Board Talk: NELHA Lease, Diamond Head Concerts, Wai`oli Violation, and Kohala House

posted in: August 2006, Board Talk, Water | 0

The Natural Energy Laboratory of Hawai`i Authority, built in the 1980s at Keahole Point, Kona, to be a center for deep seawater-related energy and aquaculture research, has always struggled to cover its costs. In recent years, the facility, which cost tens of millions of dollars to construct, has attracted some big money makers: deep sea water bottlers. But according to staff with the state Department of Land and Natural Resources’ Land Division, which administers NELHA’s lease, the facility is still struggling, in part, because the lease requires NELHA to obtain the Land Board chair’s approval of any and all subleases – a process that can take three to four months.

When the Board of Land and Natural Resources approved the issuance of a lease to NELHA in November 1999, facility representatives hoped the board would also grant them the authority to approve their own subleases. At the time, however, state law prohibited the Land Board from delegating such power to anyone but its chair.

Although that law changed in 2000 to allow the Land Board to waive its approval of subleases for “good cause,” the Land Board decided in June 2001 to authorize its chairperson to approve NELHA subleases. It also approved some 39 after-the-fact consents to subleases that month.

Since then, the Land Board chair has approved many, but far from all, of the subleases at NELHA. Then in November 2005, NELHA’s board chair Richard Henderson asked that the Land Board remove itself from the sublease process altogether – a move that was supported by the DLNR’s Land Division, led by Russell Tsuji, a former deputy attorney general who advised NELHA for years. In its June 23 recommendation to the Land Board, Land Division staff argued that a waiver would streamline the sublease process, since “much of the work reviewed and processed by DLNR, Land Division and its respectively assigned deputy attorney general are in essence duplicating work processed by NELHA and its deputy AG.” (NELHA is a state entity attached to the Department of Business, Economic Development and Tourism.)

With opportunities to issue subleases increasing at NELHA, “it’s a real burden on staff, as well as NELHA staff to go through and the process of preparing a board submittal and taking it all the way to the chairperson for approval,” Land Division administrator Tsuji said. He asked the Land Board to approve his staff’s recommendation to waive the DLNR consent requirement and that the waiver be retroactive to July 3, 2001, so the one-year subleases that were never approved and have expired don’t need to be brought to the board.

In addition, Tsuji asked that the Land Board support NELHA’s efforts to obtain fair-market rent for the use of land and water at the facility. Under state law, the DLNR must issue leases at fair-market value, except for those to other government entities or certain non-profit organizations. NELHA, on the other hand, has been setting its sublease rents far below market rates. Recently, however, NELHA’s board has been trying to change that, Tsuji told the Land Board.

“Over the years, the board, because of a lack of general funding… they’ve been moving towards setting land rates and water rates more towards what is a fair-market value, especially considering the heavy investment the state made in those [deep seawater] pipelines. I guess my amendment is more to support NELHA’s efforts to move towards self-sufficiency,” Tsuji said.

NELHA executive director Robert Baird explained that his agency had hired a consultant last year to investigate and recommend possible fair-market rates for the resources at the Keahole facility. Based on the consultant’s findings, he said, NELHA is developing a two-tiered system whereby deep sea water bottlers, which sell their desalinated tonics mostly in Japan, will pay a higher rate than its aquaculture tenants, which use the seawater to grow seahorses, abalone, and algae, among other things.

No one from the public testified on the recommendations, and without much discussion, the Land Board unanimously approved Tsuji’s recommendations.

[b]* * *
Crater Concerts to Continue At Diamond Head[/b]

On April 1, over objections from the Diamond Head Citizen Advisory Committee, but with permission from the Land Board, GM Entertainment held the first concert in the Diamond Head State Monument crater in nearly 30 years. By most accounts, the event was a success, and on June 23, the Land Board approved GM’s request to hold two more spring concerts, one in 2007, and another in 2008.

As conditions of its approval, the Land Board is requiring GM Entertainment to pay a non-refundable deposit of $2,100 (the average daily revenue at the monument), pay the DLNR’s Division of State Parks five percent of gross ticket sales to cover rent and personnel costs, include Hawaiian music performers at the events, and, at some point during the concert, brief the audience on the cultural and natural significance of the monument.

Under its first permit, GM was to have established a Diamond Head State Monument Foundation, to which it was to contribute $10,000 from the concert proceeds. But because of unforeseen expenses, the company has not made its donation. Instead, event organizer Ron Gibson has committed to making a personal contribution of $10,000 to the foundation, according to Dan Quinn, State Parks administrator.

Representatives from the governor’s office; the state Department of Business, Economic Development and Tourism; the Waikiki Improvement Association; Hawaiian Airlines, Oceanic Timer Warner Cable, and other tourism- and concert-related companies submitted testimony supporting additional concerts. The Diamond Head Citizen Advisory Committee continues to oppose concerts in the crater.

[b]* * *
Board Waives Conditions Of Wai`oli Violation Case[/b]

Laurel Bennett and Ursula Lamberson want an easement from the state to access their land, located in Wai`oli, Kaua`i. But because of unresolved Conservation District violations stemming from work done on their properties by people who owned the land more than a quarter-century ago, they’re stuck.

