Hawaii’s Senate Bill 795 threatens to empty the public harbors in preparation for leasing to private interests

(Editor's note: the below testimony was submitted to the legislature on February 23, 2020.  We reproduce it here with minor corrections that do not affect the content)

PUBLIC TESTIMONY

Katherine Lindell

Honolulu, Hawaii

February 23, 2020, 8:30 A.M.

(The committee(s) on WAM to hold a public decision making on 02-24-21 10:00AM; CR 211 & Videoconference)

In consideration of

Senate Bill 795 SD1,  RELATING TO PUBLIC BOAT HARBOR FEES

WE STRONGLY OPPOSE SB795, WITHOUT RESERVATION, for the following reasons:

IMPORTANT NOTE:  Because our submitted testimony in the past has somehow gone missing from “Testimonies” on the legislature website, this testimony has been duplicated and published on the Hawaii Ocean News website (HawaiiOceanNews.com)

This testimony is intended for the following legislators: Senators Moriwaki, Chang, DeLa Cruz, Misalucha, English, Kidani, Kim, and Shimabukuro

Regarding:

SB795, Section 1:

Rationale in the current version of Section 1 of SB795 is fatally flawed for the following reasons:

 ". . . The DLNR's revenue-generating capability has been outpaced by maintenance needs and inflation . . ."  

a) DLNR/DOBOR management practices have left, and continue to leave, scores of boat slips unrented, many for years on end. Over the past 10 years these toxic management practices have cost millions of dollars in lost revenue. Remedy: remove incompetent administration and overhaul management practices.

b). Financial losses caused by failed third-party contractor agreements because of inadequate vetting or DOBOR insider hiring. (Example: the 800 pier restoration project, AWSBH) Remedy: remove incompetent administration and replace with qualified personnel who can be held accountable for their performance.

c) Failure to upgrade and modernize the harbor management system:

(c-1) Harbor tenant records are still stored in and manipulated via brown manila folders, some of them more than an inch and a half thick, of which there are thousands of these throughout the harbor system.

(c-2) Harbor office management is inefficient and cumbersome and often fraught with costly ledger errors because:

(c-2-1) There is no proprietary slip management software on the computers in Harbor offices, such as can be found in any modern marina facility worldwide.

(c-2-2) Because Hawaii Administrative Rules allow harbor agents at each harbor facility to act at their own discretion, in some cases subjugating HAR statute, there exists a resulting lack of management uniformity within the harbor system often causing administrative confusion, especially for public harbor tenants, that leads directly or indirectly to financial losses.

(c-2-3) Harbor ledger errors are common because of antiquated software/questionable updated software and some questionable accounting methods leading to under- or over-charging harbor tenants, especially as it relates to value-added services, deposits, and slip payment tracking. (Because of this it took a full year (2019 - 2020) to transition harbor tenant paperwork from the old harbor rates to the new harbor rates established in 2019, costing the harbor system hundreds of thousands of dollars in arrears security deposits and other related expenses.)

(d)  DOBOR's history of burdening the Boating Special Fund and taxpayer coffers via the chronic mishandling of abandoned and derelict vessels:

(d-1) By introducing derelict commercial vessels from the Department of Transportation's commercial harbor into the public's recreational marina system, the public harbor system has been made liable for the expenses associated with demolishing and disposing of these vessels, costing boaters $hundreds of thousands over the past 10 years. (Example: the Navatek II incident.)

(d-2) Failure to efficiently and effectively deal with State impounded abandoned vessels within the harbor system has cost the Boating Special Fund and the State of Hawaii potentially $millions in lost revenues, and staggering debits over the past 10 years.

SB795, Section 2, as it relates to fees set by appraisal:

 a) The current choice of appraiser, CBRE, has disqualified itself. When the aforementioned appraiser suggested that  electrical rates could be set by appraisal, they demonstrated a fundamental lack of understanding of property valuation basics.  What has been lost on this appraiser is that electricity is a consumable product.  People in Kahala pay the exact same rate as the people living in Kalihi. Users pay for the electricity that they actually use, and at the same rate.  That certain individuals are singled out in Waikiki as having to pay a fictitious flat fee, "according to appraisal", presents serious credibility problems for that appraiser and potential legal problems for its employer.

b) Since appraisal opinions differ, the State has a responsibility to its people to secure multiple credible appraisals to fairly establish any so-called fair market valuation, and appraisers winning that privilege will have demonstrated previous experience with public harbor rent valuations, something the current appraiser cannot boast.

c) Left unclear is how exactly one is to establish “fair market value” in a public harbor system located in Hawaii’s unique community.

SB795, Section 2: The State of Hawaii has been issuing boaters Principal Habitation Permits, under statute, for more than a half century.

"Principal Habitation" is a permanent principal residence, a place where a person or family calls home. The State has been collecting rents from Principal Habitation vessel owners for the past half century.  A landlord, by any other description, is still a landlord, and while the State, through ambiguous wording, has sought to distance itself from that reality, the nature of the State's actions and deeds with regards to the renting of Principal Habitation within its public harbors defines this role perfectly:

1. Doubling someone's rent because of revenue shortfalls caused by internal poor management practices is legally, morally and ethically troubling, both for the State and the individual legislators and administrators who participate in this.

2. Should SB795 become law, the State of Hawaii, and each and every one of you, will be solely responsible for creating a new wave of homelessness, already proven expensive for the City and the State. Doubling anyone's rent anytime -- especially during a pandemic -- is the epitome of mean-spirited administration. The act of doubling someone's rent (during a pandemic) and subsequently forcing them out into the street into homelessness will almost certainly present the State with serious legal issues in federal court and doubtless attract an avalanche of unwanted international media attention.