Ka Wai Ola - Office of Hawaiian Affairs, Volume 9, Number 2, 1 February 1992 — DHHL chair Drake responds to The Wall Street Journal story [ARTICLE+ILLUSTRATION]

DHHL chair Drake responds to The Wall Street Journal story

An article in The Wall Street Journal of Sept. 9, 1991, caused a storm of controversy that still reverberates through the Hawaiian community. Hoaliku Drake, director of the Department of Hawaiian Home Lands, addressed the points raised by reporter Susan C. Faludi in a statement issued by DHHL in December. It was extensively quoted but, according to a spokesman from DHHL, was never printed in its entirety. Publicity continues to be generated as a result of the article.

In the January issue of Reader's Digest an excerpt of the Faludi article was published in the section called "That's Outrageous!" whieh has an explanatory headline stating the compilation objective: "Spotlighting absurdities in our society is the first step towards eliminating them." Drake's statement is printed here, in full, answering the points raised in The Wall Street Journal article. The article's title, "How Everyone Got Hawaiians' Homelands Except the Hawaiians" is a distortion of the facts.

The Department of Hawaiian Home Lands makes two types of leases. The first are homestead leases awarded to native Hawaiians for residential, agricultural, and pastoral purposes at $1 a year for 99 years, that ean be extended to a total of 199 years. There are 5.723 homestead leases awarded to native Hawaiians. The second type of leases are general leases awarded by public auction to the highest bidder, who may be non-Haweiiian. In 1978 the law was changed to allow the department to offer general leases for business purposes first to native Hawaiians, or organizations controlled by native Hawaiians before public auction. There are currently 113 general leases outstanding. The general lessees include small and large businesses, government agencies, public utilities, and individuals.

The article states: "...more than 60 percent of the Iand has been rented at bargain basement prices to non-natives many of them belonging to the richest and most powerful families in the islands - or swapped or simply given away to other government agencies." It is not true that more than 60 percent of the land is rented at "bargain basement prices" or swapped or given away to government agencies. In creating the homesteading program, Congress excluded from the program some of the best agricultural lands. Those were the lands in sugar eane cultivation, whieh were to be kept by the Territory of Hawai'i to be leased at public auction to the highest bidders. As part of a eompromise, 30 percent of the revenues derived from the leasing of the eane lands were earmarked for the support of the homesteading program.

Lands set aside for the homesteading program were generally poorer in quality and in many instances were in remote locations, while the sugar plantations succeeded in leasing the best

lands. Consequently the reason more land is used for purposes other than homesteading is that large tracts are undeveloped marginal lands. Most of the department's lands are of poor quality and undeveloped. More than 28,000 acres in Maui are undeveloped, and without adequate water; more than 9,000 acres in Moloka'i are in the Conservation District, suitable only for such use as a game rooerve; about 49,000 acres are in the remote Humuula area in Hawai'i. These three areas alone account for nearly half of the department's total land holdings.

General leases are disposed of pursuant to section 204(2) of the Hawaiian Homes Commission Act and Chapter 171, Hawaii Revised Statutes. As a general rule, general leases are awarded through public auction, with upset annual lease rent established by independent appraisal. What appears to be "bargain basement prices" reflect the fair market value of marginal land. In the case of some dispositions to government agencies, the nominal rent takes into account the benefits received by having a public agency manage the land, for example, as a park available to our beneficiaries, or by providing fire protection in Iarge forest reserve areas. The article overlooks these facts and instead implies that preferential treatment is given to the rich and powerful, and falsely accuses the department of giving land away.

The article states: "(Parker Ranch) pays the state $3.33 an acre..." The remote Humuula land under lease to Parker Ranch is predominantly lava, with stony deep soil interspersed. It is classified as C & D grazing land, whieh has a low carrying capacity for animals. The land is also infested with gorse, a noxious weed. In consideration of these conditions, the return on the land is equitable, although the rental figured on a per-acre basis may appear low. When these lands were put up for auction in 1977, more than 60 persons were present. One parcel went for an annual lease rent of $45,100, although the upset annual lease rent was $30,700. The second parcel went for the upset price: $52,800.

The article states that former Maui Mayor Elmer Cravalho was one of the first non-natives "to sign up" for land after the law was amended in 1965. The facts are these: in 1965 Maui Factors, ine., of whieh Mr. Cravalho is a principal, was the successful bidder for a pasture lease covering 15,620 acres in Kahikinui, Maui. The upset annual lease rent was $16,200, and Maui Factors bid $24,000. (The annual lease rent is now $40,550.) There were 14 persons at the auction. The land is isolated and unimproved, with two-thirds of the area consisting of Class D & E grazing land, and the rest Class B & C. It ean hardly be characterized as a "plantation," the term used in the article.

