HomeMy WebLinkAboutRES 309 Draft 01 1994-1996COUNTY OF HAWAII.... STATE OF HAWAII
RESOLUTION N0. 309 96
RELATES TO AIItPORT LEASES BY THE DEPARTMENT OF TRANSPORTATION
AIRPORTS DIVISION.
WHEREAS, in these exceptionally hard economic times, it is extremely difficult for the
small business people of our island to continue to provide jobs because too much of their energy
has to be expended defending their businesses from administrative and regulatory action
unposed on them by the State, which seems to serve no useful purpose other than to impede
economic development; and
WHEREAS, an example of this is the preponderance of problems that aviation operators
have to contend with as it concerns airport leases; and
WHEREAS, since the State controls all property on and azound each airport, the
Airports Division holds a monopoly on control of leases of these properties and, as such, there
has never been even a semblance of any "negotiation" over lease agreement terms and
conditions; and
WHEREAS, potential lessees have no recourse, since there aze no other airport
properties available which do not fall under the control of the State; and
WHEREAS, the current Airports Division "standazd" lease contains two particulazly
onerous conditions:
1) Most all leases aze "revocable, month-to-month" leases. This restriction makes it
virtually impossible for a small business to obtain bank financing for expansion,
or to make any long term commitments or decisions.
2) Many leases contain clauses which prohibit assignment to a new owner, even
when the lessee is a corporation, thus rendering many businesses without value if
an owner desires to sell to a new buyer, and
WHEREAS, the Airports Division has the authority to write lease terms in an arbitrary
and sometimes prejudicial manner; and
WHEREAS, one such lease that they proposed to an aviation mechanic for space in one
of the new hangers at the Hilo Airport included, in part, the following clauses:
1) "LESSEE must submit to LESSOR a quarterly statement showing the amount of
gross receipts of the preceding quarter, and shall further submit a Certified Public
Accountant's Annual Verification report within 60 days from year end."
Note: the proposed lease is for a fixed monthly amount, which is completely
unrelated to the lessee's receipts.
2) "Grant unto LESSOR access to all books, accounts, records and reports and the
entire business affairs and records relating to the business conducted on the
premises, at any reasonable time on twenty-four hours' notice."
3) "The LESSOR may levy and collect from the LESSEE a chazge of $250.00 per
day for each day the LESSEE is in violation of any of the terms of this Lease."
Note: this amounts to a a7, 750 per month penalty for a small, single airplane
hangar with normal monthly lease amounts of $310.00, with no appeal or due
process.
4) "LESSEE shall, within twelve months of the date of the lease, invest the sum of
not less than ONE HUNDRED FIFTY-THOUSAND DOLLARS for upgrading
and improvements of the premises."
Note:. here are no speck improvements required, just the requirement that the
lessee~spend $150, 000. They are making this requirement for a brand new
building, which has not been previously occupied, and which was.constructed in
1994 at the approximate total cost per hanger of $100, 000.
5) "The lease may be terminated or penalties assessed if, without prior written
approval of LESSOR, the ownership of LESSEE is changed by inter vivos stock
transfer to a person who is not a stockholder at the inception of the lease, or if the
lessee is a partnership, by the introduction of a new partner or partners, whether
limited or general, who is not a partner at the inception of the lease."
Note: -this clause renders useless any intrinsic value that a business might
generate, in the event the current owner desires to sell; and
WHEREAS, there is no formal review or appeals process regazding administrative
decisions made and enforced by the Airports Division.
NOW, THEREFORE, BE TI' RESOLVED BY THE COUNCIL OF THE COUNTY
OF HAWAII that it encourages the Department of Transportation to establish a permanent
review council or boazd made up of private sector citizens whose purpose would be to review the
appropriateness of administrative rules and decisions made by the Airports Division, and to act
as an arbiter when there is disagreement between operator/lessees and the Division.
BE IT FURTHER RESOLVED that the Clerk of the County of Hawaii Transmit copies
of the resolution to the Honorable Benjamin Cayetano, Governor of the State of Hawaii;
Mr. Kazu Hayashida, Duector of the Department of Transportation; Mr. Owen Miyamoto,
Airports Administrator; and Mr. Frank Kamahele, Airports District Manager, Hawaii District
Office.
Dated at Hilo, Hawari, this 1st day of Nlav , 1996.
BY:
RATH/eja
COUNTY COUNCIL
County of Hawaii
Hilo, Hawaii
I hereby certify that the foregoing RESOLUTION was by the
vote indicated to the right hereof adopted by the COUNCIL of
the County of Hawaii on i"~1' 1, 1996
~R.,
COUNTY CLERIC CHAIItMAN 6s PRESIDING OFFICER
County of Hawaii
ROLL CALL VOTE
AYES ~ NOES ~ ABS ~ EX
Arakaki X
Bonk-Abramson X
~~ X
Ik Lima X
Osorio It
Rath X
Ray X
Smith x
Reference C-1118/R&DC-15
RESOLUTION NO. 3O9 96