Molokai Land Trust Questions and Answers

The following questions were submitted to Molokai Land Trust Board president, Colette Machado on October 4, 2006. These questions were answered in the following text which was returned to the Molokai Dispatch on Friday, December 8, 2006:

MOLOKAI LAND TRUST UPDATE
December 7, 2006

1. What is the status of the Molokai Land Trust?

The Molokai Land Trust (MLT) is a nonprofit organization incorporated as a Hawai`i non
profit corporation on June 14, 2006 and is capable of conducting business in the state of
Hawai`i as a nonprofit. The incorporation articles are filed with the State’s Department of
Consumer and Corporate Affairs and are available to the public.

MLT has applied and received public charity status from the Internal Revenue Service. Public charity status is different from nonprofit status. Among other things, having
public charity status provides opportunities for private persons to donate land or money and receive favorable tax treatment as a result.

Molokai Land trust is a conservation land trust. The use of the term “trust” in MLT’s name has no legal significance — it just happens to be how these kinds of nonprofit to for the last several decades and so now it continues to be used because the public generally associates land conservation with land trusts. Conservation land trusts, such as Molokai Land Trust, owns land fee simple or acquires conservation easements to conserve the land for future generations.

There are other types of land trusts: private land trusts and community land trusts. Private land trusts are formed to hold property for specific beneficiaries such as the
Bernice Pauahi Bishop Estate. Community land trusts focus on affordable housing and community development. Today 9.4 million acres are protected by 1500 local and regional land trusts in the U.S. Two new land trusts are formed every week. Land trusts learn from each other using the Land Trust Alliance knowledge bank, a national organization advocating land trusts.

2. What is the Molokai Land Trust’s purpose?

The articles of incorporation apply to how MLT conducts business. The articles of incorporation are filed with the State of Hawai`i. The articles are similar to a
government’s constitution. They establish the fundamental principles, rights and obligations affecting the nonprofit.
MLT, as established in the articles, is organized exclusively for the following four purposes:

a. To protect and restore the land, natural and cultural resources of Moloka’i, and to perpetuate the unique Native Hawaiian traditions and character of the island, for the benefit of the future generations of all Moloka’i. particularly Native Hawaiians; and

b. To achieve the above charitable purposes and for no other purposes, to hold and acquire title and easements to lands and to gather and disseminate funds; and

c. To operate exclusively for charitable, scientific, or educational purposes as a section 509(a)(3) supporting organization within the meaning of section 501(c)(3) of the Internal Revenue Code of 1986, as now enacted or hereinafter amended, and the regulations thereunder (“the Code”); and

d. To support the mission of Ke Aupuni Lokahi, a federally funded, Hawai’i nonprofit corporation, which (a) has been granted status as a charitable organization under section 501(c)(3) of the Code that is described in sections 509(a)(1) and 170(b)(1)(A)(vi) of the Code, (b) has as part of its mission to steward the natural and cultural resources of Moloka’i; and (c) includes in its strategic plan the creation of a land trust for Moloka’i; or, to support other or additional public charities as provided in Article Vii of these Articles.

3. What are the selection criteria for the board of directors?

The board of directors are volunteers and not paid trustees. Just like any other nonprofit, the directors owe their allegiance to the corporate purposes of their organization.

The current board of directors is composed of nine individuals, but the size of the board is expected to increase. In general to be selected, potential directors must show their commitment to MLT’s purposes, proof that they will consistently be hard workers willing to put in twenty or more hours of work per month, and that they have some expertise. education, background or knowledge that will assist MLT with its activities, many of which include complex land matters.

MLT’s bylaws provide the following selection criteria:
Any person 18 years of age or older may be nominated and elected to serve as a Director. At least fifty-one percent (51%) of Directors shall be full time residents of Moloka’i. In the selection of Directors, the Board shall be mindful of the island’s unique ethnic diversity at the time of incorporation, while at the same time obtaining the service of persons having the specific knowledge, experience and abilities the Corporation requires, including in the areas of financial management, cultural resources, natural resources, subsistence practice, and fundraising.
The bylaws also provide that at least a majority of the directors at any given time must have been approved for membership by Ke Aupuni Lokahi (KAL) in accordance with section 509(a)(3) supporting organization within the meaning of section 501(c)(3) of the Internal Revenue Code of 1986.

