties (PHP), Signal’s

successor-in-interest, filed a motion to amend the LUC’s findings

of fact, conclusions of law, and decision and order.            PHP’s


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revised proposal included two “world class championship golf

courses,” and 1,550 residential units, including multi-family

units and single-family lots.       PHP offered to construct

affordable units off-site, in a number equal to sixty percent of

the unit count on the property.

           On July 9, 1991, the LUC issued amended findings of

fact, conclusions of law, and decision and order, which included

the following fifteen conditions:
           1. Petitioner shall provide housing opportunities for low,
           low-moderate, and moderate income Hawaii residents by
           offering for sale at least thirty percent (30%) of the units
           at prices which families with an income range up to one
           hundred twenty (120%) of the County of Hawaii’s median
           income can afford, and thirty percent (30%) of the units at
           prices which families with an income range of one hundred
           twenty to one hundred forty percent (120-140%) of the County
           of Hawaii’s median income can afford, provided, however, in
           no event shall the gross number of affordable units be less
           than 1,000 units.

                 This condition may be fulfilled through projects under
           such terms as may be mutually agreeable between the
           Petitioner and the Housing Finance and Development
           Corporation of the State of Hawaii. This condition may also
           be fulfilled, with the approval of the Housing Finance and
           Development Corporation, through construction of rental
           units to be made available at rents which families in the
           specified income ranges can afford.

                 This affordable housing requirement shall be
           implemented concurrently with the completion of the market
           units for the residential project. The determination of
           median income, as that term is used in this condition, shall
           be based on median income figures that exist at the time
           that this condition must be implemented.

           2. Petitioner shall develop, at its expense and in
           coordination with the State Department of Land and Natural
           Resources and the County of Hawaii Department of Water
           Supply, the necessary water source, storage, and
           transmission facilities to provide an adequate supply of
           potable water to the Property. Petitioner shall develop the
           necessary water source prior to development of the Property.

           3. Petitioner shall ensure that a buffer area along the
           boundary of the Property fronting the Queen Kaahumanu
           Highway right-of-way will be preserved to protect natural

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        open space and scenic views. This buffer area shall be
        preserved in perpetuity either through the establishment of
        a conservation easement pursuant to Chapter 198, HRS, as
        amended, or such other means as shall be reviewed and
        approved by the Office of State Planning of the State of
        Hawaii.

              The buffer area shall be comprised of approximately
        two hundred twenty-five (225) acres and shall extend inland
        from the Queen Kaahumanu Highway right-of-way to a depth of
        approximately one thousand two hundred (1,200) feet. The
        depth of the buffer area may meander to a lesser or greater
        depth to accommodate the Project’s development plan and
        preservation of natural open space and scenic views.
        Exceptions shall be made for infrastructure improvements or
        corridors that may be necessary to service the developed
        portions of the Property. The approximate boundaries of the
        natural open space buffer area are reflected in Petitioner’s
        Exhibit 11 which is attached hereto and incorporated herein
        as Exhibit B.

        4. Petitioner shall participate in the funding and
        construction of present and future transportation
        improvements at project access points as identified and
        deemed necessary by the State Department of Transportation.
        Such improvements may include a highway overpass or
        underpass. Petitioner shall also participate in the funding
        and construction of other on-site and off-site
        transportation improvements necessitated by proposed
        development and in designs and schedules accepted by and
        coordinated with the State Department of Transportation,
        provided that the extent of Petitioner’s participation shall
        not exceed its share of the increased community traffic
        impacts in the region and, provided further that, in the
        event the County adopts an impact fee for transportation
        improvements, the foregoing requirements shall not include
        or double-count the cost of any specific traffic
        improvements which may also be included in the County’s
        impact fee computation.

        5. Petitioner shall design, locate and construct a sewage
        treatment plant as may be required by the County of Hawaii
        and the State Department of Health as to minimize adverse
        impacts on adjoining properties.

        6. Petitioner shall immediately stop work on the impacted
        area and contact the State Historic Preservation Office
        should any archaeological resources, such as artifacts,
        shell, bone, or charcoal deposits, human burial, rock or
        coral alignments, paving or walls be encountered during the
        Project’s development.

        7. Petitioner shall provide a maximum of sixteen (16) acres
        within the Property for public school site(s), as the State
        Department of Education may determine to be necessary to
        service the Property, at no cost to the State of Hawaii.
        These school site(s) shall be provided, if there is a need
        for such site(s), in location(s) designated for community


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           facilities on Petitioner’s master plan, or in location(s) as
           may be mutually agreeable to the Petitioner and the State
           Department of Education.

           8. Prior to the development or transfer of any interests
           whatsoever in and to the Project, Petitioner shall provide
           community benefit assessments as agreed between Petitioner
           and the Office of State Planning and shall file it with the
           Commission within 30 days of the execution of the agreement.

           9. Petitioner shall comply with “The Eight (8) Conditions
           Applicable to This Gold Course Development”, prepared by the
           State Department of Health dated April, 1990 (Version 3) and
           attached hereto.

           10. Petitioner shall engage the services of a qualified
           golf course manager to oversee the irrigation of the golf
           course and application of fertilizers and pesticides to the
           golf course and who shall be certified by the State
           Department of Agriculture in the application of fertilizers
           and pesticides.

           11. Petitioner shall make available adequate golf tee
           times, no less than forty (40) percent of total daily golf
           tee times, at affordable rates for public play by Hawaii
           State residents.

           12. Petitioner shall provide annual reports to the Land Use
           Commission, The Office of State Planning and the County of
           Hawaii Planning Department in connection with the status of
           the Project and Petitioner’s progress in complying with the
           conditions imposed.

           13. Petitioner shall develop the Property in substantial
           compliance with the representations made to the Commission.
           Failure to so develop the Property may result in reversion
           of the Property to its former classification, or change to a
           more appropriate classification.

           14. Petitioner shall give notice to the Land Use Commission
           of any intent to sell, lease, assign, place in trust, or
           otherwise voluntarily alter the ownership interest in the
           Property covered in the petition, prior to development of
           the Property.

           15. The Commission may fully or partially release these
           conditions as to all or any portion of the Property upon
           timely, and upon the provision of adequate assurance of
           satisfaction of these conditions by the Petitioner.

           In 2005, Bridge (who had acquired the land at issue in

1999) filed a motion with the LUC to amend the 1991 decision and

order, including the affordable housing condition.           Specifically,



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Bridge sought to have the affordable housing condition (condition

#1) amended to read as follows:
           Petitioner shall provide affordable housing opportunities
           for low, low moderate and moderate income residents of the
           State of Hawaii, which shall be consistent and coincide with
           County of Hawaii affordable housing requirements. The
           location and distribution of the affordable housing or other
           provision for affordable housing shall be under such terms
           as may be mutually agreeable between the Petitioner and the
           County of Hawaii.

           Bridge explained that the scope of the project had

changed significantly from the time of the original order, and

that Bridge was proposing to build 1,924 residential units, 384

of which would be for affordable housing.         Bridge further

explained that the then-existing sixty percent affordable unit

requirement was “not economically feasible because the cost of

compliance effectively prevent[ed] the Petitioners from going

forward with the development of the Project.”          Bridge also

explained that the proposed 384 affordable housing units were in

line with the County of Hawaii’s twenty-percent affordable

housing requirement.

           On November 25, 2005, the LUC granted Bridge’s motion

to amend the affordable housing condition.          The LUC amended that

condition to provide the following:
           1. Petitioner shall provide housing opportunities for low,
           low-moderate, and moderate income residents of the State of
           Hawai#i by offering for sale at least twenty percent (20%)
           of the Project’s residential unit prices determined to be
           affordable by the County of Hawai#i Office of Housing and
           Community Development, provided, however, in no event shall
           the gross number of affordable housing units within the
           Petition Area be less than 385 units. The affordable
           housing units shall meet or exceed all applicable County of
           Hawai#i affordable housing standards, and shall be completed

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           in substantial compliance with the representations made to
           the Commission.

           1b. Petitioner shall obtain, and provide copies to the
           Commission, the certificates of occupancy for all of the
           Project’s affordable housing units within five (5) years of
           November 17, 2005.

           1c. Petitioner shall submit to the Commission the
           Petitioner’s signed joint venture agreement and a mass
           grading contract within a reasonable amount of time, not to
           exceed one (1) year from November 17, 2005.

           During 2006 and 2007, Bridge periodically appeared

before the LUC to provide updates on the project.           On October 11,

2007, the County Planning Department informed Bridge that an

Environmental Impact Statement (EIS) was required for the

project, pursuant to this court’s decision in Sierra Club v.

Department of Transportation, 115 Hawai#i 299, 167 P.3d 292

(2007).

           During a meeting held by the LUC on September 18, 2008,

commissioners expressed concern that annual progress reports

submitted by Bridge in 2005, 2006, and 2007 showed “no activity”

with respect to the conditions imposed by the 1991 decision and

order, as amended in 2005.      Specifically, Commissioner Lisa M.

Judge stated:
                 I mean it’s clear they have not, I believe, or we have
           reason to believe, that they’re failing to perform on the
           condition that was imposed, specifically this affordable
           housing condition.

                 I would say that the Commission should issue an Order
           to Show Cause to say why the property classification -- that
           the property should not revert to its former land use
           classification.

                 I would set forth a motion that the Commission issue
           an Order to Show Cause why the petition area should not
           revert to its former classification or more appropriate


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            classification.

            The LUC voted 6-0 to issue an OSC.

            On October 2, 2008, Bridge submitted to the LUC its

annual progress report for 2008.          In the report, Bridge stated

that it “was proceeding with its efforts to develop and complete

the affordable housing units,” but that “progress has been set

back by the determination by the [Planning Director of the County

of Hawai#i] that an accepted EIS will be required before the

Planning Department accepts the Project District Application for

review and processing and by the denial of the [Nonsignificant

Zoning Change Application], presently on appeal with the Board of

Appeals.”

            On December 9, 2008, the LUC issued an OSC, pursuant to

HRS § 205-4(g),1 and HAR § 15-15-93 (2000),2


     1
            HRS § 205-4(g) provides:

            Within a period of not more than three hundred sixty-five
            days after the proper filing of a petition, unless otherwise
            ordered by a court, or unless a time extension, which shall
            not exceed ninety days, is established by a two-thirds vote
            of the members of the commission, the commission, by filing
            findings of fact and conclusions of law, shall act to
            approve the petition, deny the petition, or to modify the
            petition by imposing conditions necessary to uphold the
            intent and spirit of this chapter or the policies and
            criteria established pursuant to section 205-17 or to assure
            substantial compliance with representations made by the
            petitioner in seeking a boundary change. The commission may
            provide by condition that absent substantial commencement of
            use of the land in accordance with such representations, the
            commission shall issue and serve upon the party bound by the
            condition an order to show cause why the property should not
            revert to its former land use classification or be changed
            to a more appropriate classification. Such conditions, if
            any, shall run with the land and be recorded in the bureau
            of conveyances.
                                                                (continued...)

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  1
   (...continued)

        (Emphasis added).
  2
        HAR § 15-15-93 provided:

        (a) Any party or interested person may file a motion with
        the commission requesting an issuance of an order to show
        cause upon a showing that there has been a failure to
        perform a condition, representation, or commitment on the
        part of the petitioner. The party or person shall also
        serve a copy of the motion for an order to show cause upon
        any person bound by the condition, representation, or
        commitment. The motion for order to show cause shall state:

              (1) The interest of the movant;

              (2) The reasons for filing the motion;

              (3) A description and a map of the property
              affected by the condition;

              (4) The condition ordered by the commission
              which has not been performed or satisfied;

              (5) Concisely and with particularity the facts,
              supported by an affidavit, giving rise to a
              belief that a condition ordered by the
              commission has not been performed or satisfied;
              and

              (6) The specific relief requested.

        (b) Whenever the commission shall have reason to believe
        that there has been a failure to perform according to the
        conditions imposed, or the representations or commitments
        made by the petitioner, the commission shall issue and serve
        upon the party or person bound by the conditions,
        representations, or commitments, an order to show cause why
        the property should not revert to its former land use
        classification or be changed to a more appropriate
        classification. The commission shall serve the order to
        show cause in writing by registered or certified mail with
        return receipt requested at least thirty days before the
        hearing. A copy shall be also sent to all parties in the
        boundary amendment proceedings. The order to show cause
        shall include:

              (1) A statement of the date, time, place, and
              nature of the hearing;

              (2) A description and a map of the property to
              be affected;

              (3) A statement of the legal authority under
                                                               (continued...)