The article implies that Harvey Tajiri, a state representative, received preferential treatment in obtaining a general lease. The lease was made in 1970 to the successful bidder at public auction, Tatsuo Tajiri, Harvey

Tajiri's father. This occurred 10 years before Harvey Tajiri was elected to the legislature. The article states: "Other land has gone to multi-national corporations for quarrying and mining operations..." We know of no "multi-national corporation" involved in quarrying and mining. In 1972 Pacific Concrete and Rock Company was issued a license to mine a coral hill in Waimanalo for coral aggregates. A portion of the area is to be used for housing when the hill is leveled. In 1984 the company was merged with Grace Brothers, Limited, and later renamed Grace Pacific Corporation, a Hawai'i firm. (The license has been terminated.)

"(Many lessees) belong to the richest and most powerful families in the islands..." A review of the list of lessees would show that this statement is untrue. At best it is journalistic hyperboIe, a device freely used by the writer. The article states: "Most of the nonnative lessees obtained their land rights illegally, because the 1921 act reserved the land for natives. Leasing to nonnatives was supposedly allowed under a 1965 state law but that didn't make it legal because the federal statute ean be amended only by Congress."

There are two falsehoods. First, general leasing to the public of lands not in homestead use has been authorized by the Hawaiian Homes Commission Act since it was first enacted in 1921. The law gave that duty to the Territorial Commissioner of Public Lands, and the revenues generated from leasing were to be used to sustain the homesteading program. Following statehood, the Board of Land and Natural Resources was given that duty. In 1965 the law was amended to authorize the Department of Hawaiian Home Lands to lease and manage lands not in homestead use. Secondly, it is not true that the Hawaiian Homes Commission Act ean be amended only by Congress. Under the Admission Act, amendments to the Act require the consent of Congress, but the State of Hawai'i is authorized to make certain types of amendments, including amendments to that provision dealing with the issuance of general leases, without the consent of Congress.

"The federal government has allocated $1.2 million for the department every year since 1988 - and the department has spent none of it." The department received a letter of credit for $1.2 million from the U. S. Department of Housing and Urban Development in 1990. The funds are to be used for road and drainage improvements at Paheehee Ridge, a new agricultural homestead area on O'ahu. The department has not drawn on the letter of credit because the project is in the design phase and construction has not begun. Two other authorizations of $1.2 million were not released because the Bush continued page 15

DHHL response

from page 14

administration raised constitutional questions of spending HUD funds for a specific ethnic group, but Gov. John Waihee recently resolved this problem with HUD Secretary Jack Kemp, and we have been asked by HUD to re-submit our applications.

"(The department) has also left $24 million in cash untouched in various banks." Cash is not left "untouched." All cash not immediately needed is invested in banks so that revenues to the department ean be increased. This is in accord with good cash management practices. The $24 million was not available to be spent but was restricted or committed for reserves, encumbrances, security deposits, and other obligations, or for future needs.

The article states: "Meanwhile, native Hawaiians who have applied for homelands languish on a ballooning waiting list, now 21,000 names and decades long." The truth of the matter is that the waiting list expanded greatly in recent years because of the department's 1984-1986 program to accelerate the award of homestead lots, a program undertaken to carry out a recommendation of the 1983 Federal-State Task Force on the Hawaiian Homes Commission Act. The program reduced the then waiting list of about 8,000 by awarding more than 2,500 homestead leases.

Nearly three-fourths of the applicants today (about 73.4 percent) were added to the list after 1984, because of the positive response to the Program to accelerate awarding leases. The writer also does not point out that the 21,000 names do not represent 21,000 different individuals. There are many duplications because applicants are allowed to apply for more than one type of homestead lease. Also, many individuals from the same household apply for homestead leases. The list also contains names of people who are already homestead lessees.

The article quotes the Department's Chairman, Mrs. Hoaliku Drake, as saying "she believes applicants for homelands are 'mostly high middle class. A lot of them own land already."' The reporter spent many hours talking to the chairman and to the deputy to the chairman. Out of that time, the reporter selected or changed a few quotes to suit her purposes. This quote is cited erroneously. Drake said that our applicants eome from all walks of life, including many who already own land. A recent survey of the department's waiting list showed many applicants owning real estate, but the survey definitely did not find that applicants are "mostly high middle class."

