GaryHooser's Blog

We have less than 24 hours to impact the final decision.  If you already know the story, skip to the bottom and please start calling and emailing Senators.

Yesterday, April 2nd the Hawaii State Senate held its first and only public hearing for HB1326 HD2 “the corporate water theft bill”.

Those who are following this issue closely know that passage of HB1326 HD2 will result in a $62,000,000 financial benefit to Alexander & Baldwin (A&B). 

A&B has sold much of its land on Maui to an entity by the name of Mahi Pono.  That sales contract includes a provision that requires A&B to guarantee a specific amount of water to Mahi Pono, within a specific time frame. If they fail to do so, A&B will be required to pay $62,000,000 to Mahi Pono.

One problem with this, is that A&B does not own the water, which by state constitution is a public trust resource.  They have been using the water and utilizing “revocable permits”(RP’s) for a long, long time, but they do not own the water.

A&B has a problem of their own making. They promised to deliver water that they have neither ownership of, nor control over.  It is not the legislatures role to fix their problem.

This dilemma for A&B has resulted in the creation of HB1326 HD2, which if passed by the legislature amends state law and grants A&B rights to continue diverting the streams.  They then transfer those rights to Mahi Pono, and voila, A&B secures a $62,000,000 benefit.

The measure also grants similar rights to extend water use rights and stream diversions to Kauai Island Utility Coop (KIUC) and others including various ranchers and farmers.

The public hearing was before the Senate Water and Land Committee, Chaired by Senator Kai Kahele, and heard jointly with the Ways & Means Committee, Chaired by Senator Donovan Dela Cruz. 

Ratcheting up further distrust of the process, Senator Dela Cruz proposed and scheduled a duplicate doppelgänger bill with a different number (HB1171) intending to accomplish the same ends as HB1326 HD2 (gut and replace).  72 hours after being scheduled, HB1171 was withdrawn. 

Predictably the hearing was delayed, the room was too small, warm, and overflowing with people.  The hallway outside was packed with testifiers awaiting their turn to enter, the door guarded by the Senate Sergeant at Arms.

As the hearing gaveled in (90 minutes after the original start time), the tension and apprehension in the room was palpable.

On one side of the issue were Native Hawaiians, small farmers, environmentalists, and progressives – representing all islands.  On the other side were the high powered lobbyists representing A&B and Mahi Pono, backed up by a handful of individuals who are the “go to” faces of small agriculture who always show up on behalf of large corporate agriculture.

In the middle caught in a political vise between the two sides, was an array of state senators, who would at the end of the day, be casting the deciding votes.

Chair Kahele gaveled in the meeting and immediately launched into the direct questioning of the Attorney General, the Chair of the Board of Land and Natural Resources (BLNR), and the Director of the Office of Environmental Quality Control (OEQC).  The Chair’s questioning of these Department heads was exemplary, hard hitting and to the point. 

It became ultimately very clear from the first few questions and answers, that there was no legal basis for small farmers and ranchers to be swept up in this issue. Translated: If HB1326 HD2 was killed, small farmers and ranchers would not lose their water.

After the Department testimony the public followed.  Residents who had traveled from all corners of our state came forward one at a time and shared their thoughts and feelings on the issue.

The hearing went on in this manner for the next several hours with the overwhelming sentiment of those who testified in person was to “kill the bill”.  Approximately 604 residents also submitted written testimony in opposition.  There were only 40 written testimonies in support and 103 offering only comments.

Every senator at this point knows that the passing of HB1326 HD2 would benefit Alexander and Baldwin (A&B) to the tune of $62,000,000.  Each of them also knew that the threat of water loss to small farmers, ranchers, and hydro producers, was grossly exaggerated.

At about 5:45pm, after nearly 6 hours of testimony the Chair recommended, and the joint committee agreed, to postpone decision making on the measure until Thursday April 4, at 4pm.

This means we have 24 more hours to get our message out to the Senators. 

This, I believe is a good thing.  I believe that Senator Kahele and in fact a majority of Senators on these committee’s heard our message loud and clear, and want to do the right thing.  Further, I believe it was painfully obvious that HB1326 HD2 is targeted special interest legislation, and if killed no harm will come to small farmers and ranchers.

It is also painfully obvious that behind the scenes, powerful interests continue to push for passage of this bill. The representatives from A&B did not even bother to present testimony during the hearing, though they were present in the room.  After-all, why should they bother to speak in public and possibly incur questioning in public from Senators, when they have unfettered 24/7 private access to the key decision makers? 

You can be sure, that when A&B calls, many if not most in the Senate would put their first born child on hold, to take that call.  Ok…in the pursuit of a little humor…I may be exaggerating slightly.

But in all seriousness: We have less than 24 hours to have an impact on the decision due tomorrow, Thursday at 4pm.

Please contact TODAY via phone AND email, first your own district Senator (let them know you live in their district), a complete list of which you can find HERE:

Please also contact TODAY members of the two committees that will be voting on this issue tomorrow Thursday April 4th at 4pm.  The Water Land Committee is HERE and the Ways and Means Committee is HERE.

Ask them to vote NO on HB1326 HD2. No amendments are acceptable. This measure is not needed and is simply a gift to large corporate water users. 

As always, polite and professional messages only please.

Time is of the essence, by 4pm tomorrow the decision will have already been decided, reaching out to Senators TODAY is critically important.

Just when you think things can’t get worse, they do.  Welcome to “Gut and Replace”. Corporate water theft and HB1326 – and now HB1171.

Senator Donovan Dela Cruz Chairman of the Ways and Means Committee as if by magic, has created a second corporate water theft bill (SB1171 proposed SD2).  Apparently Senator Dela Cruz is concerned that HB1326 might be killed or weakened by Senator Kai Kahele, Chair of the Water Land Committee. 

As insurance, the “Gut and Replace” technique is now in play.  This occurs when a Committee Chair (Senator Dela Cruz) takes a bill that previously had nothing to do with water diversion, then schedules a hearing (with only his committee), and “inserts the contents” of a new bill.  In this case, the inserted contents are essentially a new corporate water theft bill, much like the existing corporate water theft bill.  

A doppelgänger of sorts, only for the purposes of diverting streams and enriching corporations.

Space and time does not allow more detail at this point, but suffice it to say that “the price of poker just went up”.  As has been stated many times and never disputed, the passage of HB1326 and now HB1171 will result in a $62,000,000 financial benefit to Alexander and Baldwin (A&B). Leadership in both the House and the Senate have clearly made this their top priority, and are pulling out all the stops. 

We must do the same. 

Please email and call YOUR district Senator today and ask them to vote NO on both HB1326 and HB1171.  The hearing for both of these bills is scheduled for Tuesday, April 2 at 10:45am.  A copy of each hearing notice and links to each bills and a testimony link is available by clicking on the bill number.  Unfortunately, separate testimony must be submitted on each.

No amendments. The intent and the process, lack integrity.

Short and simple, this is special interest legislation driven by money.  Big money.

YOUR Senator must know how you feel on this issue, AND your testimony  is important and needed.  Please take these two actions today.

While I understand it is increasingly difficult to do so, please keep all testimony professional and courteous.  We do have friends in the Senate who want to do the right thing, but who need our support in doing so.

Both of these actions (contact YOUR Senator and submit testimony) need to be taken asap, and preferably no later than 10:45am tomorrow, Monday (though late testimony up until the hearing is accepted).

Testimony delivered via the testimony link on the capitol website is preferred.  However, there is a “one click” testimony option available here, along with helpful background information.

And, if possible we need your physical presence at the hearing, State Capitol room #211, Tuesday at 10:45. I understand it is an inconvenience for many and a huge expense for neighbor islanders, but for those who are able to attend please come.

It is a sad reflection on the state of our democracy when legislators are forced into corners by the moneyed and the powerful, and then when they attempt to do the right thing, the process is manipulated to block and derail their efforts.  To his credit, Senator Kahele has proposed amendments intended to satisfy concerns, even though these proposals continue to fall short.  Now, with the creation of HB1171, the process is further corrupted, shifting the power to WAM alone.  

Consequently, we are asking Senators to vote NO, and just kill the bill.  To be clear, no amendments can make this better.

