House committee backs amendments to Waiakea Community Development District bill, preserves lease revenue for current landlord

The House Committee on Consumer Protection & Commerce on Feb. 13 voted to pass HB 818 HD1, creating a Waiakea Community Development District with amendments that give the Department of Land and Natural Resources a seat on the district board and preserve lease rent for the current landlord until any formal transfer of management occurs.

The changes were adopted after the Department of the Attorney General and the Board of Land and Natural Resources (DLNR) raised concerns about how the bill handled special fund revenue and management of state leases. Committee Chair Matayoshi recommended adopting DLNR’s requested amendment to reserve a board seat for DLNR and to make lease rent go to “whatever entity is the landlord and is responsible for managing the property.” The committee passed the bill with amendments; Representative Pierrick was recorded as excused.

Why it matters: DLNR manages most state leases on the Waiakea Peninsula and relies on lease rent to maintain properties and to pay off existing reimbursable general obligation bonds tied to demolition work. Committee amendments aim to avoid an immediate transfer of revenue that DLNR says it needs while it continues managing those lands.

Committee discussion and testimony: Deputy Attorney General Kevin Tong told the committee the Attorney General’s Office submitted written comments raising compliance questions about establishing a special fund under the bill. Dawn Chang, chair of the Board of Land and Natural Resources, testified that DLNR appreciated the HD1 deletion of a proposed land transfer and asked that revenues from DLNR leases remain with DLNR while DLNR continues to manage the lands. Chang also noted outstanding reimbursable bond obligations tied to the demolition of Uncle Billy’s property: "We have an outstanding for the Uncle Billy's demolition, an outstanding 11,000,000 of the 14,000,000 for reimbursable geo bonds," she said.

Craig Nakamoto, executive director of the Hawaii Community Development Authority (HCDA), testified in support of the bill’s general purpose — creating a community development district for the Waiakea Peninsula — and said he agreed with DLNR that lease revenues should remain with DLNR "so long as DLNR is managing the lands there, any revenues derived therefrom should go to DLNR." Nakamoto said HCDA could accept the lease revenue if and when management and leases are formally transferred to HCDA.

DLNR staff clarified how past leases left the agency responsible for costly demolition and described current lease practices that can require removal bonds or other security going forward. DLNR staff said the state currently receives about $1 million a year from lease and revocable-permit revenue in the proposed district area and that most revenue in the district comes from state leases rather than county parks.

Action and vote: The committee adopted the chair’s recommendation to pass HB 818 HD1 with amendments. The roll call recorded ayes from Chair Matayoshi, Vice Chair Chun, Representative Iligan, Representative Ichiyama, Representative Iwamoto, Representative Kong, Representative Lowen, Representative Martin and Representative Tam; Representative Pierrick was excused. The committee’s recommendation will be reflected in the committee report with the recorded amendments.

Ending: With the amendments, the bill advances with a directive that lease revenue follows the party managing the land, and a DLNR board seat added to the proposed district. Committee staff noted technical edits would also be incorporated before the committee report.