Ka Wai Ola - Office of Hawaiian Affairs, Volume 11, Number 5, 1 May 1994 — Ceded land revenues [ARTICLE+ILLUSTRATION]

Ceded land revenues

by Clayton H.W. Hee Chairman, OHA Board of -Trustees Mueh has been said by our political enemies about the OHA ceded lands settlement of $134 million received in 1993. Attorney Bill Meheula has suggested that a review of that process, and what remains to be done, should be published. It's been done before, but Bill is

probably correct, we tend to forget what happened and it often helps to be reminded. At the time of my eleeūon in November 1990, OHA had been informed by the state that native Hawaiians were

owed approximately $95 million for revenues the state received for activities on ceded lands that were leased or rented. These activities ranged from lands leased to private companies, such as Duty Free Shoppers, to landing fees charged airline companies for the use of the reef runway and other airport facilities. In February 1991, OHA hired the audit firm of Deloitte and Touche to review the state's data, provided them by the state's auditor Ernst and Young. By December 1991, Deloitte and Touche determined that, based on a review of the state's numbers only, the amount owed OHA was not $95 million but $117 million.

In addition, Deloitte and Touche had many questions and requested more information. Throughout this period, OHA was engaged in discussions with the Office of State Planning. The sum and substance of the discussion focused on specific items on whieh the state (through Ernst and Young) and OHA (through Deloitte and Touche) had specific agreement. For example, if the

state said it owed $100,000 for the use of certain lands and OHA agreed that their data were correct, the $100,000 figure was set aside and no further discussion on that issue occurred. If, however, the state said it owed

$100,000 for a certain parcel and OHA disagreed, saying $150,000 was owed, the auditors were requested to review that parcel and justify their differing analysis. At no time was there a "negotiated compromise," in whieh OHA and the state said, "Let's settle for half the difference, or $125,000." The answer was either $100,000 or $150,000 based on supporting documentation. When all of the "agreed to" numbers were added up, the amount was neither $95 million, nor $1 17 million, but $1 1 1.833 million. That amount was finally inserted into the state budget by the Legislature in 1992, and in

July 1993 the state finally paid OHA approximately $134 million, whieh included all of the statutory interest. Because of this, OHA has begun, and continues, to fund programs whieh it never did before — simply because it never had the money before. Ironically, some of the recipients of OHA funding have been OHA's harshest critics — they were among the first in line. Furthermore, contrary to what OHA's political enemies assert, at no time whatsoever did OHA, by receiving the $134 million, forgive or turn its back on the tens of millions of dollars due from issues whieh the state and OHA could not agree upon.

If the state or OHA disagreed on an issue, the item was set aside for future talks. An example is revenues generated by Hilo Hospital, a facility rented out to concessionaires, and built on ceded lands. OHA contends that 20 percent of revenues derived belong to the native Hawaiians; the state disagrees. All of the "disagreed to" items have yet to be settled. On Jan. 14, 1994, OHA filed a complaint in circuit court asking the Judiciary to determine how mueh more is owed. OHA anticipates that the courts will rule favorably on OHA's contention that as mueh as $100 million (and maybe more) is still owed. Although the process is long, it's worth every penny.