For far too long, there has been too much water flowing under this bridge and into the pockets of big business – and it’s time to stop.  #killthebill 

Read more here: Pulling Back The Curtain On A&B’s Corporate Water Theft

Read Civil Beat: Lawmakers Should Reject Water Rights Bill 

Find YOUR Senator’s contact information HERE.

Time to go to the mattresses.

Gary Hooser

http://www.garyhooser.com

While the rank and file membership in the House may be able to claim they were not fully aware of the facts and circumstances that are driving this measure, the same cannot be said for State Senators who are poised to cast their votes.

By now, every legislator knows that the passing of HB1326 benefits Alexander and Baldwin (A&B) to the tune of $62,000,000.  Any legislator paying attention to this issue also knows that the threat of water loss to small farmers, ranchers and hydro producers, is pure shibai.

And, to make absolutely sure every single legislator in the building knows that HB1326 needs to be sent to the dumpster, this past Monday the Democratic Party of Hawaii delivered a letter to legislators and the governor, in strong opposition.

HB1326 has come to symbolize a public litmus test of values.  As my friend Eric Gill has reminded me over and over again, “It’s about interests, not issues”.

The core question that will be answered by legislators when the votes are eventually cast, is basic and fundamental, “Whose interests do you serve?”.

A watershed moment really – as it is rare at the legislature that the curtain is pulled back.  Normally the structure and process is managed in such a way that members are never “exposed”.  In this case, that outcome is no longer possible. While some will likely be intentionally absent from the vote, and others will attempt to shield themselves behind “WR’s”, political exposure on this issue is now unavoidable.

HB1326 (corporate water theft bill) will be scheduled very soon for a committee hearing in the Senate. 

When the hearing is scheduled, we will need your testimony and we will need you to show up.  

The message is simple – kill the bill. No amount of amendment can fix this. HB1326 is fundamentally a give-a-way of public resources to corporate interests.  A&B and all who earn a profit from selling public resources, must simply follow the rules.

Lawmakers Should Reject A&B’s Water Rights Bill’ “There is a legal process for requesting access to public lands for the purpose of diverting some of the people’s water for private use. This process is designed to ensure the watershed is protected, stream ecosystems are not harmed, and the public is properly compensated for the use of public trust resources. The Department of Land and Natural Resources and any entity seeking to divert water away from the public should be made to follow this process.”  Read entire Civil Beat article HERE

State Democratic Party of Hawaii opposes ‘corporate water theft bill’ “The increasingly unpopular HB1326 – the so-called “Corporate Water Theft” bill, currently languishing in the Senate – took another hit over the weekend. In a letter to legislators, the Democratic Party of Hawai‘i has officially declared its opposition to the proposed bill…The action puts state senators in the awkward position of voting against their own party if they decide to support the bill.” Read entire Maui Times article HERE

In case you are not on my email list…here is what I sent out this morning!

https://mailchi.mp/garyhooser/cannabis-corporate-water-theft-and-minimum-wage-your-action-needed-to-oppose-hb1326-killthebill-startovernextyear

The legislative session is quickly heading to the finish line.

The legalization of cannabis for responsible adult use appears to be dead for this year.  In its place is a measure that takes steps toward decriminalizing the use of small amounts.  While at this time, the measure seems woefully inadequate, am willing to wait to see what actually happens, or not with this issue (HB1383 HD2).

https://www.capitol.hawaii.gov/measure_indiv.aspx?billtype=HB&billnumber=1383&year=2019

Also woefully inadequate is the current $12.50 per hour minimum wage being proposed by the House which is not only way too low, but also does not take effect until 2024.  This $12.50 would go to full time employees who are covered by employee provided health care (as required by Hawaii law). Under this measure (HB1191 HD1) part-time employees would receive $15 per hour. 

https://www.capitol.hawaii.gov/measure_indiv.aspx?billtype=HB&billnumber=1191

The Senate Bill SB 789 SD1 is proposing $15 by 2023 and amending it to reach $17 by 2024 would appear to be a reasonable next step.  The Department of Business and Economic Development (DEBDT) has determined that $17 per hour is the amount needed for a single person, without children – to simply stay alive (subsistence wage). It is important to also note, both bills include provisions designed to support small business as they phase in the proposed increases.  https://www.capitol.hawaii.gov/measure_indiv.aspx?billtype=SB&billnumber=789&year=2019

