Despite pressure to abandon their practice of renewing revocable permits (RPs) every year with little to no review or rent adjustment, the state Department of Land and Natural Resources (DLNR) and its board last year settled for incremental progress, as the latter, once again, renewed hundreds of Land Division permits, this time with just a slight uptick in rent. <\/p>\n\n\n\n
In February 2016, spurred by a series of critical articles by the Honolulu Star- <\/em>Advertiser<\/em>\u2019s Rob Perez, as well as concerns\nexpressed by members of the public and the\nLand Board itself, the DLNR formed a task\nforce to evaluate how it renews its month-\nto-month RPs. Those concerns focused\nmainly on stagnant rents and the failure\nto evaluate whether environmental reviews\nwere required for the uses to which the land\nwas being put or whether the permits should\nbe converted into some kind of long-term\ndisposition, such as a lease or easement.\n<\/p>\n\n\n\n As the Land Board\u2019s discussion of the Land Division\u2019s annual permit renewals late last year revealed, raising rents to market value and transitioning permits to long-term dispositions or to other state agencies has been problematic, to say the least. <\/p>\n\n\n\n \u201cWe\u2019ve said all this time, and continue to say, we have leftovers and remnants\u2014stuff no one else wants,\u201d DLNR Land Division administrator Russell Tsuji told Environment Hawai\u2018i<\/em>. The state Departments of Education, Transportation, and Agriculture, as well as the University of Hawai\u2018i and Agribusiness Development Corporation, \u201ctook the good lands and left us with what [the] Land [Division] has,\u201d he said. <\/p>\n\n\n\n Rent<\/em><\/strong> <\/p>\n\n\n\n Earlier this year, the Land Board debated whether or not it should send to public hearings rules proposed by the DLNR\u2019s Division of Boating and Ocean Recreation that would vastly increase mooring fees at the state\u2019s small boat harbors by setting them at market value, as required by the state Legislature. While the board as a whole voted to send the rules to public hearings, two board members opposed the idea because they believed the fee hikes\nwere too great.\n<\/p>\n\n\n\n There is no similar mandate to set rents for revocable permits at market value. Even so, in 2013, the DLNR\u2019s Land Division obtained a preliminary appraisal of its 350 RPs, which estimated that the rents being charged were 1,000 to 4,000 percent below market rent. A more recent evaluation of the 247 permits deemed worthy of appraising also found that, with a few exceptions, the division was under-charging permittees, but\nto a smaller extent \u2014 seven to 1,000 percent\nbelow market rates.\n<\/p>\n\n\n\n According to DLNR responses to questions Perez posed last year, the difference between the 2013 and 2018 appraisals is that the latter factored in the short-term tenancy and use restrictions in determining market rent. <\/p>\n\n\n\n While state law does not require the DLNR to charge market rent for the permits, rents charged and conditions imposed on permittees do need to serve the best interests of the state. With that in mind, the Land Division proposed marginal rent increases \u2014 either three or ten percent \u2014 from 2018 to 2019. <\/p>\n\n\n\n In its reports to the Land Board, the division explained that it was not implementing the recommended market rents because that might spur permittees to abandon their permits, \u201cresulting not only in the loss of revenue, but also forcing the division to expend resources to maintain these lands.\u201d Rather, the incremental increases would achieve rents closer to market value without causing any major disruptions, the division stated. <\/p>\n\n\n\n Board member Keone Downing asked staff whether they thought the division would reach market rents in ten years with the incremental increases. <\/p>\n\n\n\n \u201cUnfortunately, we\u2019ll probably have to do this [again] in five years. The increases that the appraisers gave us, they said three percent a year for next five years,\u201d the division\u2019s Richard Howard replied. <\/p>\n\n\n\n \u201cWe\u2019re going to appraisers to get things\nwe\u2019re scared to charge the people. So why do\nwe go to appraisal?\u201d Downing asked.\n<\/p>\n\n\n\n \u201cWe have to know what market is. … It\u2019s\ngood to know. I don\u2019t think it\u2019s possible to\nincrease someone\u2019s rent by 90 percent and\nexpect them to remain on the property,\u201d\nHoward replied.\n<\/p>\n\n\n\n At a later meeting, Downing questioned\nthe division\u2019s Kevin Moore why it chose to\ncap its rent increases at 10 percent, especially\nwhen the recommended market rents were\nso much higher. \u201cHow did you get to 10?\nThe 10 could just as easily be 30. It wouldn\u2019t\nbe that much more,\u201d he said.\n<\/p>\n\n\n\n Moore replied, \u201cWe didn\u2019t want to go\nover 10 percent for fear of getting pushback\nfrom tenants … and being a burden for us\nto manage.\u201d\n<\/p>\n\n\n\n As a precautionary measure, the Land Board delegated authority to its chair to adjust the rents recommended by the Land Division. If those rents are implemented as approved by the board, the total increase this year over last year\u2019s rent will only be about $16,000, since O\u2019ahu\u2019s total rents decreased, while those for the other islands increased. The appraisal alone cost $500,000, according to division staff. <\/p>\n\n\n\n No Takers <\/em><\/strong><\/p>\n\n\n\n In addition to choosing to keep rent increases low, the division has tried only a handful of times since the 2016 task force report to find long-term tenants via public auction and has failed in a number\nof cases.