State lawmakers will be meeting before long to face the usual headaches of squaring Hawaii’s mounting expenses with available revenues, an enterprise that always includes a search for new sources of money.
If the state is to avoid saddling taxpayers with more of the burden, one approach has got to be making the most of the capacity for raising cash that the state already has. In monetizing valuable state-owned properties through revocable permits and long-term leasing, the state Department of Land and Natural Resources is falling well short of expectations.
The issue of how DLNR is handling the state’s valuable assets touched off a three-part series last week by Honolulu Star-Advertiser writer Rob Perez.
There are sweet deals in how businesses and individual lessees have been using some of the state’s properties, paying substandard levels of rent or even no rent at all. And in other cases, experts say, opportunities were lost because the properties were not marketed efficiently or well.
Finding ways to improve this situation should be an imperative for DLNR, and for the Legislature when it convenes in January. There may be changes in statute required to optimize the agency’s operations, and those could be uncovered through an informational briefing.
This could pair with guidance derived from the Office of the Auditor, which already has been enlisted in an audit of the agency’s Land Division.
For its part, DLNR is not identifying any performance-improvement pathways. In a written response, signed by DLNR chair Suzanne Case, the agency “has in fact taken strong actions in support of the public trust.
“With limited resources, many conflicting opinions and complex public fairness processes, DLNR must prioritize actions,” Case wrote (for more, see dlnr.hawaii.gov/newsroom/faqs/public- trust-responsibilities).
Yes, resources are limited, but there are too many examples of lost potential to rate all of them as second-priority matters:
>> At Honokohau Small Boat Harbor, business operators who pay for mooring permits have been able to use small areas of state land along the shoreline where they have built support structures or pavilions without paying rent for those add-ons. Only one permit-holder also has a written agreement with DLNR to use the land.
DLNR responded that the harbor was built by the Department of Transportation with piers but no sun shelters, and the permittees built the structures at their own cost. This does not, of course, account for the considerable value of the land, for which rent should have been collected.
>> Around the time of the recession a decade ago, when government agencies desperately needed more revenue, DLNR identified 14 properties as having the best income-generating potential. Among these was the Mill Town Business Park in Waipahu.
Because of the way the six parcels were initially packaged — two lots of three contiguous parcels each — these properties are still vacant, the only unoccupied parcels among the 52 in the business park. The individual parcels are now appraised separately, but interest has waned. The state missed prime time for the best deal, in other words.
To this the department asserts that “multiple attempts” to auction the property were made, adding that a consultant has been retained to advise on revisions needed to secure a tenant. The point is, why has it taken so much longer than for anyone else in the business complex to achieve success?
>> Landscape Hawaii, a tenant on state property in Waimanalo, stopped paying rent over a lease dispute in 2007. But DLNR did not seek to cancel the lease for five years, only to be told by the Board of Land and Natural Resources to work out an agreement instead.
It wasn’t for another five years that the board authorized a final 60-day negotiation term before lease cancellation. Talks ended, as DLNR pointed out, with an accord requiring payment of penalties, interest and back rent.
Still, there’s no excuse for allowing a tenant to slide for a decade before getting the problems squared away. This is not efficient management, to say the least.
Perhaps the most disturbing aspect of all of this is the agency’s reluctance to acknowledge any failings in its operation — even when its own staff pointed them out, concerns that were largely dismissed.
These employees sounded alarms in 2012 and 2013 about the department’s property rental program, pointing to rents that were substantially below market rates. There were hugely discounted rents that went unchanged, in some cases, since the 1990s.
DLNR is certainly not alone among state agencies with a less-than-stellar record of property management, as Perez’s earlier chronicles of similar revocable-permit irregularities in the Department of Hawaiian Home Lands documented.
But in a state where land is so valuable, it’s irresponsible to let such ineffectual management persist. Problems will require time to correct, but that process must start now, before taxpayers lose much more return from their public assets.