The Office of Hawaiian Affairs is again asking the Legislature for a greater share of revenue generated by lands formerly held by the Hawaiian Kingdom.

Not only that, OHA also wants the state to pay out $638 million the office said it’s owed after being shortchanged on land revenue payments over the last decade.

OHA uses the public land revenues, which the Legislature capped at $15.1 million since 2006, to fund grants and programs that serve Hawaiian beneficiaries like charter schools or home ownership education programs. The House and Senate failed to agree on a measure in 2019 that sought to raise the annual disbursement to $35 million.

OHA Office of Hawaiian Affairs office. 6 sept 2016
The Office of Hawaiian Affairs wants its share of ceded land payments to increase from $15.1 million to about $78 million. It also wants $638 million from the state. Cory Lum/Civil Beat/2016

Now, OHA is asking the Legislature to set that annual payment at $78.9 million a year in addition to the past due payments totaling $638 million.

The office arrived at those figures based on a financial review of public land revenues in 2015. OHA also believes that the annual payments should add up to about $78.9 million, and not $15 million.

The state has made settlements with OHA in the past.

In 2012, the state transferred 30 acres of land in Kakaako Makai to OHA to settle land claims totaling $200 million that accrued since 1978. While the land deal was thought to have been worth $200 million at the time, the office hasn’t been able to make use of those lands after repeated attempts to develop the area have been met with community opposition and legislative hurdles.

On Thursday, a panel of senators advanced Senate Bill 2122 even as state agencies pushed back against the measure because they feel they already give OHA enough money.

Sen. Maile Shimabukuro said past proposals seeking to raise the $15 million cap have stalled because of opposition from state departments that feel they are already giving OHA enough of their land revenues.

“It’s like you’re pitting two victims against each other,” she said in an interview.

But Naʻunanikinaʻu Kamaliʻi, OHA’s chief advocate, told lawmakers that the agencies shouldn’t view the issue as a budget war.

“It’s about the ceded lands trust. OHA has other funding resources and it utilizes them for Native Hawaiians, but this is a very specific revenue source we are talking about today.”

Naʻunanikinaʻu Kamaliʻi, OHA’s chief advocate, urged lawmakers to pass SB 2122 on Thursday. Screenshot: Hawaii Senate/2022

The history of ceded lands is complex, going back to the Great Mahele, which split lands between the government, the monarchy and the public in the late 1840s. After the overthrow of the Hawaiian Kingdom, the Republic of Hawaii ceded 1.8 million acres of former government and crown lands to the U.S.

Those ceded lands were transferred to the state after admission into the union. The Admissions Act dictates that the public land trust should be used for public schools, to better the conditions of Native Hawaiians, to develop farm and home ownership, for public improvements and for public use.

In 1980, the Legislature decided that 20% of revenues generated by those public lands should go to OHA. But how that 20% was calculated has been disputed. Some agencies, like those that manage hospitals on state lands, have argued that payments should not be made to OHA.

The Hawaii Supreme Court has ruled on the public land revenue issue three times, and has said each time that it’s up to the Legislature to resolve.

In 2006, the Legislature decided to set an interim annual payment of $15.1 million disbursed in quarterly payments. That amount has not increased since then.

The state Department of Transportation harbors division contributes the most to the OHA payments at about $10 million each year. DLNR comes next, with annual contributions of about $6 million. The Departments of Defense, Agriculture, Education and Economic Development and Tourism along with the University of Hawaii are all required to contribute land revenues to OHA.

But complicating matters is a federal exemption of revenues generated by food and retail establishments in state run airports. That has other state agencies like DLNR worried it could be left to pick up the tab.

At a hearing on SB 2122 on Thursday, state agencies questioned whether OHA’s accounting of the public land revenues is accurate.

Deputy Attorney General Craig Iha disputed the office’s claims that the state has underpaid OHA. He urged lawmakers to consider other purposes for public land revenues like funding public schools or improvements in public areas when deciding how much money to allocate to OHA.

In written testimony, DLNR Chairwoman Suzanne Case said making additional payments to OHA would hamper the agency’s ability to fund programs that protect watersheds, fight wildfires and preserve cultural and historic sites.

“These collective efforts have contributed significantly to the betterment of Native Hawaiians as well as the general public,” Case said.

Hawaiian Affairs Committee Chair Maile Shimabukuro.
Sen. Maile Shimabukuro, center, plans to advance SB 2122. Its chances of making it through the Legislature are less certain. Cory Lum/Civil Beat/2020

A bigger question is where the $638 million balance OHA says it is owed could come from, and what impact it would have on the state budget.

If the state gives OHA $638 million from the general fund, the American Rescue Plan Act also requires that the state give the DOE an additional $180 million and that UH receive an additional $60 million, Budget Director Craig Hirai told lawmakers.