From the Hooser Blog – Living Wage Legislation – Radical Leftist Concept or Essential Centrist Thinking?

https://garyhooser.blog/2019/01/01/living-wage-legislation-radical-leftist-concept-or-essential-centrist-thinking/

Corporate Water Theft – HB1326 HD2  Much has been written about this and we await the scheduling of a hearing.  When that happens, we will need everyone who is concerned about this issue to submit testimony, and to actually show up at the hearing if you are on Oahu.

https://www.capitol.hawaii.gov/measure_indiv.aspx?billtype=HB&billnumber=1326&year=2019

At the moment, please take the time to READ and LEARN about HB1326 HD2, and then please email All Senators (info at the bottom of this page).

Below are three blog postings that provide context and include links to source material.

Political winds stirred by political waters (most recent observations on HB1326 HD2)

“It is not an exaggeration to say that political careers will rise and fall on the actions or inactions taken by legislators with regards to the success or failure of HB1326 HD2 (referred to by opponents as the water theft bill).”

https://garyhooser.blog/2019/03/20/political-winds-stirred-by-political-waters/

Must read email from “impacted resident” (insightful commentary on the water diversion story)

“I have been testifying (for 2-3 minutes) at water meetings in Haiku and at the County Council since I was 15 years old, I am now 53…– 3 minutes to discuss a whole web of life from Mauka to Makai…You wonder why people get mad?”

https://garyhooser.blog/2019/03/18/must-read-email-from-impacted-resident/

HB1326 is all part of a well executed scam (includes link to actual A&B sales agreement)

“Part of that deal is A&B’s promise to the new owner to deliver 30 million gallons of the people’s water a day from East Maui or $62 million. That’s $62 million to A&B for water they do not own.” (In other words – A&B will receive a $62,000,000 benefit upon passage of HB1326HD2)

https://garyhooser.blog/2019/03/14/hb1326-is-all-part-of-a-well-executed-scam/

Please email sens@capitol.hawaii.gov and the Senate to oppose HB1326 HD2. No amount of amendment can restore integrity to the process that created it.  It is pilau and must be killed.

Please, be respectful and professional in your communications – as difficult as that may be.  We have many friends in the Senate who are willing to vote the right way on this.  We also have friends who are “in the middle” and are struggling to learn more about the issue and to put things into context.  We must be careful not to push away our friends and those who are learning more and will likely vote with us as well.

Finally, if you have not done so already call and email YOUR specific Senator and ask him or her where they stand on this issue, and ask again that they oppose and vote NO.  Go HERE and simply type in your address, and the name of your Senator will pop up. https://openstates.org  Click on their name and the email etc will then pop up as well.  It’s easy.

Thank you in advance for your help and involvement.  We are at a critical time in the legislative process and every email or phone call, is important.

In solidarity,

Gary Hooser

Executive Director

Pono Hawaii Initiative (PHI)

https://ponohawaiiinitiative.org

*Yes – PHI has ongoing expenses and thus fundraising needs.  Due to the political and legislative nature of our work, contributions are NOT tax deductible but are much needed.  Whether it is $25, or $2,500 any help you can offer by Friday March 22, is especially needed.  The work is stressful enough without on top of it all, worrying about paying the bills. Please help take away some of this stress if you can, by making an online contribution today at https://secure.everyaction.com/5LWqPJUnuU-BFdjqy9ccbQ2 or mail a check to: Pono Hawaii Initiative, P.O. Box 871, Honolulu HI 96808.  Mahalo in advance for any and all help you can offer.  gary

It is not an exaggeration to say that political careers will rise and fall on the actions or inactions taken by legislators with regards to the success or failure of HB1326 HD2 (referred to by opponents as the water theft bill).

While I have written about this issue previously, suffice it to say that the “sticky wicket” I referred to then, has become downright mucilaginous (will save you a trip to Webster “oozing with mucus”). 

