The private operators of a state-owned boat harbor in Kakaako have prevailed over allegations they tried to evict two low-income tenants to boost profits.
An arbitrator is recommending to a state agency that it allow the eviction of one tenant from Kewalo Basin where boat slips close to new luxury condominium towers are in high demand.
Wayne Nasser, an attorney with local law firm Ashford and Wriston, was hired by the state to conduct a quasi-judicial hearing over the complaints. He found that developer Howard Hughes Corp. and its contractor, Almar Management Inc., which runs the harbor, didn’t discriminate against the owner of the 82-foot sailboat Emeraude II.
Nasser also suggested the boat’s owner, Golden Eagle Marine Charter Services Corp., had been storing a noncommercial vessel in the commercial boat harbor for decades under lax state oversight.
Almar did not respond to requests for comment on Nasser’s findings.
Hughes Corp. said in a statement that all boat owners at Kewalo are treated equitably.
Chris Muzzi, an attorney representing Golden Eagle, said his client intends to appeal the decision to state court if the Hawaii Community Development Authority, which owns the harbor, accepts Nasser’s findings.
Golden Eagle was one of two small businesses that filed complaints against Almar and Hughes Corp. in 2017 after receiving audit requests and eviction notices for their boats, which occupied slips along the harbor’s front row.
Texas-based Hughes Corp. is developing the high-rise residential community Ward Village mauka of the harbor.
The HCDA leased the 144-slip harbor to Hughes Corp. for 45 years in part to privatize costly repairs. The state agency agreed to hold contested case hearings over the discrimination cases in which it was also alleged the private managers lacked state authority to cancel slip permits and had singled out the two boat owners because they are women.
Golden Eagle and the owner of a 64-foot fishing and dive boat named Queen of the Ring contended their six-passenger boats paid relatively little rent based on revenue, and that harbor management initiated audits and eviction proceedings in an unprecedented and unlawful attempt to free up prime slips for higher-paying boat owners.
“Almar is discriminating against vessels that can only carry six passengers in an attempt to increase their profits at the expense of existing small business permittees,” the complaints said.
Queen of the Ring’s owner, S.O.M. LLC led by Joan Joyce, withdrew its contested case petition because of litigation costs, Muzzi said. The boat was sold and the new owner obtained a permit for a different slip at Kewalo, he added.
Golden Eagle’s case was conducted with witness testimony during two days in August, and closing arguments were made in September. Nasser submitted his findings to HCDA in November, but the agency only recently asked its board to consider adopting the findings.
Nasser’s report said Golden Eagle could provide no documents that showed Emeraude II was used for commercial purposes, and that it appeared the sailboat hadn’t left its slip since 2016.
“Petitioner’s witnesses could not recall the last time that Emeraude II left slip FS on a commercial charter cruise,” the report said, noting the boat has been at Kewalo for more than 20 years.
State rules reserve the Kewalo harbor for commercial boats, including vessels used for tours, charters and commercial fishing. Leisure vessels are allowed only if no commercial boat operators are interested, though Nasser’s report said there’s an “acute shortage” of commercial berths.
John Courter, ex-husband of Golden Eagle President Laurie Bakke, testified that a Canadian citizen named Douglas Engle had a verbal “bare boat” charter agreement — meaning for the boat only, without a crew — with Emeraude II since 2014 to pay the boat owner $2,492 monthly in cash in Washington state, where Golden Eagle is based, the report said.
This revenue, used to calculate slip rent, is slightly more than the minimum required by state rules and was deemed by Nasser as suspicious.
“It did not appear credible that Engle would pay almost $60,000 in cash over a two-year period for a bare boat charter and not take the vessel to sea,” the report said.
Nasser also reported that Golden Eagle had been chronically late submitting revenue reports over at least three years, and that harbor master John Eveleth of Almar decided to audit Golden Eagle because of suspicious revenue reports and an offer of audit services from Hughes Corp.
Nasser recommended giving Golden Eagle 60 days to remove Emeraude II from the harbor. HCDA’s board deferred a decision on whether to adopt the recommendations at a meeting earlier this month. A decision could be made at an April board meeting.