The article states: "While about 5,800 families have been awarded land, the state bars more than a third of them from moving onto their land because it lacks basic infrastructure - whieh the state itself is supposed to build." The 1983 Federal-State Task Force recommended the acceleration of homestead land awards even though the site improvements were not in plaee. Within five years all site improvements would then be completed for the leaseholds awarded. The average cost of improving eaeh lot was then estimated at $30,000. To implement that strategy, the Task Force recom-

mended the federal government and the state government eaeh make matching contributions of $25 million per year (in appropriations or services) for a period of five years. From 1984 to 1986 the department awarded more than 2,500 lots, of whieh 2,161 were unimproved or partially improved. The lessees were informed that they could not build on the lots until such time as basic infrastructure was completed. lnfrastructure for some of these lots is being built now. "Others have homes, built under government programs by subcontractors, but many of the structures are falling apart or deemed substandard by state inspectors." lt is not true that many homes built by contractors hired through the department are "falling apart or deemed substandard." One subdivision built in 1977, on Kaua'i, consisting of 66 houses, was poorly built, and steps have been taken to correct the deficiencies. This 14-year old subdivision is the exception, rather than the rule.

"At least 15 non-natives in recent years have subleased their homelands to others at a substcuitial profit, state records show. The department onee considered appropriating some of the profits, but abandoned the plan when the lessees threatened legal action." The department has not "abandoned" any plan to share in net returns resulting from subleases. Subleases must be approved by the Hawaiian Homes Commission and in any case in whieh the general lessee's net returns exceed the costs of improvements and the allowable expenses associated with the improvements, the department shares in 50 percent of the returns. "At the beginning of 1990, the homelands department announced it would build 448 new houses during the year. It built 16. Last fiscal year, the department gave out only 30 loans to the thousands of applicants."

It is true the department did not meet its housing goal last year, but it is not true only 16 houses were built. Thirty-five houses were built in 1990 and at the end of the year, 87 were under construction. lt is not true only 30 loans were made to "thousands" of applicants. Seventy-three loans were made. There were 92 applicants. "Gov. John Waihee ... has taken some steps to increase state funding of the homelands department." Since taking office, Gov. Waihee has taken major initiatives in funding the department. For the first time the department was appropriated state general funds to cover operating expenses beginning July 1, 1987, to reduce its reliance on

revenues from ineome properties to finance operations. General fund support has continued eaeh year since, and during this fiscal biennium period, the department has been appropriated $8,383,440 for the operating budget. In the case of capital improvement financing, the state has appropriated $82.7 million since 1986, and this year's biennium budget provides $27.6 million for capital improvements.

"...the right-to-sue bill bars suits over violations that occurred before 1988. And if native Hawaiians win any damages, the bill requires them to give the money to the Office of Hawaiian Affairs..." This year, as part of Gov. Waihee's action plan to resolve controversies affecting the Hawaiian Home Lands Trust, legislation was enacted to establish a panel to receive and review individual claims for acts or omissions on the part of the state that occurred from 1959 (statehood) to June 30, 1988. The panel will present its findings and recommendations to the legislature in the 1993 and 1994 sessions. Claimants dissatisfied with legislative actions have the right to pursue their claims in court.

With respect to the Native Hawaiian Trusts Judicial Relief Act ("right-to-sue bill") the law recognizes two types of claims: actions to restore the trust and claims for personal damages. In the latter type actual damages may be awarded to a successful plaintiff. It is not true that payments awarded for personal damages or to restore the Hawaiian Home Lands Trust go to the Office of Hawaiian Affairs.

"...about 19 families on the waiting list took to squatting a few years ago on a homeland beach on Kaua'i called Anahola... It is a beach the county wants to turn into a park for tourists..." There are a number of inaccuracies. First, not all of the 19 families were native Hawaiians, and all were not on the waiting list. Secondly, about eight families that remained in June 1991 were issued eviction notices to make the beach park safe and available for the enjoyment of native Hawaiian homesteaders in Anahola, who had stopped using the park because of threats and harassment by those illegally living there. Third, eviction was necessary to carry out terms of a settlement agreement approved by the U. S. District Court. Fourth, there is no intention of turning the site into a park for tourists.

An Executive Order issued in 1955 set aside the land to Kaua'i County for park use, but a class action suit filed by beneficiaries in 1976 questioned the legality of the Executive Order. Under a settlement agreement approved in 1990 by the court — 127 native Hawaiian residents of Anahola signed a petition supporting the settlement — the department is to issue a license to the County to maintain and operate the 1.54-acre park. The County in turn is to spend $227,000 in cash or in-kind services to benefit the Anahola homestead community over the first seven years of the agreement and to work toward obtaining funding for other improvements for the community.

The article states: "Under the 1921 act, native Hawaiians aren't allowed to sublease their plots. But ...,many have illegally rented the property to big corporations or non-native entrepreneurs." While it is correct that subleasing of homestead lots is not permitted, the practice of allowing another party to grow crops on the lessee's land is not illegal.

Hoaliku Drake

[ K I \ ^ t/> O . I 8 • O O