On April 13, 1995, the state Board of Land and Natural Resources awarded a lease of almost 10 acres of land to Maurice M. “Mutts” Matsuzaki and his wife, Winona. Until this year, Matsuzaki had been chief of the Department of Land and Natural Resources’ Division of Conservation and Resource Enforcement.
Matsuzaki did not receive the lease through the normal bidding process. Rather, the Land Board approved the assignment of the lease to Matsuzaki from the prior lessee, Servco Pacific, Inc. Servco Pacific, in turn, acquired the lease when it bought out Evergreen Nurseries in 1979. Evergreen had itself purchased the lease from the original lessee who successfully bid for what was a 20-year lease in 1963.
In 1977, Evergreen received Land Board approval to extend the lease an additional 10 years (that is, to 1993). In 1988, however, Servco informed the DLNR’s Division of Land Management that it would need a longer lease on the land so that it could obtain long-term financing for construction and repair of greenhouses, used by Servco to grow ornamental plants for export out of state. In February 1988, the board approved a second extension, this time for 25 years, so that the lease’s new expiration date was set at December 1, 2018.
In 1990, Central Pacific Bank issued a $173,200 loan to Servco.
Withdrawal
In August 1994, Cecil Santos, O`ahu District land agent for the Division of Land Management, put Servco on notice that it had not complied with the lease requirement that it prepare a “Development Plan.” Although the lease was more than 30 years old at this point, Santos requested that the plan be submitted within 90 days of Servco’s receipt of his letter, dated August 11.
In reply, Carol K. Lam, senior vice president of Servco Pacific’s properties operations, informed Santos on September 23 that Servco’s Evergreen Nurseries division “has closed its business as of June 30, 1994.”
“We have had some discussions with parties that may be interested in taking over the lease,” Lam continued. “Therefore, at this time, the Development Plan would need to be deferred until a determination is made on the assignment of our lease.”
In early October, Servco’s Lam gave formal notice to Mason Young, DLM administrator, of the closure of its operations on not only the 10-acre lease, but also an adjoining 4-acre parcel leased from the state. After explaining the ups and downs of the foliage market on the mainland, Lam asked “for the state’s consideration in taking back General Lease No. S-3754,” the lease covering the smaller parcel. With respect to the larger lease, S-3773, Lam wrote, “We were just recently contacted by a party that may be interested in taking over our lease. While we are currently working with this party, if we are not able to reach an agreement, we will also be requesting the state’s consideration in returning this lease to the state based on economic hardship.”
‘A Deserving … Couple’
DLM Administrator Young informed Lam, by letter dated November 29, 1994, that his division would recommend that the Land Board approve assignment of the leases, should Servco be able to find a taker. “Now that the nursery and landscaping business on O`ahu has slowed down it is a good opportunity for individual farmers to acquire a state agricultural lease at a price that they can afford,” Young wrote. “It is a good opportunity for young couples who want to get into agriculture to get established. We sincerely hope that the assignees or bidders are able to take advantage of this opportunity to acquire a state lease at an affordable price and start their career in agriculture. We will be very happy to transfer this leasehold to such a deserving individual or couple.”
No further discussion of the assignment of the lease appears in the lease file until March 23, 1995. On that date, Lam wrote to Cecil Santos, in a letter hand-delivered the next day, to inform him of the fact that Servco had already assigned the lease to Matsuzaki. Attached to the letter was the completed agreement, which had been signed by the Matsuzakis on March 9.
According to Lam, “the Matsuzakis have agreed to pay to Servco Pacific $65,000 for the improvements on the property, which consist of a residential dwelling (2 bedrooms/1 bath/with 2 car garage), an office, and greenhouses with approximately 140,000 square feet under shade. We feel that the $65,000 is far below the value of these improvements, however, Servco accepted this offer in order to expedite the final closing of the Evergreen Nurseries’ operation. Based on the City and County’s assessment of the property for 1995, the improvements have been valued at $212,400.”
DLM Administrator Young told Environment Hawai`i that this letter was the first notice his office received about Matsuzaki’s interest in the lease.
Greenhouse Gifts
Although Servco had taken out the long-term loan of $173,200 in 1990 for improvements to the land, Servco did not ask the Matsuzakis to assume the mortgage, as frequently occurs in lease assignments. Rather, Servco paid off the balance owed to Central Pacific Bank in January 1993. Thus, Matsuzaki’s obligation under the lease, now unencumbered, consists of nothing more than payment of the $4,152 annual lease rent ($346 per month) and taxes on the property.
Young was asked whether it was unusual to have the Land Board be asked to approve an assignment of lease after the fact. Not at all, he said. “It would have been unreasonable for the board to withhold consent,” he said. The lease allows for assignment in the event of economic hardship, he added — and in this case, Evergreen Nurseries was demonstrably facing economic hardship.
Finally, Young was asked if Matsuzaki had submitted the long overdue development plan. No, not yet, Young said, but Matsuzaki would be required to do so.
Not Advertised
How did Maurice Matsuzaki learn of the availability of Servco’s lease? Carol Lam of Servco could not say exactly. People learned of the availability of the lease “mostly by word-of-mouth,” she told Environment Hawai`i. Inquiries were received from a number of people, including several who had heard of the lease through the Division of Land Management, she said. Also, word got out in the Waimanalo area, prompting additional calls, according to Lam.
Several interested parties were taken to the site, but Matsuzaki was one of the few who made an offer, Lam added. When asked whether Servco negotiated a sales price for the lease with Matsuzaki, Lam said she did not know how to answer. “I did part of it,” she said, referring to the lease assignment, “but others were involved, too.” They were not identified.
Matsuzaki, who has an unpublished listing, could not be reached for comment.
One of Servco’s executive vice presidents is Moses Kealoha, a former Land Board member. Matsuzaki also has had ties with former Land Board member Larry Mehau. According to a report by James Dooley in the Honolulu Advertiser of May 6, 1979, Matsuzaki, then the chief enforcement officer for the DLNR’s Fish and Wildlife Division, also worked at the time for Mehau’s security firm, Hawai`i Protective Association. HPA had the contract for security at the Honolulu airport, Dooley wrote, and Matsuzaki was HPA’s night supervisor of personnel there.
On the Record
The assignment of the Servco lease to Matsuzaki, approved by the Land Board on April 28, 1995, has not been recorded at the Bureau of Conveyances. However, Matsuzaki’s name appears in other contexts.
On May 4, 1994, a court judgment of $18,172.03 was made against Matsuzaki. In that case, his former girlfriend, Janet Robinson, claimed Matsuzaki owed her more than $13,000 for a used car she had purchased in 1991 for one of Matsuzaki’s sons. In a deposition, Matsuzaki said he thought the car had been a gift until Robinson presented him with an IOU about six months later. Matsuzaki signed the IOU, but claimed he did so under duress and out of fear. He lost the case.
In December 1994, Matsuzaki signed as co-borrower on a $220,000 mortgage issued to his wife. The mortgage covers the purchase of the fee simple interest in property in Waipahu where Mrs. Matsuzaki had been living since the mid-1970s. Signing the deed conveying the property to Winona Matsuzaki were trustees of the Robinson Estates, including former Land Board Chairman William W. Paty.
— Patricia Tummons
Volume 6, Number 1 July 1995
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