“Why do we have to keep guessing? Why don’t you just tell us what you want? This, [proposal] I thought, made some sense.”
Just a slight tone of exasperation crept into Tim Johns’ voice as he addressed Carl Christensen, attorney for Marvin “Kanak” Napeahi, a native Hawaiian who first sued the state 15 years ago for letting the Waikoloa resort build on state land. Johns was presiding over his last meeting as chair of the state Board of Land and Natural Resources and didn’t want to exit with the threat of further litigation on this matter hanging over his head.
Three years ago, a federal court vindicated Napeahi’s claim that the Waikoloa hotel built in the late 1980s by developer Chris Hemmeter occupied state land. U.S. District Judge David A. Ezra ordered the state to seek compensation from the hotel for its use of public lands. Since then, Napeahi and his attorneys, the Native Hawaiian Legal Corporation, had been pressing to get the state to resolve the encroachment.
At the December 15 meeting of the Land Board, Department of Land and Natural Resources staff presented a proposal that would have resulted in the state taking steps to acquire an industrial parcel in the Kaloko-Honokohau area of Kona that the resort’s owner would purchase. The resort then would have free use of the state land, now occupied by a lagoon and the Water’s Edge Ballroom.
But the proposal did not sit well with Napeahi and his counsel, Carl Christensen.
“Why don’t you give us some guidance?” Johns asked Christensen.
Christensen was taken aback. “It’s the first time you’ve asked us what we want,” he replied.
For two years after the 1997 judgment, the DLNR and resort owner LanPar/HTL Associates discussed possible resolutions, but were not able to agree on compensation for use of the ceded land. In July 2000, retired judge Patrick Yim served as mediator for the two sides. Still, the parties could not reach an agreement.
After LanPar/HTL rejected an offer by the state in early September, the Land Board prepared to vote September 22 on a recommendation that the Hilton, which now runs the resort, stop using the lands and return them to the state The vote was deferred when LandPar/HTL expressed a willingness to work things out.
At the Land Board’s November 17 meeting, staff recommended, in principle, a land exchange as a way of settling the dispute. Again, the matter was deferred, but was introduced again on December 15. While the recommendation was a “preliminary discussion” of sorts, it raised strong objections from Napeahi and the Office of Hawaiian Affairs (OHA).
OHA raised four basic objections in its testimony: 1) The proposal doesn’t provide for collection of back rent for the 15 or so years LanPar/HTL has occupied the property; 2) a land exchange “in lieu of paying the state money it owes for back rent deprives OHA of its 20 percent ceded land revenues mandated by state law;” 3) OHA generally opposes the giving away of ceded lands without its consent; and 4) if the exchange were to happen, the appraised value DLNR placed on the land was far too low. The DLNR valued the submerged lands – beachfront lands in a resort area – at $403,626, and $78,065 for the filled lands. The department also suggested discounting the value of the submerged lands by nearly 95 percent of their appraised value.
“This opinion is not supported by an independent appraisal and there is little or no justification for requesting a settlement of substantially less that the state is owed,” wrote Colin Kippen, OHA deputy administrator.
Christensen of NHLC agreed, telling the board that the staff proposal constituted a breach of its fiduciary responsibilities.
“The appraisal is not reasonable,” he said. “In the last two years, it is my understanding that the value of prime beachfront land has jumped tremendously. So you’re starting with what we see as an inadequate-at-the-time appraisal and now you’re coming at us with a lower appraised value at a time when the values of such land is going through the roof,” he continued.
“Furthermore, the new proposal comes up out of blue sky, apparently, with a 95 percent disutility factor to discount the value of submerged lands to virtually nothing. That’s quite frankly ridiculous…
“There is then the question of at least 12 years of back rent. In 1998, the state stated that the fair value for the rent would be some $39,000 a year. Thirty-nine thousand for twelve years is more money than the value the state is now seeking to accept in payment for the entire claim – both the back rent and the value of the land. Again, that’s ridiculous. It converts a cash receivable into a land exchange that somehow recognizes no cash income. This seems to be a subterfuge to evade the state’s obligation to pay 20 percent of those revenues to the Office of Hawaiian Affairs. It won’t fly,” he said.
Well, Land Board Colbert Matsumoto asked, what will fly?
“I would not say that a long-term lease at fair market value would be illegal with regard to the public trust doctrine,” Christensen said.
Johns still expressed confusion as to what Christensen, OHA, and Napeahi wanted. “Do you want us to get the back rent? Do want a long-term lease? Is that what you guys want?”
If the DLNR proposed something that satisfied his client, Mr. Napeahi, Christensen said, “I’d go away.” On the other hand, he noted, Napeahi might sue again if the department failed to proceed appropriately.
At the conclusion of the discussion, the board agreed to get Napeahi and Christensen’s input. Matstumoto moved to defer approving the exchange in principle, adding that a number of issues needed to be addressed and discussed with the attorney general.
State Wants to Raze Kiholo House Gained In Bakken Exchange
An exchange of land at Kiholo Bay, Hawai`i, between the state and Earl and Doris Bakken won the Land Board’s final approval on December 15. A year and a half after the Bakkens proposed the exchange, the couple now has a 9-acre piece of land to serve as buffer between the rear of their ocean-front estate and surrounding state land. Their plans call for building a caretaker’s cottage on the site.
In return, they have given the state a three-acre, oceanfront residential property that was once owned by country singer Loretta Lynn with a striking round house built by her husband. The state says it will use the land as a park reserve. But while many of the people interested in having the state acquire the Lynn property see the house as a desirable amenity – it could be used as an interpretive center, for example, or caretaker’s house – the Division of State Parks and the Hawai`i District Land Office see it as only a liability that should be torn down.
As a result, the Bakkens have agreed to remove the Lynn residence within two months from the date of execution of the exchange deed. Other conditions imposed on the exchange: Within one year of the exchange deed, the Bakkens must retore a trail that intersects an access road to the shoreline; they must install toilets and trash containers at the Lynn parcel and maintain them weekly until State Parks is ready to take over; and they must erect a sign on the highway indicating access to Kiholo Bay.
Even though the board approved the demolition of the Lynn house, it was with some reluctance on the part of Tim Johns. “I’m not sure we want to have [the house] removed just yet,” Johns said at the December 15 meeting. He then requested that before the house goes, staff should “come to the chair’s office” first.
— Teresa Dawson
Volume 11, Number 7 January 2001