Bill Text: HI SB1177 | 2018 | Regular Session | Amended

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Bill Title: Relating To Common Interest Agricultural Communities.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2018-03-23 - Passed Second Reading as amended in HD 1 and referred to the committee(s) on FIN with Representative(s) Matsumoto, Thielen voting aye with reservations; none voting no (0) and Representative(s) C. Lee, Lowen, McDermott, Souki, Tokioka excused (5). [SB1177 Detail]

Download: Hawaii-2018-SB1177-Amended.html

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THE SENATE	S.B. NO.	1177
TWENTY-NINTH LEGISLATURE, 2017		S.D. 1
STATE OF HAWAII		H.D. 1

A BILL FOR AN ACT

 

 

RELATING TO COMMON INTEREST AGRICULTURAL COMMUNITIES.

 

 

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

 

PART I. GENERAL PROVISIONS

     SECTION 1.  PURPOSE.  The purpose of this Act is to provide a solution for Hawaii's farmers to farm agricultural land and share agricultural infrastructure and other resources in an economically viable way, while establishing greater accountability to ensure proper land use, by requiring the department of agriculture to establish a five-year leasehold common interest agricultural community pilot program.

     SECTION 2.  LEASEHOLD COMMON INTEREST AGRICULTURAL COMMUNITY PILOT PROGRAM; ESTABLISHED.  (a)  There shall be established a five-year leasehold common interest agricultural community pilot program within the department of agriculture.

     (b)  The department of agriculture shall select state-owned lands under the jurisdiction of the department of agriculture which shall be used to establish the leasehold common interest agricultural community pilot program; provided that, at a minimum, three leasehold common interest agricultural community projects shall be established by the department of agriculture.

     (c)  The leasehold common interest agricultural community pilot program shall cease to exist on June 30, 2023.

     SECTION 3.  DEFINITIONS.  As used in this Act and in the declaration and bylaws provided for under this Act, unless specifically provided otherwise or required by the context:

     "Association" means the farm parcel lessees' association organized under section 22 of this Act.

     "Board" or "board of directors" means the body, regardless of name, designated in the declaration or bylaws to act on behalf of the association.

     "Bylaws" means the instruments that contain the procedures for conduct of the affairs of the association regardless of the form in which the association is organized, including any amendments to the instruments.

     "Chairperson" means the chairperson of the board of agriculture.

     "Common expenses" means expenditures made by, or financial liabilities of, the association, including any allocations to reserves.

     "Common infrastructure" means the structures, roads, irrigation systems, power supply, agricultural services, and installations within the leasehold common interest agricultural community that are owned or leased by the association and that are other than a farm parcel.

     "Common interest" means the percentage of undivided interest in the common infrastructure appurtenant to each parcel, as specified in the declaration.

     "Coordinating entrepreneur" means the developer or a qualified person capable, under a right-to-till agreement, of organizing, operating, and assuming the risk for the agricultural operation on a parcel that may include:

     (1)  Selecting crops;

     (2)  Securing capital, labor, and materials;

     (3)  Maintaining and operating equipment and infrastructure; and

     (4)  Providing for the post-harvest processing and marketing of products.

     "Declaration" means any instrument that creates a leasehold common interest agricultural community, including any amendments to the instrument.

     "Developer" means a person or group of persons who undertake to develop a leasehold common interest agricultural community, including a person who succeeds to the interest of the developer by acquiring a controlling interest in the developer or the leasehold common interest agricultural community.

     "Development rights" means any right or combination of rights reserved by a developer in the declaration to:

     (1)  Add real estate to a leasehold common interest agricultural community;

     (2)  Create farm parcels, common infrastructure, or limited common infrastructure within a leasehold common interest agricultural community;

     (3)  Subdivide parcels, combine parcels, or convert parcels into common infrastructure or limited common infrastructure;

     (4)  Withdraw real estate from a leasehold common interest agricultural community;

     (5)  Merge projects or increments of a project; or

     (6)  Otherwise alter the leasehold common interest agricultural community.

     "Farm parcel" or "parcel" means a physical portion of the leasehold common interest agricultural community designated for separate lease or occupancy, the boundaries of which are described in the declaration or pursuant to section 12 of this Act.

     "Farm parcel lessee", "parcel lessee", or "lessee" means a lessee of a farm parcel and its appurtenant common interest in a leasehold common interest agricultural community.

     "Leasehold common interest agricultural community" means a common interest agricultural community in which all of the real estate is subject to a lease, the expiration or termination of which will terminate the common interest agricultural community.

