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Posted on Feb 6, 2020 in Latest Department News

HONOLULU – After careful consideration the Hawaii Department of Transportation Airports Division (HDOTA) has concluded that operating Dillingham Airfield (HDH) is not in the best interest of the State of Hawaii and has notified the Department of the Army and the Federal Aviation Administration (FAA) that it is exercising its right to terminate the Army Lease effective June 30, 2020.

“Dillingham Airfield is the only airport in the HDOTA system that is not owned by the State and it is in the best interest of the State to transfer the airfield back to the Army to manage and maintain, based on several factors including the uncertainty of the lease, risk of losing federal funds, the water system issues, and lack of authority over the facility,” said Director Jade Butay, Hawaii Department of Transportation. “In addition, HDOTA subsidizes a million dollars a year for the operation and maintenance at the airfield and we will focus the resources on the remaining 14 airports in our jurisdiction.”

HDOTA provides the following contributing factors as some of the contentions to its decision to terminate the lease.

  1. Current Term of the Lease (5 years) – In 1961, the U.S. Army had offered the State the use of the HDH for 20 years. In 1983, the U.S. Army negotiated a 25-year lease which ended in 2008. In 2009, the Lease was negotiated for a lease term of 25-years until 2034; however, that Lease term was later amended by the parties to a five-year term ending in 2014. In 2014, the Lease term had been extended until 2019, and then further extended until 2024. The HDOTA has been unsuccessful in establishing a longer term lease with the U.S. Army over the last eight years. For the HDOTA permittees, permit terms of five (5)-years cannot qualify them for significant loans (financing) for major airport development such as hangars, business buildings/offices, or other airport infrastructure improvements. For the HDOTA itself, this inability to establish long-term leases (leases longer than (20)-years) directly affects the HDOTA’s eligibility as an airport sponsor, to apply/receive any Airport Improvement Program (AIP) grants. In any event, at this point, the HDOTA is no longer seeking a long-term lease for the HDH.
  2. Grant Assurance 5, Preserving Rights and Powers (an Airport Sponsor must preserve its rights and powers to control and operate the airport). Under the terms and conditions of the Lease, the HDOTA lacks the ability to fully exercise its rights and powers. Under the Lease, all military flight operations and ground maneuvers will take precedence over civilian aircraft operations. Under the Lease, all airport improvements (by the airport sponsor and/or by the permittees), along with all land/parcel sublet documents (e.g. leases, revocable permits) must be submitted for review and approval by the U.S. Army.
  3. Water System Responsibility Revenue Diversion. The water system at HDH along with the wells and their permitted pump allocation is leased to the HDOTA. The HDOTA must maintain the buildings and its contents (Water pump; Water Supply Treatment/Chlorinator facility). This utility system provides the sole water supply to the HDH and the surrounding civilian/public community of about a dozen residents; one commercial bed and breakfast operator; a City and County of Honolulu beach park; a U.S. Army beach parcel; a U.S. Air Force radar installation; and a YMCA Camp (capable of supporting groups of up to 300 persons). The HDOTA is not in the business of being a water system operator or purveyor and, among other issues, no fees are collected. The FAA has warned HDOTA that HDOTA’s current role regarding the water systems is not allowed.

“To continue the agreement at HDH could put HDOTA at risk for loss of additional financial resources and grants in the airports system from the FAA,” said Deputy Director Ross Higashi, Hawaii Department of Transportation.