4. How was the initial board of directors established?

Election of directors of nonprofits is ordinarily an internal, rather than public process. Most of MLT’s initial directors were part of a volunteer steering committee under the guidance of KAL for the purpose of creating a land trust that would protect culturally and environmentally important lands on Moloka’i. Establishing a land trust was one of the Moloka’i Enterprise Community Strategic Plan 1998 mandates. The members of this committee spent several hundred hours during 2005 and 2006 educating themselves on the land trust model, which has been successful around the United States, and then, working with consultants and experts in the land conservation field, creating a nonprofit land trust that could would best serve the land and people of Moloka’i for perpetuity. The ‘ public was very much a part of the genesis of MLT inasmuch as the directors were nominated from the Land Use Committee, and the volunteers were active participan7 within the sub-committees of KAL. Then KAL approved slate of board members. In the future, a nomination committee of the Board of Directors will develop a slate of board members for approval by the Board of Directors and a majority of the board confirmed by
KAL.

5. Who are the current board of directors?

Current voting board members are Colette Y. Machado, Richard Cooke III, Stephanie Crivello, Cheryl Corbiell, Clarence Halona Kaopuiki, William Akutagawa, David Lunney, Davianna McGregor, and Edwin Misaki. There are two ex-officio [standing members] non-voting positions for a representative from KAL and MPL.

6. How long will board members serve and will they be paid in the future?

The Molokai Land Trust is a nonprofit that operates like other nonprofits nationwide that conduct land conservation using the land trust model. MLT’s bylaws provide that directors will serve for four years. Like other nonprofits, MLT’s directors do not receive compensation for their services and will always be volunteer board members. The Board of Directors adopted an extensive conflict of interest policy as recommended by the IRS and Land Trust Alliance standards and practices.

7. How permanent and irrevocable is the land trust?

The permanency of MLT was foremost in the minds of its incorporators. Care has been taken to create an organization that will have the organizational capacity to operate in perpetuity. Moreover, in the extreme event that MLT as a nonprofit corporation was dissolved voluntarily or involuntarily, all of the lands and conservation easements ultimately held by MLT will be protected and held by another similar organization or by a government agency. The protections for this come from several sources, including MLT’s articles of incorporation and, in addition, state law. MLT has adopted the LTA standards and practices.

8. What is the process for the Molokai Land Trust to accept MPL donated lands?

It should first be noted that MLT can accept lands or conservation easements from any landowner with culturally or environmentally important lands, but is not required to accept the lands or land interests if they do not further MLT’s mission and corporate purposes. It is too early to discuss the specifics regarding any of the lands that Moloka’i Properties Limited has proposed to donate. With respect to any transaction undertaken by MLT, the following information applies.

Extensive due diligence (investigation of the specific property) must occur before lands or land interests are accepted. MLT has adopted the rigorous standards and practices recommended by the Land Trust Alliance, which is a national organization that focuses on providing support to land trusts located throughout the United States. Among the standards and practices are recommended practices relating to land transactions, including the following issues: identifying focus areas, project selection and criteria, federal and state requirements, public benefit of transactions, site or commercial inspection, documenting conservation values, project planning, evaluating the best conservation tool, evaluating partnerships, partnership documentation, evaluating risks, non-conservation lands, public issues, legal review and technical expertise, independent legal advice, environmental due diligence for hazardous materials, determining property boundaries, easement drafting, documentation of purposes and responsibilities, recordkeeping, title investigation and subordination, and recording. The focus over the next six months is to set the wheels in motion to accept an initial land parcel from MPL
The Land Trust Alliance standards and practices can be reviewed at http://lta.org/spl.

Molokai Land Trust
Dec 7, 2006