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why the land “should not revert to its former land use

classification or be changed to a more appropriate

classification.”     The LUC stated that it had reason to believe

that Bridge and its predecessors in interest had “failed to

perform according to the conditions imposed and to the

representations and commitments made to [the LUC] in obtaining

reclassification of the Subject Area and in obtaining amendments

to conditions of reclassification.”        Specifically, the LUC noted

the following:
           1. Condition 1a and 1b of the Findings of Fact, Conclusions
           of Law and Decision and Order, dated July 9, 1991, as
           amended on November 25, 2005 (“Decision & Order”) requires
           Petitioner, by November 17, 2010, to provide no fewer than
           385 affordable housing units within the Petition Area that
           meet or exceed all applicable County of Hawaii affordable
           housing standards and substantially comply with


                 2
                  (...continued)
                 which the hearing is to be held;

                 (4) The specific sections of the statutes, or
                 rules, or both, involved; and

                 (5) A statement that any party may retain
                 counsel if the party so desires.

           (c) The commission shall conduct a hearing on an order to
           show cause in accordance with the requirements of subchapter
           7, where applicable. Any procedure in an order to show
           cause hearing may be modified or waived by stipulation of
           the parties and informal disposition may be made in any case
           by stipulation, agreed settlement, consent order, or
           default.

           (d) Post hearing procedures shall conform to subchapter 7 or
           subchapter 9. Decisions and orders shall be issued in
           accordance with subchapter 7 or subchapter 9.

           (e) The commission shall amend its decision and order to
           incorporate the order to show cause by including the
           reversion of the property to its former land use
           classification or to a more appropriate classification.

           (Emphasis added).

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            representations made to the Commission.

            2. Condition 1c of the Decision & Order requires Petitioner
            to submit to the Commission by November 17, 2006: 1) the
            Project’s signed joint venture agreement, and 2) a mass
            grading contract.

            3. Petitioner has represented that the infrastructure and
            concrete pad for the affordable housing portion of the
            Project will be the first part of the Project to be
            constructed, thereby enabling the market units and the
            affordable housing units to be constructed concurrently.

            4. Petitioner has committed to building the Project’s
            affordable units instead of paying an in-lieu fee to the
            County of Hawaii.

            5. Petitioner represented that all contracts with the
            general contractor, subcontractors and other construction
            related consultants have been fully negotiated and will be
            executed within 30 days following the Commission’s decision
            [in November 2005].

            6. Petitioner has represented that no additional
            discretionary governmental approvals remain outstanding,
            with the sole exception of the highway access approval by
            the State Department of Transportation.

(Brackets in original).

            The LUC held a hearing on the OSC on January 9, 2009.3

During the hearing, several Commissioners expressed concern over

the project’s lack of progress.        For example, Commissioner Judge

stated the following:
                   And in 2005 the Petitioner promised to provide 385
            affordable housing units to the Kona community within three
            years. They promised that the development would provide
            jobs and the very much needed workforce housing for West
            Hawai#i.

                  . . . .

                  Unfortunately, here we are today and there are no
            affordable homes on that development. Worse yet, there’s



      3
            In the meantime, Bridge had filed another motion to amend the
affordable housing condition. In this motion, Bridge requested that the
affordable housing condition be amended to require Bridge to provide up to one
hundred workforce housing units within three years of the filing of the
amended condition. Bridge subsequently withdrew this motion.

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           not even a glimmer of them coming any time soon.   There’s no
           building permits, there’s no infrastructure.

                 But the real cause or the real reason that we are here
           today I think is much bigger. It’s a much larger issue.
           Because in my mind the hearing for the Order to Show Cause
           is when I looked back this petition started back in November
           25th, 1987, more than 20 years ago when the first
           Petitioner, Signal Puako Corporation, filed their district
           boundary [] amendment petition.

                 . . . .

                 So the affordable housing condition in my mind is
           really just the straw that broke the camel’s back. The
           real[] reason I made the Motion for the Order to Show Cause
           is there’s a state statu[t]e, [HRS § 205-4(g)] that states
           that, “The Commission may provide by condition that absent
           substantial commencement of use of the land in accordance
           with such representations the Commission shall issue and
           serve upon the party bound by the condition an Order to Show
           Cause why the property should not revert to its former land
           use classification or be changed to a more appropriate
           classification.”

                 So in my mind there’s been 20 years that have gone by
           and nothing has happened. There were representations made
           to the community. There are several conditions attached to
           those decision and orders.

                 . . . .

                 So in my mind it’s not only the affordable housing
           condition that needs to be amended. In my mind it’s every
           condition needs to be revisited, discussed and amended.
           Then a decision can be made.

           The LUC ultimately continued the hearing.           In closing,

the LUC chairman stated the following:
                 During this period the Petitioner is urged to prepare
           and present an updated description of its projects with
           timetables and critical paths, and to review the existing
           LUC conditions and commitments, and to determine whether a
           further motion is necessary in order to obtain relief from
           conditions that cannot be met, and, if necessary, to request
           changes to conditions necessary to harmonize the Project
           with the LUC conditions.

           In February 2009, Bridge informed the LUC that it

intended to assign “all of its right, title, and interest” in the

land to DW through an installment sale.         DW, in turn, filed a


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petition to be a co-petitioner with Bridge or, alternatively, to

be given party status or to intervene.

           The LUC resumed the hearing on the OSC on April 30,

2009.   For purposes of the hearing, Bridge was treated as the

sole petitioner.    DW did not participate in the hearing because

the LUC had not yet ruled on DW’s request to be a co-petitioner.

During the hearing, the County Planning Department argued that

“the current Urban District designation is appropriate and that

the public interest would be best served by allowing [Bridge] to

maintain its current classification.”         The State Office of

Planning argued, however, that “reversion of the property to its

original classification of Agriculture would be appropriate under

the facts and circumstances of this case.”          Specifically, the

State Office of Planning argued the following:
                 The issue today is whether the Petitioner has complied
           with their representations in developing the property and
           whether they are able to build [385] affordable units on
           site and obtain Certificates of Occupancy by November 2010.

                 In our view they have not developed in accordance with
           their representations. . . .

                 Our only comments would be that in our view the change
           in ownership is irrelevant to the initial and only question
           which is whether they will be able to comply with the
           condition.

                 We would not support any change, any amendment, any
           extension. This matter has gone on for many years. You may
           remember that the affordable housing requirement was amended
           to reduce those requirements in 2005. That amendment, that
           reduction in the requirements was based upon a variety of
           representations.

                 In order to preserve the integrity of this process we
           cannot allow developers to come back before you repeatedly
           each time they cannot comply with those representations,
           each time they cannot comply with a condition and simply ask


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           that a condition be changed or removed.

           At the end of the hearing, the LUC voted 7-0 to revert

the land to agricultural use.       DW then moved to stay entry of

decision and order on the LUC’s April 30 action, pending

consideration of additional evidence.         In its motion, DW argued

that its evidence included “facts that were not available to the

Land Use Commission at the April 30, 2009 meeting and include[d]

certain key facts which [would] allow the development to proceed

and which [would] allow fulfillment of the affordable housing

condition applicable to this docket.”

           On June 5, 2009, the LUC took under advisement DW’s

request to be a co-petitioner, granted DW’s motion to stay entry

of a decision and order on the OSC, and decided to schedule a

one-day hearing for the submission of additional evidence on the

OSC.   Bridge filed a motion to rescind the OSC, arguing that it

had made “substantial commencement of use of the land.”

           The LUC held the one-day evidentiary hearing on

August 27, 2009.    Bridge designated DW as its agent for purposes

of presenting evidence on the progress of the project and

compliance with the decision and order of the LUC.           During the

hearing, DW’s president, Robert Wessels, testified that DW and

Bridge were prepared to close on the sale of approximately 61

acres of the 1,060 acre parcel for the development of the

affordable housing units.      Wessels explained that grading of this


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site had begun, and that a second access road to the site had

been prepared so that infrastructure work and construction of the

townhouses could occur simultaneously.         Wessels explained that a

“package” sewage treatment plant would be used for the affordable

housing units.

           During cross-examination by the State Office of

Planning, the following exchange occurred:
           Q:    Mr. Wessels, you are familiar with the requirements
                 for a certificate of occupancy?

           A:    Yes, I am.

           Q:    In order to get a certificate of occupancy do you know
                 whether or not you need to have a working electrical
                 hookup?

           A:    I believe you do, yes. You have to meet the life
                 safety standards. And electrical would be one of the
                 requirements.

           Q:    You would also need to have sewage hookup, correct?

           A:    That’s correct.

           Q:    You would also need to have the water hookup, correct?

           A:    Yes.

           Q:    And you would need to have access to the road such as
                 Queen Ka#ahumanu Highway, correct?

           A:    That’s correct.

           Q:    You would need all of that before a certificate of
                 occupancy could be issued, correct?

           A:    That’s correct.

           And later, the following exchange occurred:
           Q:    Your current construction plan would have the vertical
                 construction [i.e., townhouse construction] going on
                 while horizontal construction [i.e., infrastructure
                 construction] is continuing, is that right?

           A:    That’s correct.



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           Q:    Would the vertical construction begin before the
                 infrastructure connections to that pad or that pod is
                 completed?

           A:    Yes.   It has to in order to meet the schedule.

           Q:    So you build the house before you have a connection to
                 the sewer, water, and electrical lines.

           A:    That’s correct.

           In response to questions from the commissioners, Wessel

testified that DW had already spent approximately $4.5 million on

the project.    The following exchange also occurred:
           COMMISSIONER WONG:       Another question. On the affordable
                                    housing, once you start vertical
                                    construction how many homes would
                                    you be able to build say, per month?

           A:                       We are starting 32 houses a month,
                                    basically. And as we build to begin
                                    with, we build so we will be
                                    delivering and finishing roughly 30-
                                    40 houses a month, roughly one[-
                                    ]and-a-half a day.

           COMMISSIONER WONG:       So let us say by March 31st how many
                                    homes would you be able to finish,
                                    31st of next year?

           A:                       (off mic) By the 31st of March
                                    according to our schedule we had
                                    roughly 32 units.

           CHAIRMAN PLITZ:          Could you repeat that with the
                                    mic[?]

           A:                       Yes. According to our construction
                                    schedule as lined out we will have
                                    one pad completed by the 31st of
                                    March, which is 32 town homes.

           By a 6-3 vote, the LUC rescinded and vacated the OSC

“provided that as a condition precedent, [Bridge] completes 16

affordable units by March 31, 2010.         Further, that the County of

Hawai#i shall provide quarterly reports to the [LUC] in

connection with the status of [Bridge’s] progress in complying

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with this condition.”     The LUC also voted 8-1 to accept DW as a

co-petitioner.    The LUC issued a written order rescinding the OSC

and accepting DW as co-petitioner.

           On December 16, 2009, the LUC received DW’s annual

report.   The report detailed how DW was progressing on satisfying

each of the conditions.      With respect to the affordable housing

condition, the report provided the following:
                 DW Aina Le#a Development, LLC (“DW”) is working to
           satisfy condition 1. As previously reported to the
           Commission in the Commission’s hearing in the docket earlier
           this year, DW subdivided a portion of the Petition area
           (Parcel D-1-B) in which the initial affordable housing units
           will be built as part of Phase 1. Phase 1 involves the
           construction of fifty four (54) 8 unit multiple family
           structures. Two structures will be located on each of 27
           pads. The individual units which will be provided to meet
           the affordable housing requirements will be either three
           bedroom units or four bedroom units. DW has previously
           submitted to the Commission its financing commitments for
           Phase 1.

                 Not less than 385 of these units will conform to the
           affordable housing requirements in the affordable housing
           agreement with the County Office of Housing Agency. The
           actual number of affordable housing units may be increased
           to conform to County of Hawaii affordable housing
           requirements.

                 The Phase 1 scheduling is designed to produce
           certificates of occupancy for the 385 Phase 1 affordable
           housing units by November 17, 2010.

                 DW has entered into a joint development agreement with
           Bridge Aina Le#a LLC which provides the development with
           rights to access over the agriculturally classified land,
           rights to obtain water for the Project and to establish a
           school site acceptable to the State Department of Education
           on Bridge Aina Le#a’s agriculturally classified land.

                 DW has a mass grading and design build contract with
           Goodfellow Brothers which has been previously submitted to
           the Commission. The grading plans for Phase 1 were approved
           by the County Department of Public Works and appropriate
           grading permits were issued. Mass grading has been ongoing
           to create the building sites and the access roads. Although
           the grading plan review and approval process took longer
           than DW initially anticipated, mass grading design drawings
           for the affordable units are 90% complete and all required


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           permits have been obtained to allow grading to proceed.
           Schedule adjustments are being made to allow the Project to
           retain its schedule.

