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The Honolulu Advertiser
Posted on: Tuesday, May 25, 2010

Say should be lauded for tenant support

By Michael Steiner

David Shapiro's May 17 column, "Lawmakers interfering in private business," suggesting that House Speaker Calvin Say is somehow involved in improprieties because he was in the Legislature at the time that Act 189 was passed, is misleading.

Calvin Say is not directly involved with any of the seven companies that comprise landlord HRPT Properties Trust holdings in the Māpunapuna area and his position within Warabeya USA has nothing to do with the bill.

Act 189 serves a legitimate public purpose, to stabilize Hawai'i's economy, especially during the recessionary period and to do so without substantial reduction in the economic benefit to the landowners. Act 189 reminds the seven companies of HRPT that the lease terms "fair and reasonable" should apply to both the lessor and lessee.

To illustrate the problem, the companies of HRPT are demanding that tenants pay rents of roughly $10 per square foot. Their own appraisers have testified that $6.50 is the market price. Since then, two arbitration panels have awarded rates averaging $5.50. Therefore, the "market" is not $10 but closer to $5.50. Lessees are not entitled to below-market rents; however, neither is the lessor entitled to rents that are close to twice the current market rate.

However, the companies of HRPT continue to ignore the arbitration awards, instead demanding exorbitant rents and lease concessions on a take-it-or-leave-it basis. Negotiation no longer exists as lessees are forced into extremely expensive ($75,000 to $150,000) arbitration proceedings.

Currently, more than 20 properties are in or about to enter arbitration with another 80 heading that way over the next two years. What is to be gained by forcing 100 properties into arbitration?

Ultimately, the public will bear the cost. Consumer prices will rise, businesses will lay off workers, tax revenue will fall and companies will go out of business. Meanwhile, the seven companies of HRPT will ship our money to their headquarters in Newton, Mass.

Act 189 had bipartisan support last year and passed with a one-year sunset that was intended to give the companies of HRPT a year to change their tactics and provide fair market rents to lessees. Unfortunately, corporate policies only worsened and the Legislature this year overwhelmingly passed Senate Bill 2020 to extend the act for three years.

U.S. District Judge Susan Oki Mollway is considering the constitutionality of the bill, which has been challenged by HRPT. However the judge rules on the technical writing of the act, the purpose, intent and wide support of the law remain in place.

Neither the governor nor the Legislature should shy away from performing their public service. Indeed, Judge Mollway said: "This court does not see its role as seeking to influence prospective legislation. This court rather sees its job as deciding matters properly before it in cases filed in this court."

Lawmakers are not interfering in private business. They are redressing a public problem with a narrowly drawn, reasonable bill. As the legal challenge to Act 189 finds its way through this and perhaps subsequent courts, small-business owners should ask the governor to allow SB 2020 to become law to extend Act 189. The need is now greater than ever.

David Shapiro, let's not malign those who have the courage to stand up to the elephant in the room. Citizens for Fair Valuation appreciates the courageous and diligent efforts of the Legislature and the governor in passing Act 189 and the concern expressed for small businesses.

While Shapiro suggests that Speaker Say should be criticized for supporting this bill, the truth is just the opposite. He should be congratulated and thanked for his continuing support and concern for the well-being and continued employment of the working people of Hawai'i.