Hawaii-2014-SB2296-Amended

SECTION 1. The purpose of this Act is to authorize the department of agriculture to create an alternative list of qualified applicants to lease agricultural lands if an initial awardee fails to complete the lease process.

SECTION 2. Section 166-6, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Any provision of this chapter to the contrary notwithstanding, the board [~~may~~], by negotiation, drawing of lot, or public auction, may directly dispose of public lands and related facilities set aside and designated for use as agricultural parks, and any other lands and facilities under the jurisdiction of the department pursuant to section 166-3 and notwithstanding chapter 171. Except as provided by subsection (c), dispositions may be by lease and shall be subject to the requirements set forth in rules adopted by the board in conformity with section 166-9, and subject also to the following limitations:

(1) The property shall be disposed of for agricultural or aquacultural purposes only;

(2) The lessee shall derive the major portion of the lessee's total annual income from the lessee's activities on the premises; provided that this restriction shall not apply if failure to meet the restriction results from mental or physical disability or the loss of a spouse, or if the premises are fully utilized in the production of crops or products for which the disposition was granted;

(3) The lessee shall comply with all federal and state laws regarding environmental quality control;

(4) The board shall determine the specific uses for which the disposition is intended; parcel the land into minimum size economic units sufficient for the intended uses; make, or require the lessee to make, improvements as are required to achieve the intended uses; set the upset price or lease rent based upon an appraised evaluation of the property value adjustable, as provided in rules adopted in accordance with chapter 91, to the specified use of the lot; set the term of the lease, which shall be not less than fifteen years nor more than fifty-five years, including any extension granted for mortgage lending or guarantee purposes; and establish other terms and conditions as it may deem necessary, including but not limited to restrictions against alienation and provisions for withdrawal by the board;

(5) No lease shall be made to any person who is in arrears in the payment of taxes, rents, or other obligations owing the State or any county; [~~and~~]

(6) Any transferee, assignee, or sublessee of an agricultural park lease shall first qualify as an applicant under this chapter. For the purpose of this paragraph, any transfer, assignment, sale, or other disposition of any interest, excluding a security interest, of any legal entity [~~which~~] that holds an agricultural park lease shall be treated as a transfer of the agricultural park lease and shall be subject to the approval of the board of agriculture upon reasonable terms and conditions, not inconsistent with this chapter or rules of the board, [~~which~~] that the board may deem necessary. No transfer shall be approved by the board if the disposition of the stock, or assets or other interest of the legal entity would result in the failure of the entity to qualify for an agricultural park lease[.]; and

(7) For dispositions by negotiation that require the submission of sealed bids pursuant to rules adopted by the department, in addition to selecting the applicant who submits the highest offer as the lessee, the department may select qualified applicants who submit the next highest offers as back-up lessees, with whom the department may enter into negotiations upon the failure by the highest offering lessee to finalize a lease for any reason."

SECTION 3. Section 166-11, Hawaii Revised Statutes, is amended to read as follows:

"[[]§166-11[]] Lease negotiation. (a) The department of agriculture may negotiate and enter into leases with any person who:

(1) [~~As of July 1, 1996, holds~~] Holds a revocable permit for agricultural purposes; [or]

(2) Has formerly held an agricultural lease [~~which~~] or holdover lease of public land that expired within the last ten years [~~preceding July 1, 1996,~~] and has continued to occupy the state land; [~~and~~

~~(3)~~ Does not own agriculturally-zoned land of twenty-five acres or more in the State, individually or jointly with a spouse, or whose spouse does not own twenty-five acres or more of agriculturally-zoned land in the State.] or

(3) Is determined by the department to have a beneficial impact on agriculture.

(b) The land eligible for lease negotiations under this section are limited to those lands:

(1) Zoned and used for agricultural purposes;

(2) Set aside by governor's executive order to the department of agriculture for agricultural uses only; and

(3) Not needed by any state or county agency for any other public purpose.

(1) Require the appraisal of the parcel to determine the fair market value;

(2) Require the payment of annual lease rent based on the fair market value established by appraisal;

(3) Require the payment of a premium, computed at twenty-five per cent of the annual lease rent, with the premium to be added to the annual lease rent for each year of the lease equal to the number of years the lessee has occupied the land, except that the premium period shall not exceed four years; and

(4) Recover from the lessee the costs of expenditures required by the department to convert the parcel into leasehold.

[~~Within six months from July 1, 1996, the~~] The department shall notify in writing [~~the permittees of lands~~] those persons eligible for lease negotiations under this section and shall inform the [~~permittees~~] applicant of the terms, conditions, and restrictions provided by this section. Any [~~permittee~~] eligible person may apply for a lease; provided that the application shall be submitted to the department in writing within thirty days from the date of receipt of notification; provided further that the department may require documentary proof from any applicant to determine that the applicant meets eligibility and qualification requirements for a lease as specified by this section."

SECTION 4. Section 166E-11, Hawaii Revised Statutes, is amended to read as follows:

"[[]§166E-11[]] Lease negotiation. (a) The department may negotiate and enter into leases with any person who:

(1) Holds a revocable permit for agricultural purposes;

(2) Has formerly held an agricultural lease or a holdover lease of public land that expired within the last ten years and has continued to occupy the land; or

(3) Is determined by the department to have a beneficial impact on agriculture.

(b) Lands eligible for lease negotiations under this section are limited to lands that are:

(1) Zoned and used for agricultural purposes;

(2) Set aside by the governor's executive order to the department of agriculture for agricultural uses only[~~, by the governor through an executive order to the department~~]; and

(3) Not needed by any state or county agency for any other public purpose.

(1) Require the appraisal of the parcel using standards of national appraiser organizations to determine the rental, including percentage rent;

(2) Require the payment of a premium, computed at twenty-five per cent of the annual lease rent, with the premium to be added to the annual lease rent for each year of the lease equal to the number of years the lessee has occupied the land, except that the premium period shall not exceed four years; and

(3) Recover from the lessee the costs of expenditures required by the department to convert the parcel into leasehold.

The department shall notify in writing those persons eligible for lease negotiations under this section and shall inform the applicants of the terms, conditions, and restrictions provided by this section. Any eligible person may apply for a lease by submitting a written application to the department within thirty days from the date of receipt of notification; provided that the department may require documentary proof from any applicant to determine that the applicant meets eligibility and qualification requirements for a lease.

(d) After the lot or lots are awarded, the department may select valid proposals as alternatives from the qualified applicants with the next highest proposals. If an award is rescinded for failure to satisfy conditions of award or other reason, the lot or lots made available shall be offered for award to the alternates in the order of the highest bid."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2050.

THE SENATE	S.B. NO.	2296
TWENTY-SEVENTH LEGISLATURE, 2014		S.D. 2
STATE OF HAWAII