Kamilonui farmers critical of rent plan

November 16, 2010

HONOLULU (AP) - Farmers who have tilled Kamilonui Valley's soil for decades are protesting a proposed rent hike, waving signs along Kalanianaole Highway over the weekend.

Kamehameha Schools, which owns land in the valley on the eastern side of Oahu, wants to raise rents from an average of $15 an acre per month to as much as $434 an acre each month, a move that prodded the farmers into action.

''We want to fight for the farmers in Kamilonui Valley,'' Judy Nii told KGMB. Her nursery, R&S Nursery, has been in the valley for more than 30 years.

''There are a lot of small farmers, vegetable farms, some nurseries, and the rent that they're asking for is just so outrageous that none of us can afford it,'' she added.

Nii said she currently pays $1,200 a year in rent for her 6 acres. ''And what they're proposing in my case is $32,000 a year, which is totally unfeasible,'' she said.

The farmers accused one of Hawaii's largest landow-ners of failing to negotiate in good faith. They said the lease renegotiation deadline was in July, and contended that Kamehameha Schools is now refusing to talk to them.

Kamehameha spokesman Kekoa Paulsen said Saturday that the institution has been meeting with the farmers since March.

''We have given them several extensions of time,'' said Paulsen. ''We are headed into arbitration on the lease negotiations. . . . We believe that the arbitration process will determine a fair price, and we will abide by the arbitrator's decision.''

Paulsen said Kamehameha hopes the farmers appreciate ''that they've been paying extremely favorable rents for 38 years for land that has provided their livelihood and also their residence.''

Republican state Rep. Gene Ward, of the Kalama Valley and Hawaii Kai areas, also participated in the sign-waving.

Dee Jay Mailer On The Hot Seat Kamehameha schools Kamilonui agricultural land

DEE JAY A. MAILER
Chief Executive Officer
Kamehameha Schools

Remember these words? Look's like She only sees Economic $$$$$$$$$$$$ Now!!!!!

 

http://blogs.honoluluadvertiser.com/hotseat.php/2007/05/02/on_the_hot_seat_kamehameha_schools_ceo_d

 

Comment from: Dee Jay Mailer

Aloha Chris,

There is no current deal to sell Kamilo Nui agricultural land to any developer, and selling Kamilo Nui land was never our initiative. A couple of years ago, some of the farmers asked us if they could purchase their leased fee interest so they could, in turn, sell the property to a developer. We agreed to let them explore that option, as long as it was acceptable to all the farmers in the valley. The farmers and the developer were not able to reach an agreement and there are no further discussions taking place. Not all of the farmers supported the development proposal, therefore, Kamehameha will honor the current lease terms.

Chris, your question is focused on Kamilo Nui, but our stewardship kuleana extends throughout the state, and our approach is holistic. Every decision we make concerning our lands is weighed against five values: Environment, Education, Economic, Cultural and Community. Can it be used for a land-based educational program? Is it culturally significant to our Legacy or our people? Can it be used to benefit the Hawaiian community? Will it generate significant economic resources that allow us to fulfill our mission and expand our educational reach into the larger community? Is it environmentally sensitive, unique or precious? We were established in perpetuity, and we must make careful decisions about our assets to make sure we protect our future.