     "Leasehold common interest agricultural community plat map" or "plat map" means, however denominated, a map or site plan of the leasehold common interest agricultural community containing the information required by section 12 of this Act.

     "Limited common infrastructure" means a portion of the common infrastructure designated by the declaration for the exclusive use of one or more but fewer than all of the parcels.

     "Managing agent" means any person retained, as an independent contractor, for the purpose of managing the operation of the project.

     "Project" means a leasehold common interest agricultural community project.

     "Public offering statement" means a statement that fully and accurately discloses the physical characteristics of the leasehold common interest agricultural community offered and all unusual or material circumstances of features affecting the project.

     "Real estate" means the leasehold lands, all improvements and all structures thereon, and all easements, rights, and appurtenances intended for use in connection with the leasehold common interest agricultural community.

     "Record", "recordation", "recorded", or "recording" means to record in the bureau of conveyances in accordance with chapter 502, Hawaii Revised Statutes.

     "Right-to-till agreement" means a contract between a parcel lessee and a coordinating entrepreneur establishing conditions that specify the crop or crops that are to be grown on the parcel, when the crops are to be grown, and how the crops are to be grown.

     SECTION 4.  SEPARATE TITLES AND TAXATION.  (a)  Each farm parcel that has been created, together with the common interest appurtenant to each parcel, shall constitute, for all purposes, a separate parcel of real estate.

     (b)  If there is any parcel lessee other than a developer, each parcel shall be separately taxed and assessed, and no separate tax or assessment shall be rendered against any common infrastructure.  Without limitation of the foregoing, each farm parcel and its appurtenant common interest shall be deemed to be a "parcel" and shall be subject to separate assessment and taxation for all types of taxes authorized by law.

     (c)  If there is no parcel lessee other than a developer, the real estate comprising the common interest agricultural community may be taxed and assessed in any manner provided by law.

     SECTION 5.  CONFORMANCE WITH STATE BUILDING CODES, ZONING, SUBDIVISION, AND LAND USE LAWS.  (a)  Any leasehold common interest agricultural community established under this Act shall comply with Hawaii state building codes as defined in section 107-21, Hawaii Revised Statutes, as may be amended by the county pursuant to section 107-28, Hawaii Revised Statutes, and county zoning and building ordinances.

     (b)  The permitted uses of each parcel shall be restricted to the uses described in section 205-4.5(a), Hawaii Revised Statutes; provided that a use permitted under section 205-4.5, Hawaii Revised Statutes, may be approved by the board, except that any dwelling that may be used and occupied for human habitation shall be prohibited.

     SECTION 6.  RIGHT TO TILL AGREEMENT.  The parcel lessee may enter into a right-to-till agreement with a coordinating entrepreneur to carry out agricultural operations on the parcel.

     SECTION 7.  WATER AGREEMENT.  (a)  The association shall enter into a water agreement with the farm parcel lessees, which shall describe:

     (1)  The responsibilities of the association for the design, construction, and maintenance of the irrigation water system facilities; and

     (2)  The quantity of water allocated to the farm parcel expressed in gallons-per-acre-per-day.

     (b)  The agreement shall authorize the association to control or limit the delivery of irrigation water when there is an equipment failure, government action, force majeure, or other reason beyond the control of the association.  The association shall be authorized to coordinate the withdrawal and delivery of irrigation water when the demand exceeds the capacity of the system.

     (c)  The agreement shall list the production costs of the irrigation system, including the cost of operations, repair, maintenance, metering, pumping, transmission lines, reservoirs, appurtenances and improvements, and administrative costs.  The agreement shall identify the pro rata share of the farm parcel lessee and provide for the assessment and payment of the production costs.

     SECTION 8.  EMERGENCY ACCESS AND FIRE SAFETY PLAN.  The developer shall collaborate with a county fire department to develop an emergency access and fire safety plan with information including:

     (1)  Available water sources including fire hydrants, water tanks, reservoirs, ditches, streams, and rivers;

     (2)  Maps to identify buildings, hazardous materials, evacuation routes, locked gates, access points, bridges with weight limits, road widths, turn outs, turn arounds for fire engines, potential staging areas; and

     (3)  Contact information for farm parcel lessees.

     A copy of the plan shall be filed with the county fire department and agency responsible for providing emergency medical services.

