Pioneer Mill has enjoyed the use of state land mauka of Lahaina, Maui, for decades. The most recent lease, which expired in February of this year, was only the last in a series extending back to territorial days.
According to records on file at the Department of Land and Natural Resources, in just the 25-year period of the most recent lease, S-4229, total gross receipts from sales of sugar and molasses derived from the acreage owned by the state amounts to more than $70 million. Total rent that the state received from that land came to roughly $2.7 million. If the Housing Finance and Development Corporation pays $750,000 to Pioneer Mill for relocating its improvements on the state-owned land, overall state revenues from Pioneer Mill’s use of 1,800 acres for a quarter of a century will come to approximately $1.9 million – in other words, $42 per acre per year.
(While the total receipts to the state should equal 5.25 percent of the total gross receipts, in fact, because of several adjustments made by Amfac years after initial payments were made, state records cannot be used to come up with an exact figure of total gross receipts. The $70 million figure is based on Amfac’s annual reports to the state.)
In the three years before S-4229 took effect in 1969, Pioneer Mill had been paying $25 an acre per year under a revocable permit. According to the information provided to the Board of Land and Natural Resources on February 9, 1968, by its Division of Land Management, that $25-an-acre rate was, in turn, “substantially” higher than the rate that had been paid by Pioneer Mill under lease 3296, which expired in 1965.
Irregularities
The lease rent was to be either a minimum amount per cultivatable acre per year or 5.25 percent of the gross receipts, whichever amount was greater. For all 25 years, the percentage of gross was greater.
In August 1993, the Land Board authorized a new rent structure that would appear to halve, at the least, Pioneer Mill’s rental for the remainder of the lease. Then, on February 25, 1994, the Land Board approved the following scenario: Until HFDC could acquire clear title to the 1,100 or so acres of land needed for the Villages of Leali’i, it would be given a lease by the Department of Land and Natural Resources allowing it to proceed with the housing development in the long-term and sugar cultivation in the short-term.
HFDC, in turn, was directed to sublease “all or portions of the state land to Pioneer Mill Company for sugar cultivation purposes. Sub-lease rents and terms negotiated will follow the general intent established by the BLNR in its action of August 27, 1993.” HFDC would pay nothing to the state for its use of the land; however, “HFDC shall remit 20 percent and 30 percent of the sub-lease rents collected” to the Office of Hawaiian Affairs and the Department of Hawaiian Home Lands, respectively – if the attorney general determined that this should occur.
Pioneer Mill would be allowed to continue cultivating sugar on the mauka portion of the state-owned land it had been leasing – roughly 680 – acres above Hahakea Gulch. The Land Board instructed the Division of Land Management to issue a revocable permit to Pioneer Mill for the use of this area. In following up on the Land Board action, Mason Young, administrator of the Division of Land Management, informed Bert Hatton, Amfac’s vice president for land administration, that his division would be issuing to HFDC a “new sugar-cane-cultivation lease for a term of twenty (20) years” for the lands below Hahakea Gulch. The 680 mauka acres, Young wrote Hatton on March 16, 1994, “will be leased to the PMCo under a month-to-month revocable permit for sugarcane-cultivation purposes. As time is of the essence due to PMCo’s continuing sugarcane-cultivation operations… our Land Management Division staff will attempt to expedite the documentation process.”
As of late July, no revocable permit to Pioneer Mill had been issued. Nor had any lease been issued to HFDC. HFDC said it was not receiving any payments from Pioneer Mill from the use of the 5,500 acres to be withdrawn. Records available at the DLNR’s Fiscal Office indicate that no invoices for use of the land in 1994 have been mailed out nor has any payment been received for use of the land beyond December 31, 1993.
According to staff at the Division of Land Management, paperwork is being processed for the revocable permit to Pioneer Mill for the mauka acreage. When that is complete, Pioneer Mill will be asked to pay rent retroactive to the time the lease expired. The rent under the revocable permit will probably be about half of what Pioneer Mill had been paying, in keeping with the Land Board’s action of August 1993.
— Patricia Tummons
Volume 5, Number 2 August 1994