REPORT TITLE:
State Leases; Farmers


DESCRIPTION:
Provides that at the time of expiration of an agricultural
lease, the current lessee shall have a right of first preference
to lease the property.  Credits the appraised value of all
infrastructure installed by the current lessee, which is directly
related to an agriculture operation, excluding residences, toward
the price the current lessee must match in exercising the
lessee's right of first preference.  Limits the lessee's right of
first preference within sixty days after the auction.  Authorizes
the department of land and natural resources (DLNR) to negotiate
long-term leases under specific terms, conditions, and
restrictions imposed by this Act with certain lessees of
agricultural land.  Allows DLNR to adopt rules to carry out the
provisions in the bill.  Specifies that within six months from
the bill's effective date, DLNR shall notify all agricultural
lessees of the terms, conditions, and restrictions under the
bill.  (HB1998 HD2)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1998
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 2
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO STATE LEASES.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1. Widespread development of farm ownership is one
 
 2 of several stipulated uses for proceeds from the public land
 
 3 trust.  The continued growth and development of diversified
 
 4 agriculture throughout the state is an objective of the Hawaii
 
 5 state plan as stated in chapter 226, Hawaii Revised Statutes.
 
 6      Certain lessees of agricultural lands have occupied state
 
 7 lands for long periods of time.  However, these same lessees face
 
 8 an uncertain future as the expiration of their leases near.
 
 9 Currently, upon expiration, if the leased land is not otherwise
 
10 disposed of, the department of land and natural resources (DLNR)
 
11 may allow the lessee to continue to hold the land for a period
 
12 not exceeding one year.  Upon expiration of the one-year
 
13 extension, if the board has not yet decided upon the re-lease of
 
14 the land or reservation for other purposes, the board may issue a
 
15 temporary month-to-month permit to the lessee.  The lessee is
 
16 then left in a precarious position with the possibility of losing
 
17 the land in a public auction.
 
18      The legislature finds that:
 
19      (1)  It is in the public interest to assist qualifying
 
20           lessees who depend on farming state land for a
 
21           livelihood;
 
Page 2                                                     1998
                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1      (2)  This Act is consistent with objectives of the Hawaii
 
 2           state plan; and
 
 3      (3)  If the offer of assistance provided by this Act is
 
 4           accepted by qualifying lessees, the State would realize
 
 5           greater returns from the long-term dispositions of
 
 6           lands now under temporary permits.
 
 7      The purpose of this Act is to authorize DLNR to negotiate
 
 8 long-term leases under specific terms, conditions, and
 
 9 restrictions imposed by this Act with certain lessees of
 
10 agricultural land.
 
11      SECTION 2.  Chapter 171, Hawaii Revised Statutes, is amended
 
12 by adding a new section to be appropriately designated and to
 
13 read as follows:
 
14      "171-     Agricultural leases.  (a) Notwithstanding any
 
15 other provisions of this chapter, at the time of expiration of an
 
16 agricultural lease, the current lessee shall have a right of
 
17 first preference to lease the property.  The right shall lapse
 
18 unless the department is notified in writing of the exercise of
 
19 the right within sixty days after the auction.  The fair market
 
20 value of all infrastructure improvements installed by the current
 
21 lessee, which is directly related to an agriculture operation,
 
22 excluding residences, shall be credited toward the price the
 
23 current lessee must match in exercising the lessee's right of
 
24 first preference."
 

 
Page 3                                                     1998
                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1      SECTION 3.  Chapter 171-40, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "171-40  Expired leases; holdover.(a)  Upon expiration of
 
 4 the lease term, if the leased land is not otherwise disposed of,
 
 5 the board of land and natural resources may allow the lessee to
 
 6 continue to hold the land for a period not exceeding one year
 
 7 upon such rent, terms, and conditions as the board may
 
 8 presecribe; provided that if, immediately prior to the expiration
 
 9 of the lease, the land was cultivated with crops having ratoons
 
10 for at least one cycle, as defined hereinafter, the board may
 
11 permit the lessee to continue to hold the leased land until the
 
12 crops from the last remaining cycle have been harvested.  The
 
13 term "cycle" as used in this section means the period required to
 
14 plant and cultivate the original crop, including the harvesting
 
15 of the first ratoon, being a period exceeding two years.  
 
