Commission defers vote on Nanakuli Village Center lease amendment and mortgage consent after beneficiaries raise governance and accounting concerns

The Hawaiian Homes Commission on July 21 deferred a vote on an amendment to the annual base rent provision of General Lease No. 281 and the commission—s consent to a mortgage for the Nanakuli Village Center after beneficiaries raised questions about association governance, missing financial reports and whether community leaders had been properly notified.

The item, presented by Land Management staff, asked the commission to revise the lease—s rent schedule (setting an annual base rent of $110,000 for years 1–25 and higher amounts for later periods) and to consent to a mortgage in favor of American Savings Bank so the Nanakuli Village Center could refinance its construction loan. Staff said the amendment is intended to provide a known rent schedule that would allow the center to obtain a long-term loan at better terms.

The proposal prompted extended public testimony from Nanakuli residents and leaders who said they had not received regular financial accounting from the Nanakuli Hawaiian Homestead Community Association or been given copies of minutes or bylaws showing board membership changes. Several former and current association members said they had not seen bank statements or reports about revenues the center was to return to the beneficiary community.

"We have not seen these documents. We have not reviewed or voted on them," said Arlene Lucero, who identified herself as a four-generation Nanakuli lessee and a long-time community association officer. "We have not had meetings. We have not seen one penny, one bank statement, nothing." Lucero and others said the association—s "special members" (perpetual members who historically served as custodians of the association—s mission) had not been consulted about leadership changes.

Former commissioner Patty K. Teruya and multiple residents urged staff to verify business registrations and outstanding debts before approving revocable-permit renewals or new permits. Teruya pointed specifically to an earlier tenant with a $344,000 debt to DHHL and asked whether a new applicant for a Kailua parcel was a new entity or related to that delinquent tenant.

Christopher Flaherty, property manager for Nanakuli Village Center, told commissioners he had met with current association board members and provided audited financials to some leaders and to the association—s on-site manager. Flaherty said the center needs a long-term rent schedule to refinance and that funds collected at the center go into a lockbox controlled by the bank and are disbursed first to loan payments and operating costs.

KHCD/land-management staff said a paralegal reviews applicants— legal documentation before contracts are issued, and staff described steps taken to remove a parcel (Nanakuli Ranch) from a revocable-permit renewal list until required corporate documents were submitted.

Because multiple beneficiaries requested more time and documentation—including association bylaws, minutes showing board membership changes and audited statements—the commission voted to convene an executive session to consult with counsel and then deferred the item to the next meeting. Commissioners asked staff to provide the association—s bylaws and minutes and requested that association representatives (including the association president) be available at the next hearing.

The commission—s deferral means the lease amendment and the requested consent to mortgage remain undecided. Staff said the association and its manager requested the change to facilitate a refinance that they expect would increase cash flow to the association over time, but beneficiaries said that without transparent accounting and proof of proper community notice they could not support immediate approval.