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Hawaii Business and MN Capital Partners LLC Compile Hawaii's Top 20 Wealthiest Landowners

To compare this year’s list of landowners with the 2001 list, researchers used a real property tax assessed value database from four counties (Oahu, Maui, Kauai and the Big Island). Year 2001 assessments from these counties were downloaded into a database management program. The information represented assessed values as of Oct. 1, 2001.

The database search was conducted to identify landowners with holdings of the highest values. The information then was confirmed with company representatives, when applicable. Researchers also reviewed annual reports, SEC filings, DCCA Business Registration records, assessment office maps and records, Bureau of Conveyances documents and other publications. The list was finalized in September 2002. The final database represents the only consistent, comprehensive and publicly available measure of value for all Hawaii real estate, including government holdings.

For real property tax purposes, assessors estimated value for every real-estate parcel in the state. Assessments are derived in a consistent manner and as of a common point in time. Given the large number of properties involved, assessors apply a mass appraisal approach using standard methodology, cost and market valuation models, common reference data and statistical testing.

One drawback to the database is that assessments represent a proxy for fee simple values; there is no division of value between leased fee (lessor’s interest) and leasehold (lessee’s interest) interests. This is significant in a market where long-term ground leases are prevalent. Therefore, 100 percent of value is assigned to the fee owner of record. This allocation tends to inflate values associated with many top Hawaii landowners, who lease the majority of their properties in the short term. That said, the attribution of value to the lessor more accurately reflects long-term ownership and control of the asset.

Although the obvious adjustment is to divide land and building values between lessor and lessee, consider the scenario where a ground lease expires in less than a year. There would be nominal, zero or possibly negative value associated with the leasehold position.

Another obstacle is that ownership is often held in different entity names. In some cases, database entries were simply misspelled. Best efforts were made to research corporate subsidiaries and refine the database information.

Special-use properties, such as power plants, churches and schools, are difficult to evaluate. These assessments are typically exempt from property-tax calculation.

Last year, the researchers inadvertently omitted the value of capital-intensive power-plant facilities. As a result, Hawaiian Electric Industries Inc. (HEI) is ranked fourth in the 2002 survey, up from No. 12 last year. Excluding the assessment of the power plant, as indicated in the footnote, lowers HEI to No. 15.

Another clarification, relevant to owners of large tracts of agricultural land, is that tax-assessed values for properties dedicated to agriculture use are lower than “market value” assessments. Assessed values depend upon the type of agricultural land use and the term of the dedication period.

It should also be noted that the figures represent total value before consideration of debt or other encumbrances on the properties.

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Hawaii Business,November