     SECTION 9.  COUNTY REVIEW.  (a)  The developer shall submit to the appropriate officer or agency charged with the administration of county zoning laws the project's declaration, certified plat map, and bylaws for review of the project and determination of conformance with the:

     (1)  Permissible uses in section 205-4.5(a), Hawaii Revised Statutes;

     (2)  Hawaii state building codes as defined in section 107-21, Hawaii Revised Statutes, as may be amended by the county pursuant to section 107-28, Hawaii Revised Statutes;

     (3)  County zoning and subdivision ordinances; and

     (4)  Requirements of this Act relating to emergency access and fire safety.

     (b)  The appropriate officer or agency charged with the administration of county zoning ordinances shall submit a verified statement to the developer and the chairperson that the officer or agency finds that the project meets the requirements of subsection (a).

PART II.  CREATION

     SECTION 10.  CREATION OF A LEASEHOLD COMMON INTEREST AGRICULTURAL COMMUNITY.  (a)  Upon receipt of the verified statement of county review as provided in section 9 of this Act, a leasehold common interest agricultural community may be created by recording the declaration and bylaws of the association executed in the same manner as a lease conveying the real estate subject to the declaration to the association.  Upon recordation of the lease together with the declaration and bylaws, the leasehold common interest agricultural community shall be deemed created.

     (b)  The leasehold common interest agricultural community shall be subject to any right, title, or interest existing when the declaration is recorded if the person who owns the right, title, or interest does not execute or join in the declaration or otherwise subordinate the right, title, or interest.  A person with any other right, title, or interest in the land may subordinate that person's interest to the common interest agricultural community by executing the declaration, or by executing and recording a document joining in or subordinating to the declaration.

     SECTION 11.  CONTENTS OF DECLARATION; AMENDMENT.  (a)  A declaration shall describe or include the following:

     (1)  The name and address of the project, and the name, address, telephone number, and electronic mail address, if any, of the developer or the developer's agent;

     (2)  The real estate submitted to the leasehold common interest agricultural community;

     (3)  The leasehold common interest agricultural community plat map filed concurrently with the declaration;

     (4)  The number of farm parcels in the project;

     (5)  The farm parcel number or identification designation of each parcel, as described in the leasehold common interest agricultural community plat map, and the common interest appurtenant to each parcel;

     (6)  A statement that the project is in compliance with Hawaii state building codes as defined in section 107-21, Hawaii Revised Statutes, as may be amended by the county pursuant to section 107-28, Hawaii Revised Statutes, county subdivision, zoning, and building ordinances; provided that the permitted uses of each parcel shall be restricted to the uses described in section 205-4.5(a), Hawaii Revised Statutes; provided further that a use permitted under section 205-4.5, Hawaii Revised Statutes, may be approved by the board, except that any dwelling that may be used and occupied for human habitation is prohibited;

     (7)  To the extent not shown on the leasehold common interest agricultural community plat map, a description of the location and dimensions of the boundaries of any parcel;

     (8)  The leasehold common interest agricultural community's common infrastructure, the fraction or percentage of the common infrastructure and common expenses assigned to each parcel, and, if an equal vote is not allocated to each farm parcel, the proportional votes in the association allocated to each farm parcel and the basis for the allocations;

     (9)  The leasehold common interest agricultural community's limited common infrastructure, if any, and the parcel or parcels to which each limited common infrastructure is appurtenant;

    (10)  The total percentage of the parcel lessees of the project that is required to approve rebuilding, repairing, or restoring the leasehold common interest agricultural community if it is damaged or destroyed;

    (11)  The total percentage of the parcel lessees of the project that is required to amend the declaration.  Except as otherwise specifically provided in this Act, and except for any amendments made pursuant to reservations set forth in paragraph (12), the approval of the parcel lessees of at least sixty-seven per cent of the common interest shall be required for all amendments to the declaration;

    (12)  Any rights that the developer or others reserve regarding the leasehold common interest agricultural community, including, without limitation, any development rights, and any reservations to modify the declaration or leasehold common interest agricultural community plat map.  An amendment to the declaration made pursuant to the exercise of those reserved rights shall require only the consent or approval, if any, specified in the reservation; and

    (13)  The emergency access and fire safety plan developed pursuant to section 8 of this Act.

     (b)  The declaration may provide for a period of developer control of the association, during which a developer, or persons designated by the developer, may appoint and remove the officers and members of the board.  The period of developer control shall terminate no later than the earlier of:

     (1)  Sixty days after conveyance of seventy-five per cent of the common infrastructure to parcel lessees other than a developer or affiliate of the developer;

     (2)  Two years after the developer has ceased to offer parcels for lease in the ordinary course of business; or

     (3)  The day the developer, after giving written notice to parcel lessees, records an instrument voluntarily surrendering all rights to control any activities of the association.

