Bills introduced by powerful House Speaker Joseph Souki that would require owners of commercial lands to sell those lands to tenants are “clearly unconstitutional” and will not be heard this session, said House Water and Land Chairman Ryan Yamane.
Yamane issued a statement Monday saying he had “serious concerns” about the bills from the first time he read them, but Souki said in an interview it was actually his decision to shelve the measures for this year. Souki said he is confident the bills are constitutional.
The forced leasehold conversion idea was proposed on the opening day of the 2016 session in a speech by Souki, who said lawmakers should “have the determination and will” to take action to help small businesses.
Souki (D, Waihee-Waiehu-Wailuku) said he was concerned about a string of closures of locally owned shops and stores in recent years that were forced out of business by landlords who dramatically raised rents on commercial properties.
“We can level the playing field and change for the better the business landscape across the state — if we are willing to reinvent the rules that govern commercial leasehold lands,” Souki said in his opening-day speech.
He told reporters that state lawmakers have already passed a law requiring mandatory leasehold conversion for lands with homes on them, and said lawmakers could legally do the same for commercial properties.
Souki then introduced House bills 1635 and 2173 to move ahead with the mandatory commercial leasehold conversion plan.
Yamane initially scheduled the bills for a hearing Saturday, but said Monday his research showed the bills would cause an array of problems for landowners ranging from Kamehameha Schools and major banks to families and trusts that own commercial lands.
He also concluded Souki’s proposal would violate both the state and federal constitutions. “There’s so many negative ramifications that I’d rather just pull the bill and then work on it in the future years,” said Yamane (D, Mililani-Waipio-Waikele).
The proposal triggered a fierce reaction from Kamehameha Schools, which Yamane said has investments in commercial properties worth about $2 billion that could be affected.
On Thursday, Kamehameha Schools CEO
Livingston “Jack” Wong sent out notices to alumni, staff and parents attacking the proposal, which he described as an effort to “revive the unforgivable practice of forcibly taking aina (land) from Native Hawaiians.”
“We will not stand and watch this unfold from the sidelines,” Wong wrote. The lands held by the trust “connect us to our people and our shared ancestry and provide us the support we need to uplift our Lahui (people). Being forced to sell them against our will, and losing that connection for generations of our keiki cannot be tolerated.”
“We will fight this, together with other Native Hawaiian organizations, families, and landowners who would likewise be forced to sever their genealogical ties with their lands,” Wong wrote.
After receiving the news Monday that the bills were being shelved, Wong issued a statement explaining that “while this is positive news, we know we must remain vigilant in the event any attempt is made to bring these forced sales proposals back in some other form during this session or at any other time.”
Yamane said in a written statement that after extensive research and discussions with landowners, “we have decided that these measures are not only unconstitutional, but they would severely impact Hawaii’s ancestral lands and redefine the property rights of all nonresidential lands. … We have heard the people of Hawaii and their serious concerns over these measures, and the House Committee on Water and Land will not be hearing these measures; effectively killing these two bills for this year.”
However, Yamane acknowledged in an interview that rising rents are hurting small businesses. “That’s an issue that we need to look at, but it’s very complicated,” Yamane said. He said lawmakers will have to find some other way to address the issue.
“We need to move cautiously, because it has a fiscal impact,” he said.
Souki said he decided to pull back his proposal because he did not get enough of a response from the business tenants who would benefit from the bills. “I asked (Yamane) to do me a favor, to cancel (the hearing), and that’s what he’s doing,” Souki said.
He said he plans to work on the bills over the next year and perhaps carve out exceptions to the law for small properties or other categories of commercial property.
Souki also might ask his House colleagues to approve a resolution to refine his proposal and do further research, or perhaps establish a task force to study the idea.