                 The following has been completed:

                 a.    About 90% of the mass grading for the affordable
                       housing townhouse sites has been completed;
                 b.    Finish grading for 18 affordable housing
                       foundation pads is complete (foundation slabs
                       are scheduled to begin in mid-December 2009);
                 c.    The immediate access roadway has been graded;
                 d.    About 80% of the internal roadways have been
                       graded;
                 e.    The initial engineering for the roads and
                       utilities has been completed;
                 f.    The water supply tank sites and service
                       corridors have been identified;
                 g.    Improvements have been made to the existing
                       water well and a 750,000 gallon collection
                       reservoir for dust control during construction
                       has been built;
                 h.    The necessary utility easements have been
                       identified and topographic maps have been
                       completed (Installation of site utilities to
                       begin about 1/1/2010);
                 i.    Plan Approval by the Planning Department for the
                       affordable housing component was issued on
                       November 30, 2009;
                 j.    Groundbreaking for the affordable housing phase
                       was held on September 22, 2009;

                 All necessary permits, including vertical construction
           permits for the affordable housing site have been prepared
           and were recently submitted. DW is working with the County
           to [ensure] that the applications for permits will be
           processed to meet the development schedule.

                 DW is working with the Office of Housing and Community
           Development on the terms of the affordable housing
           agreement. The affordable housing units will be in
           buildings which have 16 units in each pad area. The 25 pad
           areas will accordingly produce 400 units of which at least
           385 will be affordable housing units. For the affordable
           housing units, the mix will be 289 three bedroom units and
           96 four bedroom units. A revised affordable housing
           agreement was presented to the Office of Housing for its
           review and approval. The affordable housing units will be
           fee simple condominium units. DW is processing [sic] to
           create the condominium units so that specific affordable
           housing units can be identified for the affordable housing
           agreement.

           On May 4, 2010, the State Office of Planning submitted

a letter to the LUC commenting on DW’s progress.           With respect to


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the condition precedent that sixteen units be completed by March

31, 2010, the letter noted that “any vertical construction which

occurred was not accompanied by any utility connections, and the

units cannot be occupied.      The Commission has not addressed

whether a unit which has no electricity, water, sewage connection

or roadway infrastructure can be deemed ‘complete.’”            The State

Office of Planning further noted that DW was behind schedule in

seeking approval of the EIS, and that the EIS needed to be

approved before DW could secure approval for required road

improvements and installation of the wastewater treatment plant.

           The State Office of Planning also stated that Capital

Asia Group, one of the investors in the project, was using a

“troubling advertisement” guaranteeing a thirty percent return on

investment over the course of thirty months.          The State Office of

Planning explained that the advertisement was troubling because

“it indicates that financing is likely not secure.”

           The LUC visited the construction site on May 6, 2010.

The following month, the LUC mailed a letter to DW, requesting a

written status report in preparation for a hearing scheduled for

July 1, 2010.    The LUC requested that DW comment on the status of

its compliance with the condition precedent that sixteen units be

completed by March 31, 2010, and to address the concerns raised

by the State Office of Planning in its May 4, 2010 letter.             The

LUC also asked DW to provide an update on its compliance with


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each of the conditions under the 1991 decision and order, as

amended in 2005.

           The LUC received DW’s status report on June 14, 2010.

In its report, DW stated the following:
                 DW understood the requirement to be that it needed to
           complete construction of at least 16 of the affordable
           housing units by March 31, 2010. Since these units are in 8
           unit buildings, this required the completion of construction
           of two buildings.

                 DW completed the first two buildings with 8 affordable
           housing units each by March 31, 2010. These buildings have
           completed exteriors and interiors. The electrical and
           plumbing for the units in these buildings is completed and
           ready to hook up. The units have cabinets and appliances
           installed.

                 . . . .

                 The condition precedent did not require that DW obtain
           certificates of occupancy for the 16 affordable units by
           March 31, 2010. The presentation to the Commission and the
           proceedings on August 27, 2009 show that it was understood
           construction work would be proceeding even if the
           certificates of occupancy could not be obtained until a
           later time.

                 DW had submitted to the Commission its schedules for
           construction of the . . . 385 affordable housing units
           required by Condition 1 of the Decision and Order filed on
           November 25, 2005. Those schedules described the site work
           needed to create access to building sites, the establishment
           of the building pads for the structures for the affordable
           housing units and the vertical construction of the
           structures.

                 . . . .

                 I had submitted a July 30, 2009 status report in
           response to your July 10, 2009 letter for a status report on
           how Petitioners would comply with conditions for
           reclassification. The July 30, 2009 status report included
           a Phase 1 schedule for vertical construction of Phase 1[.]
           In the status report, I had indicated “[t]he goal for Phase
           1 is to obtain occupancy permits for the affordable housing
           units by November 17, 2010[.]”

                 The condition was imposed after the Commissioners had
           expressed concerns over the lack of action to implement
           representations made by prior owners in the past. The
           imposition of the condition precedent was a means of holding
           DW to actually constructing affordable housing improvements.


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           Given the testimony that was submitted before the Commission
           imposed its condition precedent, the record showed that a
           number of facts, including the completion of this EIS
           process and the approval of Queen Kaahumanu Highway
           intersection and wastewater treatment plans would be needed
           . . . before occupancy permits could be obtained.

                 DW’s plans as presented to the Commission were to
           start with construction of the affordable housing units as
           soon as appropriate grading and building permits were
           obtained and not to wait for the EIS, intersection plan or
           wastewater treatment plant approvals.

                 DW believes that it has complied with the condition
           precedent and has demonstrated by actions its commitment to
           proceed with this project. As noted below, DW has not
           limited its construction efforts to these two buildings.
           The site grading for all of the Phase 1 building is
           completed. . . . DW has also had 5 more buildings erected
           which are under construction. . . . Other efforts by DW to
           further work on this project are also described below.

                 To date, DW and its contractors have spent more than
           $19,000,000 in proceedings with this project.

           During the July 1, 2010 hearing, Commissioners

expressed concern that DW had not yet secured title to the

remaining 1,000 acres of land, the lack of communication with the

LUC, and the availability of financing for the project.            The

State Office of Planning also stated that it was concerned

because the condition precedent was not satisfied, the EIS was

behind schedule, the pace of construction had slowed, the

representations made by Capital Asia were problematic, the

failure to provide the LUC with notice of changes in ownership,

Bridge’s continuing interest in the project, and November 17,

2010 should be considered a deadline, not a goal.

           At the end of the hearing, Commissioner Devens moved to

keep the OSC pending, to schedule a hearing on or after

September 17, 2010 to consider the OSC, to affirm that

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November 17, 2010 was a deadline, and that the condition

precedent had not been satisfied.         The motion passed by a vote of

8-0.   The LUC also issued a written order finding that DW had

failed to meet the condition precedent for rescinding the OSC.

           On August 31, 2010, DW filed a motion to amend

conditions 1, 5, and 7.      Specifically, DW moved to amend the

affordable housing condition to allow it to complete “the minimum

385 affordable housing units on the following schedule: 190 units

by December 31, 2011, 195 units by December 31, 2012”; to modify

condition 5 “to allow the waste water treatment plant which will

service the entire project to be located outside the urban

classified area”; and to amend condition 7 “to require either

that [DW] provide to the State Department of Education (“DOE”) 16

acres of land within the urban classified area for a public

school or provide to DOE 32 acres of land outside the urban

classified area at such location and upon such terms as are

acceptable to DW and to the DOE.”         The County Planning Department

took no position on DW’s motion, the State Office of Planning

opposed the motion, and Bridge concurred in the motion, but

argued that the LUC should “eliminate any artificial, arbitrary

‘deadlines,’ and instead base [the affordable housing condition]

upon a revised development schedule that reasonably and credibly

reflects demand, absorption, and financing in the current

market.”   DW later submitted a supporting exhibit, i.e., a letter


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from the County Planning Department indicating that it had

accepted the final EIS for the project.

           DW later moved to amend its motion.         Specifically, DW

sought to have condition 1 amended to read as follows:
           a.    A requirement that an updated master plan covering all
                 5 phases of the development be submitted to the Land
                 Use Commission (hereinafter referred to as “LUC”) for
                 its review and approval;

           b.    That the phasing be adjusted to be consistent with the
                 current requirements of the LUC. The phasing
                 requirements would therefore be adjusted to fit within
                 10 year development periods. The phasing would also
                 include requirements that infrastructure benefitting
                 more that one phase be completed before development of
                 later phases which would be dependent on when such
                 infrastructure can begin;

           c.    That DW Aina Le’a will continue to complete the
                 affordable housing units in Phase I and related
                 infrastructure as the priority of the development. DW
                 Aina Le’a will not proceed with the development of
                 units after Phase I until the updated Master Plan has
                 been reviewed and approved by the LUC and the first 56
                 affordable housing units have been completed and the
                 affordable housing sales program has been started, DW
                 Aina Le’a will maintain its sales program for such
                 units and will continue to build affordable housing
                 units so as to maintain an inventory of such units for
                 sale to qualified residents with a minimum inventory
                 of 16 units; and

           d.    The current conditions of approval would be amended to
                 be consistent with the current practices and
                 requirements of the LUC.

           On November 12, 2010, Bridge filed a motion requesting

an order providing the following: (1) the LUC shall not act on

the OSC scheduled on the agenda for November 18, 2010; (2) the

LUC is required to strictly follow HRS Chapter 91, HRS Chapter

92, HRS Chapter 205, and Hawai#i Administrative Rules (HAR)

Chapter 15 with respect to the OSC; (3) the OSC is null and void

because the LUC did not follow the applicable statutes and rules;

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and (4) the LUC is estopped from proceeding with or taking any

further action on the matters set forth in the OSC.            DW joined

Bridge’s motion.

           The following week, the LUC held a hearing on the OSC.

Due to “the limited number of Commissioners available,” however,

the LUC heard “evidence and argument on the Show Cause Order,”

but deferred ruling on the order.

           The State Office of Planning then filed a motion for an

OSC.   The Office of Planning argued that Bridge and DW “clearly

violated the LUC’s terms and conditions,” and that “[i]n order to

preserve the integrity of LUC decisions and the LUC decision-

making process, Petitioner must be held accountable, and must

come forward to explain why the Petition Area should not be

reclassified to its former more appropriate classification.”

           The LUC scheduled a January 20, 2011 hearing on the

OSC, Bridge’s November 12, 2010 motion, the State Office of

Planning’s motion, and Bridge’s August 31, 2010 motion to amend.

Following the hearing, the LUC voted 5-3 to revert the property

to the agricultural land use district.         The LUC also voted 8-0 to

deny as moot the State Office of Planning’s motion for an OSC,

and Bridge’s November 12, 2010 motion.         The LUC did not rule on

DW’s motion to amend.

           On February 17, 2011, DW submitted a request for a

hearing on its motion to amend.       On the same day, DW also


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submitted a request to comment on any proposed findings of fact

and conclusions of law.       The LUC scheduled a March 10, 2011

hearing on the adoption of proposed findings of fact, conclusions

of law, and decision and order, and on the motion to amend.

            The day before the hearing, DW moved for a continuance.

During the hearing, the LUC voted 6-2 to adopt the proposed

findings of fact, conclusions of law, and decision and order,

with amendments.4     By a 6-2 vote, the LUC also granted a

continuance on DW’s motion to amend.

            On March 17, 2011, DW filed a motion to reconsider and

to defer entry of final findings of fact, conclusions of law, and

decision and order.      Bridge joined DW’s motion.       The State Office

of Planning took no position on the motion.

            Following a hearing on April 8, 2011, the LUC deferred

acting on DW’s motion to reconsider, and deferred acting on the

proposed findings of fact, conclusions of law, and decision and

order.    During a subsequent hearing, Commissioner Kanuha moved to

grant in part and deny in part DW’s motion to amend.

Commissioner Kanuha’s motion was defeated 3-5.           With respect to

DW’s motion to reconsider and defer entry of final findings of

fact, conclusions of law, and decision and order, the LUC voted

5-3 to deny the motion.       The LUC also voted 6-2 to adopt the

      4
            Bridge subsequently filed exceptions and objections to the
proposed findings of fact, conclusions of law, and decision and order, and
filed its own proposed findings, conclusions, and decision. DW also filed
exceptions to the proposed findings, conclusions, and decision and order.

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proposed findings of fact, conclusions of law, and decision and

order, with amendments.      Finally, on May 13, 2011, the LUC voted

6-0 to deny DW’s motion to amend.

           On April 25, 2011, the LUC entered an order adopting

the proposed findings of fact, conclusions of law, and decision

and order.   The LUC made the following relevant findings of fact:
           G. Violations

           57. As of November 17, 2010, Petitioners had failed to
           provide certificates of occupancy for at least 385
           affordable dwelling units, and violated Condition 1 of the
           2005 Order.

           58. As of January 20, 2011, over 22 years since the
           reclassification was first granted, Petitioners had failed
           to obtain a certificate of occupancy for even one affordable
           dwelling unit within the Petition Area.

           59. Of the 385 affordable dwelling units, Petitioners have
           approximately 40 dwelling units in various stages of
           vertical construction all in the same area.

           60. There is no infrastructure connection to any of the
           affordable dwelling units, including electrical lines,
           sewage lines, water lines, and finished roads. Current
           construction and preliminary infrastructure development has
           been limited to a 62-acre portion of the 1,060 acre Petition
           Area, including temporary access roads.

