A legal challenge by a Hilo business owner against the state was dismissed Friday.
Lessees of state land within the Kanoelehua Industrial Area in Hilo were allowed in 2018 to apply with the Department of Land and Natural Resources for lease extensions of up to 40 years, so long as they made certain improvements to their properties.
One such lessee, warehouse operator 69 Railroad LLC, signed an agreement for a 30-year lease extension in Feb. 2022, but the DLNR later that year made revisions to the agreement in the name of modernizing the legal language within. Some of those revisions included requiring 69 Railroad to provide the state with up to 40% of its sublease rent on top of the annual rent on the property, and to remove all improvements to the site at the conclusion of the lease.
In response to the revisions, 69 Railroad filed a petition for a contested case last September, but the Board of Land and Natural Resource rejected that petition Friday. DLNR Land Division Administrator Russell Tsuji said at Friday’s BLNR meeting that the revised language is standard among other state leases.
Furthermore, Tsuji argued that 69 Railroad not only doesn’t have legal standing to request a contested case, even if it did, the business already had the opportunity to challenge the revisions before the BLNR, which he said obviated the need for a contested case.
Ron Kim, attorney for 69 Railroad, did not challenge Tsuji at Friday’s meeting, saying he didn’t consider a BLNR meeting an appropriate venue for legal arguments. However, Kim has filed complaints against the state in Hawaii’s Third Circuit Court and the U.S. District Court which call the state’s actions “arbitrary, capricious, unreasonable and irrational and with no … rational relationship to a government interest.”
A conference hearing for the federal case is scheduled for April 3. Initial events in the Third Circuit Court case have yet to be scheduled.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.
