Lease for Hilo mall pending

A requested extension of the lease by 40 years for the Prince Kuhio Plaza has been put on hold for the time being.

The extension that would be granted to the mall, a subsidiary of Brookfield Properties, would extend the lease for 39 acres of Hawaiian residential land in Hilo from its current end date of September 30, 2042 to September 30, 2082.

The matter has been on the agenda of the Hawaiian Homes Commission meeting for the past two months and received the most, mostly negative, agenda items at the October 17 meeting in Hilo.

The lease is not on the agenda for this month’s meeting, which is scheduled for Monday in Maui.

“The commission consulted with the attorney general’s office in October following a letter from the Interior Department,” Cedric Duarte, spokesman for the Department of Hawaiian Home Lands, said in an email Friday. “DHHL is continuing discussions with the DOI to address their concerns about the proposed lease extension.

“All parties are seeking an appropriate way to maximize the 1% of DHHL’s land portfolio that will be used to generate revenue for the Trust. There is a common goal of getting the highest and best use of these lands so that funds are available to build more homesteads, and monitoring these types of land dispositions is part of the process.”

The letter Duarte was referring to, dated Oct. 13, was from DOI attorney Robert Anderson to Attorney General Holly Shikada and said the Feds had “significant concerns” about their office’s position that DHHL could apply Law 236 — A law passed in 2021 authorizes the Board of Land and Natural Resources to extend certain leases on public lands for commercial and other uses by up to 40 years — to justify granting the lease extension.

Anderson said the concern is that “any action by the Hawaiian Homes Commission to grant extensions of commercial leases for Hawaiian home lands under Hawaii Act 236 … violates federal law and constitutes a breach of trust by the state.”

Daniel Kea, general manager of Prince Kuhio Plaza, told the commissioners during their Sept. 19 meeting on Maui that the expansion was important “to get more investment into the property.” Kea said major retailers want to “recoup” the cost of improvements, which typically run into the millions, over several years.

“We can’t do that with a fixed-term lease, so we’re asking for the lease to be extended to 40 years,” he said.

Kea said the mall’s current total annual rent, which is just over $841,000, “represents 10% of the revenue DHHL generates on the Hawaii Island.”

Native Hawaiian Legal Corporation litigation director David Kauila Kopper urged the commission during the October meeting not to renew the lease. Kopper pointed to a clause in the last lease extension in 1992 that extended the mall’s lease from 2030 to 2042. The clause states: “No further extension of the rental period will be considered.”

Kopper said during the meeting that a clause in the lease precludes any renewal.

When asked about this clause last week, DHHL/HHC Chairman William Aila Jr. replied: “The Hawaiian Homes Commission shall have sole discretion over the disposition of Hawaiian Home Lands to make decisions as to their highest and best use, to generate revenue for homestead land development.”

Kahawaiola’a said the lease issue should be deferred until Governor-elect Josh Green appoints his own DHHL/HHC chairman.

Email John Burnett at [email protected]