Originally referred to the Senate Water Land Committee, whose Chair is Big Island Senator Kai Kahele, HB1326 HD2 was re-referred by the Senate President Ron Kouchi to what is now a joint committee that includes Water Land and Ways and Means – that will essentially act as a single very large committee.

Students of the legislative process will understand the nuance, or lack thereof of this particular konane move.

So now there appear to be plots within plots.

House Leadership has its agenda which is to protect its members from further political exposure, but at the same time ensure HB1326 HD2 passes into law. Any changes made in the Senate will force the bill to conference committee and quite likely back to the House floor for still yet another ugly floor vote.

Senate Leadership of course has a similar dilemma, how to protect the members from political fallout but yet pass the bill.

A classic conundrum.

And why, and for who and for what purpose?

Who exactly initiated this measure?

You can be sure that it was not the Ka’u cattle ranchers or other small farmers who have been repeatedly thrown up as human shields against those who have opposed it.

This leaves only the Kauai Island Utility Cooperative (KIUC), Grove Farm Land Company, Mahi Pono and Alexander and Baldwin (A&B), as potential initiators of the original HB1326.

All arrows however point to A&B who seems clearly to have the most to gain and the most to lose, on the rise and fall of HB1326.

In the sales agreement between A&B and Mahi Pono in which A&B is selling 41,000 acres of their land on Maui, there is a provision that requires A&B to “rebate” $62,000,000 to Mahi Pono, should A&B fail to provide sufficient water as stipulated in the purchase agreement.

An informative news article and a link to the actual purchase agreement is HERE. https://mauitime.com/news/business/mahi-pono-purchase-agreement-lots-of-legalese-with-a-few-tasty-nuggets/

Further, according to various lawyers familiar with the legal background, killing HB1326 does not prevent the ranchers or KIUC from continuing to utilize the water as they always have.

Only A&B was impacted by the court decision which triggered the legislative action providing their first 3 year extension, set to expire soon.  HB1326 HD2, would grant them 7 additional years to comply.

All users ultimately need long term leases/permits but all users are not dependent on HB1326, except apparently A&B.

My guess is that whomever originally initiated this measure, did not tell most legislators the full story.

Some on the inside of course were likely made aware of the $62,000,000 benefit for A&B.  And similarly some were likely aware that the ranchers and hydroelectric entities were not really the primary beneficiaries of HB1326.

The vast majority of rank and file  legislators who were ultimately convinced to vote in support of HB1326 probably knew nothing about these significant pieces of information.

How the bill originally came to be remains a mystery for now, subject to speculation and the inevitable castle intrigue.

What we do know is the public record, found at capitol.hawaii.gov – Here, one can see who originally sponsored the bill, who in the House voted yes or no, read the prior drafts, read all the testimony from prior hearings in the House, track the current status and see the track record of “referrals”.

HB1326 HD2 reeks of a smell that can only be found under the rocks on the floor of the reflecting pool at the Hawaii State Capitol. No amendment nor collection of amendments is capable of masking this particular kind of odor.  #killthebill

First published in The Garden Island newspaper on March 20, 2019

“I have been testifying (for 2-3 minutes) at water meetings in Haiku and at the County Council since I was 15 years old, I am now 53.  I have witnessed most of the other people that spoke that evening, do the same thing over and over and over again – 3 minutes to discuss a whole web of life from Mauka to Makai (that our life depends on) and that we are watching be destroyed!  You wonder why people get mad?!?!… You have no idea how maddening it is to witness the collapse of life itself and when you relay the issues over and over and over again to some “authority” who wants to hear your position, you have only 3 minutes!! ” Maui Resident…

Below is the entire email message sent out from this resident to certain Senators that are key to the future of HB1326 (the water theft bill).  I am posting this to cast further light on the back ground of the issue, and to describe how many residents are feeling at the moment.  The writer gave me permission to repost, when I asked if I could do so without naming her.

Dear Senator XXX,                                                                 March 14,2019

I am the lady who barked out at the end of your hearing at the Haiku Community Center last month that “there is so much more that you and the water commission and all the law makers in Honolulu do not know” about the devastating effect of the total and complete water theft from the East Maui Watershed for the last 150 years.

