After months of delays and complaints, the Board of Land and Natural Resources has authorized a tentative agreement for a 30-year extension for a lease in the Kanoelehua Industrial Area.
At Friday’s meeting of the BLNR, board members discussed extending the lease of a property under the terms of a 2018 law that allows lessees in the KIA to extend their leases with the state so long as they made improvements to their properties.
So far, less than a dozen lessees have applied for such extensions, and even fewer have been granted. But even those few applicants have been frustrated by long delays in the application process.
Jim McCully, a warehouse operator in the KIA, and a business partner applied for an extension for a 4.5-acre property in June 2019, but only in 2021 did the BLNR indicate that it would discuss the application at a meeting in October of that year. That meeting came and went without a discussion of McCully’s application.
Finally, however, the BLNR on Friday took up the matter and ultimately accepted a development agreement McCully submitted.
“It’s not a fully settled matter, and I’m only the third application to be processed,” McCully said. “But I am very pleased that the board followed the law.”
McCully said there is an “ambiguous” level of negotiation still left before the lease extension is finally approved. However, at Friday’s meeting, the board confirmed that the lease extension will not include new terms for the lessee, which was a point of contention for other applicants.
“We can’t update this lease, so we’re going to be continuing the 1961 terms for another 30 years from 2026, (the lease’s current expiration date),” Kevin Moore, assistant administrator for the DLNR Land Division, said during the meeting Friday.
McCully said the Land Division will use his proposed development agreement as a blueprint for a final agreement. His attorney, Ron Kim, said he expects that final agreement to be presented in one or two months.
Kim commended the board for finally discussing the application, but noted that, if it had done so earlier, his clients would be in a better position.
According to documents submitted to the board, McCully and his partner have more than $600,000 of improvements lined up.
“Now that we’re in the pandemic, costs are higher now than they were when they submitted the application,” Kim said.
Kim said he is not sure whether the board finally took up the matter in response to his and McCully’s discussions of possible legal action against the state.
After a BLNR meeting in January, Kim said he thought the only option McCully might have had to move the application forward would be by taking the matter to the state Supreme Court.
“I don’t know if it’s because of recent pressure,” Kim said. “The thing is, we’ve been applying pressure for years.”
McCully said he feels the long delay may have been in part because the BLNR “lacks market sophistication,” given that the board seemed unsure of how to deal with land issues, such as subleases, that other state agencies like the Department of Hawaiian Home Lands easily manage.
But, with his long-delayed application finally moving, McCully said it was “a great day for the industrial area.”
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.