     (c)  The declaration may be amended by a vote or written consent of the parcel lessees of at least sixty-seven per cent of the common interest, unless the declaration specifies a different percentage for all amendments or for specific subjects of amendment.  Every amendment to the declaration shall be recorded as provided in section 10 of this Act by any officer of the association designated for that purpose or, in the absence of a designation, by the president of the association.

     (d)  The declaration may contain any additional provisions that are consistent with this Act.

     SECTION 12.  LEASEHOLD COMMON INTEREST AGRICULTURAL PLAT MAP; CERTIFICATION.  (a)  A leasehold common interest agricultural community plat map shall be recorded with the declaration.  The plat map shall contain the following:

     (1)  The metes and bounds of the leasehold common interest agricultural community and a depiction of the layout, location, boundaries, farm parcel numbers, and dimensions of the farm parcels;

     (2)  A depiction of the location, layout, and access to the common infrastructure included or anticipated to be included in the project, and a depiction of access for farm parcels to a public road or to a common infrastructure road leading to a public road;

     (3)  Unless specifically described in the declaration, the layout, location, and identifying information of the common infrastructure; and

     (4)  Unless specifically described in the declaration, the layout, location, and identifying information of the limited common infrastructure.

     (b)  The leasehold common interest agricultural community plat map shall bear the statement of a licensed architect, engineer, or surveyor certifying that the plat map is consistent with the plans of the project filed or to be filed with the government agency having jurisdiction over the issuance of permits for the construction of buildings in the county in which the project is located.  If any building or buildings exist on the project at the time the plat map is recorded, the certification shall state that, to the best of the architect's, engineer's, or surveyor's knowledge, the plat map depicts the layout, location, dimensions, and numbers of the buildings substantially as built.

     (c)  The leasehold common interest agricultural community plat map may contain any additional information that is consistent with this Act.

     SECTION 13.  COMMON INFRASTRUCTURE.  Each parcel lessee may use the common infrastructure in accordance with the purposes permitted under the declaration, subject to:

     (1)  The rights of other parcel lessees to use the common infrastructure;

     (2)  Any lessee's exclusive right to use of the limited common infrastructure as provided in the declaration;

     (3)  The right of the parcel lessees to amend the declaration to change the permitted uses of the common infrastructure; provided that nonmaterial additions or alterations of the common infrastructure or minor additions to or alterations of the common infrastructure for the benefit of individual parcels shall be permitted if the additions or alterations can be accomplished without substantial impact on the interests of other parcel lessees in the common infrastructure, as reasonably determined by the board;

     (4)  Any rights reserved in the declaration to amend the declaration to change the permitted uses of the common infrastructure; and

     (5)  The right of the board, on behalf of the association, to lease or otherwise use for the benefit of the association common infrastructure that the board determines is actually used by one or more parcel lessees for a purpose permitted in the declaration.  The lease or use shall be approved by the parcel lessees of at least sixty-seven per cent of the project, including all directly affected parcel lessees that the board reasonably determines actually use the common infrastructure.

     SECTION 14.  LIMITED COMMON INFRASTRUCTURE.  (a)  The limited common infrastructure designated in the declaration shall be subject to the exclusive use of the lessee or lessees of the parcel or parcels to which the limited common infrastructure is appurtenant, subject to the declaration and bylaws of the association.  No amendment of the declaration affecting any of the limited common infrastructure shall be effective without the consent of the lessee or lessees of the parcel or parcels to which the limited common infrastructure is appurtenant.

     (b)  Except as provided in the declaration, any parcel lessee may transfer or exchange designation of limited common infrastructure that is designated to the lessee's parcel to another parcel.  Any transfer shall be executed and recorded as an amendment to the declaration.  The amendment shall be executed by the parcel lessee of the parcel whose designation of limited common infrastructure is being transferred and the parcel lessee of the parcel receiving the designation of limited common infrastructure; provided that parcel leases may also require the consent of lessors, respectively, of the parcels involved.  A copy of the executed and recorded amendment shall be delivered to the association.

     SECTION 15.  CONTENTS OF LEASES OF PARCELS.  (a)  Leases of farm parcels shall contain:

     (1)  The title and date of the declaration and the declaration's bureau of conveyances or land court document number or liber and page numbers;

     (2)  The farm parcel number of the parcel leased;

     (3)  The common interest appurtenant to the farm parcel leased as assigned in the declaration;

     (4)  For a farm parcel, title to which is registered in the land court, the land court certificate of title number for the parcel, if available; and

     (5)  For a farm parcel, title to which is not registered in the land court, the bureau of conveyances document number or liber and page numbers for the instrument by which the grantor acquired title.

