Lingle vetoes bill on airport rent relief

By Gordon Y.K. Pang
Advertiser Capitol Bureau

Gov. Linda Lingle has vetoed legislation that would give DFS Group and other airport concessionaires rent relief, calling it a "fiscally irresponsible" bill motivated by favoritism that could end up costing the state more than $100 million in revenues.

Lingle, in a message dated Friday, listed a multitude of reasons for rejecting Senate Bill 44.

Concessionaires already can negotiate relief with the Department of Transportation, she said, and the bill "implies that each and every concessionaire is deserving of more relief than is likely to be agreed to by the state in separate, arms-length negotiations with each concessionaire."

Further, Lingle wrote in her five-page statement of objections, the bill mandates open-ended relief that easily could exceed $100 million, with the bulk of that relief going to a single airport concessionaire, DFS Group L.P.

The governor noted that the state is in litigation with DFS for about $50 million in back rent. DFS in April agreed to pay $25 million and to begin negotiating new terms to keep operating its 40 airport locations.

A 60-day negotiating schedule was supposed to end today.

Sharon Weiner, DFS Group vice president, said that deadline was extended yesterday until July 10.

Weiner declined to comment on the negotiations.

If the bill were to become law, Lingle wrote, "it would dramatically and adversely affect these discussions."

Lingle also said that the bill would pose "an unacceptable threat to the continued viability of the state's airport system" by making it "impossible for the state to guarantee the financial integrity of the airport revenue fund."

Further, the governor said the bill helps only "a narrow a group of affected businesses" and would "have the airport system's primary mission be one of serving the concessionaires rather than serving the public."

The bill is "particularly troubling" because of "the tenor of distrust that runs through this bill," the governor wrote. "Without having given this administration a meaningful opportunity to work with the concessionaires, some legislators may have assumed or already concluded that this administration cannot be trusted to negotiate settlements that are fair and reasonable, and in the best interests of all of the people in Hawai'i."

Of the governor's veto, Weiner said: "Obviously, the concessionaires are deeply disappointed."

DFS has said it cannot afford to pay the minimum rent of about $60 million annually because of a decline in visitors from Japan since Sept. 11 and increased security measures at the airports.

In October 2001, the Legislature authorized temporary relief for the concessionaires, and the Transportation Department granted rental waivers and other measures that saved airport businesses more than $26 million. Those waivers expired after April 2002.

A bill to extend the waivers passed the Legislature last year, but was vetoed by Gov. Ben Cayetano, who said it would give retailers too much state support.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com or at 525-8070.