           61. As of July 1, 2010, Petitioners owed approximately 5.5
           million dollars to the General Contractor, Goodfellow
           Brothers for work previously done.

           62. Petitioners continue to be in violation of Condition 1
           of the 2005 Order, and are unlikely to complete 385
           affordable units in the near future.

           63. Petitioners have not substantially commenced use of the
           Petition Area in conformance with the representations made
           in 2005 or in conformance with the applicable
           representations and conditions as of January 20, 2011.
           Furthermore, Petitioners have failed to substantially comply
           with representations made to the Commission.

           64. Through multiple status hearings and the issuance of the
           December 9, 2008 Order to Show Cause, the Commission has
           clearly informed Petitioners of the importance of complying
           with their representations and all conditions of approval,
           including but not limited to Conditions 1 and 13.


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        65. It is important to the integrity of the State land use
        process that Petitioners comply with the conditions imposed
        by the Commission and with the representations made by the
        Petitioners.

        66. Under the facts and circumstances of this case,
        Petitioners have failed to show cause why the Petition Area
        should not be reverted to its original classification.
        Petitioners have continually violated Condition 13, which
        requires them to substantially comply with representations
        made to the Commission, including but not limited to the
        following:

        • On September 30, 2005, Mr. Paoa represented that
        Petitioner Bridge would build 385 affordable housing units
        on-site within the Petition Area (2005 Order, FOF 9); that
        the homes would be built and certificates of occupancy
        obtained within three years (2005 Order, FOF 12); that no
        additional discretionary governmental approvals were needed,
        with the sole exception of the highway access approval (2005
        Order FOP 26); and that all Petitioner Bridge’s contracts
        with contractors and consultants have been negotiated and
        would be executed and construction site work started within
        30 days of the Commission’s decision (2005 Order, FOF 24 and
        25).

        • On April 30, 2009, Petitioner Bridge represented the
        capabilities, particularly the experience and financial
        capability of DW #Aina Le#a to step into Bridge’s shoes and
        meet all the conditions the Commission had set down.
        Further, Mr. Paoa represented that Petitioner Bridge had the
        capabilities to meet the timeline for construction of the
        affordable housing.

        • On June 5, 2009, in response to a question by the
        Commission prior to being accepted as a co-petitioner, a
        representative of DW #Aina Le#a represented that they had
        reviewed the conditions imposed by the Commission and that
        they were prepared to comply with the conditions. The
        representative of DW #Aina Le#a also represented that they
        had no intent to seek to amend conditions in the 2005 Order.

        • On August 27, 2009, Mr. Wessels, a representative of DW
        #Aina Le#a, represented that DW #Aina Le#a was familiar with
        the Commission’s July 10, 2009 letter to Petitioner Bridge
        requesting information on compliance with conditions, the
        subsequent response letter by Petitioner Bridge on July 30,
        2009, DW #Aina Le#a’s response letter on July 31, 2009, and
        that DW #Aina Le#a was prepared to comply with the conditions
        imposed by the Commission in their 2005 Decision and Order.

        • On December 16, 2009, Co-Petitioner DW #Aina Le#a submitted
        an annual report that represented that all necessary
        permits, including vertical construction permits for the
        affordable housing site had been prepared and recently
        submitted; that they planned to construct the wastewater
        treatment plant in the Agricultural District which would
        require a State Special Permit and amendments to the


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        conditions; that they intend to provide 32 acres in the
        Agricultural District to the Department of Education which
        would require amendments to the conditions; that they would
        comply with DOH conditions; and that they will provide the
        Commission with notice of any intent to sell, lease, assign,
        place in trust, or otherwise voluntarily alter the ownership
        interest of the Property.

        • On November 18, 2010, Co-Petitioner DW #Aina Le#a admitted
        not meeting a deadline by a “very major amount” in reference
        to the requirement to provide certificates of occupancy for
        385 affordable units by November 17, 2010; and further
        admitted that they could not provide a firm date by which
        the 16 units that had been constructed could be occupied.

        • On November 18, 2010, in response to questioning by the
        Commission, Co-Petitioner DW #Aina Le#a represented that
        condominium documents had not been submitted, the package
        wastewater treatment plant had not been delivered and plans
        not submitted to the State Department of Health for review
        and approval, no application had been made to the Public
        Utilities Commission for approval of wastewater or water
        utilities, no plans for landscaping had been submitted for
        review and approval by the County, and Co-Petitioner DW Lea
        had not authorized anything to facilitate the construction
        of the intersection to provide access to the Property.

        The LUC also made the following conclusions of law:
        1. Any conclusions of law herein improperly designated as a
        finding of fact should be deemed and construed as a
        conclusion of law; any finding of fact herein improperly
        designated as a conclusion of law should be deemed and
        construed as a finding of fact.

        2. The Commission has the authority to revert a Petition
        Area to its original land use classification for failure to
        comply with the conditions imposed by the Commission.
        Lana#i Co. Inc. v. Land Use Commission, 105 Hawai#i 296, 318
        (Haw. 2004), and HRS Section 205-4(g).

        3. Under the facts and circumstances of this case,
        Petitioners have failed to satisfy Condition 1 and have
        failed to substantially comply with representations made to
        the Commission, in violation of Condition 13.

        4. Under the facts and circumstances of this case, reversion
        of the Petition Area to its original agricultural
        classification does not violate any applicable rule or
        statutory provisions,
        including Hawai#i Administrative Rules (HAR) subchapter 7 of
        Chapter 15-15, and HRS Chapters 91, 92, and 205.

        5. The Commission does not rule upon questions of
        constitutional law.

        6. Under the facts and circumstances of this case, reversion


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             of the Petition Area to its original agricultural
             classification for violation of conditions, including
             Condition 1 and Condition 13, is not precluded by the
             doctrine of estoppel.

             The LUC therefore ordered that the property be reverted

to its prior agricultural land use classification.

B.     Circuit court proceedings

             Bridge appealed the LUC’s order to the Circuit Court of

the First Circuit (Civil No. 11-1-0969-5), and DW appealed to the

Circuit Court of the Third Circuit (Civil No. 11-1-0112K).               The

parties later stipulated to          transfer venue of Bridge’s appeal

to the Third Circuit, where the two appeals were consolidated.5

             DW filed a motion to stay the LUC’s April 25, 2011

order.    DW argued it was likely that it would prevail on the

merits, it would sustain irreparable harm absent a stay, and the

public interest would be served by a stay.            The circuit court

denied DW’s motion to stay.         The circuit court concluded that the

LUC had not violated HRS § 205-4(h) because the reversion was

made pursuant to HRS § 205-4(g), but that there was insufficient

evidence to determine whether DW would prevail on its argument

that the LUC had violated HRS § 205-4(g).           The circuit court also

concluded that it could not assess the merits of DW’s vested

rights, estoppel, and constitutional arguments.             The circuit

court further concluded that the threat of irreparable harm was


       5
             The parties also stipulated to dismissing without prejudice all
claims against the State of Hawai#i Office of State Planning, County of
Hawai#i, and County of Hawai#i Planning Department.

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speculative, and that it could not determine whether the public

interest would be served by a stay.        The LUC filed a motion to

strike a portion of the record on appeal.         Specifically, the LUC

sought an order:
           striking that portion of the Designation of Record on Appeal
           designating the following dockets as part of the record on
           appeal: Land Use Commission dockets: “A93-701; Kaupulehu
           Developments; A00-730, Lanihau Properties; A03-744,
           Hiluhilu; A06-770, The Shopoff Group, L.P.; A06-767,
           Waikaloa Mauka, LLC; and A10-788, HHFDC Forest City”.

           In a memorandum in support of its motion, the LUC

argued that “[t]he additional 6 dockets designated by Appellant

are not part of the evidentiary record in [this case].”            DW

opposed the motion to strike, arguing that the additional dockets

demonstrated that the LUC violated DW’s equal protection rights.

DW also argued that the First Circuit Court had denied a

substantially similar motion during Bridge’s appeal to that

court.   Specifically, Bridge had requested that documents from

eighteen LUC cases be included in the record on appeal in the

First Circuit Court, and the First Circuit Court denied the LUC’s

motion to strike those documents.         The Third Circuit Court denied

the LUC’s motion to strike.

           Bridge made the following six main arguments in the

circuit court: (1) the LUC violated HRS Chapters 205 and 91; (2)

“zoning estoppel” prevented the LUC from enforcing the boundary

amendment; (3) the LUC violated its equal protection rights; (4)

the affordable housing condition was an “unconstitutional land


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development condition”; (5) the LUC’s final order was not

supported by the record; and (6) the LUC violated its due process

rights.

            DW raised the following six arguments:          (1) the LUC’s

final order violated HRS Chapter 205 and HAR Chapter 15-15; (2)

the LUC exceeded its statutory authority in enforcing the

affordable housing condition; (3) equitable estoppel barred the

LUC from reverting the property to the agricultural land use

district because DW’s development rights in the property were

vested; (4) its equal protection rights under the United States

and Hawai#i Constitutions were violated; (5) its procedural and

substantive due process rights were violated under the United

States and Hawai#i Constitutions; and (6) the reversion amounted

to an unlawful taking under the United States and Hawai#i

Constitutions.

            The LUC filed a consolidated answering brief, advancing

seven arguments.6     Those arguments were that:       (1) HRS § 205-4’s

requirements relating to district boundary amendments do not

apply to reversions; (2) the affordable housing condition was

      6
            The County Planning Department also filed an answering brief. The
County Planning Department explained that it relied on the LUC’s
reclassification of the land in adopting a rezoning ordinance, granting
subdivision approval, and issuing building permits. The County Planning
Department explained that the LUC’s reclassification of the property back to
the agricultural land use district “raises significant questions as to whether
the [County’s] rezoning action, pursuant to the January 8, 1993, Ordinance No.
93-1, amending the County’s Zoning Code for the project area from Unplanned to
Residential, Multi-Family, and Village Commercial uses, is still valid.” The
County Planning Department, however, did not suggest how the circuit court
should decide the case.

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constitutional; (3) Bridge’s and DW’s equal protection and due

process arguments were unfounded; (4) the doctrine of zoning

estoppel did not apply because the classification was made

subject to conditions; (5) its procedures were proper; (6) its

decision was supported by the record and was neither arbitrary

nor capricious; and (7) there was no unconstitutional taking.

           The circuit court entered its amended findings of fact,

conclusions of law, and order reversing and vacating the LUC’s

final order on June 15, 2012.       The circuit court did not address

individual findings of fact and conclusions of law in its order.

Instead, the circuit court’s order provided that the LUC’s April

25, 2011 order was “reversed and vacated in its entirety.”

           The circuit court first concluded that the LUC exceeded

its statutory authority and violated HRS Chapter 205.            The

circuit court explained that HRS Chapter 205 “granted the LUC

authority to establish land use regulations for the major classes

of uses and to establish the boundaries of the districts for

these uses,” but that the “responsibility of enforcing the land

use classification districts adopted by the LUC was expressly

delegated to the counties.”       The circuit court further noted that

HRS Chapter 205 “expressly delegates the power to enforce land

use conditions, and zoning, to the counties.”          The circuit court

therefore concluded that the LUC lacked “the authority to

sanction Bridge and DW with reclassification of the Property to


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the Agricultural land use district without consideration of the

factors required for land use district boundary changes pursuant

to HRS §§ 205-16[7] and 205-17[8].”

     7
            Section 205-16 provides: “No amendment to any land use district
boundary nor any other action by the land use commission shall be adopted
unless such amendment or other action conforms to the Hawaii state plan.” HRS
§ 205-16 (2001).
     8
           Section 205-17 provides:
           In its review of any petition for reclassification of
           district boundaries pursuant to this chapter, the commission
           shall specifically consider the following:

           (1) The extent to which the proposed reclassification
           conforms to the applicable goals, objectives, and policies
           of the Hawaii state plan and relates to the applicable
           priority guidelines of the Hawaii state plan and the adopted
           functional plans;

           (2) The extent to which the proposed reclassification
           conforms to the applicable district standards;

           (3) The impact of the proposed reclassification on the
           following areas of state concern:

                 (A) Preservation or maintenance of important natural
           systems or habitats;

                 (B) Maintenance of valued cultural, historical, or
           natural resources;

                 (C) Maintenance of other natural resources relevant to
           Hawaii’s economy, including agricultural resources;

                 (D) Commitment of state funds and resources;

                 (E) Provision for employment opportunities and
           economic development; and

                 (F) Provision for housing opportunities for all income
           groups, particularly the low, low-moderate, and gap groups;

           (4) The standards and criteria for the reclassification or
           rezoning of important agricultural lands in section 205-50;

           (5) The county general plan and all community, development,
           or community development plans adopted pursuant to the
           county general plan, as they relate to the land that is the
           subject of the reclassification petition; and

           (6) The representations and commitments made by the
           petitioner in securing a boundary change.
                                                                  (continued...)

