STAND. COM. REP. NO. 2557

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2005
                                        




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B.
No. 2005 entitled: 

     "A BILL FOR AN ACT RELATING TO PUBLIC LANDS,"

begs leave to report as follows:

     The purpose of this bill is to permit the Department of Land
an Natural Resources to enter into new long term leases with the
existing lessees on Banyan Drive in Hilo, Hawaii.

     Banyan Drive faces a unique and critical situation.  It is
an integrated resort area built on lands leased from the State.
The State thus controls a significant portion, approximately
eighty percent, of the hotel space in East Hawaii.  The majority
of the leases are approaching the end of their term in 2015.
There are few incentives for the lessees to make the necessary
improvements to their property without some type of guarantee
that their leases will be renewed.  If the properties are allowed
to slide into disrepair and the infrastructure deteriorate, East
Hawaii will not be able to take advantage of the visitor market
when the visitor market rebounds, and the value of the parcels
and thus the State's lease rents will decline.

     Your Committee finds that making an exception to the state
policy of offering the leases to the highest bidder at public
auction is necessary to the future of Banyan Drive and the
economy of East Hawaii.  This exception would allow the State to
issue new leases directly to the existing tenants and would apply

 
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                                   STAND. COM. REP. NO. 2557
                                   Page 2


to fifteen leases, ten leases covering three resort facilities,
three leases of apartment/condominium facilities, one golf course
lease, and one restaurant lease.  Your Committee further finds
that this bill contains sufficient protection to allow the State
to receive a higher lease rent if there are other entities
seriously interested in bidding on the leases.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
2005 and recommends that it pass Third Reading.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
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