In 2006, the Legislature required the Department of Land and Natural Resources to “provide an accounting of all receipts from lands described in Section 5(f) of the Admission Act for the prior fiscal year.” The lands described in that section are ceded lands, with the Office of Hawaiian Affairs entitled to a portion of the rents derived from them.
The total income, the DLNR reports, came to $116,385,148.77, with $11,089,142.86 of that paid to OHA. Neither the Hawaii Public Housing Authority nor the University of Hawaii submitted the requested reports, however.
Three agencies account for nearly 94 percent of the total income: the Department of Transportation’s divisions of harbors and airports, and the Department of Land and Natural Resources (in aggregate). Together, they pulled in $109.4 million in revenues from the use of ceded lands.
But just two agencies make up more than 95 percent of the amount OHA received: DOT Harbors accounts for 59 percent of the OHA revenue, the DLNR 36 percent. The DOT’s Airports Division reported it paid no part of its $40 million-plus revenues to OHA.
Incomplete, Inconsistent
In an effort to establish some sort of uniform accounting among the diverse agencies involved, the DLNR and the Department of Budget and Finance last August distributed a spreadsheet template that was to be used when the agencies submitted their reports to the DLNR. As required by Act 178, the agencies were to identify by tax map key number or other means the specific lands that generated the revenue.
The response was mixed, to judge by the spreadsheets that the DLNR Fiscal Office attached to its report to the Legislature. Many of the reporting agencies, including some within the DLNR itself, omitted specific property identifications. Most notable in this respect is the spreadsheet offered up by teh DOT Harbors Division. The revenue-generating lands are identified only by a three-digit code; no key is given.
The DOT reports have at least the virtue of being presented in concise, summary form. Receipts from the different facilities are summed up, with the totals from each separate facility being entered as a line item. This is the pattern followed by most of the other agencies, including the Department of Agriculture, the Agribusiness Development Corporation, and the Hawai`i Community Development Agency, the Hawai`i Housing Finance and Development Corporation, and the Foreign Trade Zone, all of the Department of Business, Economic Deelopment, and Tourism.
Not so with the DLNR’s reporting divisions (Boating, Forestry and Wildlife, Land, and State Parks) or the Natural Energy Laboratory of Hawai`i Authority (NELHA). In these cases, the agencies performed a data dump.
NELHA’s spreadsheet runs to some 35 pages and includes more than 9,000 separate ledger entries. Every single payment received by the agency — whether for purchase of deep seawater, reimbursement of electric charges by tenants, or rental of the NELHA conference room — is itemized. NELHA’s gross revenues of $2,767,118.85 represent just 2.38 percent of the total income from ceded lands; its payments to OHA of $191,182.85 are 1.72 percent of the total OHA share.
The DLNR’s spreadsheet, with nearly 30,000 separate entries, would run to more than 1,000 pages if printed out. Entries for the Division of Boating alone number nearly 9,000. The Land Division lists more than 10,000 individual entries.
Land, Boating, and State Parks entries generally provide adequate identification of the area where the revenue was generated. Not so for the more than 500 entries on behalf of the Division of Forestry and Wildlife. The identification of land for most of the entries for DOFAW is given simply as “non-land,” even though OHA receives a portion of the revenues generated. (Most DOFAW revenue comes from the commercial users of state trails, although $45,000 of the more than $166,000 in reported DOFAW income was paid by Tradewinds, the company that has the license — as yet unused — to harvest timber from the Waiakea Forest Reserve. Twenty percent of that, or $9,000, was transferred to OHA, although the column where the land generating the revenue was to be identified is filled in as, again, “non-land.”)
And Imprecise
The DLNR Fiscal Office saw its budget bump up by $250,000 last year to help offset the costs of preparing the report. Even so, the DLNR issued a disclaimer about the report’s reliability.
“Responsibility for the accuracy of individual transactions continues to rest within each agency’s jurisdiction,” the report states. “Verifying the accuracy of such transactions was beyond the scope of the specified tasks prescribed in Act 178. Similarly, the confirmation of trust land status for each parcel was not conducted as part of this report.”
Still, the report gives an impression of precision, with down-to-the-last penny calculations of revenues and payments to OHA.
In the case of the summary spreadsheets, such as those provided by the Departments of Transportation and Agriculture, it is impossible to know how the totals given were calculated.
But in the case of the DLNR spreadsheets, the world can see just how fraught with vagaries the accounting process can be. The Division of Boating entries show dozens of “corrections” to daily reports. Anyone who has ever cashed out a business at the end of the day knows you can’t just tell the boss how much you’re short; you need to reconcile the recorded receipts with actual cash. If there’s no match, you cannot simply fudge the books by making an adjustment — which is exactly what DOBOR appears to have done repeatedly.
A number of other discrepancies appear in DOBOR’s accounts. Payments for accounts in one small-boat harbor show up in the receipts of other small-boat harbors. For exampl,e hte Honokohau Harbor receipts include payments identified as being made by users of Ala Wai, Ke`ehi, Puako, and Keauhou facilities. Ke`ehi and O`ahu South Shore show up in the Kailua-Kona pier records, as do Port Allen (Kaua`i) and Kawaihae (Big Island).
Most puzzling of all the DOBOR entries is the credit of $929, identified simply as “variance with Leroy’s report.”
OHA Response
The Office of Hawaiian Affairs responded to the report in late January In a letter to Peter Young, director of the DLNR, OHA administrator Clyde Namu`o outlined five specific “concerns and questions” that his agency had about the report.
First, there was the issue of the reliability of the data presented: “without any method for ensuring accuracy and reliability, the report is of limited utility to all state agencies (including OHA) and the Governor,” Namu`o wrote.
Namu`o also expressed concerns over the failure of the UH and teh Hawaii Public Housing Authority to submit reports; the lack of any discussion as to how the departments determined what lands they used were ceded; and the calculations of revenue and determination of amounts owed to OHA, with the range of percentages running from 0 to 17 percent.
“We want to be as patient as we can be in giving the DLNR time to come up to speed in terms of how they account for all the funds that were collected,” Namu`o told Environment Hawai`i. He noted that the DLNR did not want to take on the assignment and opposed the legislation last year. But, he continued, “OHA felt we needed to identify one state agency that we’d hold accountable for collecting information on ceded lands revenue. The Legislature agreed with us that the DLNR would in fact be that agency.
“Although we haven’t gotten everything in the format we’d like, we do understand everyone is in transition in terms of reporting this information. We’re hopeful that next year we’ll have a better reporting method for the DLNR to follow.”
– Patricia Tummons
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