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            The circuit court expressly stated that it was not

concluding that the LUC could never impose specific dates and

benchmarks, only that “if the LUC is going to enforce these

conditions, it must do so within a much broader context, and that

context is found in HRS §§ 205-16 and -17.”          In this regard, the

circuit court noted that “one of the stated purposes of

imposition of conditions under HRS Chapter 205 is to hold

petitioners to their word of representations.”

            The circuit court next concluded that the LUC violated

HRS § 205-4(h).     The circuit court explained that the LUC

violated HRS § 205-4(h) by failing to “find upon the clear

preponderance of the evidence that the proposed boundary is

reasonable, not violative of HRS § 205-2 and part III of HRS

Chapter 205, and consistent with the policies and criteria

established pursuant to HRS §§ 205-16 and 205-17[,]” and “by

failing to obtain six affirmative votes to amend the land use

district boundary.”

            Third, the circuit court concluded that the LUC

violated HRS § 205-16 because “there are no findings of fact or

conclusions of law in the Final Order, nor any evidence in the

record, indicating that the LUC considered the Hawaii State

Plan.”    The circuit court next concluded the LUC also violated


      8
       (...continued)

HRS § 205-17 (Supp. 2008)

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HRS § 205-17 because it failed to consider the factors listed

therein.    Fifth, the circuit court concluded that the LUC

violated HRS § 205-4(g) because the OSC was not resolved within

365 days of its issuance.

            The circuit court further concluded that the LUC

violated HRS Chapters 91 and 205, and HAR Chapter 15 based on

improper procedures.     Specifically, the circuit court concluded

that “instead of following these statutes and rules, the LUC

implemented a rolling and continuing OSC procedure that not only

extended far beyond the 365-day period required by HRS § 205-

4(g), but also ignored the required procedures, and created new

procedures that were not already established.”

            Sixth, the circuit court concluded that the LUC

violated Bridge’s and DW’s procedural and substantive due process

rights.    The circuit court specifically noted “(1) [the LUC’s]

rolling and continuing OSC that extended far beyond the time

period allowed by law; (2) the LUC’s conduct that was in

derogation of the statute and rules established to protect Bridge

and DW; and (3) the LUC’s attempt to create a new procedure that

was not already established.”       The circuit court concluded that

the LUC denied Bridge and DW their right to a meaningful

opportunity to be heard, and that the final order was “arbitrary

and unreasonable, having no substantial relation to the public

health, safety, morals, or general welfare.”


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           The circuit court also concluded that the LUC violated

Bridge’s and DW’s equal protection rights.          The circuit court

explained that the LUC treated “Bridge, DW and this Project

differently, and less favorably, than other petitioners in cases

involving facts and circumstances substantially similar to this

case.”   The circuit court noted “at least six other major project

dockets” where the LUC has taken no action to revert, even though

“the petitioners have failed to fulfill their representations to

the LUC; have failed to meet their projected development

timeframes; and have failed to build any housing units, much less

any affordable housing units.”9

           The circuit court reversed and vacated the LUC’s final

order in its entirety, declaring that the April 25, 2011 order,
           violates constitutional and statutory provisions, exceeds
           the LUC’s authority and jurisdiction, was made upon unlawful
           procedures, was affected by other errors of law, was clearly
           erroneous in view of the reliable, probative, and
           substantive evidence on the whole record, and was arbitrary,
           capricious, or characterized by abuse of discretion or
           clearly unwarranted exercise of discretion.

           Finally, the circuit court ordered that the OSC and all

other orders issued by the LUC that were inconsistent with the

circuit court’s decision were rescinded and voided.

           The circuit court entered an amended final judgment,

from which the LUC timely filed a notice of appeal.            The ICA


     9
            The circuit court did not reach the zoning estoppel and vested
rights arguments advanced by Bridge and DW, and they are not at issue on
appeal. The circuit court also did not address DW’s unconstitutional taking
argument. We therefore do not consider these arguments.

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dismissed the appeal for lack of jurisdiction, however, because

the amended final judgment neither entered judgment on nor

dismissed the administrative appeals as to the State Office of

Planning, the County Planning Department, and the County of

Hawai#i.    The circuit court thereafter entered a second amended

final judgment, which stated that all claims against the County

of Hawai#i, the County of Hawai#i Planning Department, and the

State Office of Planning had been dismissed, and the LUC timely

filed a notice of appeal.

            The LUC timely filed an application for transfer of the

appeal from the ICA to this court, and Bridge filed a joinder to

the LUC’s motion.    This court granted the LUC’s application for

transfer.

            On appeal, the LUC raises three points of error:
            1.   Haw. Rev. Stat. § 205-4(g) (2001) and Supreme Court
                 case law specifically affirm [the issuance of] “an
                 order to show cause why the property should not revert
                 to its former classification or be changed to a more
                 appropriate classification.” The circuit court erred
                 by ruling to the contrary[.]

                 . . . .

            2.   Haw. Rev. Stat. § 91-14(f) (2012) and Haw. Rev. Stat.
                 § 91-9(e) (2012) provide that the court’s review
                 “shall be confined to the record.” The circuit court
                 erred by considering matters not part of the record.

                 . . . .

            3.   The circuit court erred in ruling in an agency appeal
                 — without any opportunity for presentation of evidence
                 and without regard to the right to trial by jury —
                 that the LUC and individual commissioners violated
                 developers’ constitutional rights to equal protection
                 and due process.

                 . . . .

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                       II.   Standard of Review

A.     Secondary appeal

             Review of a decision made by the circuit court upon its
             review of an agency’s decision is a secondary appeal. The
             standard of review is one in which this court must determine
             whether the circuit court was right or wrong in its
             decision, applying the standards set forth in HRS § 91–14(g)
             . . . to the agency’s decision.

Citizens Against Reckless Dev. v. Zoning Bd. of Appeals of City &

Cnty. of Honolulu, 114 Hawai#i 184, 193, 159 P.3d 143, 193

(2007).

             Section 91-14(g) provides the following:
             Upon review of the record the court may affirm the decision
             of the agency or remand the case with instructions for
             further proceedings; or it may reverse or modify the
             decision and order if the substantial rights of the
             petitioners may have been prejudiced because the
             administrative findings, conclusions, decisions, or orders
             are:

             (1) In violation of constitutional or statutory provisions;
             or

             (2) In excess of the statutory authority or jurisdiction of
             the agency; or

             (3) Made upon unlawful procedure; or

             (4) Affected by other error of law; or

             (5) Clearly erroneous in view of the reliable, probative,
             and substantial evidence on the whole record; or

             (6) Arbitrary, or capricious, or characterized by abuse of
             discretion or clearly unwarranted exercise of discretion.

HRS § 91-14(g).

             “‘[U]nder HRS § 91–14(g), conclusions of law are

reviewable under subsections (1), (2), and (4); questions

regarding procedural defects under subsection (3); findings of

fact under subsection (5); and an agency’s exercise of discretion

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under subsection (6).’”        Citizens Against Reckless Dev., 114

Hawai#i at 193, 159 P.3d at 152 (quoting In re Hawaiian Elec.

Co., 81 Hawai#i 459, 465, 918 P.2d 561, 567 (1996)) (brackets in

original).

                              III.   Discussion

A.     The circuit court correctly concluded that the LUC erred in
       reverting the property to the agricultural land use district
       without complying with the requirements of HRS § 205-4

             The LUC argues that the circuit court’s “fundamental

error was to equate the reclassification process [under HRS

§ 205-4(a)], with reversion pursuant to [HRS § 205-4(g)].”

Specifically, the LUC argues that pursuant to HRS § 205-4(g), it

is authorized to impose conditions on a petition seeking to amend

a district boundary, to issue an OSC, and to revert property to

its former land use classification.          In the LUC’s view, because

reclassification is different than reversion, it was not required

to consider the factors set forth in HRS §§ 205-16 and 205-17, it

did not have to satisfy the requirements of HRS § 205-4(h), and

it did not have to satisfy the 365 day deadline set forth in HRS

§ 205-4(g).

             DW and Bridge argue that the LUC may only revert

property pursuant to an OSC if the petitioner has not

substantially commenced use of the property.            DW and Bridge

further argue that, upon issuance of an OSC, the LUC must follow

the same procedures applied in considering any other district

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boundary amendment petition.       Thus, according to DW and Bridge,

pursuant to HRS § 205-4(h), the LUC must find by a clear

preponderance of the evidence that the proposed boundary is

reasonable, not violative of HRS § 205-2, and consistent with the

policies and criteria established under HRS §§ 205-16 and 205-17.

They also argue that at least six affirmative votes are required

to revert property.

           To the extent DW and Bridge argue that the LUC must

comply with the general requirements of HRS § 205-4 anytime it

seeks to revert property, they are mistaken.          The express

language of HRS § 205-4(g) and its legislative history establish

that the LUC may revert property without following those

procedures, provided that the petitioner has not substantially

commenced use of the property in accordance with its

representations.    In such a situation, the original

reclassification is simply voided.

           Thus, once the LUC issues an OSC, the relevant

considerations to be taken into account by the LUC and the

procedures it must follow turn on whether the petitioner has

substantially commenced use of the land in accordance with its

representations.    When the LUC reverts property before the

petitioner has substantially commenced use of the land, the LUC

may do so without following the procedures otherwise applicable

under HRS § 205-4.     However, if the LUC seeks to revert property


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after use of the land has substantially commenced, then the LUC

is bound by the requirements of HRS § 205-4.          Applying these

principles to the facts of this case, the circuit court correctly

concluded that the LUC erred in reverting the property to

agricultural use without complying with the requirements of HRS

§ 205-4 because, by the time the LUC reverted the property, DW

and Bridge had substantially commenced use of the land in

accordance with their representations.

     1.    Amendments to district boundaries pursuant to HRS §
           205-4

           There are four major land use districts in which all

lands in the state are placed:       urban, rural, agricultural, and

conservation.    HRS § 205-2.     The LUC generally sets the standards

for determining the boundaries of each district.           Id.

           Section 205-4 generally sets forth the procedures the

LUC must follow in amending a district boundary.           Section 205-

4(a) provides that any department or agency of the State, any

department or agency of the county in which the land is situated,

or any person with a property interest in the land sought to be

reclassified may petition the LUC for a boundary change.             HRS

§ 205-4(a).   Not less than sixty days and not more than one

hundred eighty days after the proper filing of a petition, the

LUC must conduct a hearing on the petition.          HRS § 205-4(b).

           Section 205-4(h) provides that no amendment to a



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district boundary shall be approved unless the LUC “finds upon

the clear preponderance of the evidence that the proposed

boundary is reasonable, not violative of section 205-2 and

consistent with the policies and criteria established pursuant to

section 205-16 and 205-17.”       HRS § 205-4(h).     Section 205-4(h)

further provides that “[s]ix affirmative votes of the commission

shall be necessary for any boundary amendment under this

section.”    HRS § 205-4(h).

            Section 205-4(g) is particularly relevant here.           That

section provides that within a period of not more than three

hundred sixty-five days after the filing of a petition for a

boundary amendment, the LUC shall act to approve, deny, or modify

the petition, by filing findings of fact and conclusions of law.

HRS § 205-4(g).    This section further provides that the LUC may

modify a petition by imposing conditions necessary to uphold the

intent and spirit of HRS Chapter 205, the policies and criteria

established pursuant to HRS § 205-17, or to assure substantial

compliance with representations made by the petitioner in seeking

a boundary change.     HRS § 205-4(g).     In other words, HRS §

205–4(g) gives the LUC broad authority to impose conditions on

boundary amendment petitions.       Lanai Co. v. Land Use Comm’n, 105

Hawai#i 296, 317, 97 P.3d 372, 393 (2004).

            In general, however, enforcement of these conditions is




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left to the counties under HRS § 205-12,10 and not the LUC.

Lanai Co., 105 Hawai#i at 394-95, 97 P.3d at 318-19.            For

example, in Lanai Co., the LUC reclassified land from the rural

and agricultural land use districts to the urban land use

district to allow for the construction of a golf course.              105

Hawai#i at 298, 97 P.3d at 374.         The LUC reclassified the land

subject to a condition prohibiting the landowner from utilizing

potable water from the high-level groundwater aquifer for golf

course irrigation use, and another condition requiring the

landowner to develop its own sources of water to service the

property.    Id. at 300, 97 P.3d at 376.        The reclassification was

also made subject to the condition that the landowner “shall

develop the property in substantial compliance with

representations made to the [LUC]” and that “[f]ailure to do so

may result in reclassification of the property to its former land

use classification.”      Id. at 300-01, 97 P.3d at 376-77.

            After the land was being used as a golf course, the LUC

issued an OSC why the land should not revert to its former

classifications or be changed to a more appropriate

      10
            Section 205-12 provides:

            The appropriate officer or agency charged with the
            administration of county zoning laws shall enforce
            within each county the use classification districts
            adopted by the land use commission and the restriction
            on use and the condition relating to agricultural
            districts under [HRS § 205-4.5] and shall report to
            the commission all violations.

