Land board hikes
Hilton’s fees for pier
Voyager Submarines says it will take
By Ian Lind
the lease if Hilton doesn't want it
Star-BulletinHilton Hawaiian Village General Manager Peter Schall says he'll have to examine a decision by the state Board of Land and Natural Resources to dramatically boost the hotel's rental fees to the state for a landmark pier. But Ed Boot, manager of Voyager Submarines, a competitor of Atlantis, which operates from the pier, says: "If Hilton doesn't like it, we'll take the deal tomorrow. Where do we send the check?"
The land board voted to charge rent of $30,000 a month, or $1.50 for each paying passenger using the pier, whichever is greater. The hotel has most recently been paying a monthly rent of $3,485.
The pier is built on submerged lands owned by the state and is controlled by the hotel under terms of a month-to-month revocable permit first issued in 1964. Hilton has in turn subleased the pier to Atlantis Submarines since mid-1992 for its underwater tours.
The pier lease became controversial after the Star-Bulletin reported that Hilton has been allowed to make substantial profits despite questions about the legality of its deal with Atlantis.
State records show Hilton was paid $870,921 during 1996 from the Atlantis operations, but paid the state just $30,500 in rent during the same period. The state would have received $423,162 under the new fee structure, based on a count of 282,108 Atlantis customers during the year, the board was told yesterday.
The board voted to impose the new fees retroactive to Dec. 1, 1996, but will not seek to recover rents back to 1994, when a long-term easement arrangement with higher fees was supposed to replace the month-to-month permit. The easement was never finalized because Hilton balked at paying the proposed rent of 3.5 percent of gross revenues from the submarine tours and related activities.
The board said the new fee is only an interim solution to protect the state's interest pending an attorney general's opinion on whether the pier lease should be auctioned to the highest bidder.
A 1993 attorney general opinion found Hilton's deal with Atlantis violated the terms of its revocable permit. The board then agreed to grant Hilton an easement, but late last year the attorney general determined it could not be issued without competitive bidding.
The board voted last month to defer a decision on whether to auction the lease after Hilton raised legal and policy objections. Those matters, and the pier's long-term fate, remain unresolved.
In adopting the new fee structure yesterday, the board rejected both a staff recommendation for a $2 fee, and a request by Hilton to reduce the toll to just $1.20.
Land board member Michael Nekoba, whose term ends next week, initially argued for a fee as high as $3 per person.
"We've been shortchanged for many years," Nekoba said.
"Now we know better, and we know what kind of revenue the pier is generating. This is the only pier on Waikiki Beach, and there is only one Waikiki Beach."
Schall argued that public perceptions of big profits for Hilton are wrong because of expenses that go along with the pier.
Schall told the board that a $2 per passenger fee would have left Hilton with just $78,030 in pier-related profits last year, after paying expenses and corporate income taxes.
