Since rail construction started, Honolulu city officials have mostly managed to dodge using the unpleasant, last-resort tactic of eminent domain.

They’ve threatened to condemn dozens of properties along the rail line. In the end, however, most of those owners have agreed to take the money offered them, including those who felt they were getting short-changed.

But a more contentious condemnation battle looms with one of the most powerful and prominent landowners in Kakaako over one of the largest and potentially most expensive acquisitions required to build the project through town.

Negotiations with Howard Hughes Corp. have broken down, rail and federal oversight officials report. Now the two parties appear headed for a showdown in court next year.

Cory Lum/Civil Beat

Howard Hughes and the Honolulu Authority for Rapid Transportation, the semi-autonomous agency that oversees rail construction for the city, are far apart on the value of nearly 90,000 square feet of land needed along the route between Cooke and Kamakee streets.

At one point, the Dallas-based corporation suggested the area needed was worth about $100 million more than the city’s latest offer, according to recent federal oversight reports.

To put that in context, HART’s total budget to acquire some 224 properties along the 20-mile rail line — from the fields east of Kapolei to Ala Moana — amounts to $193 million.

“HART and Howard Hughes attempted to negotiate a settlement of the pending eminent domain action; however, the negotiations were not successful and the action continues through the court process,” the rail agency said in a statement this week.

HART remains open to negotiating, it added, but “the Court will be meeting shortly with counsel for the parties to set a trial date – which will likely be scheduled in 2020.”

A Critical Pathway

Most of the Howard Hughes properties needed for rail are narrow strips — not full parcels — meant to buffer the street from the elevated rail line as it runs along Halekauwila and Queen streets.

It also includes more than 37,000 square feet for the system’s future Kakaako station, near the Ross Dress For Less and former Sports Authority stores on Ward Avenue.

HART launched condemnation proceedings against Howard Hughes in December 2017 — the same as it’s done to numerous other property owners along the rail line. Since then, it’s managed to obtain an order of possession granting the agency some access apart from the larger fight over condemnation.

The court, meanwhile, has rejected Howard Hughes’ challenge of the proceedings, according to the latest available oversight report.

Mark Murakami, an attorney who’s represented Howard Hughes in the dispute with the city over rail, did not respond to requests for comment this week.

In years past, Murakami and various property owners along the line have expressed concerns that HART and the city often launch formal condemnation proceedings against them while still negotiating a price.

Courtesy of Olelo Community Media

HART argues this “dual-track” tactic is needed — and proper — in order to keep a $9 billion mega-project that’s already years behind schedule from slipping even further. Should negotiations break down, the city could then move swiftly to take the land it needs through condemnation without waiting months for the process to play out in court.

But property owners have argued the approach gives the city undue leverage. Further, in 2017, Murakami argued before the HART board that the action violates the federal property acquisition process the city agreed to follow when it accepted federal dollars to help build rail.

HART and the city have largely avoided condemnation. Some small business owners along the line who initially resisted their offers said it was too expensive and risky for them to fight the city all the way to court over what they felt were low appraisals.

The one exception so far has been Honolulu Hardwoods owner Bryan Hoernig, who took the fight over fair price to state Circuit Court. Hoernig was convinced the city had undervalued his former Kakaako warehouse by $2 million. He settled after several days of trial and considerable expense — before the jury could render its final decision.

Howard Hughes is a large real estate corporation, however, and it could be better positioned financially to challenge the city over its rail land appraisals. HART needs 35 separate easements on 16 Howard Hughes-owned properties along the rail line.

At their December 2017 meeting, rail board members pushed back against Murakami, noting that Howard Hughes stood to benefit from rail and thus should help HART get the needed parcels.

“I think it’s really important that we work cooperatively together, and you need to make sure that you take it back to your client, the board’s firm commitment that this rail is going to be built,” Ember Shinn, a former HART board member, told Murakami. “It’s going to be built through Kakaako and … we would hope you would cooperate with this endeavor.”

The city currently has eight eminent domain cases filed in court against owners with whom it’s been unable to agree on terms. At least eight more cases have been recently approved by the City Council and are moving closer to a court filing, according to a HART spokesman.

Out of the 224 properties needed for Oahu’s rail line, more than 60 parcels have faced eminent domain (condemnation) proceedings so far, including a high-profile dispute with the Blood Bank of Hawaii. Most of those proceedings have not reached the court level, however.