One of the biggest headlines from the demise of Island Air is that the state is losing out on a whole lot of rent.

The state Department of Transportation had come to a deal with the airline to defer payment on $1.5 million, which is nearly a full year’s lease costs, and may not ever be paid because it is the bankrupt airline’s largest unsecured debt.

We dug deeper and found that’s not the state’s only airport tenant with a deal to delay payment in something called a deferral agreement.

The DOT tells us So Ono Food Products has pledged to catch up on $288,426, Airmed International has $25,899 on the books, and Offshore Flight School is slow-paying $2,104.

That’s news to lawmakers like Sen. Will Espero, vice chair of the Senate Committee on Transportation and Energy.

“Certainly these figures need to be reviewed and looked at to see how the state can make certain that it gets back all of these monies if a business continues to struggle and may eventually go into bankruptcy,” he said.

While that was the case for Island Air, some of the other businesses tell Always Investigating they’re doing much better now thanks to and because of the payment plans.

A So Ono spokesperson said the company was able to work out a right-sizing of its leased space and is now on an upswing: “It’s two businesses working things out and trying to make sure everybody is successful in the process.”

So Ono kept 130 people employed and says the back rent could be paid off as soon as year-end.

Offshore Flight School’s owner says its debt, while small, was critical to surviving a slow period.

These are examples where businesses got a lifeline that saved jobs, saved their business, and helped get them to a turnaround period.

“That’s fine and the state wants to help employers, and not be the big gorilla that just demands and is not flexible,” Espero said, “but at a certain point in time, we need to cut our losses, and when you have an operation owing $1.5 million, it does make you wonder whether that operation was reviewed properly.”

The DOT said in a statement: “There are more than 1,300 tenant accounts related to airport property and a very small percentage enter into a payment plan. Each case is considered on an individual basis and interest is collected on payment plans. The HDOT Airports Division sees the value in working with companies in order for them to continue operations, providing jobs and services, and contributing to commerce and the State.”

Airmed International’s mainland spokesman said the amount on DOT’s books is a debt of the former owner, and the company no longer rents hangar or office space here.

“In the case of Airmed International, there is no current tenant, however our counsel recommended leaving the case open in order to continue seeking payment,” DOT told Always Investigating.

Offshore Flight School’s owner says he foresees full payoff within 4 to 6 months for his couple-grand back-rent, which is a drop in the bucket for DOT Airports Division’s $473 million in annual revenue. Last fiscal year, about $333,000 ended up written off as uncollectible bad debts from all vendors, and under $1 million was owed by various vendors 90 or more days late.

“From the perspective of banking, it’s a low debt ratio which is good,” Espero said, “but obviously the concern here is at what point do you continue subsidizing these small businesses, and then either look for a better deal or get security?”

Whether and when anyone knew security was needed is unclear. Fitch Ratings recently upgraded DOT to an A grade for bonds in part because it thought Island Air would be expanding, stating in its credit analysis that “the Airports Division expects near-term traffic results will be better than projected due to Island Air expanding interisland traffic, more than doubling capacity over last year.”

“I could see where when it comes to bond ratings, the information could possibly be murky or we don’t see the full truth or hear the full truth,” Espero said, “but certainly you have to think that the state had much more information at an earlier time regarding the finances and the strength of Island Air.”

DOT says the deferral for Island Air was about more than just back-rent, telling Always Investigating:

“HDOT and Island Air agreed to a rent deferral program that allowed the airline to finance its rent payments while it transitioned to a new location at HNL. The full amount of the six month rent deferral was to be paid back beginning January 2018 over 36 months with an interest rate of 3 percent. The agreement was issued in part because HDOT recognized that moving the airline from its current location in the Commuter Terminal to another area in the Diamondhead Terminal would have increased expenses for the airline. HDOT will work through the bankruptcy proceedings to determine if assets or payments will be made to the State. Now that the airline has ceased operations, the State expects to save the revenue associated with moving the airline to the new location.”

Always Investigating asked Espero, knowing now what was found out about these deferral agreements, what questions will lawmakers have in the next regular session?

“We’ll need to know how many of these deferral agreements are out there, and not just the airports. It could be anybody doing business with the state or on state properties,” Espero said. “It probably would be in our best interest to get an annual report from all state agencies that might be giving some type of financial assistance or subsidies so to speak to these businesses that should be paying us revenue instead.”

We’ll follow up on what other late-payment plans are out there between various state agencies and their tenants, and whether lawmakers can get more transparency next session.