     (b)  Leases of parcels may contain additional information and details that are consistent with the declaration and this Act.

PART III.  REGISTRATION AND ADMINISTRATION

     SECTION 16  REGISTRATION; PUBLIC OFFERING STATEMENT; APPLICATION.  (a)  A developer shall not offer for lease any farm parcels in a project unless the project is registered in accordance with this Act and rules adopted by the chairperson.

     (b)  An application for registration of a project shall include:

     (1)  The developer's name, telephone number, address, and electronic mail address; or if a corporation or partnership, the telephone number, address, and electronic mail address of each of the developer's offices in the State;

     (2)  The leasehold common interest agricultural community plat map prepared pursuant to section 12 of this Act;

     (3)  A copy of the master lease, or other evidence that the developer holds the leasehold interest in the project;

     (4)  A statement of all liens or encumbrances, if any, upon the developer's title to the project's real estate;

     (5)  A copy of the proposed contract of lease for farm parcels;

     (6)  A copy of a receipt for a written notice advising the lessee of the lessee's right to rescind a contract within seven days after signing the contract, without penalty to the lessee;

     (7)  An executed copy of an escrow agreement with a third party escrow depository authorized to do business in the State that provides for the retention and disposition of funds from lessees or prospective lessees in accordance with rules adopted by the chairperson;

     (8)  A project budget showing all costs required to complete the project, and evidence of the availability of sufficient funds to pay all costs required to complete the project;

     (9)  A declaration by the developer that the permitted uses of the parcels in the project shall be restricted to the uses described in section 205-4.5(a), Hawaii Revised Statutes; provided that a use permitted under section 205-4.5, Hawaii Revised Statutes, may be approved by the board, except that any dwelling that may be used and occupied for human habitation is prohibited;

    (10)  A description of the promotional plan for the disposition of the farm parcels together with copies of all advertising material that has been prepared for public distribution by any means of communication, or a statement that no such advertising material has been produced as of the date of application;

    (11)  The proposed public offering statement;

    (12)  A statement that the developer has not, or if a corporation, the officers, directors, and principals, or if a partnership, general partners, have not been convicted of a crime involving land dispositions or any aspect of the land-sales business in this State, the United States, or any foreign country within the past ten years, and have not been subject to any injunction or administrative order within the past ten years involving land dispositions;

    (13)  A copy of the verified statement that a project has been reviewed by the county and conforms with the requirements of section 9 of this Act; and

    (14)  Any other information that the chairperson may require to assure full and fair disclosure to prospective lessors.

     (c)  The application for registration shall be accompanied by nonrefundable fees as provided in rules adopted by the chairperson pursuant to chapter 91.

     (d)  The developer shall immediately report to the chairperson any material changes in the information contained in any application for registration.

     SECTION 17.  REGISTRATION; INQUIRY AND EXAMINATION.  Upon receipt of an application for lease in the proper form prescribed by the chairperson, and the payment of appropriate registration, inspection, or consultant fees, the chairperson shall issue a notice of filing to the applicant, and initiate an examination to determine that:

     (1)  The developer can convey or cause to be conveyed the interest in the leasehold common interest agricultural community offered for disposition if the lessee complies with the terms of the offer, and when appropriate, the release clauses, conveyances in trust, or other safeguards provided;

     (2)  There is reasonable assurance that all of the proposed improvements will be completed as represented;

     (3)  The advertising material and the general promotional plan are not false or misleading and comply with the standards prescribed by the rules adopted by the chairperson and afford full and fair disclosure;

     (4)  The developer has not, or if a corporation, the officers, directors, and principals, or if a partnership, general partners, have not been convicted of a crime involving land dispositions or any aspect of the land-sales business in this State, the United States, or any foreign country within the past ten years, and have not been subject to any injunction or administrative order within the past ten years; and

     (5)  Preliminary or required approvals have been granted by the county in which the land is situated.

     SECTION 18.  ORDERS OF REGISTRATION AND REJECTION.  (a)  Within forty-five days from the date of notice of filing, the chairperson shall enter a preliminary or final order registering the project or rejecting the registration.

     (b)  The chairperson may return an incomplete application to the developer and require the developer to submit an amended application.