I have lived in the East Maui watershed for 49 years on a very large, totally dry streambed (except for storms) and have witnessed a massive deterioration of its health and balance in that time, including the near shore sea life.  And that is after 100 years of abuse prior to my arrival.  The stories from the “old timers” of how it was before the water theft altered the environment so drastically, fills one with wonder and awe… and deep sadness at the loss that has occurred and is continuing to occur.  Literally the death of Paradise on Earth.  You may think that I am exaggerating… but I am not.  I have traveled the world extensively.  Maui No Ka Oi is real.

I have been testifying (for 2-3 minutes) at water meetings in Haiku and at the County Council since I was 15 years old, I am now 53.  I have witnessed most of the other people that spoke that evening, do the same thing over and over and over again – 3 minutes to discuss a whole web of life from Mauka to Makai (that our life depends on) and that we are watching be destroyed!  You wonder why people get mad?!?!… You have no idea how maddening it is to witness the collapse of life itself and when you relay the issues over and over and over again to some “authority” who wants to hear your position, you have only 3 minutes!!   And yet you know that when they return to Oahu, A&B has its headquarters and paid lobbyists just around the corner from the Ledge (not mention, relatives working at every level of government) who get a lot more time than 2-3 minutes to promote their cause and have a lot more leverage ($$$$) to accomplish their agenda.    Without any accountability, they want to continue to take as much water from the East Maui Watershed as it can produce, leaving next to nothing for the flora and fauna that live there, or the residents, farmers, gatherers and fishermen.

There is a history of reckless abuse and negligence by EMI in the East Maui Watershed and A&B for the `Aina.  If that abuse is allowed to continue the watershed will become less and less effective at collecting water and sending it into the aquifer (that means less water for future generations.)  As the Mauka to Makai flows continue to be blocked at 50 or more streams and tributaries, the health of the watershed, stream life and fisheries is put in severe peril.

Where is the accountability in this bill?  Where are the required steam flow measurements pre and post diversion of the water? What is the established base flow that will be kept in the streams to keep the watershed alive and functioning? And what is the public platform for reporting streamflow measurements and diversions?  Where are the required upgrades to the diversion system that allow for stream life to pass up and down the river? Which total diversions will be torn down and reconstructed to allow for stream flow, fauna flow and a fair amount of water to be diverted?  Where is the required contribution to a fund/organization that manages invasive species impacting the watershed? Simultaneously, use of Roundup along the diversion ditches kills native stream life and flora – important and delicate parts in the web of life there.  Where are the reparations to the few native Hawaiians left (dangling by a thread) who’s civilization, culture and communities were destroyed by the total theft of the water by EMI & A&B not abiding by the original agreements in the contracts for the water?  Where is the requirement and funding to create an organization (a consortium of East Maui Watershed stake holders) that will together form a management plan and system and enforcement that will actually protect the watershed and its inhabitants in a sustainable way, to maximize yields (on and off stream), far into the future?

EMWP (East Maui Watershed Partnership) only manages above 3000 ft. elevation and, their actions are deleteriously effecting Our main area of concern which is below 3000 ft. elevation.  This is the area with the State leases and the diversions that this Bill impacts and, that needs pono management and protection.

Furthermore, regarding off-stream uses that significantly impact water consumption:

Where in this bill are the requirements for Mahi Pono to improve the tilth of the soil in the central valley by certain measurable parameters in a specific timeline so that their soil actually holds water instead of letting it all run off the surface and kill the reefs?  Improving the soil’s ability to retain water will drastically reduce the amount of water that is needed to irrigate the fields and thereby be taken from the watershed.  The central valley needs to be contoured with swales to retain rainfall, it needs unlined reservoirs used for aquifer recharge and it needs lined reservoirs to serve as storm water storage for farming.

Everyone wants to see the central valley of Maui farmed instead of developed.  So stop pitting small farmers against watershed protectors… we are on the same side!!!  There is plenty of water.  But you cannot destroy the watershed to get it.  EMI and A&B have been destroying the watershed and this bill HB1326 will allow Mahi Pono and EMI to continue to destroy the watershed.  Kill this bill!