Hirai also questioned the accuracy of OHA’s calculations and suggested that lawmakers instead form a negotiating committee that would determine OHA’s share of public land revenues.

While it’s not clear if SB 2122 will make it, Shimabukuro, who is chairwoman of the Senate Hawaiian Affairs Committee, hopes lawmakers at a minimum agree to give OHA access to an account that holds land trust overpayments.

The account totaled $29 million in 2021, but OHA can’t access any of that. On Tuesday, the committee advanced a measure that would allow OHA to tap into those funds.

Shimabukuro said she’s not sure covering $638 million could be possible this year. A portion of it could be paid off with the budget surplus, or lawmakers could consider another land deal like one struck in 2012 with former Gov. Neil Abercrombie’s administration.

“All of us are sympathetic to OHA. All of us recognize they are owed past-due money,” Shimabukuro said. “The question is how to realize that.”

Kakaako Makai Underutilized

A deal struck with Abercrombie’s administration settled past due claims that accrued between 1978 and 2012 totaling $200 million by transferring 30 acres of land along the Kakaako waterfront to OHA. But the office was hampered before it even received those lands.

In 2006, lawmakers considered allowing the Hawaii Community Development Authority to expand in the Kakaako area around the waterfront park and Children’s Discovery Center. But the Legislature ultimately passed a law that limited development makai of Ala Moana Boulevard after heavy pushback from Kakaako residents and surf groups who frequent the area.

OHA has since tried several times to lift that prohibition, but those efforts at the Legislature have failed. In 2020, the office reported that those lands generated just $1.4 million in revenue.

Now, OHA is focusing on opening up space for commercial enterprises on two of the lots it was considering for residential high rises. OHA CEO Sylvia Hussey told lawmakers during a hearing on Jan. 12 that development work would start on a lot where the old Fisherman’s Wharf restaurant used to be.

Kakaako Waterfront Park Kewalo Basin Harbor aerial.
OHA has plans to put commercial developments on some of its Kakaako Makai lands. Cory Lum/Civil Beat/2019

OHA is also looking at renovating a building across the street from that lot that houses several state offices, Board of Trustees Chair Carmen Hulu Lindsey said.

“It’s temporary, we want to see how our beneficiaries receive the area. Do they want to start a small business? Maybe they want to move on to a bigger place. But we have a place for them to start businesses and give them that opportunity,” Lindsey said.

Sen. Sharon Moriwaki, whose district includes Kakaako, said residents shouldn’t have a problem with low-rise commercial buildings in the area. Moriwaki has been an opponent of high-rise developments on OHA lands.

“If their intent was to build residential high-rises, they shouldn’t have accepted that field. That’s what the hard rub is,” Moriwaki said.

Moriwaki and other lawmakers have considered proposing a land swap with OHA, but she said no measure would be introduced in the Legislature until an agreement is reached between the office and the state.

Revenues Fund Nonprofit Programs

That annual disbursement makes up the lion’s share of OHA’s annual operating budget of about $37 million.

Under a spending plan approved by OHA’s Board of Trustees last summer, funds from the public land trust go directly to programs for Hawaiian beneficiaries.

OHA sends Hawaiian charter schools and the state Department of Hawaiian Home Lands $3 million each. In 2021, OHA awarded $16 million to community organizations.

Portrait of Jeff Gilbreath image.
Jeff Gilbreath, executive director of Hawaiian Community Assets, said grants from OHA have helped to fund numerous housing education and assistance programs. Cory Lum/Civil Beat/2019

One of those organizations is the Big Island Substance Abuse Council, which last year received $150,000 to fund a drug rehabilitation program that helps individuals being released from jail or prison.

Correction: A previous version of this story incorrectly stated the grant award amount to the council as well as the total amount of community grants awarded in 2021.

“We found there was a gap during the Covid-19 pandemic where a lot of individuals were being released and not having a place to go,” Hannah Preston-Pita, chief executive officer of the council, said.

Preston-Pita said the program allows those individuals to seek treatment while also being housed. The grant also helps to fund other programs like a garden where participants can work.

She said the council intends to keep the program running even after the grant ends.

Hawaiian Community Assets, a nonprofit housing counseling agency has also benefited from OHA grants in the last decade. HCA runs workshops on mortgages and savings plans. It also helps to pay for rental deposits and closing costs or down payments for new homebuyers that go through those workshops.

“If you don’t have access to capital in a capitalist system, ain’t no way you’re getting into affordable housing,” HCA Executive Director Jeff Gilbreath said.

OHA grants have helped to fund a debt consolidation program as well as pay for the organization’s workshops. Support from the office, county governments and other agencies “allowed us to go deeper and do more in the Native Hawaiian community,” Gilbreath said.

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