Opinion ID: 2514143
Heading Depth: 2
Heading Rank: 1

Heading: OHA's Entitlement to Payment of Airport Revenue Under Act 304

Text: In the case before us, OHA seeks its pro rata share of revenues that the State receives pursuant to its lease [8] of airport premises to the duty free concessionaire [hereinafter, DFS]; specifically, OHA seeks the revenues that are based on gross receipts from the Waik;ik;i Duty Free Store (WDF). [9] The State argues that the portion of the rent received from DFS that is based upon the receipts from WDF does not result from activity situated upon or from actual use of the ceded lands and is, therefore, not derived from ceded lands. We disagree. Under the plain language of HRS § 10-2, as amended by Act 304, revenue includes, inter alia, all ... rents ... derived from any . . . lease ... result[ing] from the actual use of [ceded] lands[.] See HRS § 10-2. Thus, to the extent that the State leases premises to DFS that are situated upon ceded lands, OHA would be entitled to the equivalent of twenty percent of the rent charged. According to the DFS Lease Agreements, the rental amount charged is equal to the greater of: (1) a minimum annual guaranteed rental; or (2) the sum of twenty percent of the lessee's gross receipts. Under the agreement, gross receipts includes all receipts derived or received by DFS as a result of its operation of the concession and the exercise of the right to deliver [duty free] merchandise to the Airport regardless of whether the ... entire transaction takes place at the Airport or only a portion thereof takes place at the Airport[.] The fact that the amount of rent due may be calculated by the total of receipts received by DFS, including those receipts from WDF, does not change the fact that the rent paid is for the actual use ( i.e., the lease) of the Airport premises. Were that not true, the State, itself, would have no basis for collecting any money from DFS that is derived from WDF receipts. [10] Accordingly, under HRS § 10-2, as amended by Act 304, OHA is entitled to twenty percent of the rent paid for its lease or use of that portion of the Airport premises situated on ceded land, [11] irrespective of whether that rent is calculated at a flat rate or is based on DFS receipts, including those from WDF. In other words, Act 304 obligates the State to pay to OHA the airport revenues sought in this case. We now address whether federal law precludes the payment of airport revenue to OHA.