HRS § 205-12 (2001).

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classification, based on a claim that the landowner had

impermissibly used water from the high-level groundwater aquifer,

and had failed to develop and utilize alternative sources of

water.   Id. at 302, 97 P.3d at 378.       The LUC concluded that the

landowner failed to perform according to the groundwater aquifer

condition, and issued an order requiring the landowner to comply

with this condition, to cease and desist any use of water from

the high-level aquifer, and to file a detailed plan specifying

how it would comply with the order.        Id. at 306, 97 P.3d at 382.

The circuit court concluded that the LUC’s finding that the

landowner had violated the groundwater aquifer condition was

clearly erroneous and the LUC exceeded its authority in issuing

the cease and desist order.       Id.

           This court affirmed the circuit court’s ruling that

the LUC’s finding regarding the alleged violation of the

groundwater aquifer condition was clearly erroneous, but remanded

the question of whether the landowner was using potable water

from the high-level aquifer to the circuit court, with

instructions to remand the issue to the LUC.          Id.   For purposes

of remand, this court explained that whether there had been a

breach of a condition was a determination to be made by the LUC.

Id. at 317, 97 P.3d at 393.

           This court explained that HRS § 205-4(g) empowers the

LUC to use conditions to uphold the intent and spirit of HRS


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Chapter 205, uphold the policies and criteria established

pursuant the HRS § 205-17, and assure substantial compliance with

representations made by a petitioner seeking a boundary change.

Id.     This court further explained, however, that HRS Chapter 205

does not expressly authorize the LUC to issue cease and desist

orders.     Id. at 318, 97 P.3d at 394.        Thus, this court concluded,

although “the LUC must necessarily be able to order that a

condition it imposed be complied with, and that a violation of a

condition cease,” the “power to enforce the LUC’s conditions and

orders . . . lies with the various counties.”             Id.

              This court explained that “[t]here is no provision in

HRS § 205-12 that expressly delegates enforcement power to the

LUC,” and that “[i]f the legislature intended to grant the LUC

enforcement powers, it could have expressly provided the LUC with

such power.”      Id.   Thus, this court observed, “looking to the

express language of HRS § 205-12, it is clear and unambiguous

that enforcement power resides with the appropriate officer or

agency charged with the administration of county zoning laws,

namely the counties, and not the LUC.11           Id.

      11
            The Lanai Co. court also stated that “the legislature granted the
LUC the authority to impose conditions and to down-zone land for the violation
of such conditions[.]” 105 Hawai#i at 318, 97 P.3d at 394. As DW and Bridge
observe, this passage was dictum. Moreover, elsewhere in the opinion, the
court noted that the power to revoke was dependent on whether substantial
commencement of use of the land had occurred. See Lanai Co., 105 Hawai#i at
317, 97 P.3d at 393 (“Moreover, ‘absent substantial commencement of use of the
land in accordance with such representations made . . . in seeking [the]
boundary change[,]’ the LUC is expressly authorized to order a reversion of
land to the prior classification.” (ellipsis and brackets in original)
                                                                (continued...)

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            The one exception to this general rule is found in HRS

§ 205-4(g).    That section provides in relevant part that, “The

commission may provide by condition that absent substantial

commencement of use of the land in accordance with such

representations [made to the LUC by the petitioner], the

commission shall issue and serve upon the party bound by the

condition an OSC why the property should not revert to its former

land use classification or be changed to a more appropriate

classification.”12

            This sentence was added to HRS § 205-4(g) in 1990.

1990 Haw. Sess. Laws Act 261 § 1 at 563-64.            The legislative

history indicates that the legislature sought to empower the LUC

to void a district boundary amendment where the petitioner does

not substantially commence use of the land in accordance with

representations made to the LUC.         In this regard, the Senate

Committee on Energy and Natural Resources explained in its report

that the purpose of adding this sentence was “to allow the Land

Use Commission to attach a condition to a boundary amendment

decision which would void the boundary amendment when substantial

commencement of the approved land use activity does not occur in



      11
        (...continued)
(footnote and emphasis omitted)).   Thus, this passage is not dispositive of
the issue here.
      12
            Although HRS § 205-4(g) provides that the LUC may either revert
the land or change it to “a more appropriate classification,” the latter
alternative is not at issue in the instant case.

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accordance with representations made by the petitioner.”             S.

Stand. Comm. Rep. No. 2116, in 1990 S. Journal, at 915 (emphasis

added).   The House Committee on Planning, Energy, and

Environmental similarly stated in its report that the purpose of

the bill was to “strengthen existing statutes by permitting the

Land Use Commission further control over a proposed development

by voiding a change in zoning if the petitioner does not make a

substantial commencement of the approved land use activity.”                H.

Stand. Comm. Rep. No. 1086-90, in 1990 H. Journal, at 1265

(emphasis added).

           The legislative history further indicates that the

legislature added this language in order to empower the LUC to

address a particular situation, namely, where the landowner does

not develop the property in a timely manner.          The Senate

Committee on Energy and Natural Resources specifically noted that

“[v]acant land with the appropriate state and county land use

designation is often subjected to undesirable private land

speculation and uncertain development schedules[,]” and that

“[s]uch speculation and untimely development inflates the value

of land, increases development costs, and frustrates, federal,

state, county, and private coordination of planning efforts,

adequate funding, public services, and facilities.”            S. Stand.

Comm. Rep. No. 2116, in 1990 S. Journal, at 915.

           The fact that the legislature sought to address


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situations where the petitioner has not substantially commenced

use of the land is further evidenced in the testimony presented

to both the Senate and House committees.         In both the Senate and

the House, the Office of State Planning offered testimony that

“[a] positive approach to comprehensive land use planning and a

strong preventive measure to land speculation, necessitates this

bill which will require that successful applicants for land use

boundary amendments either ‘use it, or lose it.’”           Letter from

Office of State Planning, to S. Comm. on Energy & Natural Res.

(Feb. 7, 1990) (on file with the Hawai#i State Archives)

(emphasis added); Letter from Office of State Planning, to H.

Comm. on Planning, Energy & Envtl. Protection (Mar. 8, 1990) (on

file with the Hawai#i State Archives) (emphasis added).            The LUC

also offered testimony to both the Senate and the House, stating

that “the proposed amendment will clarify the Commission’s

authority to impose a specific condition to downzone property in

the event that the Petitioner does not develop the property in a

timely manner.”    Letter from Land Use Comm’n, to S. Comm. on

Energy & Natural Res. (Feb. 7, 1990) (on file with the Hawai#i

State Archives) (emphasis added); Letter from Land Use Comm’n, to

H. Comm. on Planning, Energy & Envtl. Protection (Mar. 8, 1990)

(on file with the Hawai#i State Archives) (emphasis added).

Thus, the legislative history establishes that by adding this

sentence to HRS § 205-4(g) in 1990, the legislature sought to


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empower the LUC to void a boundary amendment, after giving the

landowner the opportunity for a hearing, if the landowner failed

to substantially commence use of the land in accordance with its

representations.

           The proper procedure to be followed by the LUC in

ruling on the OSC therefore depends on whether the petitioner has

substantially commenced use of the land in accordance with its

representations.    Section 205-4(g) represents a limited exception

to the general principles set forth in HRS Chapter 205, which

require consideration of whether the boundary change violates HRS

§ 205-2 (setting forth general considerations in districting and

classifying land), is consistent with the policies and criteria

set forth in HRS § 205-16 (compliance with the Hawai#i state

plan) and HRS § 205-17 (setting forth decision-making criteria

for the LUC).

           Where the LUC issues an OSC and seeks to revert

property based on a petitioner’s failure to substantially

commence use of the land in accordance with its representations,

the LUC is not required to follow the procedures otherwise

applicable to boundary changes under HRS Chapter 205.            A

reversion in such circumstances simply restores the status quo

ante, prior to the original reclassification.          Following the

general procedures set forth in HRS § 205-4 would serve no




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purpose under these circumstances.13

           Indeed, as noted above, the legislative history of HRS

§ 205-4(g) indicates that the legislature intended to empower the

LUC to void a boundary change where the petitioner failed to

substantially commence use of the property in accordance with its

representations.     S. Stand. Comm. Rep. No. 2116, in 1990 S.

Journal, at 915 (“The purpose of this bill is to amend section

205-4(g), Hawaii Revised Statutes, to allow the Land Use

Commission to attach a condition to a boundary amendment decision

which would void the boundary amendment when substantial

commencement of the approved land use activity does not occur in

accordance with representations made by the petitioner.”

(Emphasis added)); H. Stand. Comm. Rep. No. 1086-90, in 1990 H.

Journal, at 1265 (“The purpose of this bill is to strengthen

existing statutes by permitting the Land Use Commission further

control over a proposed development by voiding a change in zoning

if the petitioner does not make substantial commencement of the

approved land use activity.” (Emphasis added)).           In other words,

the legislative history of HRS § 205-4(g) indicates that


     13
            DW and Bridge argue that the LUC violated HRS § 205-16. Section
205-16 provides that “[n]o amendment to any land use district boundary
amendment nor any other action by the land use commission shall be adopted
unless such amendment or other action conforms to the Hawaii state plan.” HRS
§ 205-16 (emphasis added). However, as noted above, the legislature expressly
granted the LUC the authority to revert land where the petitioner has not
substantially commenced use of the property in accordance with its
representations under HRS § 205-4(g). There is no indication that the LUC’s
authority to void a boundary amendment pursuant to HRS § 205-4(g) is
conditioned on a finding under HRS § 205-16.

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compliance with all of the procedures of HRS § 205-4 is

unnecessary when the petitioner has not substantially commenced

use of the land because the prior reclassification is simply

voided.    Thus, when the petitioner has not substantially

commenced use of the land, the LUC may revert the land without

following the procedures set forth in HRS § 205-4.14

            On the other hand, if the LUC seeks to revert land

after the petitioner has substantially commenced use of the land,

the LUC is required to follow the procedures set forth in HRS

§ 205-4.    After the petitioner substantially commences use of the

land, the circumstances have changed and it may no longer be

appropriate to revert the land to its prior classification.

            Having the LUC follow the procedures set forth in HRS

§ 205-4 after the petitioner has substantially commenced use of

the land is also consistent with the division of authority

between the LUC and the counties of Hawai#i.          As this court noted

in Lanai Co., the power to enforce the LUC’s conditions and

orders generally lies with the various counties.            105 Hawai#i at

318, 97 P.3d at 394.      The one exception to this general rule, of

course, is the LUC’s express grant of authority to revert land if

the petitioner has not substantially commenced use of the land in


      14
            Of course, this is not to say that the LUC is free of any
procedural constraints when it seeks to revert land in such circumstances.
The LUC is bound by the procedures it has set forth in HAR § 15-15-93,
including the specific requirements relating to the information to be included
in the order to show cause, the necessity that a hearing be held on the
motion, and the LUC’s post-hearing procedures.

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accordance with its representations.         See HRS § 205-4(g).

           Thus, where the petitioner has substantially commenced

use of the land, the LUC is required to follow the procedures set

forth in HRS § 205-4 that are generally applicable when

boundaries are changed.      The LUC is therefore required to find by

a clear preponderance of the evidence that the reclassification

is reasonable, not violative of HRS § 205-2, and consistent with

the policies of HRS §§ 205-16 and 205-17.         HRS § 205-4(h).      The

LUC is also required to obtain six votes in favor of the

reclassification.    HRS § 205-4(h).       Finally, the LUC must resolve

the reversion or reclassification issue within three hundred

sixty-five days.    HRS § 205-4(g).       On the other hand, if the

petitioner has not substantially commenced use of the property,

then the LUC may revert the property without following the

strictures of HRS § 205-4, so long as it otherwise complies with

HAR § 15-15-93.

     2.    The LUC erred in reverting the property to the
           agricultural land use district without complying with
           the requirements of HRS § 205-4 because Bridge and DW
           substantially commenced use of the property

           We therefore consider as a threshold matter whether

Bridge and DW substantially commenced use of the land in

accordance with their representations.         If Bridge and DW did not

substantially commence use of the property, then the LUC was not

required to follow the procedures of HRS § 205-4.           If, however,



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Bridge and DW did substantially commence use of the property in

accordance with their representations, then the LUC was required

to follow the procedures of that section.

           Section 205-4(g) does not include a definition of

“substantial commencement,” and the LUC’s April 25, 2011 order

does not explain how the LUC interpreted that term.            The

interpretation of a statute is a question of law which is freely

reviewable by this court.      See Univ. of Haw. v. Befitel, 105

Hawai#i 485, 488, 100 P.3d 55, 58 (2004).         “Substantial” is,

according to Blacks’s Law Dictionary, “considerable in amount or

value; large in volume or number.”        Black’s Law Dictionary 1656

(10th ed. 2014).    In drafting HRS § 205-4(g), the legislature did

not require that the use be substantially completed, but rather

that it be substantially commenced.        This is consistent with the

concerns identified by the legislature in the legislative history

of the statute, i.e., that it was trying to deter speculators who

obtained favorable land-use rulings and then sat on the land for

speculative purposes.