Kamehameha Schools/Bishop Estate wants to destroy farmers in Hawaii

First they nail you to the wall, then they said you are Great. Holy cow Batman!! Hard to figure
 Bra.
Kona Coffee Farms at Risk in Lease Talks
Special from Hawaii Free PressBy Andrew Walden, 12/4/2007
North Kona coffee growers fear being forced out of business under terms proposed by Kamehameha Schools’ land lease negotiators. Over 240 farmers face renegotiation as their 35-year ground leases expire. Demands by Kamehameha Schools (KS) would increase ground rents for the average five acre parcel from the current $1,250 to 7,500 per year to an average closer to $40,000 per year. Leasehold farmers in North and South Kona produce about 65 percent of Kona coffee. North Kona coffee growers have formed a leasehold committee to negotiate. They are asking Kamehameha Schools to pattern the North Kona lease renewals on the lease renewals given to South Kona coffee growers beginning in March, 2006 -- after 7 years of negotiations. South Kona leases were signed with four or five North Kona farms -- including one run by a former KS manager -- and then suddenly KS stopped and demanded higher payments from North Kona.
Robert Rosehill is the KS Land Assets Manager handling the negotiations. In an Oct. 31 letter to Kraig Lee, the Chairman of the North Kona Leasehold Committee Rosehill points to, “the combination of escalated real estate values (and) phenomenal profits to lessees from the sale of KS leaseholds ….” Rosehill asks, “… your understanding of the constraints that have been placed upon us by forces not directly involved with land management or farming.” Both the South Kona and proposed North Kona leases contain a 30 percent "assignment fee" paid to KS when leases are sold. Both also take a percentage of business revenues generated on the leasehold in the event that the percentage exceeds the base rent.
Over 250 farmers met Nov. 17 at the Church of Christ on Konawaena Rd in Kealakekua. A second large meeting of leasehold farmers was held in September. Farmers believe KS is pressuring media to remain silent. One supporter explains, “… more than 400 people were in attendance (in September), but there was no media coverage at all.”
One leasehold farmer, who asks not to be identified for fear of retaliation explains, “They (KS) are expanding Keauhou Shopping Center three times its current size. Our farm is mauka of that area and KS sees these leaseholds as potentially the Beverly Hills of West Hawaii. We have spent our own money and effort to establish our farm, our brand and our marketing.” Under the new lease agreement, “Before you grow your fist bean you’re nearly $100,000 in debt every year. We would have to surrender our lease. There isn’t enough money in coffee. For over 120 years bishop has renewed the leases. We built roads and houses based on the expectation.”
Another believes KS intends to drive out the North Kona coffee farmers and “develop for upscale properties instead.” Lee discounts these theories pointing out that KS has thousands of acres of undeveloped land, including Kona lands he feels are much better situated for luxury development.
As the negotiators crawl forward, some farmers are already on month-to-month leases. Others expire in 2008. Explains one farmer, “An ohia tree crashed down on my neighbor’s drying platform. He can’t justify spending $65,000 to repair it when he doesn’t know if the lease will be renewed.”
In a letter to Rosehill, Lee writes, “Most households could not afford an additional $3000+ a month increase in their budget. No farmer could afford it. If this increase were to happen, most lessees would attempt to sell their leases. This would not work because no one would purchase their lease even with a substantial or total discount in sales price, knowing they had to pay $3,333.33 a month in lease rent ….KSBE would go from having an income stream on their leases to a tremendous liability, expense and legal/litigation dealing with lessees, lenders, title companies, squatters, deterioration of crops, dwellings and buildings and abandoned leases, real estate taxes. This would not be good stewardship by KSBE and would be a major community disaster.”
The proposed $40,000 per year average annual lease payment is patterned on KS’ current 4-percent-of-fee-value “penalty rent” assessed only to leaseholders who don’t pay on time or otherwise fall out of compliance. Lee continues: “We would like to believe we are not being punished for farming ….At our own expense we have brought in utilities, cleared land, installed roads, paved roads, planted crops, installed water systems, irrigation systems, ripped out failed crops and installed new crops, built houses, barns and fences, etc. The proposed revised rent structure would … destroy farming on KSBE leased land in North Kona as we know it today.”
Rosehill responds “KS is bound by its fiduciary responsibilities to its beneficiaries”—the native Hawaiian students of Kamehameha Schools. “The Trustees…are prohibited from giving away trust assets. This includes negotiating rental income that reduces or falls below contracted levels.” He adds, “The absence of a current detailed, convincing argument makes it nearly impossible to justify application of the South Kona rent schedule and new 35-year lease in North Kona.”
The North Kona farmers have hired University of Hawaii - Hilo agricultural economist Dr. Sabry Shehata to study the economics of Kona coffee farming and help develop a compromise proposal.
Some Kona coffee farmers in late 2005 and early 2006 were outspoken in opposition to plans for by “PLK Air Services LLC” to build a $25 million coffee and macadamia nut processing facility financed by state-backed bonds at Kona’s Keahole Airport. The Kona Coffee Council, Hawaii Coffee Association, and the Kona Farm Bureau all opposed the new plant.
The “L” in PLK stands for Robert Lindsey, a former Land Assets manager and Regional Director for KS. In April the Office of Hawaiian Affairs board of trustees selected Lindsey as OHA’s Big Island trustee replacing the late Linda Dela Cruz. PLK announced in August it is purchasing the Hilo Mauna Loa macadamia nut processing plant from Mauna Loa’s new brand owner, Hershey. Market turmoil has left many Big Island macnut producers unable to sell their crops for the last two seasons. PLK partner Albert K.F. Kam Jr told Pacific Business News August 3 that PLK is still pursuing its Kona airport plans.
Lee discounts any connection, calling Lindsey “a nice guy” and pointing to “Honolulu bean counters” as the source of KS’ demands.
Says Lee, “There are some people who want to go right to litigation. Both sides have a duty to negotiate in good faith. We probably would be thrown out of court if we didn’t negotiate first.”
Related story, Coffee farmers oppose PLK:
http://www.hawaiiislandjournal.com/2005/10b05a.html
Andrew Walden is the publisher and editor of Hawaii Free Press, a Big Island-based newspaper. He can be reached via email at mailto:andrewwalden@email.com
HawaiiReporter.com reports the real news, and prints all editorials submitted, even if they do not represent the viewpoint of the editors, as long as they are written clearly. Send editorials tomailto:Malia@HawaiiReporter.com