     (c)  If the chairperson determines, upon inquiry and examination, that the project meets the requirements for registration under section 17 of this Act, the chairperson shall enter a final order registering the project and approving the form of the public offering statement.

     SECTION 19.  PUBLIC OFFERING STATEMENT.  (a)  A public offering statement shall disclose fully and accurately to prospective lessees all the unusual and material circumstances or features affecting the project, including but not limited to:

     (1)  The name and address of the project, and the name, address, telephone number, and electronic mail address, if any, of the developer or the developer's agent;

     (2)  A general description of the leasehold common interest agricultural community, other than any plats and plans, and any recorded covenants, conditions, restrictions, and reservations affecting the project;

     (3)  The total number of farm parcels, the common infrastructure, and the limited common infrastructure in the project;

     (4)  The contract for leasing the parcel with a statement that the lessee has a seven-day period after signing a contract to rescind the contract;

     (5)  The annual maintenance fees and the monthly estimated cost for each parcel and when the lessee becomes obligated to start paying the common expenses charged to the parcel;

     (6)  A description of all warranties, if any, for a parcel and the common infrastructure;

     (7)  The declaration, bylaws, and any rules of the association; any contracts and leases to be signed by lessees at closing; and any other covenants, conditions, restrictions, and reservations affecting the leasehold common interest agricultural community;

     (8)  A description of any development rights reserved to the developer;

     (9)  The permitted uses and prohibitions on the farm parcels, and a declaration that the project complies with all land use laws and county zoning and building ordinances; and

    (10)  Any other information as may be required by the chairperson.

     (b)  The chairperson may require the developer to alter or amend the proposed public offering statement in order to assure full and fair disclosure to prospective lessees, and no change in the substance of the promotional plan or plan of disposition or development of the project may be made after registration without notifying the chairperson and without making appropriate amendment of the public offering statement.

     SECTION 20.  ENFORCEMENT; INSPECTION; PENATLY.  (a)  After giving appropriate notification, the county agency charged with the administration of land use and county zoning ordinances may conduct an inspection of a project or a farm parcel or parcels for conformance with this Act.

     (b)  When an inspection is made, the developer or farm parcel lessee shall be required to pay an amount necessary to cover the actual expenses of the inspection not to exceed $500.

     (c)  The penalties and fees for expenses collected by a county agency to enforce this section shall be realizations of the county enforcing this section and shall be deemed to satisfy article VIII, section 5, of the Constitution of the State of Hawaii.

     SECTION 21.  PENALTIES.  Any person who wilfully violates this Act or a rule adopted pursuant to this Act shall be guilty of a misdemeanor punishable by a fine of not less than $10,000 and not more than $        , or imprisonment for a term not exceeding one year, or both.

PART IV.  MANAGEMENT AND GOVERNANCE

     SECTION 22.  FARM PARCEL LESSEES' ASSOCIATION; MEMBERSHIP AND ORGANIZATION.  (a)  The membership of the farm parcel lessees' association shall consist exclusively of all the farm parcel lessees.

     (b)  The farm parcel lessees' association shall meet and organize no later than one hundred eighty days after recordation of the first parcel conveyance; provided that forty per cent or more of the project has been leased and recorded.

     SECTION 23.  FARM PARCEL LESSEES' ASSOCIATION; REGISTRATION.  (a)  Within thirty days of the association's first meeting, the farm parcel lessees' association shall register with the chairperson by:

     (1)  Submitting a completed registration application as determined by the chairperson;

     (2)  Paying the fees established by the chairperson by rule;

     (3)  Submitting the names and positions of the officers of the association;

     (4)  Submitting the name of the association's managing agent, if any;

     (5)  Providing the street and the postal address of the leasehold interest agricultural community, and the name and current address where a designated officer of the association can be contacted; and

     (6)  Any other additional information required by the chairperson.

     (b)  The association shall notify the chairperson, within thirty days, of any changes to the information contained in the registration information of the association.

