ADC: Tobacco license, Galbraith's 1st Lessee, and More

posted in: Agriculture, Energy, June 2013 | 0
Tobacco Project Wins ADC License Despite Board Member’s Objections
Over the objections of an incensed William Tam, the Agribusiness Development Corporation board voted to approve a three-year license to LBD Coffee, LLC, to test its tobacco crops on three acres in Kekaha, Kaua`i.

A version of the project — for a two-year revocable permit — first came to the board in January but failed to win enough votes because one board member had to recuse herself, Tam voted against the project, and a couple of board members were absent. (In our February issue, we incorrectly stated that Paula Hegele and board chair Marissa Sandblom had both recused themselves. Only Hegele, whose company wholesales LBD cigars, recused herself. Sandblom, whose employer, Grove Farm, leases land to LBD, did not.)

At that meeting, Tam argued that public lands should never be used to grow tobacco, especially when the state spends so much money trying to prevent people from smoking or to get them to quit. A lengthy debate ensued over whether cigars should be viewed in the same light as cigarettes, whether tobacco is any worse than other crops that could potentially cause cancer, and whether the board should be making moral judgments about crops on the ADC’s land.

After a motion to approve a one-year permit to LBD failed, the matter was deferred without any motion or vote to do so.

On May 8, the board took the matter up again. This time, the proposal was for a three-year license. Tam argued that the board had already voted on the matter and that that should have been the end of it. But deputy attorney general Myra Kaichi countered that the agenda item presented in January — to approve a two-year revocable permit — was a mistake since such a thing is not allowed under state law. (Revocable permits are limited to one year.) The board didn’t have enough members present to amend the agenda to correct the error, she said.

“I don’t think its improper, the fact that it’s on the agenda today,” she said.

With no members of the public testifying on the matter, board member David Rietow made a motion to approve the license, which was seconded. Tam, however, vowed to fight the project.

“I will take it to the governor. This is not a neutral [project]. This is not acceptable. I am extremely unhappy. This is a moral issue with me and it’s a policy issue for the state. This is not just another crop,” Tam said, adding that he thought a vote on the matter would be illegal.

“I will take legal action if necessary, despite our counsel,” he said, arguing again that once a matter is voted on, “it’s finished.”

As he did in January, Rietow said he felt the ADC board’s purpose it to lease land to farmers, “not to pass judgment.”

“These people [LBD] are talking about cigars, not cigarettes,” he said, pointing out that people already object to some of the ADC’s largest tenants for “moral” reasons. Referring to the controversy over transgenic crops, commonly referred to as GMOs (genetically modified organisms), Rietow said, “We’ve got [transgenic] corn in Kekaha. They say, ‘It’s bad for you. It’s GMO.’ They can’t even define GMO.”

When it came time to vote, Tam again was alone in his opposition. This time the motion received the six votes necessary to pass.

In January, LBD owner Les Drent said that if the crop test in Kekaha proves successful, he will seek a license for 40 acres from the ADC.

Former ADC Board Member
Wins First Galbraith License

Kunia farmer Larry Jefts, one of the most productive farmers in the state, has become the first lessee of the ADC’s newly acquired Galbraith Estate lands. Under an agreement with Ho`opili developer D.R. Horton, the ADC promised to give farmers displaced by the impending residential development in Central O`ahu first crack at 500 of the 1,200 acres. Jefts leases 400 acres from Horton. On May 8, the ADC voted unanimously to issue Jefts a 10-year lease for 150 acres.

At first, Jefts will pay only $100/acre/year while he works on developing a water source and preps the land. During the latter half of the lease term, he’ll pay $200/acre/year.

“Those are pretty tough lands to develop, $1,000 per acre to prepare and that’s not including water,” explained ADC executive director James Nakatani. In addition to giving Jefts a break on rent while he makes the land farmable, the ADC has also hired him through a competitive bidding process to prepare an additional 200 acres of Galbraith lands for other, smaller farmers to use.

So far, Jefts has removed trees from the area and once the rain subsides, he’ll mow it, Nakatani said. He added that Jefts is having a hard time acquiring coral lime from the state Department of Transportation to prep the soil. (The state procurement office has rejected an ADC request to purchase lime for Jefts.)

“We have not gotten developmental funds from the Legislature,” Nakatani continued. “By using the private sector partnership, we can develop these things [and] hopefully see some farming in 2014.”

