The failure of the Agribusiness Development Corporation to collect rent on its Keaʻau parcel represents the loss to the state of a significant income stream over the years. If the state were to receive a modest 6 percent return on its investment of $500,000, that would pencil out to a rental rate of $2,500 per month, or $210,000 over the minimum seven years that Pacific Biodiesel, LLC, seems to have occupied the lot. If interest were to accrue on unpaid rent over time, the total owed by Pacific Biodiesel would be far higher.
The existence of a right-of-entry dating back five years is the only document the ADC has provided that gives some cover to the company’s occupation of the ADC lot in Keaʻau. But even that seems to have been made two years, or more, from the commencement of use of the property by Pacific Biodiesel. And it fails to explain why the ADC is giving a pass to a privately held company for all these years.
Another loss is to Hawaiʻi County. No property tax is collected on unencumbered state lands. But if the acre-and-a-half were under lease or permit, the county would have received tens of thousands of dollars in tax payments over the last 10 years. A neighboring parcel that is an identical size and also vacant has a 2024 tax bill of $7,921. Since 2016, taxes on that parcel add up to $55,193. Before the ADC purchased the adjoining lot, it was privately owned and the county would have been collecting property taxes on it of around $5,000 a year.
The January 2021 report of the Office of the Auditor on the Agribusiness Development Corporation pointed out the laxity in the ADC’s record-keeping. “For instance, when we requested documents we believed would be essential to the day-to-day operations of a corporation that manages land and properties … we were informed that the requested materials did not exist… In addition, we found that ADC’s recordkeeping is inconsistent, incomplete, and in many cases, non-existent.”
In the case of the Keaʻau property, Environment Hawaiʻi asked ADC asset manager Lyle Roe whether the ADC was receiving any rent from the Keaʻau property. Instead of a straightforward reply, Roe turned the question into a formal Uniform Information Practices Act request, to which he then replied.
According to that reply, “Agency requires additional time to respond to the request in order to avoid an unreasonable interference with its other statutory duties and functions.”
Not until we were hours away from going to press did the ADC provide the right-of-entry.
Pacific Biodiesel has enjoyed an excellent reputation over the years as a leader in waste-oil recycling and a champion of developing alternative fuels. That it has not paid rent to the state for nearly a decade is a black stain on that reputation.
The ADC should immediately explain how this rent-free occupation of state-owned land came about and why it should not cease at once. If it does not, then the Department of Business, Economic Development, and Tourism, to which the ADC is administratively attached, should demand an explanation.
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