The Department of Hawaiian Home Lands has ordered the operator of Oahu’s only auto racing venue to vacate the Kalaeloa property he has leased for the past seven years, citing what the agency calls multiple violations of a now-terminated rental agreement.
The department has turned the case over to the attorney general’s office for enforcement, including the possibility of pursuing an eviction and attempting to recover more than $40,000 that DHHL says is owed in delinquent rent and utility payments.
The race track operator, George Grace III, is fighting back in court. And some prominent people have written letters on his behalf, including City Council Chairman Ernest Martin and state Sen. Maile Shimabukuro.
Those concerned about the possible shutdown of Kalaeloa Raceway Park say more racers could turn to public highways, endangering other motorists, if the island’s only track where drivers can compete head-to-head is closed.
"I’d rather they have a safe, supervised alternative as opposed to racing on the streets," said Martin, who wrote a letter June 24 to DHHL Director Jobie Masagatani urging her agency to review the case for possible reconsideration.
The dispute between the agency and Grace over the 38-acre DHHL parcel has been ongoing for months and came to a head at the June 16 meeting of the Hawaiian Homes Commission, which oversees the department.
The commission voted 8-0 to pursue enforcement action against Grace and 17 other former holders of revocable permits, the month-to-month rental agreements, saying tenants still were either in default despite the DHHL’s attempts to seek resolutions or were not eligible for new monthly leases.
On the same day the commission took that vote, Grace sued the agency and its nine commissioners.
Grace, owner of Save Oahu’s Race Tracks LLC, alleged in the court documents that the defendants acted arbitrarily in denying him due process over the termination of his permit and in seeking to destroy his business. Grace cited the DHHL’s failure to establish administrative rules for the permit program — rules that he said would have served to check the "unbridled discretion" of agency employees and provide a way for permit holders to challenge the department’s actions. Without rules, DHHL officials were able to harass and interfere with his business, including giving permission for activities that he later was penalized for, he alleged.
Grace also filed a request for a temporary restraining order, asking the court to temporarily prevent DHHL from pursuing enforcement. A hearing has been set for July 29 on his motion.
Grace told the Honolulu Star-Advertiser that he wasn’t even notified that his request to DHHL to have a hearing before the commission was on the agenda for the June 16 meeting. The commission denied the request.
"We are tired of being bullied and abused by this agency," Grace said in a statement to the newspaper last week.
The commission’s decision to initiate enforcement action against the 18 former revocable permit holders is the latest development in a yearlong effort by the department to clean up the problem-plagued monthly land rental program.
The effort was triggered by a May 2013 Star-Advertiser series, which exposed problems of mismanagement, selective enforcement and lax oversight of the revocable permits. Among the newspaper’s findings was that DHHL for years had failed to develop administrative rules for the program.
The supposedly short-term leases — some of which have lasted for decades — were established to generate rent revenue and help the agency manage mostly raw land not ready for homestead development. The tenants, who paid discounted rates because the leases could be ended with a month’s notice, were responsible for maintaining the land.
Responding to the newspaper’s findings, DHHL suspended the issuing of new permits, inspected the nearly 200 existing properties for violations and started reviewing the entire program, assisted by a governor-appointed task force, with the aim of developing rules to make the system more fair, efficient and transparent. The commission is expected to discuss the proposed rules for the first time at its regular meeting July 21 at DHHL offices in Kapolei.
Among the enforcement actions the agency has taken since publication of the series was ordering Stuart Hanchett, a former DHHL commissioner, to remove an unauthorized home he built on revocable permit land on Kauai. The Star-Advertiser disclosed that the department failed to investigate the matter even though Kauai beneficiaries complained about it several years earlier — when Hanchett was on the commission. Residential use is not allowed on permit land.
In May, when DHHL checked the Hanchett parcel, most of the house was demolished, according to Puni Chee, a department spokesman.
The newspaper series also disclosed the failure of the state to take action against brothers Nowlin and Weston Correa, whose permit for a 105-acre Waimanalo parcel was revoked in March 2009 but who have maintained possession of the land since then. In November, the state filed a lawsuit against the brothers, seeking return of the property. The two sides recently agreed that the brothers will return the parcel by late September, according to court records. A hearing on potential damages is scheduled for October.
Chee said the commission’s June decision to pursue enforcement action against the 18 former permit holders reaffirmed the department’s commitment to its Native Hawaiian beneficiaries, given that the leasing of nonhomestead land generates funds for the agency. DHHL attempted to resolve the compliance issues with the tenants, but when that didn’t happen, the commission took action, he said in written responses to Star-Advertiser questions.
"This was an important step in clearing the way for a stronger program," Chee wrote.
In the raceway case, DHHL cited a variety of violations, including the delinquent rent and unauthorized construction and mining activities, when it ordered Grace to cease all operations there in late March, according to agency records.
"The department believes that this is a simple case in which the former permittee has not abided by the terms and conditions set forth in the revocable permit," DHHL said in a June document to the commission. "The permit has since expired, (Save Oahu’s Race Tracks) refused to resolve its outstanding issues, and the department is obligated to take action to protect and properly administer that parcel of Hawaiian Home Lands."
Grace’s troubles have not been confined to DHHL.
City records show nearly $240,000 in unpaid fines against Grace and his company for several grading and stockpiling violations dating to 2012 at the Kalaeloa site. All but one of the violations has since been corrected, according to a city spokesman.
The unpaid fines have been referred to city attorneys for legal action.
Grace blamed some of his problems on what he described as poor DHHL management and misrepresentations.
In court documents, he said DHHL employees told him he did not need a city permit to conduct grubbing operations and bring in soil, yet he was later cited by the city for those activities.
He also told the Star-Advertiser that the department sometimes failed to send rent and utility invoices.
Grace and his company have made more than $300,000 in improvements to the Kalaeloa parcel and have more than $300,000 worth of equipment and other inventory at the site, according to court documents he filed.
The documents also include letters of support that Grace sought from racing enthusiasts and others, all of whom lauded the purpose of the Kalaeloa facility.
Martin’s letter to Masagatani, on City Council letterhead, describes Grace as a "hard-working family man."
Shimabukuro, the state senator, signed a June 26 declaration in which she supports providing SORT with due process in response to DHHL’s decision to terminate the revocable permit.
Shimabukuro told the Star-Advertiser that she signed the declaration as a private citizen, not as a state senator. The declaration makes no mention of her Senate position and is not on Senate stationery.
Ed Kemper, host and co-producer of "Island Driver TV" on OC-16, expressed concerns in his June 25 letter about what racers would do if Kalaeloa Raceway Park closes.
"It would be like having only one golf course on Oahu and suddenly that shuts down," Kemper told the Star-Advertiser.
