The state Land Use Commission is scheduled to decide next week whether to consider revoking the 1986 reclassification of 236 acres at Turtle Bay from agriculture to urban and resort use.

The legal skirmish represents just the latest hurdle potentially blocking a decades-old proposal to expand the North Shore resort by adding five more hotels between Kawela Bay and Kahuku Point, a plan now opposed by much of the community and by Gov. Linda Lingle, who in January launched a state effort to acquire and preserve the land as open space.

Oaktree Capital Management, the Los Angeles-based investment firm that purchased the former Kuilima Hotel and landowner Kuilima Development Company in August 1998, was hit with a foreclosure lawsuit in December 2007 after defaulting on $258 million in loans. In an agreement last month, Oaktree agreed to turn the property over to its lenders if it cannot be sold within six months.

The Defend O’ahu Coalition, an association of North Shore residents, environmentalists and religious leaders who oppose expansion of the resort, have asked the commission to require the resort’s owner, now known as Kuilima Resort Company, to “show cause” why the land should not revert to its former agricultural classification, a move that would preclude resort development.

In a March 30 letter to the commission, the coalition’s chair, Rev. Robert Nakata, said Kuilima Development “made key representations to the Land Use Commission in exchange” for the original shift from agricultural designation to urban, but dropped their expansion plans more than 15 years ago and failed to fulfill several of the conditions.

Nakata told Honolulu Weekly that their case is simple.

“They (Turtle Bay and its current owner, Kuilima Resort Company) haven’t performed. They didn’t build the hotels, they didn’t create the jobs that were promised, they didn’t turn over the parks and shoreline rights of way and they didn’t improve the intersection.”

“But now conditions have changed, and the community does not want these things any longer,” Nakata said.

The coalition argued that the LUC can’t reclassify land from agriculture to urban or resort use simply to increase its speculative value. It allows reclassifications only for specific purposes and projects.

“A twenty-year failure to commence development and satisfy the required conditions is tantamount to mere speculation inasmuch as all supporting testmimony and market studies presented in support of the reclassification are now stale.”

Coalition’s attorney Robert D. Harris argued the LUC cannot duck its responsibility, pointing to a rule providing that it “shall” issue a show cause order whenever it has “reason to believe that there has been a failure to perform according to the conditions imposed, or the representations or commitments made….”

In this case, all parties, including the developer, admit the conditions imposed back in 1986 have not been met, LUC documents show.

Shyla Cockett, an attorney representing Kuilima Resort Company, referred questions to lead counsel, Sharon Lovejoy, who could not be reached for comment.

In documents filed with the Land Use Commission, Lovejoy and Cockett raise several technical defenses.

First, they argue that the Defend O’ahu Coalition lacks legal standing to raise its complaint because it was not a party to the original land reclassification and is not an “interested person” as defined by commission rules, which would require a specific interest in the issue “clearly distinguishable from that of the general public.”

Allowing the coalition to intervene at this time, they argue, would set a precedent of allowing “almost anyone” to challenge land use decisions, “making the land use planning process intractable.”

Second, they argue that although the Land Use Commission imposed conditions, it did not set any deadlines for compliance.

“Imposition of deadlines now, when they were not explicitly made known previously, is improper,” they argue.

But the coalition responded that it is “nonsensical” for Turtle Bay to claim it can take forever to comply with conditions imposed by the Land Use Commission because the commission’s own rules requiring a five-year deadline became “part and parcel of the underlying conditions,” the coalition argued.

The coalition also called the issue of standing “a red herring” because it is not seeking to formaly intervene in the case. Instead, “Defend O’ahu is merely notifying the Commission of Kuilima’s failure to comply with the conditions and representations. Upon receipt of this [notification...the] Commission now bears the responsibility to proceed” with enforcement.

Attorneys for the Office of State Planning question whether the five-year deadline can be enforced, but suggest that nothing prevents the Land Use Commission from taking the initiative to modify the conditions or impose a new deadline.

Although the meeting agenda has not been posted, Harris said attorneys have been told the Turtle Bay issue will be considered by the LUC on Friday, July 11, beginning at 9 a.m.

---