In July 1993, the Land Board fined Kaua`i residents Douglas Bonar and Joe Thomson and the Boyce Brown Trust a total of $13,000 for 26 violations, including illegal grading and grubbing, destroying an auwai (irrigation canal), and moving a road onto state property in the Conservation District. They were also fined $4,624 in administrative costs.

[i]Environment Hawai`i[/i] reported that same year that the DLNR had received a complaint in October 1989 about extensive grubbing and grading and road improvements in the area, including culverts and bedding stones, by Bonar. DLNR investigators later found that vegetation had been cleared from about five acres and placed in piles or burned, areas had been re-contoured with fill, and a berm had been constructed along Wai`oli Stream. These violations occurred on state property as well as on lands owned by the Brown Trust and Bonar. According to the state’s Historic Preservation Division, at least nine historic sites had been present on the graded properties, including agricultural terraces, an auwai, walls, and a house site.

In addition to the fines, the Land Board required Bonar and Brown to remove the illegal roadway and other improvements, survey and flag their lots, submit to the state Commission on Water Resource Management information relating to their stream alteration activities, submit to the state Historic Preservation Division information relating to their destruction of historic sites, submit reforestation and debris disposal plans, and post a $20,000 performance bond, among other things.

Over the years, a portion of the fines was paid (those for Thomson and the Brown trust), but few, if any, of the conditions had been complied with. Neither the Water Commission nor Historic Preservation followed up on the alleged violations under their purview. Enforcement of the Land Board’s conditions came to a halt after the abrupt death in 1997 of DLNR planner Ed Henry, who had been overseeing the case.

Since 1997, some of the parcels were sold, confiscated by the federal government, then sold again, and the land has largely healed itself, according to a June 9, 2006, DLNR report. Two of the newest owners, Bennett and Lamberson, want an easement from the Land Board to access their properties, but are prevented from getting one so long as the violations are outstanding.

So on June 9, Office of Conservation and Coastal Lands administrator Sam Lemmo asked that Bennett and Lamberson be allowed to proceed with their applications provided they meet certain conditions.

“Based on the loose facts that staff has been able to compile on this odd case, as well as on a site visit, staff does not believe that Lamberson, Bennett, or the state should remediate the road,” Lemmo wrote in his June 9 report to the Land Board. He added that the most reasonable resolution would be to allow Lamberson and Bennett to apply for an after-the-fact Conservation District Use Application for the parts of the road they would be using. Because Bonar’s whereabouts are unknown and because they have been using the illegal road, Lemmo also recommended that Lamberson and Bennett pay the unpaid portion of Bonar’s fine for his violations on state land – $8,134.20.

Once the two have received a CDUP and have paid the fine, Lemmo asked the Land Board to allow them to apply for easements.

Bennett and Walton Hong, Lamberson’s attorney, agreed to pay the fine, and the board unanimously approved Lemmo’s recommendations.

[b]* * *
Time Extension For Kohala CDUA[/b]

The Land Board has extended the time frame for processing a Conservation District Use Application for a house at Pao`o, North Kohala. The extension, granted last month, was needed to allow time for a contested case hearing on the recommendation of the DLNR’s Office of Conservation and Coastal Land’s to the board that it deny the requested permit.

The request for a time extension almost didn’t happen. According to OCCL staff, last April, the office notified Randy Vitousek, attorney for applicant Jonathan Cohen, that the existing deadline for completing processing of the application – August 7 – would not be sufficient. Staff asked Vitousek to request an extension.

On May 17, Vitousek replied that his client was “not inclined to request a further extension,” preferring instead “that the Contested Case Hearing Process be initiated and progressing so as to have more accurate information as to the likelihood of it being completed by August 7, 2006, before requesting any further extensions.”

But with a pre-hearing conference set for July 24, there was little chance of completing the contested case hearing by the August 7 deadline. On June 5, OCCL staff again asked Vitousek to seek a time extension. According to the staff submittal to the board, Vitousek gave three reasons for his refusal to file: “1) that nothing had been done on the case during the previous extension; 2) that he wanted to know why there was such a delay in processing the contested case hearing; and 3) that he wanted to know the consequences of not filing for an extension before filing.” (The staff submittal indicates that they told Vitousek the case was indeed moving forward in a timely manner without delays “and that staff did not know what the consequences of not filing would be.”)

On June 28, OCCL administrator Lemmo again wrote Vitousek, asking him for a request for a time extension, which would need to be approved by the Land Board. Finally, at 4:05 p.m. on Thursday, July 6, Vitousek complied – but “under duress,” he said.

Vitousek wrote: “We have been advised … that if the applicant does not request an extension of time, the matter will be placed on the Board’s agenda with a recommendation that the application be denied. We do not see how the Board could properly act on an application without conducting a contested case hearing … This seems inconsistent with the statutes, rules, and requirements of due process.

“This issue comes up because of the failure of the department to conduct the contested case hearing in a timely manner. About 90 days have passed since the request for a contested case hearing was made, and very little has been accomplished. The time limits on Board action set out by statute exist to protect applicants from precisely this type of delay. To threaten applicants with denial of the permit if they do not request an extension of the time period is to make a mockery of the statutory mandate that the department act in a timely manner.”

— Teresa Dawson

Volume 17, Number 2 August 2006