STAR-BULLETIN / 1997 Before the terrorist attacks in New York and Washington, D.C., in September, there were more customers at Honolulu Airport's Duty Free Shop. Concessionaires at Hawaii airports hope they can continue to receive rent relief from the state until business picks up.

Bill to extend help for
airport merchants
opposed by DOT chief

Brian Minaai says the measure
could run afoul of the FAA, but
the merchants disagree

---

By Crystal Kua
ckua@starbulletin.com

A bill intended to provide continued rent relief for airport concessionaires who suffered financially after Sept. 11 could be become the victim of a governor's veto.

State Transportation Director Brian Minaai said that he will recommend to Gov. Ben Cayetano that Senate bill 2306, conference draft 1, which is headed for a final vote at the Legislature next week, be vetoed.

Minaai said the bill does not provide the state with enough flexibility to determine which businesses should be covered and the measure could also run afoul of the Federal Aviation Administration and jeopardize millions of dollars in federal airport funding.

"We're very concerned that the bill does not give us the discretion to help those concessionaires that need the relief the most," Minaai said. "The FAA also has concerns."

But a representative of the concessionaires said the measure is needed to prevent businesses at the airport from going under and they are confident, after checking with the FAA, that the bill would withstand federal scrutiny.

"It's very necessary," said Peter Fithian of the Airport Concessionaires Committee. "Without it, we'll have some failing businesses."

Minaai said that the bill mandates that the state allow concessionaires to "break even" if both sides are unable to negotiate rent relief, and would set higher rates for a replacement vendor.

"The bill as it is assures them to break even and to get back to what they were," Minaai said. "How long that takes and how much that takes could be for a long time and could compromise our funding and it could also compromise our bond status, our bond rating and it could ultimately lead to higher landing fees for the airline."

In a letter to Minaai, the FAA's David Bennett, director of Office of Airport Safety and Standards, wrote, "We believe the pending state legislation for the State of Hawaii goes too far in accommodating losses concessionaires have incurred or may incur in the future."

Bennett wrote that the economic relief that is being proposed could be inconsistent with the intent of federal law if airports do not receive "fair market value" for nonaeronautical facilities and services.

Federal policy surrounding airport improvement grants issued to the state requires airports to set rates at fair market value for nonaeronautical tenants, the letter said.

"We do not agree that fair market value is affected by, or must be adjusted for, short-term economic changes," Bennett wrote.

Minaai said that federal airport improvement grants are issued for qualified construction projects.

But Senate Transportation Chairman Cal Kawamoto (D, Waipahu) said that it is time the state help concessionaires whose businesses bring in the bulk of airport revenues.

"We should help them, help to the point where all they want to do is break even," Kawamoto said. "The state doesn't want to do that. They want new tenants in airport concessionaire."

Fithian also said that the concessionaires have followed up with the FAA since the Bennett letter and are confident the bill passed yesterday addresses the FAA concerns.

Kawamoto said that it would be difficult for the airport to attract new concessionaires when foot traffic is lessened as a result of new federal security requirements.

House Transportation chairman Joe Souki (D, Wailuku) said he is concerned about a possible governor's veto but said that not giving the state enough flexibility to negotiate relief could pose a problem.

"On the other hand, I agree with the fact that the concessionaires have been good corporate citizens all these years," Souki said. "Now that they're having some pilikia, they should be given a break, and this bill does provide some minimum breaks."

Kawamoto said the relief would only apply to the dozen or so tenants who are currently receiving reduced rent.

"So it's not everybody. DOT is saying everybody, but it's not for everybody," he said.

---

Legislature Directory

Legislature Bills & Hawaii Revised Statutes

Testimony by email: testimony@capitol.hawaii.gov
Include in the email the committee name; bill number;
date, time and place of the hearing; and number of copies
(as listed on the hearing notice.) For more information,
see http://www.hawaii.gov/lrb/par
or call 587-0478.