Bill Text: HI SB2153 | 2024 | Regular Session | Amended
Bill Title: Relating To Public Lands.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2024-02-14 - Report adopted; Passed Second Reading, as amended (SD 1) and referred to JDC/WAM. [SB2153 Detail]
Download: Hawaii-2024-SB2153-Amended.html
THE SENATE |
S.B. NO. |
2153 |
THIRTY-SECOND LEGISLATURE, 2024 |
S.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO PUBLIC LANDS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that the State
has a fiduciary duty to manage state lands in the best interests of the public
by enhancing state revenues and promoting the social, environmental, and
economic well-being of Hawaii's people. As the majority landowner in east Hawaii, the State has an
enormous influence on the vision, economic development, and overall success of
the east Hawaii community.
The
legislature further finds that, under existing laws,
many public land lessees face uncertain futures following the expiration of
their leases. In 2021, twelve
applications for lease extensions have been submitted. However, only one such extension has been
finalized. Lessees
are further constrained by the lengthy process to achieve approval from the
board of land and natural resources to conduct small maintenance projects or
major renovations. Despite
improvements made by lessees, the board of land and natural resources
continually issues new terms, making guidelines for lease improvements
ambiguous. As a
result, the infrastructure and facilities on public lands in east Hawaii have
been deteriorating in many locations.
Additionally,
lessees also face difficulties in renegotiating leases
with the board of land and natural resources. The lessees work tirelessly to improve and
revitalize the Kanoelehua industrial area for the benefit of neighbors and the
State alike. As an incentive for lessees
to make continuous improvements to the lands, negotiations should favor lessees
by utilizing current tax assessed values to ease difficulties in the
negotiation process.
The
legislature also finds that the Banyan drive area on the Waiakea peninsula in east
Hawaii, Wailoa state park, Wailoa estuary, and the commercial leases in the
Kanoelehua industrial area are currently facing this difficult economic challenge. Due to the uncertainty regarding continued
tenancy, improvements have not been made and infrastructure has deteriorated,
leaving the region underutilized and in disrepair. The legislature further
finds that Hilo has the potential for increased growth that can improve
workforce and affordable housing, parks and open space, public facilities, and
commercial, industrial, and hotel facilities, and a pilot project in this area
has the potential to revive public lands, resulting in more tax revenue and
community revitalization, and be assessed to determine whether it can be
replicated in other areas of the State.
The
purpose of this Act is to clarify the oversight that the board of land natural
resources has over lease extensions and to require the board of land and
natural resources to utilize the current taxed assessed value for lease
extensions and require all applications to the Board of Land and Natural
Resources for an extension of fixed rental periods or lease terms to be made
within one hundred eighty days.
SECTION 2. Section 171-192, Hawaii Revised Statutes, is amended to read as follows:
"[[]§171-192[]]
Lease restrictions. (a) The board, from time to time, upon the
issuance or during the term of any intensive agricultural, aquaculture,
commercial, mariculture, special livestock, pasture, hotel, resort, or
industrial lease of public lands within the Hilo community economic district,
may:
(1) [Modify or eliminate] Eliminate
any of the restrictions specified in section 171-36(a);
(2) Extend or modify the fixed rental period or the term of the lease upon approval by the board of a development agreement proposed by the lessee to make substantial improvements to the existing improvements or to construct new substantial improvements so long as the length of any extension granted does not extend the original lease term by more than forty years; or
(3) Extend the term and modify any provisions of the lease,
to the extent necessary to qualify the lease for mortgage lending or guaranty purposes with any federal mortgage lending agency; to qualify the lessee for any state or private lending institution loan, private loan guaranteed by the State, or any loan in which the State and any private lender participates; or to amortize the cost of substantial improvements to the demised premises that are paid for by the lessee without institutional financing.
(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, in determining whether to approve the development agreement
pursuant to subsection (a)(2), consider:
(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] current tax assessed value of the
lands to be developed, as determined by an appraiser for the board, and the
percentage of rent where gross receipts exceed a specified amount.
(c) An application for an extension of the
fixed rental period or term of the lease shall be made to the board within
one hundred eighty days, which shall offer the lease fee amount based on
the [economic life of the substantial improvements as determined by the
board or an independent appraiser;] current tax assessed value of the
leased premises and without the need for board approval; 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] that they were
originally leased;
(2) The length of any extension granted for the fixed rental period of the lease shall not extend the fixed 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] current tax
assessed value 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] that shall ensure
and promote the purposes of the demised lands.
(d) The board, from time to time, during the term
of any agriculture, intensive agriculture, aquaculture, commercial,
mariculture, special livestock, pasture, hotel, resort, or industrial lease of
public lands within the Hilo community economic district, may modify or eliminate
any of the restrictions specified in section 171-36(a)[, extend or modify
the fixed 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.
(e) The approval of any extension granted pursuant to subsection (d) shall be subject to the following:
(1) The demised premises has been used
substantially for the purposes [for which] that 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] that 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 original lease's fixed rental period by more than forty years.
(f) The applicant for any lease extension
pursuant to this section shall pay all costs and expenses incurred by the [department]
board in connection with the processing, analyzing, and negotiating of any
lease extension request and document and of the development agreement under
subsections (a) and (b)."
SECTION 3. Section 171-193, Hawaii Revised Statutes, is amended subsections (b) and (c) to read as follows:
"(b) Within one hundred eighty days of a lessee's written request to initiate a request for interest, the board shall:
(1) Appraise the [value of the land and
any improvements to the land] current tax assessed value that
existed as of the date of the written request pursuant to section 171-17(a) [and
require the awardee of a new lease executed pursuant to this section to
reimburse the department for the appraisal];
and
(2) Publish a request for interest and request for qualifications notice inviting persons to express their interest in leasing the land and their qualifications as potential lessees and describing any improvements to the land that exist as of the date of the written request. The notice shall be given at least once statewide and at least once in the county where the land is located and shall contain:
(A) The qualifications required of eligible
lessees [which] that shall conform to [department] board
policy for new leases;
(B) A general description of the land,
including the address and tax map key, the termination date of the existing
lease, and [of any improvements to the land] the current tax assessed
value that existed as of the date of the written request;
(C) That the land to be leased is classified as hotel, resort, or commercial and industrial use pursuant to section 171-10;
(D) The [appraised value] current
tax assessed value of the land [and of any improvements to the land]
that existed as of the date of the written request;
(E) The closing date and manner by which a person shall indicate interest and submit a statement of qualifications; and
(F) Notice that a current business plan is a prerequisite to participate at time of auction or direct negotiation, if applicable, and shall be made a term of the lease.
(c) Within ninety days after the closing date
specified in the notice, the board shall determine if any persons have
qualified under the terms of the request for qualifications and shall notify
all persons who expressed interest as to whether they qualified. Qualified bidders shall be required to
deposit an amount equal to one per cent of the current tax assessed value
of the leasehold improvements [as determined by appraisal], but not less
than $1,000, to be held in an interest bearing account as deposit by the [department]
board and returned to the applicant at the applicant's cancellation of
interest, the applicant's unsuccessful bid at auction, or as a credit against
the applicant's successful bid at auction.
The board shall also notify the current lessee as to whether any other
persons qualified."
SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 5. This Act shall take effect on July 1, 2050.
Report Title:
BLNR; Lease Extensions; Hilo Community Economic District
Description:
Requires the Board of Land and Natural Resources to utilize the current taxed assessed value for lease extensions. Requires all applications to the Board of Land and Natural Resources for an extension of fixed rental periods or lease terms to be made within 180 days and confirm lease extensions. Takes effect 7/1/2050. (SD1)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.