Three years later, Best of friend

Kamehameha Schools at KCCF

November 11, 2010

MEDIA RELEASE
Kamehameha Schools stewards about 180,000 acres of agricultural lands as part of its statewide portfolio. On Hawaii Island alone, more than 72,000 acres of high-value agricultural lands help support a reliable food source, local jobs and a sustainable future for Hawaii.
Prudent management of the Schools’ natural and cultural resources is essential. Kamehameha Schools Land Assets Division (LAD) forged a strategic agricultural plan to provide goal-based initiatives for optimal agricultural management.
Roughly 800 Kamehameha Schools agricultural tenants are actively farming a variety of crops on Hawaii Island. These agricultural tenants play a vital role in providing Hawaii’s bountiful harvest and supporting Kamehameha Schools’ mission of creating educational opportunities to improve the capability and well-being of people of Hawaiian ancestry.
Makahiki heralds this time of year where abundance and the harvest is celebrated. With more than 70 percent of Kona coffee grown on the Schools’ lands, Kamehameha Schools is honored to participate as a sponsor of the 40th annual Kona Coffee Cultural Festival.
Les Apoliona, Kamehameha Schools North Kona land manager, said, “Farmers are the ambassadors of the Kona coffee brand worldwide.”
On of the highlights of the festival comes when the Kona coffee industry gathers at Keauhou Beach Resort to witness the prestigious judging of Kona’s finest coffees at the Gevalia Kona Coffee Cupping. The final round of cupping begins 9 a.m. Thursday, Nov. 11.
The public is invited to meet these Kona coffee ambassadors and to judge a bit for themselves at the Keauhou Resort Kona Coffee Label and Website Competition, and the art exhibit.
Dave and Trudy Bateman, KS agricultural tenants and owners of Heavenly Hawaiian, will be on hand alongside Kamehameha Schools to share farm information and samples of their 100% Kona coffee.
Also Thursday at the Keauhou Beach Resort, join Kamehameha Schools and its featured agricultural tenant – the family-owned Kona Coffee & Tea Company, the 2009 winner of the Gevalia Cupping Contest. The Private Reserve and Malia Ohana roasts will be available for sampling and purchase.
Following the Kamehameha Schools Kona Coffee Grand Parade on Saturday, Nov. 13, the Schools will join the festivities and cultural events at the Makaeo County Pavilion. KS agricultural tenants Hawaii Island Gourmet and Kona Cowboy Coffee will be featuring food pairings.
With three generations of paniolo, Onaka Ranch proudly makes its special Kona Cowboy Coffee available for all to taste and savor.
Hawaii Island Gourmet, known to many for their signature Atebara potato chips will also be available for sampling and purchase including taro, sweet potato and shrimp chips and cookies.
Also this week, the Association of Hawaiian Civic Clubs is convening its annual convention at the Sheraton Keauhou Bay Resort. Kamehameha Schools will be exhibiting and sharing its land stewardship and strategic agricultural plans with convention attendees.
For more information on how to support local farmers or to view Kamehameha Schools agricultural tenants with commercial businesses, visit www.ksbe.edu/land

Kamehameha Schools/Bishop Estate wants to destroy small business farmers in Kamilonui Valley

This letter when out to all the KS Alumni

 From: KS Alumni

Date: November 17, 2010

To: all the KS Alumni

Subject: Background on KS Lease Issues in Kamilonui

Aloha e Nä Hoaloha,

As you may already know, a small group of lessees who hold agriculture leases with Kamehameha Schools in Kamilonui - East Honolulu are protesting lease rent increases that we have proposed and consider to be fair.  We have been negotiating with the lessees since March, and while we continue to meet with them, we are also proceeding with arbitration, which is the process provided for in our lease agreements. We believe the arbitration process is a fair one.  A three-member arbitrator’s panel, selected by the lessees and Kamehameha Schools, will determine a fair lease rent structure based on comparable parcels in the area.  We respect the arbitrators’ expertise and will abide by their findings.