“This land is not good or bad land. It is what it is,” Jefts told the board. But it does need help. He said farmable soil is usually around 6.5 pH. The Galbraith soils are more acidic, with a pH of around 4.

A pH of 4 is good for pineapple but little else, he said, adding that he plans to dump a semi-truck load of sand on every acre as soon as possible.

“Small farmers are not going to be able to do this on their own,” he said.

Board member William Tam asked Jefts how he planned to water to his lease area and the 200 acres he’s preparing for others.

The one well on the property can deliver about 3 million gallons a day. But with no drip irrigation, no main line, and no reservoir, it’s going to take a lot of capital to make a system suitable for farming, Jefts said, adding that pumping the well is going to be more expensive than paying municipal water rates. Even so, it’s “doable,” he said.

Jefts also said he plans to use water from Lake Wilson, but did not describe how that would be done.

Board member Mary Alice Evans asked Nakatani whether he planned to limit other farmers’ tenure to 10 years.

“Not necessarily,” he said. “We wanted to give Jefts a longer tenure,” he went on to say, but without knowing how productive the land would be, 10 years was thought to be a good test run.

Jefts predicted it would be four years before his lands yield a successful crop.

“You must begin to plant crops that will work there and be willing to accept smaller yields. If the sand and water is ready, we’ll start planting as soon as possible,” he said.

Aside from the D.R. Horton farmers with an option to lease the Galbraith land (which will likely include Aloun Farms and Ho Farms), Nakatani said his office has received requests from nearly 70 farmers to farm there.

“We’ll learn a lot by getting him [Jefts] started,” he said. “We have all of these challenges to bringing the land into production.”

PLP Squeaks By
Financing Hurdle

After more than an hour in executive session, the Agribusiness Development Corporation announced to a nearly empty room last month that Pacific Light & Power (PLP) had met its license requirement to provide evidence of financing for its proposed renewable energy projects in Kekaha. Board member William Tam, who is also director of the state Commission on Water Resource Management, recused himself because of the water issues involved.

Now if only the company could get the island’s utility, the Kaua`i Island Utility Cooperative (KIUC), to agree to buy its power. It’s a goal that has eluded the company ever since KIUC filed applications in late 2010 with the Federal Energy Regulatory Commission to build two hydropower plants on the ADC’s Kekaha and Koke`e ditches, the same ones PLP had planned to use. KIUC filed its FERC applications around the time PLP won preliminary approval for more than 1,000 acres of ADC land, beating out Pacific West Energy, LLC, which had an agreement with KIUC to provide 20 megawatts of biofuel-generated power.

In April 2011, the ADC finalized a 25-year license to PLP, which had proposed growing biofuels and building three hydropower plants and a bio-gas plant. The power generated — an estimated 11 megawatts — was expected to be used first by the Kekaha Agriculture Association, which includes all of the ADC’s tenants in Kekaha. Any excess power would be sold to KIUC.

Under its license, PLP had to meet a number of benchmarks, including providing evidence of financing and completing the state environmental review process. PLP has recently begun an environmental assessment and late last year provided some evidence of financing. (Canada’s Kreuger Energy has agreed to provide $10 million in equity financing for the $40 million project.)

Representatives from KIUC and/or its hydropower consultant, Free Flow Power Corporation, have been attending recent ADC board meetings to monitor the fate of PLP’s project. With a handful of green energy projects under development, the utility expects renewables to supply more than 41 percent of its customers’ electricity needs within a couple of years. KIUC has identified five hydropower projects — including those proposed for the Koke`e and Kekaha ditches — that could bring that total to 64 percent.

KIUC’s goal is to generate 50 percent of its electricity by 2023. In late March, the KIUC board authorized CEO David Bissell to continue working with Free Flow Power on studying the feasibility of hydroelectric projects on the island.

Former Kaua`i Commissioner
Replaces Sandblom on Board

Gov. Neil Abercrombie chose not to nominate Marissa Sandblom for a second term on the ADC board. Sandblom, a vice president for Kaua`i’s Grove Farm, currently serves as the board’s chair.

Next month, former Kaua`i Aston hotel manager and planning commissioner Sandi Kato-Klutke will take Sanblom’s seat on the board. Kato-Klutke has been an advocate for the Kaua`i Farm Bureau and received strong support from the Kaua`i farming community, as well as ADC executive director James Nakatani.


Volume 23, Number 12 June 2013

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