Hilo mall lease in limbo

A requested 40-year lease extension for Prince Kuhio Plaza is on hold for now.

The extension, which if granted to the mall, a subsidiary of Brookfield Properties, would extend the lease of 39 acres of Hawaiian homes land in Hilo from its current end date of Sept. 30, 2042, to Sept. 30, 2082.

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The matter was on the Hawaiian Homes Commission’s meeting agenda the past two months and received the most testimony, mostly negative, of any agenda item at the October meeting in Hilo on Oct. 17.

The lease is not on the agenda for this month’s meeting, scheduled for Monday on Maui.

“The commission conferred with the attorney general’s office in October following a letter from the Department of the Interior,” Department of Hawaiian Home Lands spokesman Cedric Duarte said in a Friday email. “DHHL is continuing discussions with the DOI to address their concerns on the proposed lease extension.

“All parties are seeking an appropriate way to maximize the 1% of the DHHL’s land inventory that is used to generate revenue for the trust. Seeking the highest and best use of these lands so there are funds available to build more homestead lots is a shared goal, oversight on these types of land dispositions is a part of the process.”

The letter Duarte referred to, dated Oct. 13, was from DOI Solicitor Robert Anderson to state Attorney General Holly Shikada and said the feds have “significant concerns” about her office’s position that the DHHL can use Act 236 — a law passed in 2021 that authorizes the Board of Land and Natural Resources to extend certain leases for public lands for commercial and other uses for up to 40 years — to justify granting the lease extension.

Anderson said the concern is that “any actions by the Hawaiian Homes Commission to grant extensions of commercial leases of Hawaiian home lands pursuant to Hawaii Act 236 … violate federal law and constitute a breach of trust by the state.”

“Paramount to the limitations imposed on the state’s management of Hawaiian home lands is the prohibition against increasing encumbrances on Hawaiian home lands without congressional approval,” the letter states. “Act 236, as the state acknowledges, would have the effect of authorizing DHHL and the commission to increase encumbrances on Hawaiian home lands. Accordingly, Act 236 must be reviewed by the (DOI) secretary and approved by Congress.”

Patrick Kahawaiola‘a, president of the Keaukaha Community Association, said he’s “glad” the commission took the lease extension request off the agenda.

“That letter from the solicitor was one of the first times I’ve heard them say, ‘You do that, it’s going to be breach of trust,’” Kahawaiola‘a said.

Daniel Kea, Prince Kuhio Plaza’s general manager, told commissioners during their Sept. 19 meeting on Maui that the extension is important “to do more investment on the property.” Kea said that large retailers “want to amortize” the cost of improvements, which are usually in the millions, over multiple years.

“With a limited lease, we’re not able to do that, which is why we’re asking for the 40-year lease extension,” he said.

Kea said the current total annual lease rent of the mall, which is a little over $841,000, “represents 10% of the income generated for DHHL on Hawaii Island.”

David Kauila Kopper, litigation director for the Native Hawaiian Legal Corporation, urged the commission during the October meeting not to extend the lease. Kopper pointed to a clause in the last lease extension, granted in 1992, that extended the mall’s lease from 2030 to 2042. The clause states: “No further extension of lease term shall be considered.”

Kopper opined during the meeting that clause in the lease would preclude any extension.

When asked about that clause last week, William Aila Jr., DHHL/HHC chairman, replied, “The Hawaiian Homes Commission has sole discretion on the disposition of Hawaiian Home Lands to make decisions on its highest and best use to generate revenue for homestead lot development.”

Kahawaiola‘a said the lease matter should be deferred until Governor-elect Josh Green appoints his own DHHL/HHC chair.

Kaui Almeida, president of the Panaewa Hawaiian Home Lands Community Association, requested during the October meeting that the matter of the lease “be tabled pending consultation with the beneficiaries, especially of our community.”

“No to the extension of this lease. That’s my bottom line,” Almeida told the Tribune-Herald on Friday. “I don’t believe that Hawaiian Homes should fall under (Act 236). Hawaiian Homes is a completely different animal. Now they have to go through consultations with the Department of the Interior, and that’s how it should be.

“… We’ve never had a chance to sit at the table with DHHL in determining what our community should look like. These lands that have been provided by Hawaiian Homes for mercantile (use) are basically for Native Hawaiians. All the lands under (the Hawaiian Homes Commission Act) are for Native Hawaiians … and there’s, like, 28,000 on the wait list (for a homestead).

“None of them have businesses? … They do.”

Email John Burnett at jburnett@hawaiitribune-herald.com.