Farm lease dispute goes to arbitration

The fate of 10 farmers in Hawaii Kai looks like it will be in the hands of three arbitrators after a recent breakdown in negotiations over rent with landowner Kamehameha Schools.

The roughly $8 billion private charitable trust recently called off negotiations in favor of arbitration to settle the issue of resetting rents for the last 15 years on the farmers’ leases that cover their farms and homes spread over 87 acres in Kamilo Nui Valley.

For both sides, the matter is particularly aggravating because many of the farmers are in their 80s and can’t farm too actively. But rents haven’t changed since they were established in the early 1970s.

Kamilo Nui farmers, who lease parcels from three to 10 acres, pay an average $185 an acre per year, which Kamehameha Schools seeks to raise to $5,200 — a 28-fold increase.

Kamehameha Schools believes the farmers should have prepared for the hike knowing that adjusting rents to present market rates would happen this year. The trust, which benefits Hawaiian children and has a fiduciary duty to maximize the revenue from its assets, also emphasizes that it is committed to farming uses of the land for the next 15 years.

The farmers, who were relocated to the valley to make way for industrialist Henry J. Kaiser developing Hawaii Kai, say they are willing to pay more but not beyond what they reasonably can afford from farming. Jacking up rents to market rates, they say, would put them out of business.

Hawaii Kai farmers face 25-fold rent hike

Old age caught up long ago with a group of farmers working 87 acres in East Honolulu’s Kamilo Nui Valley, and now the rent they pay to lease the land is about to catch up after four decades.

Kamehameha Schools recently notified its 13 farm tenants in the agrarian Hawaii Kai neighborhood that it is seeking a roughly 25-fold increase in rent.

The trust, Hawaii’s largest private landowner, believes the offer is fair given that the farmers have to date been paying rent set in the early 1970s, and that the farm leases call for rent to be reset now for the 15 years remaining on the leases.

But many of the farmers, some of whom are in their 80s, say they cannot handle such a drastic hike, especially at their age and with the economy the way it is.