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Deadbeat Lessee Leaves State Holding $227,000 Debt

April 26, 2013, 6:27 PM HST (Updated April 29, 2013, 11:56 AM)
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A lease of state land to a Colorado man nearly two decades ago has turned out to be a nightmare for Hawaii’s taxpayers.

Franklin Hulce obtained a lease of about eight acres of land in Pu`uanahulu in North Kona in 1994.

According to permit No. S-6986, issued by the state Board of Land and Natural Resources, the former Pu`uanahulu School lot parcel was te be used for single-family residential and agricultural purposes.

The cost of the month-to-month lease was $610 a month, and Hulce was required to post double that amount, $1,220, as a security deposit.

For reasons that are not currently clear, the lease was terminated on Nov. 30, 2001.

A subsequent inspection by the Department of Land and Natural Resources found “considerable environmental contamination” on the property, according to a report to the land board from the DLNR staff.

According to a letter from the DLNR to Hulce dated May 7, 2002, the problems included “debris and petroleum spillage.”

The contamination also included possible paint contamination as well as spilled chemicals, the letter said. The debris included diesel tanks, abandoned vehicles and numerous smaller materials “spread throughout the property and overgrown with grass.”

There was also a gas pump and underground gas storage tanks that needed removal according to Environmental Protection Agency standards, it said.

DLNR officials said the pump and tanks had been installed by a previous lessee and used by Hulce for his construction business.

The letter told Hulce that because the lease called for the premises to be kept “in a clean, sanitary and orderly condition,” he was responsible for the cleanup. If Hulce did not clean it up, the state would have it done and bill him for it.

Which the state did, at a cost of nearly $229,000. After subtracting credit for a month’s rent, and for the security deposit, the amount assessed Hulce ended up at $227,131.

But Hulce could not be found, and the state was not reimbursed for the clean-up.

Fast-forward to this month, when the DLNR’s Land Division submitted a request to the Board of Land and Natural Resources to have the debt written off as uncollectible. It said that the Civil Recoveries Division of the attorney general’s office had approved the write-off in February.

State law allows the write-off under certain circumstances including if the debtor cannot be located, if the debtor has filed for bankruptcy or if the account “may be deemed by the attorney general to be uneconomical or impractical to collect.”

The staff report to the land board said that the state attorney general’s office had sent five letters between 2003 and 2008 informing Hulce of his obligation to pay, but received no response.

Officials said the state did receive a letter from Hulce’s daughter stating that her father had filed for bankruptcy, moved back to Colorado and was living on social security payments.

At a meeting in Honolulu earlier this month, the Board of Land and Natural Resources approved the request to delete the bill from the DLNR’s list of accounts receivable.

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