The state has granted 25 acres of prime shoreline land parcels in Kakaʻako Makai to settle its $200 million dollar debt to OHA for back rent on uncollected ceded land revenues from 1978 through 2012. OHA conducted an extensive series of public meetings, but it seems we need to bring much more clarity to the settlement offer.
This column is my attempt to bring some clarity to what the settlement proposal is and, probably more important, what it is not. Simply put, the state owed OHA $200 million dollars in back rent. OHA would have liked the cash. But the state is broke. Instead, the state offered land in fee title equal to the $200 million cash debt.
But, it’s more important to know what is not affected by the settlement. It has no impact on other land claims Hawaiians may bring against the state. It does not extinguish any existing rights, claims, or entitlements Hawaiians have which include the Hawaiian Homestead lands as well as the ceded land trust. People will tend to make more of this than is the reality so I think it bears repeating: the state owed us money. They had no money. They made an offer of land instead of writing a check. The result is that OHA has become a landowner and subject to all the laws governing land ownership, joining the Kamehameha Schools, Queen Liliʻuokalani Trust, Queen Emma Land Company, Lunalilo Trust, the Department of Hawaiian Homelands, and other Hawaiian institutions that own land.
There is legitimate concern in assessing the value of the land and its potential to create cash for OHA and its beneficiaries; after all, the settlement, if not in cash, needs to provide some way of yielding cash. Some argue it’s not enough and some go so far as to say it’s a rip-off. OHA conducted due diligence and determined it was a fair value.
Some Kanaka Maoli (Native Hawaiians) have always challenged OHA’s legitimacy because it is a creature of the state. I respect their position of not recognizing the jurisdiction of the state or the federal government over Hawaiians and Hawaiʻi as a result of the illegal overthrow of the Hawaiian Nation. OHA has no bone to pick with those who choose to continue to issue such challenges for they too are beneficiaries, however unwilling, and OHA supports their right to seek justice and take a different path to self-determination. But, we have to stay focused on the kuleana or responsibility extended to OHA – even though a creature of the state – and that is to attend to the betterment of conditions of native Hawaiians and Hawaiians.
OHA’s kuleana stretches beyond the politics of sovereignty and nationhood. We are equally concerned about those things that define the quality of life for the vast majority of Hawaiians: home ownership, education, health care, and employment. The Kakaʻako settlement will take us a big step further toward these ends. Ua mau ke ea o ka ʻāina i ka pono—the life of the land is perpetuated in righteousness.
Unlike the Department of Hawaiian Home Lands (DHHL), Kamehameha Schools, and other Hawaiian institutions which are land trusts, OHA is a money trust. Our charge is to manage the revenue stream that flows to us by virtue of OHA’s 20% share of revenues derived from certain state lands known as ceded lands. The cash is deposited into OHA’s investment portfolio that earns a return on the investment. This money then goes directly into the Hawaiian economy as programs and services that empower Hawaiians and increase their capacity to build better families and better communities. Accepting a land settlement instead of cash presents some challenges in order to convert the land to a revenue stream. OHA now becomes a land owner who has to don the hat of a developer in order to convert the land to liquid assets.
This settlement should be embraced as a significant investment opportunity in the Hawaiian economy. Consider that OHA money flows to every corner of the state. Our $12.5 million in program grants last year alone was channeled to communities on every island. Much of it translated directly into enhancing family incomes by creating jobs and supporting a statewide network of health, education, recreational, and financial services. $90 million in bond financing over 30 years assists the DHHL to build residential communities on every island, which then translates into hundreds of jobs – not just for Hawaiians but for every person and every business that is connected to building homes. OHA’s annual $42 million operating budget also translates into hundreds of jobs, not limited to OHA employees but spread to our network of sub-contractors, suppliers, consultants, and so forth. Over the years OHA has allocated $9.5 million in support of the 17 Hawaiian Charter schools which has literally allowed them to keep their doors open. Our First Hawaiian Bank Mālama Loan program has put money in people’s pockets that then flow into the marketplace. The list of programs, services, and the portals through which OHA’s resources flows out to every corner of the state is exhaustive.
