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The Honolulu Advertiser

Posted on: Tuesday, March 25, 2003

Ceded lands problem can't be settled easily

One of Hawai'i's great unsolved mysteries is how much of the revenue from ceded lands — former crown and government lands — should be shared with the Office of Hawaiian Affairs.

We believe OHA should receive the support it needs to do its job: working for the betterment of Native Hawaiians. But a financing formula must be carefully examined before the Legislature hastily approves a revenue stream just to rid the state of this political thorn.

Right now, the Legislature is determining which formula to use when it resumes ceded land payments to OHA. The Lingle administration has resurrected a 20 percent pro-rata formula based on an extremely vague 1980 law.

Advertiser writer Johnny Brannon reports that a Senate bill, authored by OHA, would give the agency 20 percent of all income derived through ceded land lease payments.

However, Brannon points out, the measure doesn't say whether we're talking about 20 percent of the gross income or the net income. In other words, does OHA get the money before or after the state deducts for its investments, operations and maintenance?

Nor does it say whether the 20 percent would include proceeds from enterprises related to, but not necessarily on, facilities such as Honolulu Airport. In a 1996 ruling, Circuit Judge Daniel Heely determined that OHA was owed additional revenue from harbors, Honolulu Airport and other entities that have at least part of their activities on ceded lands.

OHA argued that the agency should get revenues from the Duty Free Shoppers Waikiki because it would not exist but for Duty Free Shoppers at Honolulu Airport.

We don't buy the "but for" reasoning in this case. However, the issue has yet to be resolved. The state appealed the Heely decision to the Hawai'i Supreme Court. Meanwhile, a series of laws was passed to set up an interim revenue stream for OHA.

In 2001, the Hawai'i Supreme Court responded by striking down the 1990 law that set up a mechanism for ceded lands payments to OHA on grounds that it conflicted with federal law. However, the court found that the state was still obliged to compensate Native Hawaiians and suggested that the Legislature find ways to meet that obligation.

If that obligation turns into a 20 percent pro-rata payment — as the Lingle administration appears to support — then we expect the Legislature's brightest legal minds to figure out: 20 percent of what? To date, there is no reliable inventory of ceded lands and all the financial variables associated with them.

While it might make sense to share revenues from ceded lands that are "commercialized" — leased out for commercial purposes — does it make sense to include revenues that flow from sovereign or public purposes such as harbors, hospitals and housing?

While the governor may be trying to do the right thing by resuming ceded land payments, the state should think carefully before basing any new formula on a flawed law.