\n<\/p>\n\n\n\n One of the main criticisms levied against the DLNR and Land Board has been that by simply renewing revocable permits year after year, they are creating de facto leases and denying opportunities for other interested parties to bid. <\/p>\n\n\n\n In testimony to the board, the Office of Hawaiian Affairs bemoaned the fact that no timetable had been established to convert some three dozen RPs to a long-term disposition, as recommended by the revocable permit task force. <\/p>\n\n\n\n \u201cNotably, many of these RPs involve\nparcels that have been continuously issued\nto the same permittees for years, if not\ndecades, and several have been approved\nfor conversion to leases since the 1990s\nor prior. Delays in the conversion of such\nRPs to longer-term, market value leases or\nsimilar dispositions accordingly represent\ncontinued lost opportunities to obtain a\nmore appropriate return from the private\nuse of public lands, including public trust\nlands whose revenues are subject to Native\nHawaiians\u2019 pro rata share,\u201d OHA wrote.\n<\/p>\n\n\n\n Division administrator Tsuji tried to explain to the board how some of the lands under revocable permit are undesirable. As an example, he noted that the division tried to auction off a parcel in Mapunapuna two or three times recently and got no takers. That parcel is notoriously vulnerable to flooding and even board member Sam Gon acknowledged, \u201cNobody\u2019s gonna want that.\u201d <\/p>\n\n\n\n Tsuji also complained that preparing to auction a parcel is expensive. \u201cBefore we go out, we gotta get it appraised. You spend money with package being publicized …\u201d he said. Tsuji added that compared to other agencies such as the Department of Transportation or Department of Agriculture, where parcels under their jurisdiction are contiguous, his division has \u201cone parcel here and there.\u201d <\/p>\n\n\n\n \u201cWhen [DOT] harbor guys lease out\nthe industrial [lots], they do one appraisal\nfor the whole area and charge pro rata per\nsquare foot. [For] every single one [of the\nLand Division\u2019s parcels], we have to do an\nappraisal,\u201d he said.\n<\/p>\n\n\n\n Board member Chris Yuen suggested that perhaps the division needed more flexibility in how it disposed of its lands. <\/p>\n\n\n\n \u201cWe really have two boxes: leases and the\nRPs. The leases are hard and the RPs are\nreally easy. Maybe we need another box,\u201d\nYuen said.\n<\/p>\n\n\n\n While revocable permits are not a \u201cfavored disposition,\u201d under state law, the bulk of the division\u2019s properties that are under RPs are not of great interest to anybody, he continued. <\/p>\n\n\n\n Yuen reminded the board of a couple of\npasture lease auctions the division did for\nHawai\u2018i island in recent years, which got\nonly one bidder. Another for an agricultural\nlot got none, he said.\n<\/p>\n\n\n\n \u201cWe\u2019ve haven\u2019t had rip-roaring success\nwhen we have gone out for public auction,\u201d\nhe said.\n<\/p>\n\n\n\n Board member Downing suggested\nthat the division forgo getting an appraisal\nand simply set the lease upset price at the\nrevocable permit rent.\n<\/p>\n\n\n\n \u201cWhat you\u2019re really trying to do is get at least RP price. If you used an appraised price, chances are you\u2019re not going to get anybody to bite,\u201d he said.<\/p>\n\n\n\n While Tsuji said that might not be a bad idea, he said the statute may require the division to get an appraisal. \u201cAnother idea, too, if we could do direct lease, it would make it so much easier. … Now [direct leases are] limited to renewable energy, non-profits,\u201d Tsuji said.<\/p>\n\n\n\n Yuen said that the laws governing how the division disposes of its lands are similar to the state\u2019s procurement laws, which are based on the suspicion that somebody\u2019s getting a special deal. \u201cThey wind up setting these very elaborate procedures that have had the result of not doing very many public auctions anyway. … Another kind of statutory procedure, with oversight, would help,\u201d he said. <\/p>\n\n\n\n Despite the difficulties the Land Division has had successfully auctioning a lease, board member Stanley Roehrig reiterated his concerns that so many of the RPs were several years old and suggested that the division redouble its efforts to secure long-term dispositions. <\/p>\n\n\n\n (For more background on this issue, see \u201cBoard Talk: Lack of Detail in Permit Renewal List Draws Fire from Public, Board Members<\/a>,\u201d from our February 2016 issue and \u201cRent, Subdivision Issues Confound Efforts To Fix DLNR\u2019s Revocable Permit Mess<\/a>,\u201d from our May 2016 issue.) <\/p>\n\n\n\n \u2014 Teresa Dawson\n<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" Despite pressure to abandon their practice of renewing revocable permits (RPs) every year with little to no review or rent adjustment, the state Department of Land and Natural Resources (DLNR) and its board last year settled for incremental progress, as … Continued<\/a><\/p>\n","protected":false},"author":1,"featured_media":11044,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[451],"tags":[3],"class_list":["post-11043","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-march-2019","tag-teresa-dawson"],"_links":{"self":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/11043","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11043"}],"version-history":[{"count":0,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/11043\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/media\/11044"}],"wp:attachment":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11043"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11043"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11043"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}