OHA is relevant to the growth of the Hawaiian economy in profound ways. In meeting our obligations to our beneficiaries many of the benefits flow through them to making Hawaiʻi a better place for everyone. We hope legislators and the general public will view the Kakaʻako Ceded Land Settlement as more than simply paying off a debt, and recognize that it’s a profound opportunity for OHA to grow its capacity to impact the Hawaiian economy in ways that help everyone.
The spirit of the settlement can’t be considered complete until these lands can actually be converted into streams of cash that can be invested in our Native Hawaiian Trust Fund portfolio which now hovers at about $350,000,000. It’s all easier said than done and therein lies the challenge for the Trustees. Kaka‘ako Makai has long been a subject of controversy in terms of how these lands are to be used. A significant number of community voices were raised, prior to the settlement, through the Kaka‘ako Community Planning Advisory Council, a formal planning process established by the Hawaii Community Development Authority (HCDA), the state agency charged with responsibility for managing the development of the area. What emerged was a conceptual plan that anticipates far less commercial and revenue producing activity than a plan that would seek to pursue the highest and best uses for each and every parcel. Both HCDA and the Community Advisory Council were caught by surprise by the OHA settlement.
And so the question is raised, will OHA give weight to what the community has expressed when it shapes its vision for Kaka‘ako Makai? I can say that OHA does recognize that the conceptual plan we have sort of inherited still carries weight as an official expression of the community from which it sprung, and that highest and best use was the farthest thing from their minds. And yet, it is technically a fiduciary duty for Trustees to engage in development planning that maximizes the settlement on behalf of our Hawaiian beneficiaries to at least the anticipated $200 million level of revenue.
Navigating the dilemma will take skill, diplomacy, patience, cool heads, and a lot of common sense. I believe, as Hawaiians, in our hearts we share the community’s desire that Kaka‘ako should become a gathering place that we all can be proud of. We are walking the fine line to at once generate the kind of development projects needed to financially support the trust fund and still be able to honor a promise of shoreline access and public space that support the feeling of openness of the existing park. One development idea, which is a priority for the Conceptual Master Plan advanced by the Community Advisory Planning Council, is to create a Cultural Public Market Place. Such a Cultural Public Market Place could be patterned after the famous Ferry Building on the San Francisco Waterfront. It could be the balance between commerce and culture.
OHA’s vision is to create a vibrant area that will increase public access to the shoreline, surf breaks, and park. We want to have a commercial-retail mix of local eateries, clothing stores, entertainment venues, farmers markets, and other community friendly vendors, supported by affordable leases. And we want to provide housing for local people, including our Hawaiian beneficiaries and kūpuna (seniors). We intend to open up the Kewalo Basin shoreline and create a promenade from Ala Moana Boulevard to the Point, which would then link to the promenade of Waterfront Park. We want to see the area thriving with residents, local visitors, and others who enjoy a uniquely Hawaiian experience.
In short, OHA intends not just to be a responsible developer, but to be a Native Hawaiian developer, with all of the values that implies.
OHA is not a greed-driven stockholder organization. We are accountable to over 250,000 Hawaiian beneficiaries who live in Hawai’i. OHA would be the first to protest any attempt to turn Kaka‘ako Makai into a place for the rich.
To support OHA’s vision of a vibrant local community, OHA needs an offsetting revenue strategy. The key to establishing affordable leases for local businesses is to convert three of the parcels, none of which are on the shoreline, to residential use, because residential yields higher revenue than commercial-retail. The residential entitlements are important to the realization of a community-based approach to the development of Kaka‘ako Makai.
The irony is that OHA agrees with a lot of what the opposition sees as responsible development because Hawaiians, more than anyone, know the pain of bad and inappropriate development. It is profoundly sad that while some rage on for open space and public access, Kaka‘ako Makai is one of the most underutilized urban coastal settings in the nation. It is so abandoned of current public use that it has become a haven for the unfortunate colony of homeless families that have located there, drawn to the area because there is so little public use or presence.
There will never be better environmental stewards of Kaka‘ako Makai than OHA. We have always defended public access from mountain to sea and have been outspoken advocates of sustainable growth. Now that we are landowners, we intend to practice what we preach. Hawaiʻi Loa Kū Like Kākou – All Hawaiʻi Stand Together.