Ceded Lands

Portions of lands underlying Honolulu, Kahului, Hilo and Keahole airports are lands which were ceded by the Republic of Hawaii to the United States in 1898 and subsequently conveyed to the State by the United States at or following Hawaii’s admission to the Union in 1959.

Under the Admissions Act, Ceded Lands, together with income and the proceeds and income from the sale, lease or other disposition of any Ceded Lands, are required to be held as a public trust for the support of the public schools and other public education institutions, the betterment of the conditions of native Hawaiians, the development of farm and home ownership on as widespread a basis as possible, the making of public improvements and the provision of lands for public use.

In 1978 the State constitution was amended to provide that Ceded Lands were to be held as a public trust for native Hawaiians, the general public, and to establish the Office of Hawaiian Affairs to manage and administer the pro rata portion of the public trust set aside to benefit native Hawaiians.

Hawaii laws enacted in 1979 defined the “public land trust” as all proceeds and income from the sale, lease or other disposition of Ceded Lands and authorized OHA to collect, administer and expend 20 percent of all funds derived from the “public land trust” for the betterment of the conditions of native Hawaiians.

In 1984, OHA sued the Director of Transportation and other State officials for a declaration that OHA was entitled to 20 percent of the income and proceeds derived from the use of Ceded Lands comprising Honolulu International Airport.  The Hawaiian Supreme Court refused to decide the controversy.

In Trustees of the Office of Hawaiian Affairs v. Yamasaki, 69 Haw. 154, 737, P.2d 446(1987), cert. denied, 484 U.S. 898 (1987), the Hawaii Supreme Court held that because applicable Hawaii statutes contained no judicially discoverable or manageable standards to resolve the conflicting claim of OHA to 20 percent of revenues from Ceded Lands, and the State’s pledge of Airports System Revenues to its bondholders, a determination of OHA’s entitlement to Revenues from the Airports System was a political question to be determined by the Legislature.

The Legislature subsequently enacted Act 395, SLH 1988, the Native Hawaiian Trusts Judicial Relief Act, which:

  • Waived the State’s sovereign immunity for a breach of the “public land trust” in the disposition of Ceded Lands after July 1, 1988, and granted native Hawaiians, including OHA, the right to sue the State after July 1, 1990, in the State court to recover monetary damages for a “breach of trust,” and
  • Required the Governor to present a proposal to the Legislature by the conclusion of the 1991 legislative session to resolve controversies relating to the Ceded Lands issues arising prior to the effective date of Act 395.

The Legislature also enacted Act 304, SLH 1990, which:

  • Clarified the Ceded Lands comprising the public land trust and limited revenues derived from the public land trust to proceeds, fees, rents and other income from the actual use of Ceded Lands, excluding income derived through exercise of governmental powers;
  • Required the Department of Budget and Finance and OHA to determine the amount equivalent to 20 percent of revenues due to OHA previously received by OHA, and to propose a plan for paying this amount with interest;
  • Required the Department of Land and Natural Resources, the Office of State Planning of the Governor’s Office and OHA to identify public lands to be conveyed to OHA in full or partial satisfaction of the actual amounts determined to be payable to OHA; and
  • Appropriated $7.2 million for Fiscal Year 1991 from the State General Fund as the initial installment of revenues payable to OHA from the public land trust, which appropriation the Director of Finance was authorized to reimburse from special funds that derive revenues from Ceded Lands, including the Airport Revenue Fund, only upon a determination that the reimburse was not contrary to any bond covenant and would not impair the rights and privileges of holders of Bonds outstanding.

In 1991, the DOT identified the lands within the Airport System which constituted Ceded Lands. These Ceded Lands were primarily located under the runways at Honolulu International, Kahului, Hilo, and Keahole airports.

The Department of Budget and Finance determined that OHA was entitled to recover approximately $108 million for the State’s proprietary use of Ceded Lands during the period from June 16, 1980 through June 30, 1991.  Of this amount, approximately one-third was attributable to revenues generated from Ceded Lands underlying portions of the Airports System.

The Office of State Planning, Department of Budget and Finance and the DOT agreed that beginning in Fiscal Year 1992 and each Fiscal Year thereafter, 20 percent of the gross proprietary revenues derived from the use of Ceded Lands which are part of the Airports System would be paid to OHA. The DOT estimated that OHA’s entitlement to revenues derived from the use of Ceded Lands at the Airport System would be approximately $3.5 million per year; the actual entitlement, however, would be subject to negotiations with OHA.

Payments to OHA constitute an expense of the Airports System and are included in determining the Airport Use Charge Requirement under the current Airport-Airline Leases, and under the proposed airport-airline leases, would be included in the Airports System costs in determining the compensatory rentals and landing fees and the Support Charge.

In FY 1993, DOT paid OHA $7.7 million representing OHA’s entitlements to revenues derived from the use of Ceded Lands at the Airports system for FY 1993.