The lessees have taken their cause to the media, suggesting that the proposed lease rent increase is too high and jeopardizes their futures.  The news media appear to have accepted the lessees’ characterization of this process, so we wanted to share our side of the story and hope that you can help us by being advocates.  Here are some facts about the issue:

1.            KS has abides by all of the requirements of the lease contracts signed 38 years ago, even if those requirements did not favor Kamehameha’s interests.

2.            One of those requirements was that rents would not be increased from that time until July 1, 2010.

3.            This has resulted in lease rents for the last 38 years amounting to $15/acre per month (which includes the right to reside on the property).  Clearly this amount is far below market value and far below what is a fair return for KS today.

4.            The lease rent proposed by KS is about $434/acre per month.  Although this is a significant increase from $15/acre, the amount is still low and very fair especially considering the residential element. 

a.            As a comparison, the State Department of Agriculture recently completed a bid process for agricultural acreage in Waimänalo that resulted in leases, for bona fide farmers, of approximately $460/acre per month.

b.            KS has also already settled lease rents with several of the other agricultural lessees in the area who have agreed to KS’ lease rent offers.

5.            A majority of the current lessees are not currently farming the minimum requirement of 50% of their properties.

6.            Although subleasing is not allowed under the current agreement, several lessees are allowing others to use the property – and charging them for it. Two of these sublessees are not farming at all; we’ve also been told that one sublessee pays $1,875/acre per month. That means that their landlord (our lessee) is making a significant profit by subleasing our agricultural land for residential use.

a.            Recognizing that subleasing to bona fide farmers could allow current lessees to generate additional income to offset their new market rent, KS is offering to allow subleasing for bona fide agricultural use in the new leases.

7.            Several leases are in violation – using the land as dumping grounds of abandoned vehicles, scrap metals and discarded plastics.

Unfortunately, a group of the lessees who accepted the favorable terms of the lease agreement for nearly four decades, did not use the long stretch of very low lease rents to prepare for the eventual readjustment to fair market rates. As you know, we have a fiduciary duty to ensure that our lands provide the income critical to our ability to fulfilling our educational mission. We also have kuleana for the stewardship of our lands, and we take our kuleana very seriously.

Please help us be ambassadors for our mission and our children.  We would like to call on you to advocate for a fair and impartial resolution of this issue.  We believe that will be accomplished through the arbitration process.  Please let us know by email at land@ksbe.edu if you are willing to kokua this effort. 

Mahalo nui ia `oukou,

Ann Botticelli, Vice President

Community Relations & Communications Group

P.S.  We’ve also included (below) a quick-reference fact sheet regarding our Kamilonui lease issues. Mahalo for your consideration.

KAMILONUI FACT SHEET

11/17/2010

Lease history and current background

•              For the past 38 years, Kamilonui lessees have paid lease rents that have been far below fair market value; KS has abided by its agreement to not increase lease rents for Kamilonui lessees for that entire time.

•              The average Kamilonui lease rent has been $15/acre per month.

•              The lands have been used by lessees to generate income and for residential use.

•              The leases require at least 50% of the property to be in Agricultural Use; however, fewer than a third of the lessees are currently meeting the agricultural use requirement, and several of the Kamilonui properties have limited or no agricultural activity at all.

•              Although subleasing is not allowed under the current agreement, several lessees are subleasing or allowing others to use the property.

•              One sublessee pays approximately $1,875/acre per month in rent to our lessee.

New Rent Negotiation Efforts

•              The lease renegotiation period has been known since the leases were signed in 1970.

•              KS has granted lessees several extensions of time during the lease negotiation period.

•              KS has been meeting with the lessees and remains open to meeting with the lessees.

•              KS’ offer to the lessees was approximately $434/acre per month:

o        The offer included the right to sublease property for bona fide farm use;

o        A residence is allowed on the property.

Arbitration is Next Step

•              Several of the lessees have rejected KS’ offer; therefore, the new lease rent will be determined by an arbitration process that was contractually agreed upon when the leases were signed.

•              Arbitration requires that the new lease rent be set by a 3-member panel of arbitrators:

o        KS has named its arbitrator;

o        Lessees are required to name their arbitrator by mid November;

o        The two arbitrators will then decide on the third arbitrator.

•              KS believes that its offers were fair but will abide by the result of the arbitration process. 

•              As a comparison, the State of Hawaii recently completed a competitive bid process for Agricultural lands in Waimänalo; the winning bids by bona fide farmers were approximately $460/acre/month.

•              KS is seeking the same return as other comparable agricultural lands for its lands in Kamilonui.

•              KS is seeking fair market rent – nothing more.

 PLEASE NOTE:

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