Yes, it’s true.
There’s another pair of bills authorizing $50,000,000 in special purpose revenue bonds (yes, as in $50 million) to a Hawaii company, Keahole Hotel & Suites LLC, for planning, designing, constructing, and equipping facilities for a hotel at the Ellison Onizuka Kona International Airport at Keahole.
According to state business registration records, Keahole Hotel & Suites LLC has a single member, Mason Industries LLC, which in turn also has a single member, Melvin G. Mason, Jr.
That’s the same Melvin G. Mason, Jr. behind the additional request for $100 million in special purpose revenue bonds via the pair of bills described here yesterday which would support Mason’s pipe dream, House of Aloha Enterprises LLC.
The bills are SB256 and a companion, HB688.
Someone appears to have greased the skids in the Senate, where SB256 ended up with a single referral directly to Committee on Ways & Means, which recommended passage of the bill by a 9-0 vote of members present on Wednesday, February 10. A hearing on HB688 is scheduled for this morning at 10 a.m. before the House Committee on Transportation.
There were two testimonies submitted in support of SB256. One was from Melvin G. Mason Jr. on behalf of Keahole Hotel & Suites LLC. The other was from Melvin G. Mason Jr. on behalf of Mason Industries, LLC. This testimony failed to mention that Mason Industries is the sole controlling member of Keahole Hotel & Suites LLC. And neither submission included any details of the proposed project.
There were also two departments that offered testimony.
Budget & Finance offered what it called a “technical comment.”
Federaltaxlawrequires, among other things, that hotels financed with tax-exempt bond proceeds must be governmentally owned and operated by a governmental unit and/or private entity (subject to a qualified management contract), and available for use by the general public for short term stays.
To utilize tax-exempt revenue bonds, a hotel must be government owned, and the bill states calls for tax-exempt bonds. This was pointed out in testimony submitted on behalf of the Department of Transportation.
DOT politely did not testify in opposition to the bills. However, it did put forward considerations that are likely fatal to the hotel proposal.
…the department respectfully offers the following comments for the Committee’s consideration:
1.) The Bill makes reference to the proposed special purpose revenue bonds being exempt from federal income taxation. Such an exemption would require the project to be owned by a governmental entity or a 501(c)3 non-profit corporation; although the project could be operated by a for-profit entity if the terms of such operation comply with IRS requirements.
2.) Airports Division is subject to both Federal Aviation Administration and existing contractual restrictions regarding how it uses airport revenues. Airport revenues would presumably not be available to support special purpose revenue bonds of this nature.
3.) Airports Division is subject to contractual restrictions including restrictions applicable to: (a) the incurrence or guaranty of new indebtedness; (b) the acquisition, disposition and maintenance of property; and (c) a capital budgeting process involving the approval of signatory airlines.
4.) Airports Division is subject to statutory and constitutional restrictions, including, but not limited to, those relating to expenditure of public funds, procurement and leases of governmental land.
And then, just for the record, DOT’s testimony concluded: “Further, if it is determined that a governmental owner is necessary for the tax-exemption of the special purpose revenue bonds, Airports Division believes that it would be a poor fit to serve in such capacity.”
In other words, we don’t want to be involved with this.
It’s important to note that there’s a relatively long history to this project, with lots of warning signs flashing along the way.
I liked the moment captured by Pat Tummons in her excellent review cited below. She described a telling interaction at an August meeting of the Hawaii County Leeward Planning Commission on a related matter involving Mason.
Right before the commissioners were set to vote on the issue, commissioner Max Newberg asked Mason, “Out of curiosity, are you a developer?”
Mason replied, “Yes, I’m going to be developing this.”
Of course, Newberg appeared to be asking whether Mason had any credentials or experience as a developer. And his answer did not answer the question.
It’s the same sort of question about credentials, experience, and resources that need to be asked and answered before any of these bond proposals can be approved.
For additional important background, see:
“Leeward Planning Commission gives OK to airport hotel proposal,” Nancy Cook Lauer, West Hawaii Today, August 23, 2020.
“Panel Green-Lights Zoning Change for Hotel, Other Uses at Kona Airport,” Pat Tummons, Environment Hawaii, September 2020.
“SB652: Will Legislators Give Drunk Rave Promoter $50M?” Andrew Walden, Hawaii Free Press, February 17, 2019.
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You’re an excellent purveyor of bruddah-bruddah graft. Understanding thru your reference to other red flag waving reporters, citizens continue give their reps license to defraud by voting them in again.
Whoz on Senate Ways n Means rubber stamp committee?
WAYS AND MEANS (WAM)
Dela Cruz, Donovan M. (Chair)
Keith-Agaran, Gilbert S.C. (Vice Chair)
English, J. Kalani; Inouye, Lorraine R; Kanuha, Dru Mamo; Kidani, Michelle N.; Moriwaki, Sharon Y.; Shimabukuro, Maile S.L.; Taniguchi, Brian T.; Wakai, Glenn; Fevella, Kurt
https://www.capitol.hawaii.gov/docs/LEADERSHIPCOMMITTEEASSIGNMENTS.pdf
So how much “grease”, exactly, have the Masons put up and to which legislators, over the years?
SB1412. Different folks but quite a scheme.
Wow I’m very concerned about the Legislature living in a bubble. First the Speaker Saiki takes on the State Auditor Kondo for what seems to be a contrived underlying rationale and then there isn’t even opposition on Ways and Means to financing like this at a time when spending should be under scrutiny. Perhaps the legislature is taking advantage of the fact that nobody from the public can show up to the Legislature to observe and comment in person as to what is going on and the only means of commenting is through the internet and in writing.
“Wow I’m very concerned about the Legislature living in a bubble.”
Of course. It’s absolute hubris from serving in the legislature virtually their entire adult lives (in a technically “part time” job) and realizing they can get away with almost anything short of murder.
Term limits are way overdue for the legislature. I’ll bet if they allowed it to come up for a vote in this state, the verdict would be unanimous. That’s why it won’t be allowed to come up for a vote.
The real concern is whether after passage these special purpose bonds are ever issued. My perhaps too optimistic hunch is that the legislators rely on Budget & Finance to weed out the egregious ones; therefore, they look at their legislative approval as a “free” vote to curry approval with whomever is making the request. Some decades ago I helped a friend who was an expert in the area that was the subject of a bond request testify at the Legislature in opposition to the proposal. I was struck at how angry various legislators were at my friend for disrupting what was supposed to be a pro forma approval hearing. Once again, without Ian none of us would know that this sort of skid greasing continues for supplicants devoid of shame and usually talent as well. Otherwise, they would access private financing.