16      Upon expiration of the one-year extension, if the board has
 
17 not yet decided upon the re-lease of the land or reservation for
 
18 other purposes, the board may either:
 
19      (1)  [issue] Issue a temporary permit to the lessee, subject
 
20           to section 171-55 and the rent and such other terms and
 
21           conditions as the board may prescribe[.]; or
 
22      (2)  Enter into an agricultural lease of not fewer than
 
23           fifteen years and not more than fifty-five years with
 
24           any person who:
 

 
Page 4                                                     1998
                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1           (A)  On January 1, 2000, was holding a temporary permit
 
 2                for agricultural purposes issued in accordance
 
 3                with section 171-55; or
 
 4           (B)  Formerly held a state agricultural lease which
 
 5                expired within the last five years preceding
 
 6                January 1, 2000, and has continued to occupy the
 
 7                state land; provided that the lands eligible for
 
 8                lease negotiation under this subsection shall be
 
 9                lands zoned and used for agricultural purposes and
 
10                not needed by any state or county agency for any
 
11                other public purpose;
 
12           (C)  Has continued to occupy the public land previously
 
13                leased; and
 
14           (D)  Has been deemed by the department to be a good
 
15                steward of the public lands leased.
 
16      (b)  In negotiating and executing a lease under subsection
 
17 (a)(2), the board shall:
 
18      (1)  Require appraisal of the parcel in accordance with
 
19           section 171-17(b); 
 
20      (2)  Impose lease provisions, restrictions, and conditions
 
21           provided by sections 171-35, 171-36, and 171-37 as may
 
22           be required to protect the state's interests;
 

 
 
 
Page 5                                                     1998
                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1      (3)  Recover from the lessee the costs of surveying and
 
 2           subdividing the parcel incurred by the department; and
 
 3      (4)  Require the payment of annual lease rent based on the
 
 4           appraised value of the land; provided that the fair
 
 5           market value of all infrastructure improvements
 
 6           installed by the current lessee, that are directly
 
 7           related to an agriculture operation, excluding
 
 8           residences, is credited toward the lessee's annual
 
 9           lease rent."
 
10      SECTION 4.  Within six months from the effective date of
 
11 this Act, the department shall notify in writing all lessees of
 
12 agricultural lands eligible for lease negotiations under this Act
 
13 and shall inform the lessees of the terms, conditions, and
 
14 restrictions provided by this Act.  Any lessee may apply for a
 
15 lease; provided that:
 
16      (1)  The application shall be submitted to the department in
 
17           writing within thirty days from the date or receipt of
 
18           notification; and
 
19      (2)  The department may require documentary proof of any
 
20           applicant to determine that the applicant meets
 
21           eligibility and qualification requirements for a lease
 
22           as specified by this Act.
 

 
 
 
Page 6                                                     1998
                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1      SECTION 5.  The department may adopt rules, pursuant to
 
 2 chapter 91, relating to appraisals, lease terms and duration,
 
 3 cost recovery, and other issues necessary to carry out the
 
 4 purposes of this Act. 
 
 5      SECTION 6.  The department may hire temporary personnel and
 
 6 consultants without regard to the requirements of chapters 76 and
 
 7 77, and section 78-1 to carry out duties and responsibilities
 
 8 necessary in implementing this Act.
 
 9      SECTION 7.  There is appropriated out of general revenues of
 
10 the State of Hawaii the sum of $          or so much thereof as
 
11 may be necessary for fiscal year 2000-2001 to implement the
 
12 purposes of this Act.
 
13      The sum appropriated shall be expended by the department of
 
14 land and natural resources for the purposes of this Act.  
 
15      SECTION 8.  Statutory material to be repealed is bracketed.
 
16 New statutory material is underscored.    
 
17      SECTION 9.  This Act shall take effect on July 1, 2000.