(BIVN) – The Senate Ways and Means Committee will hold a public decision making on SB3090 on Friday at the Capitol.
The controversial bill seeks to establish a new Mauna Kea Management Authority, wresting the responsibility away from the University of Hawaii which currently holds the BLNR-issued master lease for the summit area of the mountain.
A February 12 hearing on the bill before the Senate Water & Land and Higher Education Committees was marked by sharp questioning from Hilo State Senator Kai Kahele, who is pushing ahead with the legislation despite widespread opposition.
Meanwhile, other matters related to the mountain are being litigated. Two cases concerning the proposed Thirty Meter Telescope are set to go before the Hawaii Supreme Court on appeal.
Oral arguments in the E. Kalani Flores vs. the State of Hawaii / University are scheduled for March 15 in Honolulu. The case involves Flores’ right to contest the sublease between the University and TMT. An environmental court ruled that, based upon the Supreme Court’s opinion in Mauna Kea Anaina Hou v. Board of Land and Natural Resources, the land board “infringed upon Flores’ constitutional right to due process by rejecting his request for a contested case hearing. Thus, the environmental court vacated BLNR’s consent to the Sublease and remanded the case to BLNR,” the high court summarized.
During the February 12 hearing, Sen. Kahele dove into the sublease issue with UH administrators and DLNR land division officials.
“It’s my understanding, in years one, two, three (of the TMT sublease) $300,000 would be paid by TMT and that they’ve paid that for a few years,” Kahele said. “Are they still paying that 300,000 a year?”
“I don’t believe so” answered Greg Chun, the chair of the Mauna Kea Management Board who was recently appointed as senior advisor to UH on Maunakea.
“By year 11, or when the telescope would get first light, they would be paying a little over a million dollars a year in ground rent. How do we determine those numbers?” Kahele asked.
Chun said the TMT international Observatory – or TIO – engaged the services of James E. Hallstrom, Jr., the Managing Director, Valuation & Advisory Group of CBRE Hawaii, to arrive at the numbers.
Kahele said Hawaii Revised Statutes §171-17 dictates that the price for the use of public lands and the fair market value for those lands should be negotiated, or at least be determined, by an appraiser by the (state’s) land division or an independent appraiser.
“Did (the Office of Mauna Kea Management) contract professional services for an independent appraiser to do a ground rent analysis of the 13 north plateau where TMT would be located?” Kahele asked.
DLNR Land Division administrator Russell Tsuji said he did not think the University is required to follow the statute that Kahele referred to, since UH is basically a government entity and is therefor exempt. Whether or not an agreement between UH and TIO is required to follow §171-17, Tsuji said, “I don’t think so but that’s more of a legal question for the lawyers on both sides.”
“TIO was the one who contracted with Hallstrom to do the market lease analysis,” OMKM director Stephanie Nagata stepped in to say. “I don’t recall all the details, but from what I do recall, it was that there are no comparables that they could find for the Mauna Kea situation. And because the entities on the summit of Mauna Kea are not-for-profit institutions, whereas most lease rents are determined in large part based on a revenue stream for profit making. So there were none. The best that they could do was to look at lease rents that were paid on other parts of the Big Island.”
The final figures “far exceeded the highest rents that were being paid on the Big Island, and particularly for resort areas,” Nagata said.
“So TIO contracted a professional appraiser to do an appraisal, and they came up with those numbers.” Kahele said. “Did we verify those numbers? Did the University, OMKM, verify those numbers to make sure that was an appropriate amount that we should be receiving from TIO in ground rent.”
“The university did not do its own independent anaysis,” Nagata replied.
“Should we have? How do you know we’re getting the appropriate revenue from the land if we don’t do our own appraisal?” Kahele asked.
“I suppose the university could have,” Nagata answered, “but Hallstrom is a reputed individual who does these kinds of analyses.”
“I don’t disagree with you that it’s difficult to find comparable sales on Mauna Kea,” Kahele told the OMKM director, “which is why I would think you would utilize one factor on Mauna Kea to determine ground rent, which would be astronomical viewing time. Was that in any consideration for the ground rent? How much that time is worth to foreign countries or universities that utilize the time on the telescope?”
“Generally when you’re looking at rent, it’s usually looked at if you’re making some monies or profits and that is usually taken into account. But the observatories are not revenue-generating entities. They are research facilities, which get grants primarily from government agencies to run their operations,” Nagata said.
“My concern is we aren’t getting enough ground rent that we should,” Kahele told Nagata. “An independent appraisal would determine how much ground rent, potentially, could be received. And if that amount is more than what is currently determined, that’s more money for OHA, it’s more money for the state, it’s more money for DLNR, it’s more money for UH.”