HILO, Hawai'i — The state Supreme Court yesterday upheld a 2003 lower-court ruling that blocked a 457-acre Kona subdivision in a decision that could change how the counties handle subdivision applications.

The Supreme Court agreed with Kona Circuit Judge Ronald Ibarra that the developer of Ki'ilae Estates LLC must obtain a special management area use permit before the county can approve the plans.

The high court also agreed with Ibarra's finding that there were technical flaws that invalidated the tentative approval the county granted for the Ki'ilae project in 2002.

Ki'ilae Estates LLC wants to subdivide 457 acres about 22 miles south of Kailua, Kona, and south of Pu'uhonua o Honaunau National Historic Park.

The challenge to the Ki'ilae subdivision was filed on behalf of Wayne Leslie, a subsistence fisherman and Hawaiian who lives at Napo'opo'o.

Lawyer David Kimo Frankel, who represents Leslie, said the Supreme Court ruling "has implications far beyond Ki'ilae."

"It should affect the way Hawai'i County and all the counties approve subdivision applications," he said. "They have been doing so without getting information that is required by law."

The proposed subdivision would divide the land into 40 lots of five acres each and nine larger parcels ranging from eight acres to 74 acres.

The subdivision application included 64 acres in the shoreline special management area, but the developer argued the project did not need an SMA use permit because the subdivision did not involve chopping that 64 acres into smaller parcels.

The Supreme Court rejected that argument, noting its 1989 ruling in the proposed Sandy Beach development on O'ahu that projects with part of the land in an SMA area are required to obtain SMA use permits.

Some disputes over SMA applications have dragged on for years, and some developers avoid the process if at all possible.

Frankel said developers have been submitting little more than maps to obtain preliminary subdivision approval, when the county codes require the counties to collect information from the developers about drainage, sewer disposal, water service and other details.

Big Island Planning Director Chris Yuen was unavailable for comment last night. However, Yuen has said the county has been using the same process for granting preliminary subdivision approval for 20 years or more, and it will create "a big problem" if developers are forced to submit more detailed information earlier in the process.

Frankel also predicted the ruling would affect projects pending in Ka'u, where other developers argue they do not need special management area permits for projects that involve land inside the SMA area.

Meanwhile, the dispute continues. The Ki'ilae developer submitted a new application for subdivision approval after Ibarra's 2003 ruling that halted the project, and that application was approved by Yuen, Frankel said. Leslie again appealed Yuen's action, and the issue is to be heard before the Hawai'i County Board of Appeals tomorrow.

Reach Kevin Dayton at kdayton@honoluluadvertiser.com.