Bill Text: HI SB1251 | 2020 | Regular Session | Amended
Bill Title: Relating To Lease Extensions On Public Land.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2019-12-01 - Carried over to 2020 Regular Session. [SB1251 Detail]
Download: Hawaii-2020-SB1251-Amended.html
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THE SENATE |
S.B. NO. |
1251 |
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THIRTIETH LEGISLATURE, 2019 |
S.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO LEASE EXTENSIONS ON PUBLIC LAND.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that many of the leases
for commercial and industrial properties on public land statewide may be
nearing the end of the lease term. Faced
with the uncertainty of continued tenancy, lessees have little incentive to
make major investments in infrastructural improvements and to ensure the
long-term maintenance of the facilities.
As a result, the infrastructure on these properties has been
deteriorating.
The legislature finds that business lessees
typically sell or assign their leases that are nearing the end of the lease
terms at a discount, and believes that it would be unfair to the prior
assignors of the leases if the State granted extensions of leases that
previously could not be extended under existing law or lease terms to the newly
assigned lessees who acquired their leases at a discount due to short remaining
lease terms.
The purpose of this Act is to authorize the
board of land and natural resources to extend commercial or industrial leases
that will
expire within years, for lessees who commit to making substantial
improvements to the existing improvements.
SECTION 2. Chapter 171, Hawaii Revised Statutes, is
amended by adding a new section to part II to be appropriately designated and
to read as follows:
"§171- Commercial
or industrial leases; extension of term. (a) Notwithstanding section 171-36, for commercial
or industrial leases that are subject to the management, administration, or
control of the board and will expire within
years of receipt of an application for a lease extension submitted pursuant to
this section, the board may extend the rental period or the
term of the lease upon approval by the board of a development agreement
proposed by the lessee or the lessee and developer to make substantial
improvements to the existing improvements or to construct new substantial
improvements; provided that the length of any extension granted, in the
aggregate, shall not extend the original lease term by more than forty years.
(b) Prior to entering into a development
agreement, the lessee or the lessee and developer shall submit to the board the
plans and specifications for the total development being proposed. The board shall review the plans and
specifications and determine:
(1) Whether the development proposed in the
development agreement is of sufficient worth and value to justify the extension
of the lease;
(2) The
estimated period of time to complete the improvements and expected date of
completion of the improvements; and
(3) The
minimum revised annual rent based on the fair market value of the lands to be
developed, as determined by an appraiser for the board, and if deemed
appropriate by an appraiser, the appropriate percentage of rent where gross
receipts exceed a specified amount.
No lease extension shall be approved until the
board and the lessee or the lessee and developer mutually agree to the terms
and conditions of the development agreement.
(c) No construction shall commence until the
lessee or the lessee and developer have filed with the board a sufficient bond
conditioned upon the full and faithful performance of all the terms and
conditions of the development agreement.
(d) An extension of the rental period or term of
the lease shall be based on the economic life of the substantial improvements
as determined by the board or an independent appraiser; provided that the
approval of any extension shall be subject to the following:
(1) The demised
premises have been used substantially for the purpose for which they were
originally leased;
(2) The length of
any extension granted for the rental period of the lease shall not extend the
rental period of the original lease by more than forty years;
(3) The length of
any extension granted for the term of the lease shall not extend the original
lease term by more than forty years;
(4) If a reopening
occurs, the rental for any ensuing period shall be the fair market rental as
determined under section 171-17(d) at the time of reopening;
(5) Any federal or
private lending institution shall be qualified to do business in the State;
(6) Proceeds of any
mortgage or loan shall be used solely for the operations or substantial
improvements on the demised premises;
(7) Where
substantial improvements are financed by the lessee, the lessee shall submit
receipts of expenditures within a time period specified by the board, otherwise
the lease extension shall be canceled; and
(8) The rules of
the board, setting forth any additional terms and conditions, which shall
ensure and promote the purposes of the demised lands.
(e) The board, from time to time, during the term
of any commercial or industrial lease of public lands within the State, may
modify or eliminate any of the restrictions specified in section 171-36(a),
extend or modify the rental period of the lease, or extend the term of the
lease upon a showing of significant economic hardship directly caused by:
(1) State disaster,
pursuant to chapter 209, including seismic or tidal wave, tsunami, hurricane,
volcanic eruption, typhoon, earthquake, flood, or severe drought; or
(2) A taking of a
portion of the area of the lease by government action by eminent domain,
withdrawal, or conservation easement; provided that the portion taken shall not
be less than ten per cent of the entire leased area unless otherwise approved
by the board; provided that the board determines that the lessee will not be
adequately compensated pursuant to the lease provisions.
(f) The approval of any extension granted
pursuant to subsection (e) shall be subject to the following:
(1) The demised
premises have been used substantially for the purposes for which they were
originally leased;
(2) The rental
shall not be less than the rental for the preceding term;
(3) The rules of
the board, setting forth any additional terms and conditions, which shall
ensure and promote the purposes of the demised lands; and
(4) The length of
the extension shall not exceed a reasonable length of time for the purpose of
providing relief and shall in no case extend the rental period of the original
lease by more than forty years.
(g) Any extension of a lease granted pursuant to
this section shall be effectuated, documented, and executed using the most
current lease form and leasing practices and policies of the board. The intent of this subsection is to ensure
that an extended lease, like the issuance of a new lease, will be subject to
the most current leasing practices and policies of the board, which shall be
incorporated into the lease document.
(h) The applicant for a lease extension shall pay
all costs and expenses incurred by the department in connection with the
processing, analyzing, and negotiating of any lease extension request and
document, and the development agreement under subsections (a) and (b).
(i) For purposes of this section,
"substantial improvements" means any renovation, rehabilitation,
reconstruction, or construction of the existing improvements, including minimum
requirements for off-site and on-site improvements, the cost of which equals or
exceeds thirty per cent of the market value of the existing improvements that
the lessee or the lessee and developer installs, constructs, and completes by
the date of completion of the total development."
SECTION 3. New statutory material is underscored.
SECTION 4. This Act shall take effect on December 31, 2050, and shall be and repealed on .
Report Title:
Board of Land and Natural Resources; Public Lands; Lease Extension; Development Agreement
Description:
Authorizes the BLNR to extend the rental period or term of leases of public lands for commercial or industrial use upon approval of a proposed development agreement to make substantial improvements to the existing improvements as long as the length of any extension granted does not extend the original lease term by more than 40 years. Establishes causes of economic hardship for which BLNR may modify or eliminate any of the existing statutory restrictions, extend or modify the rental period, or extend the term of these leases and amends the conditions for BLNR's approval of any modification, elimination, or extension. Repeals on . Takes effect 12/31/2050. (SD1)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
