Feds to oversee valuation of DHHL land where city built rail hub

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The federal government is stepping in to make sure Native Hawaiian beneficiaries get their fair share after the city built rail’s operations hub on about 50 acres of DHHL land that the city does not yet have title to.

It’s been about a decade since the City and County of Honolulu and the Department of Hawaiian Homelands agreed in principle to swap Pearl City and Kapolei parcels, and there’s been disagreement ever since how to measure the values. It’s going to take U.S. Department of the Interior oversight to work it out.

The ROC — or rail operations center — is so mission critical for Honolulu’s rail system that HART built out all 176,000 square feet of it without actually owning the land. It has a licensing agreement from DHHL on a swap deal that’s supposed to give DHHL equally valuable land.

Ten years ago, the site eyed was in the form of two parcels in Kapolei near Varona Villages and down the road from where Ka Makana Alii mall was developed on DHHL land. The acreage of the city parcels in about the same as the DHHL land, referred to as Ewa Drum in Pearl City, where the ROC was built. But valuation has been another question.

“I think there was a lot of discussion about the positioning each party’s potential appraisal values,” William Aila, director of the Department of Hawaiian Home Lands, told Always Investigating. “It appears that there was a difference of opinion on what level of entitlement in terms of zoning each party’s parcel was going to be assigned.”

HART said in a statement: “City attorneys have been diligently completing the land exchange.”

But values haven’t even been agreed to, much less land titles drafted. And that concerns Honolulu City Councilmember Heidi Tsuneyoshi, in the wake of other HART cost escalations and property-related mistakes elsewhere, such as the feds demanding a HART do-over on portions of its relocation program.

“This is just one other issue that we really need to make sure we do our due diligence,” Tsuneyoshi said, “going out to the community, going out to the beneficiaries and letting them know that this has gone on ”

Tsuneyoshi put forth a resolution (Res. 19-257) to ask the federal Department of the Interior — which has oversight of DHHL — to postpone any land exchange until more hearings can be held about the parcel swap. This comes within months of DHHL and the city mutually agreeing to use the Department of the Interior’s appraisal process to break the deadlock.

Always Investing asked: Do you look at it as a 2009 valuation, or present valuation as a developed parcel that is the heart and brain of the train system?

“We are going to look at it at today’s value,”Aila said, “not the value at the time the memorandum of agreement went into play.”

That could be a huge gap.

“It could be,” Aila said. “The challenge is, the appraisal process is going to be the highest and best use.”

Always Investigating asked, what are the options for reimbursing DHHL for a potential gap, in what HART had budgeted for, which was essentially a 1-for-1 swap, and what could be a difference of tens of millions of dollars or more?

“We’re fortunate to have the Department of Interior on our side because they’re overseeing us,” Aila said. “Whatever differences that are arrived at each of our appraisals, we will be happy to entertain creative solutions. If it’s not straight monetary, if it’s not straight land, we can consider additional parcels of land. We can consider potential development rights along the railway.”

Aila says Department of the Interior will help make sure Native Hawaiians get the best value possible, but he says he’s mindful the city taxpayers can’t be squeezed too hard.

“I think we need to be advocates for our own sides,” Aila said, “however ultimately beneficiaries pay taxes to the county, which is going to pay for this, so we just have to be reasonable.”

Elsewhere, DHHL will be making its first foray into high-rise affordable rentals, redeveloping the former Bowl-O-Drome in Moiliili. Aila sees the same potential in areas along the rail line to give Native Hawaiians more housing choices toward the urban core.

“No. 1, it’s closer to jobs. No. 2,  their transportation costs go down,” Aila said. “The opportunities, too — the opportunities for schools, the opportunities for community colleges all nearby, the rail gives them the opportunity to travel along the rail station and hopefully one day up to the University of Hawaii (at Manoa).”

The city is paying a dollar-a-year license fee to DHHL for the ROC land meanwhile, and vice versa. HART told KHON2 in a statement: “In the interim, the parties have allowed each other to use and build on the properties proposed for exchange.”

Aila says DHHL will wait for the dust to settle before doing anything on their future parcel. They are looking at anything from homes to commercial uses, and he says they will consult the Hawaiian Homes Commission, community and beneficiaries again, as they did for the original proposed exchange a decade ago.

KHON2 asked, what can fit on the swapped land?

“We haven’t restricted any use to a certain use, so residential brings up the value, but we could also consider using it for other uses which could potentially bring it up higher,” Aila said.

“I think we do have to address the situation to the beneficiaries and at the very least bring it out to the beneficiaries,” Tsuneyoshi said. “How are the steps moving forward that is a fair and equitable transaction?”

Some portions of the city land it intends to give DHHL are not presently zoned for homes or businesses, but DHHL has the latitude to re-zone lands for uses that it sees fit.

“If it’s monetary or if it’s land, we would take that and try to develop it as soon as possible to take people off the waitlist,” Aila said. “That is the quickest way that our beneficiaries would receive the best return.”

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