Mauna Kea is only worth three apartment building development projects
The proposed sublease rent rates UH plans on charging the TMT LLC totals to roughly three times what the state will charge, in total, developer Forest City to build the 690 Pohukaina apartment building complex.
UPDATE: University of Hawaii at Hilo Chancellor Donald Straney emailed the following statement to the Hawaii Independent yesterday afternoon:
The rent for the TMT is based on the cost of implementing the Comprehensive Management Plan for the Mauna Kea Science Reserve, the midlevel facility at Hale Pohaku and the summit access road between them. In 2009, the legislature authorized the University to collect fees for subleases and required the fees collected be placed in a special fund which may only be used for management on the mountain. The rent for the TMT sublease represents that project’s share of the costs of meeting our obligations for management on the mountain.
Using standard means of comparing rents (present value per net usable square foot), the TMT sublease rent will be the highest of any non-ocean front properties on Hawaii Island.
On Friday the Board of Land and Natural Resources (BLNR) will address the proposed Mauna Kea sublease between the University of Hawaii (UH) and the Thirty Meter Telescope (TMT) LLC. Of particular importance is the sublease rent amounts UH is proposing to collect from the TMT LLC.
The proposed sublease would cover an area of approximately 8.7 acres on the northern plateau below the Mauna Kea summit. The term of the sublease will expire on December 31, 2033, along with the UH master lease on most of the land it manages on the mountain. However, UH has requested that the BLNR cancel this lease (and one other that would expire on February 27, 2041) and immediately issue two new 65-year leases to UH, which would allow the sublease to extend past 2033 as well. Action on this matter was deferred by the BLNR last year at the request of UH, until after it completes an environmental review of the project.
Part of the conditions upon which the UH Board of Regents (BOR) agreed to the sublease plan was a requirement that the BOR and the TMT LLC “negotiate in good faith to secure substantial funding in the form of sublease rent that shall be applied specifically for management of the mountain.”
This is also a condition of the Conservation District Use Permit the BLNR issued to UH on April 12 of last year. UH views the Conservation Use Permit process as “over,” despite an appeal that is pending in the Third Circuit Court of Appeals. In a memo sent from UH Hilo Chancellor Donald Straney to BOR Chair John Holzman on February 12 of this year, Straney says that the appeal will not “stay construction of the TMT,” and that the final step before construction can begin is simply “completion and execution of the Sublease.”
The proposed annual rent UH plans on charging the TMT LLC for upkeep of the mountain is scheduled to increase over the course of the first 11 years after the sublease goes into effect. The schedule is as follows:
Year 1-3: $300,000
Year 4-5: $400,000
Year 6-7: $600,000
Year 8-9: $700,000
Year 10: $900,000
Year 11 and after: $1,080,000
That would equal a total of $65.5 million for the requested 65 year lease. For a comparison, the developer Forest City will pay the state $14 million to lease the land at the proposed 690 Pohukaina site, along with a few other lump-sums to cover things like an Environmental Impact Statement, for a total of $21.8 million. That’s roughly a third of the total amount the TMT LLC will have to pay to sublease land at Mauna Kea for the same amount of time.
At press time, UH Hilo Chancellor Donald Straney had not responded to inquiries from the Hawaii Independent regarding who established the proposed sublease rent rates and who determined them to be “fair market value.”