Under the state’s leases with the Natural Energy Laboratory of Hawai’i Authority, the Board of Land and Natural Resources is to approve subleases of land to tenants. In addition, royalties on income received from tenants are to be waived, but only on submission of regular statements of gross receipts.
On both counts, NELHA appears to have been in regular violation.
Subleases
“The lessee shall not rent or sublet the whole or any potion of the demised premises, without prior written approval of the [BLNR].” This section is included in both of NELHA’s leases with the BLNR and appears to have been violated innumerable times for over a decade.
For its smaller, research tenants, NELHA does not issue subleases but rather allows occupancy based on what are called Facilities Use Agreements (FUAs) and Facilities Research Agreements (FRAs). These are short-term agreements and usually cover users of an acre or less.
On December 20, 1985, the Land Board authorized a FUA between NELHA (then NELH) and West Coast Lobster Company, Inc. and authorized the BLNR chairperson (then Susumu Ono) to approve future FUAs that involved occupancy of land for a year or less.
After this decision, the NELHA board has approved many FUAs for small research/demonstration projects, most of them without BLNR approval.
The small number of tenant agreements filed at the Big Island and O’ahu DLNR offices compared to the long list of tenants and research projects in NELHA’s annual reports indicates that many FUAs and FRAs were entered into throughout the 1990s without the BLNR’s knowledge.
Until this year, the NELHA Board has approved such agreements, but recently, this practice has come under fire by the deputy attorney general assigned to advise NELHA. At the NELHA Board’s meeting of July 22, 1997, minutes state, deputy attorney general Guy Archer “noted that NELHA still needs BLNR approval on everything. FUAs and FRAs are all rental agreements and these are valid. Staff is in the process of putting together a package for BLNR approval and will encourage them to accept FUAs and FRAs with short terms.”
At its August 19, 1997, meeting, the NELHA board discussed an option agreement with new tenant Big Island Abalone. As the minutes state, Archer noted that if NELHA is going to give an interest in land they have to go back to the BLNR. “If they are only doing an executory type of contract, such as an agreement to lease land in the future or a right of first refusal type option, then NELHA can go forward in that direction.”
According to Tom Daniel, scientific and research manager at NELHA, someone – either the attorney general or DLNR – has recently decided that what the NELHA board has been doing over the past ten years is illegal. Currently, the Big Island’s Land Division Administrator for the DLNR, Charlene Unoki, is trying to compile a list of research projects that have come and gone without BLNR approval.
Royalties Violations
On May 19, 1997, Unoki wrote her supervisor, Dean Uchida, administrator of the DLNR’s Division of Land Management, notifying him of several apparent violations of NELHA’s two leases: S-4717 for the NELH and S-5157 for the HOST Park. One violation in particular spans a decade.
The terms of the lease S-4717 state that the DLNR would waive payment of royalties provided that the lessee submit statements of gross receipts.
“Are you folks planning to do something with this lease (S-4717) and General Lease S-5157?” Unoki wrote. “We need to check if these leases are in compliance regardless if they are a government agency. This tenant is missing a performance bond, [has] no liability insurance, and hasn’t been submitting Statements of Gross Receipts since 1987.”
Unoki was not the first to notice these lacks. In June 1996, Daniel received a letter from Sam Lee, then with the Hilo Division of Land Management, requesting the missing financial statements.
NELHA “has no personnel available to prepare this documentation,” Daniel responded. However, a month later, the DLNR received the list of three statements from NELHA accountant Sheryll Kaniho.
Volume 8, Number 5 November 1997
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