           In its April 25, 2011 order, the LUC found that

“Petitioners have not substantially commenced use of the Petition

Area in conformance with the representations made in 2005 or in

conformance with the applicable representations and conditions as

of January 20, 2011.”     The LUC contends that Bridge and DW did

not challenge that finding and are accordingly bound by it.             DW,


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however, challenged this finding in the circuit court,15 and the

circuit court reversed and vacated the April 25, 2011 order in

its entirety.

            To the extent the circuit court concluded that the

LUC’s finding as to whether DW and Bridge had substantially

commenced use of the land in accordance with their

representations was clearly erroneous, that conclusion was

correct.    As the circuit court found, after the LUC rescinded the

OSC on September 24, 2009, DW “continued to actively proceed with

preparation of plans and studies, including building plans and

studies for the EIS.”      Moreover, “DW also continued work on

infrastructure and proceeded forward with building the affordable

housing townhomes for the Project.”

            Specifically, DW had constructed sixteen townhouses on

the property by March 31, 2010.        DW explained that the units had

“completed exteriors and interiors,” with “cabinets and

appliances installed,” and with “electrical and plumbing . . .

ready to hook up.”      DW also offered testimony that an additional

24 townhouses had been constructed up to the roof, with 32 more

townhouses in various stages of completion.           In a status report

submitted to the LUC, DW also stated that mass grading for the


      15
            In the circuit court, DW explicitly argued that the LUC finding
“that ‘Petitioners have not substantially commenced use of the [Property] in
conformance with [their] representations,’” was “clearly erroneous in view of
th reliable, probative, and substantial evidence on the record.” (Brackets in
original).

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affordable housing sites had been completed, foundation slabs for

eight buildings (64 townhouses) were complete, and the immediate

access and internal roadways were graded.          In a later filing, DW

also informed the LUC that by July 2010, “more than $20,000,000

had been expended for plans and construction work on the

project.”

            Rather than holding the land undeveloped for

speculative purposes — the result which the legislature sought to

avoid in HRS § 205-4(g) — Bridge and DW invested a considerable

amount of money and effort, by any reasonable measure, to develop

the affordable housing.       In these circumstances, Bridge and DW

substantially commenced use of the land.16         This is particularly

clear when Bridge’s and DW’s actions in 2009 and later are viewed

in the context of the events that occurred prior to the initial

issuance (and subsequent conditional recision) of the December 9,

2008 OSC.

            The 1991 order amending the original reclassification

order included a condition providing that “Petitioner shall

develop the Property in substantial compliance with the

representations made to the Commission[,]” and that “[f]ailure to

so develop the Property may result in reversion of the Property


      16
            In the absence of both a statutory definition of “substantial
commencement” and an expression of LUC’s interpretation of “substantial
commencement” for a particular project, a determination of whether a party has
substantially commenced use of the land will turn on the circumstances of each
case, not on a dollar amount or percentage of work completed.

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to its former classification, or change to a more appropriate

classification.”17    The LUC initially issued Bridge an OSC

stating that it had reason to believe that Bridge and its

“predecessors in interest have failed to perform according to the

conditions imposed and to the representations and commitments

made to the Commission in obtaining reclassification of the

Subject Area and in obtaining amendments to conditions of

reclassification.”     The LUC did not err in issuing the OSC.          See

HAR § 15-15-93(b) (“Whenever the commission shall have reason to

believe that there has been a failure to perform according to the

conditions imposed, or the representations or commitments made by

the petitioner, the commission shall issue . . . an [OSC].”).

Bridge and DW do not contend otherwise.

           In this regard, during a January 9, 2009 hearing on the

OSC, Commissioner Judge noted that despite the representations

made by Bridge, “there are no affordable homes on that

development.    Worse yet, there’s not even a glimmer of them

coming any time soon.      There’s no building permits, there’s no

infrastructure.”     Commissioner Kanuha expressed similar concerns,

noting that “thus far there has been no progress, no nothing


      17
            Bridge argues that the affordable housing condition was an
“unconstitutional land development condition.” However, as noted above, HRS §
205-4(g) gives the LUC broad authority to impose conditions, including those
necessary “to assure substantial compliance with representations made by the
petitioner.” Given this broad authority and Bridge’s representations to the
LUC, the affordable housing condition and its included deadline were valid.
Bridge cites no authority that would prevent the LUC from imposing benchmarks
or deadlines on development schedules.

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related to the Project.”      Commissioner Constrades later stated,

“I don’t see anything happen when I go by that place.            You can

tell me ‘I spent millions of dollars.’         Where?    What has

happened?    Why four years ago when they’re begging for housing

and there’s still nothing there?        Now you guys come back and say

‘Please, we need the housing.’       Nothing’s happening.”       Following

a subsequent hearing on April 30, 2009, the LUC voted 7-0 to

revert the property to its former agricultural land use district.

            Despite the LUC’s vote to revert the property, the

Commission never entered a corresponding written order.             Instead,

the LUC later rescinded the OSC, provided that as a condition

precedent, sixteen affordable units be completed by March 31,

2010.   In this regard, DW notes that the “LUC did not define the

term ‘complete[.]’”     This is correct.      In its order, the LUC

stated that the OSC was rescinded “provided that as a condition

precedent, the Petitioner completes 16 affordable units by

March 31, 2010,” but the order did not make it clear what would

qualify as a “complete” unit.

            This court has observed that “[p]arties subject to an

administrative decision must have fair warning of the conduct the

government prohibits or requires, to ensure that the parties are

entitled to fair notice in dealing with the government and it

agencies.”    Lanai Co., 105 Hawai#i at 314, 97 P.3d at 390.          Thus,

“[a]n administrative agency, such as the LUC, has the

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responsibility of stating with ascertainable certainty what is

meant by the conditions it has imposed.”          Id.   Here, the LUC

failed to state what level of completion would satisfy the

March 31, 2010 deadline.

           Moreover, during the August 27, 2009 hearing, DW made

it clear that the townhouse structures would be completed before

utilities could be installed.        In this regard, the following

exchange occurred between DW’s president and an attorney for the

State Office of Planning:
           Q     Your current construction plan would have the vertical
                 construction going on while the horizontal
                 construction is continuing is that right?

           A     That’s correct.

           Q     Would the vertical construction begin before the
                 infrastructure connections to that pad or that pod is
                 completed?

           A     Yes.   It has to in order to meet the schedule.

           Q     So you build the house before you have a connection to
                 the sewer, water, and electrical lines.

           A     That’s correct.

           Thus, DW made it clear to the LUC that vertical and

horizontal construction would be occurring simultaneously, and

that townhouses would be completed before they would have

connections to sewer, water, and electrical lines.            The LUC

failed to state with “ascertainable certainty” that in addition

to completing the physical townhouse structures, certificates of

occupancy were also required in order to satisfy the March 31,

2010 deadline.    See Lanai Co., 105 Hawai#i at 314, 97 P.3d at

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390.     Thus, to the extent the LUC kept the OSC pending because

“[s]ixteen affordable units have been constructed, but no

certificates of occupancy have been obtained,” it erred in doing

so.

              In any event, regardless of whether the sixteen

townhouses were “complete” by March 31, 2010, the record is plain

that by the time the LUC held its July 1, 2010 hearing, DW had

substantially commenced use of the property in accordance with

its representations to the LUC.          At that point, the LUC could no

longer revert the property without following the requirements of

HRS § 205-4.

              In this regard, before the LUC could revert the

property, its was required to find by a “clear preponderance of

the evidence” that the reversion was reasonable, not violative of

HRS § 205-2, and consistent with the policies and criteria

established pursuant to HRS §§ 205-16 and 205-17.              HRS § 205-

4(h).     The LUC was also required to resolve the OSC within 365

days.     HRS § 205-4(g).      These requirements were not met here.

              In its order reverting the property to the agricultural

land use district, the LUC explained how DW and Bridge had failed

to comply with representations made to the commission.               The LUC

made no specific findings, however, relating to whether reversion

was “reasonable,” not violative of HRS § 205-2, and consistent

with the policies and criteria established under HRS §§ 205-16

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and 205-17.   At most, the LUC concluded that “[u]nder the facts

and circumstances of this case, reversion of the Petition Area to

its original agricultural classification does not violate any

applicable rule or statutory provisions, including Hawai#i

Administrative Rules (HAR) subchapter 7 or Chapter 15-15, and HRS

Chapters 91, 92, and 205.”      The LUC’s conclusion, without more,

fails to demonstrate that the commission considered the requisite

factors under HRS § 205-4(h).

           Moreover, the circuit court correctly concluded that

the LUC violated HRS § 205-4(g) in failing to resolve the OSC

within 365 days.    The circuit court concluded that the OSC had to

be resolved by December 9, 2009, i.e., 365 days after the initial

OSC was issued on December 9, 2008.        The LUC’s findings of fact

and conclusions of law were not filed until April 25, 2011.

Although the LUC had rescinded the OSC on September 28, 2009,

that recision was conditioned upon the completion of sixteen

affordable housing units by March 31, 2010.          On July 26, 2010,

the LUC entered an order finding that the condition precedent was

not satisfied, and that the OSC remained pending.           Thus, the OSC

was not resolved until April 25, 2011, well beyond the 365 days

allowed under HRS § 205-4(g).

           The circuit court therefore correctly concluded that

the LUC erred in reverting the property without complying with

the requirements of HRS § 205-4.

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B.     The circuit court erred in denying the LUC’s motion to
       strike documents not in the administrative record

             The LUC next argues that the circuit court erred in

considering materials not part of the record.            Specifically, the

LUC argues that the circuit court erred in denying its motion to

strike from the record on appeal documents from other cases

before the LUC.      DW argues that the circuit court did not err in

allowing supplementation of the record with documents from other

dockets before the LUC.        Because the additional documents were

not part of the record before the LUC, they should have been

stricken.

             In an agency appeal, judicial review is generally

confined to the administrative record.           See HRS § 91-14(f) (“The

review shall be conducted by the appropriate court without a jury

and shall be confined to the record, except that in the cases

where a trial de novo . . . is provided by law and also in cases

of alleged irregularities in procedure before the agency not

shown in the record[.]” (Emphasis added)).            Section 91-14(e),

however, provides in pertinent part that
             If, before the date set for hearing, application is made to the
             court for leave to present additional evidence material to the
             issue in the case, and it is shown to the satisfaction of the
             court that the additional evidence is material and that there were
             good reasons for failure to present it in the proceeding before
             the agency, the court may order that the additional evidence be
             taken before the agency upon such conditions as the court deems
             proper.

HRS § 91-14(e).

             Here, neither DW nor Bridge moved to supplement the

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record pursuant to HRS § 91-14(e).        The circuit court was

therefore “confined to the record” under HRS § 91-14(f).             See

Diamond v. Dobbin, 132 Hawai#i 9, 24, 319 P.3d 1017, 1033 (2014)

(“Pursuant to HRS § 91–14(f), a review of an agency decision

‘shall be conducted by the appropriate court . . . and shall be

confined to the record.’”).

           Under HRS § 91-9(e), for purposes of agency decisions,

the record includes:     (1) all pleadings, motions, intermediate

rulings; (2) evidence received or considered, including oral

testimony, exhibits, and a statement of matters officially

noticed; (3) offers of proof and ruling thereon; (4) proposed

findings and exceptions; (5) report of officer who presided at

the hearing; and (6) staff memoranda submitted to members of the

agency in connection with their consideration of the case.

           The LUC argues that the circuit court erred in denying

its motion to strike portions of the record on appeal designated

by DW and Bridge.    Specifically, the LUC argues that the circuit

court erred in allowing 9,917 pages of documents from the dockets

of six other cases before the LUC to be included in the record.

To the extent these specific documents were not before the LUC,

the LUC is correct that the circuit court erred in denying its

motion to strike.

           On numerous occasions before the LUC, Bridge and DW

argued that they were being treated differently than other

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petitioners before the LUC.       In support of this argument, DW and

Bridge cited specific cases both in writing and during hearings.

They did not, however, present documents from those other cases

to the LUC to consider.       Moreover, to the extent Commissioner

Kanuha referred to the six cases during the April 21, 2011

hearing, neither DW nor Bridge presented the actual dockets to

the LUC.     Also, they did not move to supplement the record on

appeal once the case was in the circuit court, and did not

request that the circuit court take judicial notice of the

dockets.18

             Although the LUC argues that the circuit court erred in

“considering” the additional materials designated by Bridge and

DW, it is unclear whether the circuit court in fact relied on the

documents in issuing its order.        In the LUC’s opening brief, it

states that the circuit court “may have considered the material

in its ultimate ruling but does not specifically refer to it.”

