SB2421

SECTION 1. The legislature finds that it is in the public interest to acquire private lands currently owned by the George Galbraith Estate (Estate) for the preservation of agricultural lands in central Oahu, and protection of the health, welfare, and safety of the people of the State of Hawaii.

The Estate was established pursuant to the will of George Galbraith, which was admitted to probate on March 25, 1905. Due to considerable ambiguity on the intention and validity of the will, the will was litigated extensively. In Fitchie v. Brown, 18 Haw. 52 (November 1, 1906), the Hawaii Supreme Court held that the will created a trust to accumulate unapplied income; that the lives in being listed in the will were the named annuitants; and that the trust estate would be distributed twenty-one years after the death of the last surviving annuitant listed in the will. The Supreme Court of the United States upheld this interpretation in 211 U.S. 321 (1908).

Subsequent litigation established that the heirs of life annuities took their shares of the annuities by right of representation; that annuities could be sold in fee; and that the final holders of the annuities, at the time of distribution, would take a per capita share of the estate. Hawaiian Trust v. Galbraith, 22 Haw. 78 (1914); Hawaiian Trust Co. v. Galbraith, 24 Haw. 174 (1919).

The corpus of the Estate currently includes twenty individual and contiguous parcels having a combined area of approximately two thousand one hundred acres situated north of Wahiawa--a significant assemblage of some of the most fertile agricultural land in the state. These lands were historically leased to pineapple growers on a long-term basis and have not been available for sale for more than one hundred years.

On April 26, 1986, Arthur Cathcart, the last named annuitant in the George Galbraith will, died. Pursuant to the terms of the will, the Estate was to terminate on April 26, 2007. However, because of the numerous interpretations of the will and the passage of time, a large number of minuscule life annuities were created, precipitating considerable difficulty in determining who some of the annuitants are, and how the corpus would be distributed among the beneficiaries. Accordingly, although the termination date of the Estate has passed, the trustees have not yet sold the landholdings while these and other legal issues are addressed. Furthermore, chapter 517, Hawaii Revised Statutes, authorizes the trustees of an estate or trust, with the approval of the court, to sell the real property of the estate or trust beyond the expiration date of the estate or trust.

The legislature further finds that the State of Hawaii is committed to preserving its limited natural resources. Article XI, section 3 of the constitution of the State of Hawaii requires the State to "conserve and protect agricultural lands, promote diversified agriculture, increase agricultural self-sufficiency and assure the availability of agriculturally suitable lands." As such, the legislature further finds that the acquisition of the Galbraith landholdings in central Oahu furthers this essential public policy.

The legislature also finds that the body of water in Wahiawa, commonly referred to as Lake Wilson, is on real property owned by the Estate and an affiliate of Castle and Cooke Hawaii (Castle and Cooke). While the Estate intends to sell that land upon the termination of the Estate, Lake Wilson remains an agricultural irrigation asset of the other half-owner of the land under the Lake--Castle and Cooke.

According to the American Society of Civil Engineers, the earthen Wahiawa dam on Kaukonahua stream that creates Lake Wilson is classified "high hazard", not because of structural or functional deficiencies, but because of its precarious location. A failure of the Wahiawa dam could cause massive loss of life, injuries, and property damage to downstream areas throughout the communities of Waialua and Haleiwa.

While the State has had discussions with the Estate and Castle and Cooke on the possible "gifting" of the landholdings under Lake Wilson, the imminent termination of the Estate and the fiduciary responsibility of the trustees to obtain the maximum return for beneficiaries have greatly compounded the complexity of the negotiations between state officials and the landowners.

Lastly, the valuation of the Estate's landholdings has been a matter of conjecture for many years, especially due to the enormous potential it may hold should the land ever be reclassified from agricultural to a higher use. As such, there is a strong possibility that the placement of these lands on the open market may create a frenzy of speculative buying that might result in the break up of these large contiguous tracks of land.

For tax purposes, the city and county of Honolulu has determined that as of October 1, 2006, the total property assessed value of the parcels situated in central Oahu was approximately $100,000,000:

Parcel Assessed Value

TMK 6-5-002:010 $10,569,100

TMK 6-5-002:025 $6,154,700

TMK 6-5-002:026 $3,589,000

TMK 7-1-001:001 $1,898,900

TMK 7-1-001:002 $17,492,900

TMK 7-1-001:003 $7,879,900

TMK 7-1-001:005 $12,969,000

TMK 7-1-001:006 $3,421,500

TMK 7-1-001:007 $813,500

TMK 7-1-001:008 $17,613,100

TMK 7-1-001:012 $1,736,400

TMK 7-1-001:013 $900

TMK 7-1-001:017 $100

TMK 7-1-001:020 $11,300

TMK 7-1-001:021 $7,200

TMK 7-1-001:022 $156,800

TMK 7-1-001:023 $1,041,200

TMK 7-1-001:024 $200

TMK 7-1-001:025 $998,600

TMK 7-1-001:026 $11,356,900

TMK 7-1-001:027 $464,100

TMK 7-1-001:028 $507,400

TMK 7-1-001:029 $335,500

TMK 7-1-001:032 $878,900

TOTAL $99,897,100

The purpose of this Act is to appropriate funds for the acquisition of lands owned by the Galbraith Estate in central Oahu. It is the intent of the legislature that this Act not be construed to preclude the State and the Estate from entering into a land exchange or any other agreement that would reduce the expenditure of funds authorized by this Act.

SECTION 2. There is appropriated out of the general revenues of the State of Hawaii the sum of $100,000,000 or so much thereof as may be necessary for fiscal year 2008-2009 to acquire the lands currently owned by the Galbraith Estate in central Oahu and designated by tax map keys 6-5-002:010, 6-5-002:025, 6-5-002:026, 7-1-001:001, 7-1-001:002, 7-1-001:003, 7-1-001:005, 7-1-001:006, 7-1-001:007, 7-1-001:008, 7-1-001:012, 7-1-001:013, 7-1-001:017, 7-1-001:020, 7-1-001:021, 7-1-001:022, 7-1-001:023, 7-1-001:024, 7-1-001:025, 7-1-001:026, 7-1-001:027, 7-1-001:028, 7-1-001:029, and 7-1-001:032.

The sum appropriated shall be expended by the department of land and natural resources for the purposes of this Act.

SECTION 3. This Act shall take effect on July 1, 2008.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2421
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII