Jury adds $1M to Sheehan property value

LIHUE — A 5th Circuit jury on Friday decided that a Hanalei boatyard owner’s property was worth $1 million more than the county wanted to give him.

Michael Guard Sheehan, owner of Hanalei River Enterprises, Inc., a company that ran a former commercial boat landing adjacent to Black Pot Beach Park, said the jury was fair in its assessment. He said the issue should not have gone to court and it would have been preferable to go through mediation.

“This is a good chapter in an ongoing saga where the people got to decide finally how to spend their own money,” Sheehan said. “I have been in favor of Black Pot Beach Park expanding for many, many years and it is finally coming to fruition through the action of the people.”

The jury issued a decision just after 10 a.m. that said the county should have valued Sheehan’s property at $5.8 million in 2011. This was more than the county’s $4.68 million assessment, and less than Sheehan’s $7.41 million.

Lenny Rapozo, director of the county Parks and Recreation Department, said the county is pleased with the $5.8 million award, which is slightly less than the original appraisal of $5.89 million in 2011.

“The county is now preparing a master plan for the Hodge parcel, Black Pot Beach Park, boatyard and surrounding areas,” Rapozo said.

Judge Kathleen Watanabe presided over the four-day trial that including a trip to Hanalei to personally view the property.

She instructed the jurors to determine the fair market value for Sheehan’s property at its highest and best use in 2011.

Attorneys Rosemary Fazio and Jodi Higuchi of the Ashford & Wriston firm represented the county.

Fazio said the case is about the value of three parcels of land with special problems and restrictions. The properties are not ideal for residential development because of nearby commercial activity and a 13-foot flood and tidal zone requirement.

The devaluation was based on market conditions and negative factors that would influence the likelihood of a sale in the open market. The adjustments were based on physical surroundings and factors including flood zone, property borders and use of restricted space.

Fazio said this was made clear in a report from the county’s witness, Alan Conboy, of Hastings, Conboy, Braig & Associates, who performed the $4.8 million assessment. She questioned the Sheehan report for including comparable properties that didn’t match.

Sheehan’s attorney Richard Wilson, said the county’s $4.8 million valuation was “a discount offer” that was unfair to Sheehan and to everybody. He presented Paul Cool, an appraiser with John Child and Company of Honolulu, and president of the Appraiser Institute as Sheehan’s witness.

Cool covered all six elements of value, while the Conboy study was performed in a fraction of the time without nearly as much ground regarding flag portions that are essentially easements, Wilson said.

Cool provided a $6.74 million assessment and said there was common ground with the 2010 Conboy report, but for several key adjustments that reduced property value. He said the report lacked a fundamental underlying basis for the changes in adjustments particularly with the absence of adequate market data.

The Planning Commission voted in May 2010 to revoke permits that Sheehan had used since 1987 to operate a boatyard in Hanalei. They cited Special Management Area Use, and Class IV Zoning Permit violations in the operation of a boatyard.

The county plans to expand Hanalei Black Pot recreation area and preserve the land from development, in accordance to the Holo Holo 2020 plans, together with other proposals for recreational use in the area.

Sheehan said that after 25 years of working against boating activity in Hanalei, the county is now using a county parks “peddler and concessionaire ordinance” to select who may engage in the same commercial activity on his former property.

Rapozo disagrees and said the county is not working on permits to conduct commercial boating on this newly acquired site. He said the SMA applications are to ask the Planning Commission to allow state licensed boating operations that may legally operate in Hanalei under DOBOR permits — to load and unload passengers from the Weke ramp pursuant to the peddlers and concessionaires ordinance.

“These permittees will be subject to county conditions that will mitigate their effect on Black Pot Beach Park,” Rapozo said.

Sheehan said his next step is to have the appellate and federal court decide if the county violated a doctrine of futurity by taking his property for a stated purpose and then using it for another. He believes this is a county plan to take over commercial tour boating from a private but environmentally sound boatyard operation.

A three-year old federal case is on hold pending the outcome of another 5th Circuit case that is before the Intermediate Court of Appeals review of a  ruling on the propriety of the Planning Commission revocation of the commercial boatyard permits. He is claiming the county held executive sessions on matters in violation of the sunshine law.

Sheehan said he was of the idea of preserving the land as an expansion of Black Pot Beach and that he offered all seven acres to the county for the 2009 assessed commercial value of three acres at $10 million.

The county turned him down, Sheehan said, because of a conditional day-use only with no commercial operation clause. Instead the county revoked the permits and that reduced the highest use value from commercial to residential.

Some of the three parcels in this trial were registered as Land Court property but most was still under the Hawaii Bureau of Conveyances — the old English system for land registration, Sheehan said. Only the landowner can petition to consolidate into the Land Court system, he said, but the county, in an attempt to make a diminution in value, consolidated a portion that was still registered under the Bureau of Conveyances.

“They jumped the gun and arbitrarily eliminated the boundary on a small parcel,” Sheehan said.

In the meantime, Sheehan said he has plans for the remaining 3.2 acres after the three-acre land acquisition. He said he is planning a new ramp facility and an environmentally sound boat wash with wastewater filtration system, as well as to rebuild the central meeting hall, commercial kitchen and retail office.

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