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The Honolulu Advertiser

Posted on: Friday, May 9, 2003

Lingle should veto airport giveaway bill

Gov. Linda Lingle should lose no sleep and waste no time in vetoing Senate Bill 44, a bill designed to give economic relief to airport concessionaires.

It's not about politics. Former Gov. Ben Cayetano vetoed something similar last year without blinking.

We're not sure what lawmakers were thinking when they put this piece of work together, but it's totally unworthy.

First, it's poorly drafted. Its ambiguities are as legion as they are gaping.

Second, it's bad policy. Its essence is to take the risk out of doing business at the airport, under almost any circumstances. You'll notice that Hawai'i government isn't proposing to allow other businesses in this state repeatedly to default on leases and contracts.

Sure, business conditions at the airports are bad. You've heard the litany of SARS, Iraq and Sept. 11, which contribute to a slowdown in airport use. Those conditions, of course, are hurting most businesses.

Indeed, the state Department of Transportation should have some leeway to negotiate alternative terms for well-meaning tenants. But times have changed, and the state has no business underwriting antiquated business plans.

Third, the bill mandates absolute relief to a level that's left to the courts or a court-appointed CPA to determine. The potential cost to the state is tens or even hundreds of millions of dollars.

Fourth, the bill probably would kill the state's lawsuit against by far the largest concessionaire, Hawai'i's duty-free operator, DFS. It is the lawsuit that has compelled DFS to begin serious negotiations with the state to pay its overdue rent, even as it managed to make a $100 million payment to its 60 percent owner, LVMH Moet Hennesy Louis Vuitton.

Attorney General Mark Bennett argues it is illegal under the state Uniform Fraudulent Transfer Act for DFS to pay LVMH while it is defaulting on debt. If SB 44 becomes law, DFS apparently can continue that outrageous practice.

This is one bill that simply demands a veto.