Thus, although the circuit court erred in denying the LUC’s

motion to strike, there is no indication that the circuit court

in fact relied on the disputed documents.



      18
            Hawai#i Rules of Evidence (HRE) Rule 201(d) (1993) provides that a
“court shall take judicial notice if requested by a party and supplied with
the necessary information.” Cf. Williams v. Aona, 121 Hawai#i 1, 11 n.6, 210
P.3d 501, 511 n.6 (2009) (court takes judicial notice of terms of collective
bargaining agreement). However, there is no indication that DW requested that
the circuit court take judicial notice of the documents from the other LUC
cases, nor does the record demonstrate that the circuit court in fact did so.
Additionally, DW and Bridge do not request that this court take judicial
notice of the records.

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C.     The circuit court erred in concluding that the LUC violated
       DW’s and Bridge’s constitutional rights to due process and
       equal protection

             The LUC’s final argument is that the circuit court

erred in determining that the LUC violated DW’s and Bridge’s

constitutional rights to due process and equal protection.               On

the merits, the LUC argues that it violated neither DW’s nor

Bridge’s substantive or procedural due process rights.              The LUC

further argues that DW’s and Bridge’s equal protection arguments

are unfounded.      Both DW and Bridge argue that the LUC violated

their procedural and substantive due process rights, and equal

protection rights.

             This court has observed that, “‘if a case can be

decided on either of two grounds, one involving a constitutional

question, the other a question of statutory construction or

general law, . . . [this court] will decide only the latter.’”

State v. Lo, 66 Haw. 653, 657, 675 P.2d 754, 757 (1983) (ellipsis

and brackets in original) (quoting Ashwander v. Tenn. Valley

Auth., 297 U.S. 288, 347 (1936) (Brandeis, J., concurring)).

Here, however, Bridge has a suit pending against the LUC and its

Commissioners in federal court, raising many of the same issues

presented in the instant appeal.          The federal district court

stayed that case pending resolution of this appeal.              See Bridge

Aina Le#a, LLC v. Haw. Land Use Comm’n, No. 11-00414 SOM-BMK,

2012 WL 1109046, at *1 (D. Haw. Mar. 30, 2012).             The LUC filed an

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appeal and Bridge a cross-appeal from the district court’s order

(9th Cir. Nos. 12-15971 and 12-16076).         The United States Court

of Appeals for the Ninth Circuit heard oral argument on the

cross-appeals on June 10, 2014, and thereafter issued an order

withdrawing submission of the appeal, pending our decision in

this case.     In the interest of judicial economy, we therefore

also consider the constitutional claims decided by the circuit

court.

     1.      The circuit court may decide constitutional issues in
             an administrative appeal

             As a preliminary matter, the LUC argues that the

circuit court erred in ruling on DW’s and Bridge’s due process

and equal protection arguments because the LUC had no opportunity

to present evidence and did not have the benefit of a trial by

jury.     The LUC argues that it was “inappropriate” for the circuit

court to rule on these constitutional claims under such

circumstances, and that in doing so, the court “deprived the LUC

and Commissioners of any process whatsoever.”          Section 91-14(g)

explicitly provides, however, that the circuit court may reverse

or modify an agency decision “if the substantial rights of the

petitioners may have been prejudiced because the administrative

findings, conclusions, decisions, or orders are . . . in

violation of constitutional or statutory provisions[.]”

(Emphasis added).     Section 91-14(g) does not condition the


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circuit court’s authority on either the opportunity of the

parties to present evidence or whether the case was tried before

a jury, and the LUC does not cite any authority supporting its

argument that a court’s power is limited in the absence of these

conditions.   Thus, the circuit court properly considered DW’s and

Bridge’s constitutional arguments in reversing and vacating the

LUC’s final order.

     2.    The circuit court erred in concluding DW’s and Bridge’s
           due process rights were violated

           The circuit court concluded that the LUC’s conduct

constituted “a denial of procedural and substantive due process”

under both the United States and Hawai#i Constitutions.

Specifically, the circuit court noted the LUC’s “rolling and

continuing [OSC] that extended far beyond the time period allowed

by law,” “conduct that was in derogation of the statute and rules

established to protect Bridge and DW,” and “attempt to create a

new procedure that was not already established.”           The circuit

court also concluded that the LUC “denied Bridge and DW their

rights to a meaningful opportunity to be heard,” and that its

final order was “arbitrary and unreasonable, having no

substantial relation to the public health, safety, morals, or

general welfare.”




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            “The basic elements of procedural due process of law

require notice and an opportunity to be heard at a meaningful

time and in a meaningful manner before governmental deprivation

of a significant property interest.”        Sandy Beach Def. Fund v.

City Council of City & Cnty. of Honolulu, 70 Haw. 361, 378, 773

P.2d 250, 261 (1989) (citing Matthews v. Eldridge, 424 U.S. 319,

333 (1976)).

            Here, both Bridge and DW had notice and a meaningful

opportunity to be heard before the LUC reverted the property.

With respect to notice, as early as September 2008, Bridge was

aware that the LUC was considering issuing an OSC.           The LUC

issued the written OSC on December 9, 2008.          This was two months

before DW had obtained any interest in the property.            Both Bridge

and DW therefore plainly had notice that the LUC might revert the

property.

            With respect to a meaningful opportunity to be heard,

Bridge presented testimony on its behalf with respect to the OSC

during hearings on January 9, 2009, and April 30, 2009.            As noted

above, after the LUC voted to revert the property, it did not

issue a written order effecting the reversion.           In fact, the LUC

stayed entry of its decision and order, and allowed DW to present

evidence during a hearing on June 5, 2009.          DW also presented

additional testimony during a hearing on August 27, 2009.             After

the March 31, 2010 deadline for the completion of the sixteen

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units had passed, DW was again heard by the LUC during a hearing

on July 1, 2010.    The LUC held subsequent hearings on

November 18, 2010, January 20, 2011, March 10, 2011, April 8,

2011, April 21, 2011, and May 13, 2011.         Bridge and DW were each

represented by counsel during all of these subsequent hearings.

Because both Bridge and DW had notice and a meaningful

opportunity to be heard on the reversion issue, the circuit court

erred in concluding that their procedural due process rights had

been violated.

           As this court has stated, “[d]ue process includes a

substantive component that guards against arbitrary and

capricious government action[.]”        In re Applications of Herrick,

82 Hawai#i 329, 349, 922 P.2d 942, 962 (1996).          To establish a

violation of substantive due process, “an aggrieved person must

prove that the government’s action was clearly arbitrary and

unreasonable, having no substantial relation to the public

health, safety, morals, or general welfare.”          Lopez v. State, 133

Hawai#i 311, 322, 328 P.3d 320, 331 (2014) (quoting In re

Herrick, 82 Hawai#i at 349, 922 P.2d at 962).

           On this issue, the circuit court stated only that the

LUC’s final order “was by its terms arbitrary and unreasonable,

having no substantial relation to the public health, safety,

morals, or general welfare.”       Although the circuit court echoed

the language set forth by this court in Herrick, the facts of

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this case do not support such a conclusion.

           Here, the LUC first reclassified the land at issue from

the agricultural to the urban land use district in 1989.             By the

time the LUC issued an OSC in December 2008, the land had changed

hands numerous times and the LUC had amended the original

reclassification order on multiple occasions.          Moreover, as noted

above, by the end of 2008, the landowners had done little to

develop the property in accordance with representations made to

the LUC.   Given this history, the LUC was understandably wary of

representations being made by Bridge and DW that they would be

able to satisfy the 1991 order’s conditions, as amended in 2005.

Nevertheless, Bridge and DW repeatedly assured the LUC that they

would be able to complete the affordable housing units by

November 2010.    As it turned out, however, Bridge and DW did not

satisfy the affordable housing condition, and did not comply with

numerous other representations made to the LUC.           Thus, although

Bridge and DW may disagree with the process that ultimately

resulted in the reversion, the LUC’s conduct was not “arbitrary

and unreasonable,” given the long history of unfulfilled promises

made in connection with the development of this property.             In

these circumstances, the circuit court erred in concluding the

LUC violated Bridge’s and DW’s substantive due process rights.




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     3.    The circuit court erred in concluding Bridge’s and DW’s
           equal protection rights were violated

           The circuit court also concluded that the LUC

“intentionally treated Bridge, DW, and this Project differently,

and less favorably, than other petitioners in cases involving

facts and circumstances substantially similar to this case.”

Specifically, the circuit court concluded that the LUC treated

Bridge and DW “in a materially, adversely different manner than

other similarly situated developers, and that the LUC did so

intentionally and without any rational basis for the differential

treatment.”

           In general, the equal protection clauses of the United

States and Hawai#i Constitutions “mandate[] that all persons

similarly situated shall be treated alike, both in privileges

conferred and in the liabilities imposed.”          State v. Freitas, 61

Haw. 262, 271, 602 P.2d 914, 922 (1979).         “[E]qual protection

jurisprudence has typically been concerned with governmental

classifications that ‘affect some groups of citizens differently

than others.’”    Engquist v. Oregon Dept. of Agric., 553 U.S. 591,

601 (2008).   The United States Supreme Court has nevertheless

recognized that an equal protection claim may be brought by a

“class of one,” “where the plaintiff alleges that [he/she] has

been intentionally treated differently from others similarly

situated and that there is no rational basis for the difference


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in treatment.”    Vill. of Willowbrook v. Olech, 528 U.S. 562, 564

(2000).

            Bridge and DW do not argue that they are part of a

group of persons that are being treated differently than others.

Rather, Bridge and DW argue that their equal protection rights

were violated because the LUC did not seek to revert the

classification of properties owned by similarly situated

developers that experienced similar delays.          Their equal

protection arguments are therefore dependent on the “class of

one” theory.    This court has not previously adopted that theory.

Assuming arguendo that the “class of one” theory is applicable

under Hawai#i law, the LUC did not violate Bridge’s and DW’s

equal protection rights.

            DW argues that it was treated differently than others

who were similarly situated, citing the affordable housing

condition and its November 2010 deadline, and the fact that the

LUC reverted the property because DW failed to meet this

deadline.    Neither DW nor Bridge, however, have demonstrated that

they were treated differently than other similarly situated

developers because the documents from the LUC cases involving the

other developers were not properly included in the record on

appeal, supra at 86-89.      In any event, even assuming Bridge and

DW had demonstrated different treatment, their equal protection

argument still fails because they did not establish that the LUC

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was without a rational basis.       As noted above, the LUC has broad

discretion to attach conditions to orders granting

reclassification petitions.       Lanai Co., 105 Hawai#i at 317, 97

P.3d at 393.   Given the long history of this property and the

LUC’s dealings with the landowners over the course of many years,

we cannot say it was irrational for the LUC to exercise its broad

discretion by imposing a completion deadline.          Again, the LUC had

good reason to be wary of any assurances being offered by Bridge

and DW, given the history of the project.

           Moreover, the fact that the LUC enforced its conditions

did not violate Bridge’s and DW’s equal protection rights.                As

the Court has explained:
           There are some forms of state action, however, which by
           their nature involve discretionary decisionmaking based on a
           vast array of subjective, individualized assessments. In
           such cases the rule that people should be “treated alike,
           under like circumstances and conditions” is not violated
           when one person is treated differently from others, because
           treating like individuals differently is an accepted
           consequence of the discretion granted. In such situations,
           allowing a challenge based on the arbitrary singling out of
           a particular person would undermine the very discretion that
           such state officials are entrusted to exercise.

Engquist, 553 U.S. at 603.

           In short, the LUC had broad authority to impose

conditions and the power to determine whether Bridge and DW

breached those conditions.      See Lanai Co., 105 Hawai#i at 317, 97

P.3d at 393 (“Whether there has been a breach of [a condition] is

a determination to be made by the LUC.”).         Thus, Bridge’s and

DW’s equal protection rights were not violated because the record

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does not establish that the LUC lacked a rational basis for its

decisions.

                             IV. Conclusion

           The circuit court’s second amended final judgment is

therefore affirmed in part and vacated in part.           We affirm the

judgment to the extent it is based on the circuit court’s

conclusion that the LUC erred in failing to comply with the

requirements of HRS § 205-4, we vacate the judgment to the extent

it is based on the circuit court’s conclusion that the LUC

violated Bridge’s and DW’s constitutional rights, and we remand

to the circuit court for further proceedings consistent with this

opinion.

William J. Wynhoff                 /s/ Mark E. Recktenwald
for petitioner
                                   /s/ Paula A. Nakayama
Bruce D. Voss and
Matthew C. Shannon                 /s/ Sabrina S. McKenna
for respondent
Bridge Aina Le#a, LLC              /s/ Richard W. Pollack

David J. Minkin,                   /s/ Randal K.O. Lee
Dayna H. Kamimura-Ching,
and Troy J.H. Andrade
for respondent DW Aina
Le#a Development, LLC




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