The chairman of the Hawaiian Homes Commission last month told the manager of Prince Kuhio Plaza that if a 40-year lease extension the mall is seeking is to be granted, PKP and its parent company, Brookfield Properties, will have to improve its benefits package for Native Hawaiians.
The lease extension request has been in limbo since an Oct. 13, 2022, letter sent by U.S. Department of the Interior Solicitor Robert Anderson to Holly Shikada, then the state attorney general.
The letter said the feds have “significant concerns” about the state’s position hat the Department of Hawaiian Home Lands can use Act 236 — a state 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.”
“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,” Anderson’s letter said.
However, the lease renewal was included in the agenda for last month’s Hawaiian Homes Commission meeting in Kona as a “for information only” item.
It came out during discussions between commissioners that Act 236 and the proposed lease extension was discussed extensively during an executive session between the commission and the office of Attorney General Anne Lopez, and both sides are still entrenched in opposing views of whether the state has the authority to extend DHHL leases under the law signed in 2021 by then-Gov. David Ige.
The extension, which if granted to the mall, 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.
The current total annual rent is $841,100.47, which includes base ground rent of $292,792.50, additional ground rent of $420,867.97 and rent for an a separate 5.25 acres of parking of $127,440.
Daniel Kea, PKP’s general manager, told commissioners on May 21 as he did in October 2022 that the mall needs the longer lease term to better finance renovations and to attract tenants.
“It’s very difficult for us to continue leasing and to be doing capital improvements based on the short term …,” Kea said. “We’ve already done about $19 million in the past four or five years, and our plan is to do about $14.5 million more in improvements to the property and stuff. But a lot of that is hindered now because of working on the financing of it. That’s actually why we’re asking for this lease (extension), so we can extend out some of those projects, to amortize those projects, as well as generate long-term leases to generate more revenue for the property.”
Kali Watson, Hawaiian Homes Commission/DHHL chairman, told Kea he understands the need to amortize improvements, but then asked, “What, if any thoughts, have you guys given towards the benefits package to the Native Hawaiians?”
Kea said he and his management team are “currently in discussion with the Native Hawaiian Chamber of Commerce, working with them toward doing some sort of pop-up makeke thing within the mall.”
“But from a corporate standpoint, I was actually working with our team to come up with a benefit package. One of the things I had suggested would be to help with the Kamoleao project for the Panaewa association and to clear the area,” he said. “I know they have long-term plans to build a cultural center, and we’re hoping to be able to help in that endeavor, as far as to help them clear that area for them. But I’m still working with my corporate on creating that package and what it would look like.”
Kahana Albinio, acting administrator of DHHL’s Land Management Division, told Watson that Kea’s original presentation in 2022 had a PowerPoint presentation with “some direct benefits to DHHL beneficiaries, one of them being annual payments of $100,000, another one designating space and usage in the mall for beneficiaries. Another one is Makaala (Street) egress improvements.”
Kea also told Watson, in response to a question, that less than 5% of the mall’s tenants are Native Hawaiian-owned businesses.
“Three, I know for sure are beneficiaries,” he said. “The others, I do not know for sure. I know they’re part Hawaiian, but I couldn’t tell you if they’re beneficiaries.”
“We’re going to need a lot more details and concrete efforts on your part,” Watson replied. “I know you want an extension, and I think we have a commission that’s very sensitive to the Native Hawaiian beneficiary package. You’ve got to strengthen that, because what I’m seeing now is not very impressive. So, if you want an extension, I think you guys should really, really put a lot of work into that.”
Kaui Almeida, president of the Panaewa Hawaiian Home Lands Community Association, testified that her organization wants to “repurpose” the mall site “or community use of that property.”
“Currently, when you look at the plaza, it’s run-down,” Almeida said. “… We want our community to look like how we want to see our community. And so, we want to be afforded an opportunity to come up with a plan. The reason why is we studied malls across the United States and across the world. Online services is the way to go now. What you see going on with the Prince Kuhio mall is exactly what’s going on across the whole United States.”
Noting the legal loggerheads between the DOI and the state, Patrick Kahawaiolaa, president of the Keaukaha Community Association, suggested a motion for declaratory judgment “should quickly be filed to see if, in fact … that state can do what it says it can do and/or the Department of the Interior prevails.”
Such a court judgment is binding and can immediately resolve uncertainties as to the legal obligations or rights between two parties.
Email John Burnett at jburnett@hawaiitribune-herald.com.