     SECTION 24.  ASSOCIATION POWERS AND DUTIES.  (a)  Except as provided in the declaration, the bylaws, and this Act, the association may:

     (1)  Adopt and amend the declaration, bylaws, and rules of the association;

     (2)  Adopt and amend budgets for revenues, expenditures, and reserves and collect assessments for common expenses from parcel lessees;

     (3)  Hire and discharge managing agents and other independent contractors, agents, and employees;

     (4)  Institute, defend, or intervene in litigation or administrative proceedings in its own name on behalf of itself or two or more parcel lessees on matters affecting the leasehold common interest agricultural community;

     (5)  Make contracts and incur liabilities;

     (6)  Regulate the use, maintenance, repair, replacement, and modification of common infrastructure;

     (7)  Cause improvements to the common infrastructure;

     (8)  Acquire, hold, encumber, and convey in its own name any right, title, or interest to real estate or personal property; provided that any conveyance of or security interest in any common infrastructure shall be subject to section 13 of this Act;

     (9)  Subject to section 14 of this Act, grant easements, leases, licenses, and concessions through or over the limited common infrastructure;

    (10)  Impose and receive any payments, fees, or charges for the use, rental, or operation of the common infrastructure, other than limited common infrastructure, and for services provided for parcel lessees;

    (11)  Impose charges and penalties for any late payment of assessments after notice and opportunity to be heard, and levy reasonable fines for violations of the declaration, bylaws, and rules of the association;

    (12)  Impose reasonable charges for the preparation and recordation of amendments to the declaration, documents requested for the re-leasing of parcels, or statements of unpaid assessments;

    (13)  Provide for indemnification of its officers and board and maintain directors' and officers' liability insurance;

    (14)  Assign its right to future income subject to the limitations in the declaration or bylaws;

    (15)  With the written approval of parcel lessees representing fifty per cent of the common interest, authorize the board to borrow money for the repair, replacement, maintenance, operation, or administration of the common infrastructure and personal property of the project;

    (16)  Require that disputes between the association and parcel lessees or between two or more parcel lessees regarding the leasehold common interest agricultural community be submitted to nonbinding alternative dispute resolution as a prerequisite to commencement of a judicial proceeding; and

    (17)  Exercise any other powers necessary and proper for the governance and operation of the association.

     (b)  A parcel lessee and the tenant of the parcel lessee shall be jointly and severally responsible and liable for any violation of the declaration, bylaws, or rules of the association by the tenant, including any reasonable fines levied by the association and any reasonable attorney's fees and costs incurred by the association relating to the violations.  The association shall provide the violators with notice of the violations and a hearing prior to levying any fines therefor.

     SECTION 25.  ASSOCIATION ANNUAL MEETING AND NOTICE.  (a)  An annual meeting of farm parcel lessees shall be held by the association at a time, date, and place stated in the bylaws.  Special meetings of the association may be called by the president, a majority of the board, or by a petition to the board signed by not less than the percentage of the parcel lessees specified in the bylaws.

     (b)  The notice for each annual and special meeting of the association shall be:

     (1)  Hand delivered;

     (2)  Sent postage prepaid by United States mail to the mailing address designated by the parcel lessee; or

     (3)  Sent by electronic mail to the electronic mail address designated by the parcel lessee.

The time, date, place of the meeting, and items on the agenda shall be set by the board in accordance with the requirements established in the bylaws.

     SECTION 26.  ASSOCIATION MEETINGS, VOTING AND PROXIES.  (a)  Farm parcel lessees may vote:

     (1)  At a meeting in person;

     (2)  By absentee ballot without being present at the meeting by requesting an absentee ballot from the association at least      days before the scheduled meeting; provided that the association shall verify that the ballot is cast by the parcel lessee having the right to do so; or

     (3)  By proxy pursuant to subsection (c).

     (b)  At a meeting of the association:

     (1)  Parcel lessees who are present in person may vote by voice vote, show of hands, standing, or any other method for determining the votes of parcel lessees, as designated by the person presiding at the meeting; and

     (2)  Unless a greater number of the votes of the members of the association is required by this Act or the declaration, a majority of the votes cast shall determine the outcome of any action of the association.

     (c)  Unless otherwise provided in the declaration or bylaws, proxy voting shall require that:

     (1)  The vote allocated to a parcel to be cast pursuant to a directed proxy be dated, valid only for the meeting to which it pertains, and duly executed by the parcel lessee; and

     (2)  A parcel lessee may revoke a proxy given pursuant to this section only by giving an actual notice of revocation to the person presiding over a meeting of the association.

     SECTION 27.  BOARD OF DIRECTORS; OFFICERS, POWERS, AND MEETINGS.  (a)  The board of directors of the association shall act on behalf of the association.  Upon the termination of the developer's control of the board as provided in the declaration, parcel lessees shall elect a board of directors of at least     members, who shall be farm parcel lessees.  The officers of the board shall be elected by the members of the board from among its members.

     (b)  The board, as provided in the bylaws, shall:

     (1)  Develop the policies, procedures, and rules necessary and appropriate for the operation and management of the association; and

     (2)  Enter into contracts and agreements necessary for the performance and responsibilities of the association.