This is a bad bill, lumping all the islands together!!!  Each island is unique and their watershed issues, users and demands are unique.  The only thing that is the same is the corporations wanting to take everything and not caring if they destroy the environment to make a profit.  So, they create a bill benefiting their cause by lumping all the islands together.  Bad bill. You can point that out.  Some rules work statewide like no drinking and driving, and some do not.  Every watershed is unique, don’t pretend otherwise.

Those of us that are aware that we live on the most remote landmass in the world, have lived here for generations and hope that our future generations can continue to live on these tiny remote islands, realize the value of protecting our source of life – the environment, especially the watersheds.   This is a serious matter!

In conference, you will be splicing and dicing tiny nuances of this bill when what you need to be discussing is not even in the bill at all!! You will be discussing apples & oranges when you need to be talking about bananas and Kalo.  Kill the bill!  And save your seat.

Educated and sincerely concerned for our future,

A Maui resident…

From FB post of Marti Townsend who has researched this issue extensively dated, March 14, 2019

This is all part of a well-executed scam. A&B got HB2501 passed in 2016, allowing them to divert stream water using temporary permits despite a court order telling them not to (paying the state pennies on the gallon for access to the water, btw).

That bill inflated the financial value of their land. Then A&B converted to a Real Estate Investment Trust (REIT), a type of business that does not pay state income taxes. (This was just after laying off the last of their workers at HC&S with little notice, almost no safety net, and a state-funded job re-training program).

Material below is from me (Hooser)

Readers Note: For the source of the $62 million dollar information go directly to the A&B and Mahi Pono purchase agreements linked below:

http://investors.alexanderbaldwin.com/…/af1aea4e-3c42…

2.7 Rebates. In order to reflect the diminished value of the Property due to lost farm revenue and the reduced productivity potential of the Property expected to result if EMI or Seller is unable to legally deliver irrigation water sufficient for Buyer to fully implement its farming plan, Seller will rebate portions of the Purchase Price (collectively, the “Rebates”) as follows:

(a) Seller will make a one-time rebate to Buyer of Thirty-One Million Dollars ($31,000,000) of the Purchase Price, and the Purchase Price shall be deemed to be reduced by $31,000,000 (the “Initial Productivity Loss Rebate”), if at any time prior to the earlier of (i) the date State Leases are obtained as provided in Section 2.7(d) below or (ii) eight (8) years after the Closing Date: (x) EMI or Seller is legally prohibited from delivering the Minimum Water Amount (defined below) to Buyer, and 👍 the amount of water that EMI is then not legally prohibited from delivering to Buyer is less than Buyer’s actual surface water need at that time, as determined by Buyer in its sole discretion, exercised in good faith, to meet the irrigation requirement of its then existing crops or crops planned for the upcoming 24 months in the area served by East Maui surface water (a “Productivity Loss Event”). EMI’s inability to deliver water in the Minimum Water Amount solely due to a major casualty or events beyond human control such as earthquakes, droughts or natural disasters that impair EMI’s operations shall not be considered a Productivity Loss Event.

(b) On the date one year after the initial Productivity Loss Event described in subsection (a) (the “Initial Productivity Loss Event”), Seller will rebate to Buyer an additional Thirty-One Million Dollars ($31,000,000) of the Purchase Price, and the Purchase Price shall be deemed to be reduced by $31,000,000 (the “Continuing Productivity Loss Rebate”), for a total reduction in the Purchase Price of $62,000,000, unless by that date the Initial Productivity Loss Event is cured. If a Continuing Productivity Loss Rebate is paid pursuant to this subsection (b) or the following subsection (c), the payment obligations set forth in this Section 2.7 shall be deemed satisfied and Seller shall have no further obligation to pay any further Rebate or seek the State Leases; provided, however, that Seller shall take any and all action reasonably necessary at that time in order for Buyer and EMI to continue to seek and obtain the State Leases without further involvement by Seller.

(c) If the Initial Productivity Loss Event is cured within one (1) year as provided in subsection (b) but at any time after such cure a Productivity Loss Event occurs again, Seller will immediately pay Buyer the Continuing Productivity Loss Rebate, for a total reduction in the Purchase Price of $62,000,000. Such Continuing Productivity Loss Rebate will not be refunded to Seller even if such second Productivity Loss Event is thereafter cured.”

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