Aspects of a years-long eminent domain dispute over the construction of a rail station within real estate developer Howard Hughes Corp.’s property in Kakaako will face a higher level of judicial scrutiny this week.

The Hawaii State Supreme Court is scheduled to hear oral arguments involving the Texas- based developer, doing business here as Victoria Ward Ltd., and the Honolulu Authority for Rapid Transportation’s 2018 condemnation of about 2 acres containing roughly 25 parcels owned by the developer — from Cooke to Kamakee streets. The property was originally slated for mixed-use development within Ward Village, but sought by the rail agency for the planned rail line’s Kakaako Station near Ward Avenue.

Projected cost to taxpayers to acquire the property has been reported to be as much as $200 million, with HART by 2021 having spent nearly $23.3 million in legal fees over the planned Kakaako station.

The back-and-forth legal battle between HART and Victoria Ward over the value of the property has played out in Circuit Court but to no agreeable resolution. Although the current plan is to end the rail line well before the property in dispute due to high construction costs, the station might reappear in another future “phase” of the project, according to the rail agency.

To that end, the state Supreme Court’s expected ruling in HART v. Victoria Ward has more to do with determining unsettled points of law over just compensation related to eminent domain rather than the actual rail project itself. Once a ruling is rendered by the state’s high court, the matter is expected to return to Circuit Court for a future jury trial.

On Monday, HART did not immediately respond to questions over its eminent domain action or pending Supreme Court hearing.

For its part, Victoria Ward offered a written statement but declined to respond to specific questions over the legal matter.

“Victoria Ward Ltd. (VWL) continues to support the progression of the rail line and its connectivity for Honolulu. Both parties to HART’s condemnation of VWL’s lands in Kakaako have pending appeals before the Hawaii State Supreme Court,” the company’s statement reads. “Under condemnation law, VWL is seeking just compensation for the land in question and related impacts caused by HART’s use of eminent domain, and we look forward to the hearing.”

In this case a number of appeals at issue concerned Victoria Ward’s claims for just compensation or severance damages — typically, the amount determined as the loss of value to remaining property over the value of land and structures taken by the government.

According to the state court’s briefing of this case, the matter began well over a decade ago. In 2009 the Hawaii Community Development Authority issued a master plan permit for the Ward Village development, which covers an area of approximately 60 acres in the Kakaako Mauka area owned by Victoria Ward and proposes a pedestrian-friendly, smart-growth community.

Eventually, the parties would disagree over language in the master plan permit — which states, in part, that “a more detailed transit route and station location shall be addressed and incorporated” — and whether it precluded Victoria Ward from recovering severance damages for impacts to property not taken, the court states.

The Circuit Court eventually issued a number of summary judgment orders preventing Victoria Ward from seeking severance damages.

Moreover, the Circuit Court also ruled Victoria Ward could not recover for the loss of a planned luxury tower “that allegedly could have been built on the site of the Kakaako Station, for relocation of units from that tower to less valuable locations, for severance damages to property stipulated to be distinct from those where condemnations took place, or for replacing lost parking if replacement costs exceed loss in value.”

HART appeals from other Circuit Court rulings include those specifying some of Victoria Ward’s damages may not be offset by certain alleged “special benefits” flowing from the rail project, the court states. And according to a 2021 HART report related to this case, Victoria Ward was expected to seek $200 million in severance damages.

Still, as time has passed, the developer-owned properties in question lie outside of the rail’s current truncated scope of work, which ends at the planned Civic Center station at Halekauwila and South streets.

Under Mayor Rick Blan­giardi’s administration, the city in 2022 postponed the last 1.25 miles of guideway and the final two stations at Kakaako and Ala Moana to reduce the project’s expenses from over $12.45 billion for a 20-mile route and 21 stations, down to a nearly $10 billion, 18.9-mile rail line project and 19 stations.

At the time, the plan to stop rail construction two stations short of Ala Moana Center was thought to be a way to reduce costs and eliminate the need to build a 20th station, which was then projected to cost taxpayers as much as $200 million to acquire. And by October 2021, HART had spent nearly $23.3 million in legal fees to two law firms in its eminent domain dispute with Victoria Ward over the planned Kakaako station.

Over time those costs were only expected to grow.

In March 2022, Council member Augie Tulba voted against two rail-related bills over HART’s operating and capital budgets. Tulba’s “no” votes represented a statement that he wanted more information on HART’s “recovery plan” and the project’s true costs.

“Enough already,” Tulba previously told the Honolulu Star-Advertiser following those dissenting votes. “Give me some clarity. Do I want to see the project completed? Of course. I’m not against rail. I just want transparency. Be honest.”

Tulba added he was disappointed in the new plan “because they sold the public on Ala Moana, that they had to get to Ala Moana to get the full federal funding. And now it’s downtown (Civic Center). … I just want a plan. How much is it going to cost, and when can I ride it?”

On Monday, Tulba expressed his disappointment over these lawsuits affecting the city related to the rail line heading farther east into Kakaako.

“We made promises that we cannot keep,” Tulba said. “So that’s my worry, that we’re going to be continuing to pay for lawsuits and continue to put the burden on the taxpayer.”

The Supreme Court hearing will begin at 2 p.m. at Aliiolani Hale, second floor, at 417 S. King St. The live hearing can also be viewed online at youtube.com/ hawaiicourts and on ‘Olelo Community Media.

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Honolulu Star-Advertiser staff writer Dan Nakaso contributed to this report.