     (c)  Meetings of the board shall be open to the parcel lessees, except during executive sessions.  An executive session may be held only to:

     (1)  Consult with the association's attorney concerning legal matters;

     (2)  Discuss existing or potential litigation or mediation, arbitration, or administrative proceedings;

     (3)  Discuss labor or personnel matters;

     (4)  Discuss contracts, leases, and other commercial transactions to purchase or provide goods or services currently being negotiated; or

     (5)  Prevent public knowledge of the matter to be discussed if the board determines that public knowledge would violate the privacy of any person.

     SECTION 28.  BYLAWS.  (a)  The bylaws of the association shall provide:

     (1)  For:

          (A)  The number of members of the board of directors and the titles of the officers of the association; and

          (B)  The qualifications, powers and duties, terms of office, the manner of electing and removing of directors and officers, and filing of vacancies;

     (2)  Requirements for the meetings, quorums, voting, and other activities of the association;

     (3)  The process for the preparation, execution, certification, and recordation of amendments to the declaration of the association;

     (4)  The amendment of the bylaws by the association;

     (5)  The process for the preparation, amendment, and execution of the association's budget; and

     (6)  Any other matters the association deems necessary and appropriate.

     (b)  The bylaws may be amended by a vote or written consent of parcel lessees representing at least sixty-seven per cent of the common interest.  Every amendment to the bylaws shall be recorded as provided in section 10 of this Act by any officer of the association designated for that purpose or, in the absence of a designation, by the president of the association.

PART IV

     SECTION 29.  Section 484-3, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Unless the method of disposition is adopted for the purpose of evasion of this chapter, or unless the subdivider files in writing with the director that this chapter shall apply to the subdivider's subdivision, this chapter shall not apply to offers or dispositions of an interest in land:

     (1)  By a purchaser of subdivided lands for the purchaser's own account in a single or isolated transaction;

     (2)  If fewer than twenty separate lots, parcels, units, or interests in subdivided lands are offered by a person in a period of twelve months;

     (3)  Where the division of lands is a leasehold agricultural lot within state agricultural districts on which no dwelling structures are constructed as provided in section 205-4.5(f);

     (4)  On which there is a residential, commercial, or industrial building, or as to which there is a legal obligation on the part of the seller to construct a building on the land within two years from the date of disposition; provided that the obligation to construct shall not be, directly or indirectly, transferred to or otherwise imposed upon the purchaser;

     (5)  To persons who are engaged in, and are duly licensed to engage in, the business of construction of buildings for resale, or to persons who acquire an interest in subdivided lands for the purpose of engaging, and do engage in, and are duly licensed to engage in, the business of construction of buildings for resale;

     (6)  Pursuant to court order;

     (7)  By any government or government agency;

     (8)  As cemetery lots or interests;

     (9)  Registered as a condominium property regime pursuant to chapter 514B; [or]

    (10)  Registered as a leasehold common interest agricultural community pursuant to Act    , Session Laws of Hawaii 2018; or

   [(10)] (11)  Registered as a time share plan pursuant to chapter 514E."

PART V

     SECTION 30.  The department of agriculture shall submit a report of the progress made on establishing the leasehold common interest agricultural communities under the leasehold common interest agricultural community pilot project established by this Act, including any necessary proposed legislation, no later than twenty days before the convening of each legislative session beginning with the regular session of 2019.

     The department of agriculture shall submit a final report on the leasehold common interest agricultural community pilot project established by this Act, including any issues or difficulties faced in establishing the leasehold common interest agricultural communities, successes and failures of the leasehold common interest agricultural community pilot project, the effects, if any, on the growth of the agricultural industry and agricultural sustainability, and any other recommendations, including recommendations on whether the pilot project should be made permanent, and any proposed legislation no later than twenty days prior to the convening of the regular session of 2023.

     SECTION 31.  This Act shall take effect on July 1, 2112, and shall be repealed on June 30, 2023; provided that section 484-3, Hawaii Revised Statutes, shall be reenacted in the form in which it read on January 1, 2019.

 

Report Title:

Common Interest Agricultural Communities; Pilot Project

 

Description:

Establishes the leasehold common interest agricultural community pilot program under the jurisdiction of the Department of Agriculture.  Requires the Department to authorize a minimum of three leasehold common interest agricultural community projects.  Requires report.  Repealed on June 30, 2023.  (SB1177 HD1)

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.