The city’s lengthy, high-stakes court battle against one of Oahu’s most prominent developers, Howard Hughes Corp., over land that might eventually be needed for the rail line is heading to trial either late this year or early next year, officials say.

That announcement from the volunteer board overseeing Honolulu’s Skyline construction follows a recent, pivotal Hawaii Supreme Court ruling. The Dec. 29 decision reversed a significant lower-court ruling that had strongly benefited the city in its condemnation lawsuit against Howard Hughes. 

With the reversal, a jury could now decide whether Howard Hughes is owed as much as $100 million in additional damages for two acres of land that the city will need for a future rail station in Kakaako.

Two attorneys for the city briefed the Honolulu Authority for Rapid Transportation board behind closed doors for more than an hour last week on the implications of the Supreme Court ruling. 

The board didn’t take any action. Its chair, Colleen Hanabusa, said that the group would continue to discuss the matter going forward.

Despite the high court’s reversal, HART said in a statement Friday that it is confident a jury will rule in its favor. Howard Hughes’ claim that its Ward Village development plans are hurt by rail is “inconsistent” with state requirements that the company incorporate rail into anything it builds there.

Meanwhile, Howard Hughes’ local affiliate in Hawaii, Victoria Ward, said Friday that it “supports the development of the rail line and its role in connecting people and communities.”

“We are pleased with the Supreme Court’s decision … which affirms that a jury is the appropriate means to resolve what is due as a result of the property taking by HART,” the company added in the statement.

The dispute has resulted in a costly legal tab that continues to grow for taxpayers.

Originally, the city had looked to pay Howard Hughes $13.5 million for a 2-acre stretch of land needed to build the Kakaako rail station just east of Ward Avenue. But in the past nearly six years the city has racked up at least $23 million in legal fees as it looks to avoid paying Howard Hughes and Victoria Ward as much as $220 million in damages.

The transit station at the heart of the dispute now falls just outside the Skyline rail system’s updated scope, which is based on what the city can currently afford to build. The length of the elevated transit line was trimmed in 2022 after the project again went over budget.

Now, it’s not clear where the city might get the funding to build the full 20-mile line to Ala Moana, including the section that runs through Ward Village. The Kakaako station was still part of the project scope when the city filed its condemnation suit against Howard Hughes in 2018.

The Lost Tower

Previously, Circuit Judge John Tonaki had ruled that Howard Hughes could not claim what’s known as “severance damages” as part of the city’s condemnation. 

Those damages refer to the negative impacts to the land that a property owner retains after a condemnation occurs. 

However, Tonaki ruled in 2021 that Howard Hughes had known for years that it would have to factor any impacts of rail into its ambitious development plans for the 60-acre Ward Village based on the state’s own Ward Neighborhood Master Plan.

In addition to severance damages, Howard Hughes claimed in court filings that the city’s plans for the Kakaako Skyline station prevented it from developing a 400-foot-tall condo tower at that site, in addition to the nine other such towers that are either already built or in the works in that area.

Tonaki found Howard Hughes’ argument dubious because neither the Dallas-based corporation nor its local affiliate, Victoria Ward Limited, presented any concrete plans for that tower. He ruled against them.

In its December ruling, the Supreme Court said that the facts surrounding Howard Hughes’ right to severance damages remain in dispute so those issues should be heard and sorted out by a jury instead.

“We acknowledge the factual and legal complexity of this case, and the circuit court’s legitimate concern with narrowing the issues for trial,” the high court wrote in its ruling. “However, we conclude that in several circumstances, the circuit court incorrectly used summary judgment to resolve disputed factual issues.”

Two former HART board members have said that Howard Hughes once threatened HART with a “huge” legal claim if they didn’t build rail through Kakaako. The reason, according to former board member Terrence Lee, was that the developer was counting on the assumed increases in value to its condominium towers from the transit line.

Rail systems in other cities have shown it’s possible to integrate elevated train stations into private commercial development, including through high-rise towers, such as in the Miami Central mixed-use project in downtown Miami.

Nonetheless, the city and Howard Hughes have been unable to work together. Instead, they’ve been mired in expensive litigation.

“Ward Village, along with restaurants, retailers, building owners and other developers in this neighborhood have all been affected by HART’s condemnation,” the developer said in its statement Friday. “Victoria Ward Ltd. is seeking fair compensation for our land.”

Read the Hawaii Supreme Court decision on the lawsuit here: