Hawaii Monitor: Business Group Presses For Sand Island Land Swap
25 years of money, politics, and special interest
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When the Senate Ways and Means Committee deferred action on Senate Bill 51 late last month, effectively killing the bill for this legislative session, it marked the quiet end to yet another chapter in a classic 25-year power play by a small group of well-connected local business owners who control the Sand Island Business Association.
SIBA is far from a household name. It exists to hold a master lease on 70 acres of state land that make up the Sand Island Industrial Park, a testament to its political clout.
SB51 is just the latest in a long string of SIBA’s forays into the political world as it has sought to convert its lease into fee-simple ownership.
SB51 started life as an appropriation to build the amenities envisioned by the Sand Island ocean recreation park master plan.
Then, in one of those interesting legislative two-steps, the Senate Water and Land Committee, chaired by Big Island Senator Malama Solomon, amended the bill by slipping in an unrelated special interest provision for SIBA. It would require the Department of Land and Natural Resources to negotiate a land swap giving SIBA fee-simple ownership of the 70-acre industrial park in exchange for unspecified properties of supposed equal value elsewhere in the state.
Solomon’s amendment came less than two weeks after the Board of Land and Natural Resources rejected a similar land swap proposal.
The board’s action came in response to a 2011 law pushed through by SIBA “authorizing” the department to negotiate a sale or land exchange and requiring a report back to the legislature. The 2011 bill, which was signed into law as Act 235, was passed despite opposition from DLNR.
At the land board’s January 25, 2013 meeting, staff from three divisions continued to strongly oppose any land exchange and urged the board to nix the idea.
They pointed to the important revenue produced by the current leases and, more importantly, their future revenue potential. They presented data showing SIBA has enjoyed a very, very good deal, probably too good.
During the first 25 years of the lease, SIBA has paid “significantly less” than the fair market rent for the same period, even after considering the infrastructure and management costs, according to calculations presented to the land board at its January 25, 2013 meeting.
SIBA is currently paying annual lease rent of $4.9 million, although a recent appraisal determined the current fair market rent would be $8.2 million. This below market rent will continue until 2017.
It was previously estimated that the below-market lease rent saved SIBA $13 million in the first five years of the lease alone. Over time, those savings have added up to tens of millions more.
In addition, the Legislature appropriated $6 million to improve Sand Island Access Road leading to the industrial park in the early 1990s, and authorized $25 million in tax-exempt revenue bonds that allowed SIBA to save on borrowing costs.
A History Of Controversy
SIBA was formed a quarter-century ago by Sand Island businesses then operating under short-term revocable permits from the state. Their goal was to replace those permits with a long-term lease to the 70 acres of state land, with SIBA in control.
The group immediately ventured into the wild world of money and politics, dropping more than $500,000 into the campaign coffers of the governor, mayor, and key legislative leaders.
As I reported at the time, SIBA, its member businesses and their owners and employees contributed $117,800 to Sen. Milton Holt, then a contender to take over as Senate President. Holt was credited with sponsoring the bill establishing the Sand Island Industrial Park and managing its passage.
The Sand Island group added another $224,000 to other legislators and Honolulu City Council members, along with $79,000 to then-Gov. John Waihee and another $63,400 to then-Mayor Frank Fasi.
Clyde Kaneshiro, a longtime SIBA director, illustrates the group’s continued skill at the money game. Kaneshiro is considered Hawaii’s king of garbage, controlling a network of interlinked businesses that have dominated the commercial trash-hauling business statewide for decades.
He contributed $10,000 to the Democratic Party of Hawaii in October 2012, while another officer of Kaneshiro’s Honolulu Disposal Service contributed $17,500 to the National Republican Senatorial committee, according to FEC records. Kaneshiro also gave $5,000 to U.S. Rep. Colleen Hanabusa for her 2012 campaign, and another $5,000 to U.S. Sen. Mazie Hirono in 2011, and made substantial contributions to former governor and Senate candidate Linda Lingle as well.
When House Speaker Calvin Say was the honored guest at a 2008 fundraiser for the OIA Athletic Foundation, Honolulu Disposal was one of two lead sponsors of the event, which featured a 106-page glossy publication of Say’s life in photos and text.
The following year, a bill requiring the state to give the Sand Island land to SIBA through a sale or exchange came close to passing, but was pulled back at the last minute.
SIBA’s effort to force a land deal has failed so far, but the group follows one of the Golden Rules of legislative politics: “There’s always next year.”
I don’t believe for a minute that we’ve seen the last of this proposal.