SB2242

Report Title:

Agricultural Leases; Extension

Description:

Authorizes the Board of Land and Natural Resources to extend an agricultural lessee's lease to amortize the lessee-financed improvements made to the land and to allow lessee additional time to make productive use of the land when productivity was negatively affected by special circumstances.

THE SENATE	S.B. NO.	2242
TWENTY-FIRST LEGISLATURE, 2002
STATE OF HAWAII

A BILL FOR AN ACT

 

RELATING TO PUBLIC LAND LEASES.

 

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

SECTION 1. Section 171-36, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The board, from time to time, upon the issuance or during the term of any intensive agricultural, aquaculture, commercial, mariculture, special livestock, pasture, or industrial lease, may:

(1) Modify or eliminate any of the restrictions specified in subsection (a);

(2) Extend or modify the fixed rental period of the lease; or

(3) Extend the term of the lease

to the extent necessary to qualify the lease for mortgage lending or guaranty purposes with [the Federal Housing Administration, Federal National Mortgage Association, Department of Veterans Affairs, Small Business Administration, United States Department of Agriculture, Federal Land Bank of Berkeley, Federal Intermediate Credit Bank of Berkeley, Berkeley Bank for Cooperatives, or any other] any federal mortgage lending agency [qualified to do business in the State, and their respective successors and assignees, or], 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[; provided that the private lender shall be qualified to do business in the State;], to amortize the cost of substantial improvements to the demised premises that are financed by the lessee without institutional financing, or to allow lessee additional time to make productive use of the land when productivity was substantially and directly hampered by special circumstances; provided further 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 aggregate of the initial term and any extension granted shall not be for more than fifty-five years;

(3) In the event of a reopening, the rental for any ensuing period shall be the fair market rental at the time of reopening; [and]

(4) The federal or private lending agency engaged by the lessee shall be qualified to conduct business in the State;

(5) Proceeds of any mortgage or loan procured by the lessee to qualify for a lease extension shall be used solely for the operations or improvements on the demised premises;

(6) Where the improvements to the demised premises are financed by the lessee:

(A) The term of the lease extension shall be based upon the economic life of the improvements as determined by an independent appraiser hired by the lessee and approved by the board;

(B) The independent appraiser shall account for the economic life of the improvements financed by the lessee prior to the lessee's application for a lease extension; and

(C) The lessee shall submit receipts of expenditures within the time period specified by the board, otherwise the lease extension shall be canceled;

[(4)] (7) The rules of the board, setting forth any additional terms and conditions, which shall ensure and promote the purposes of the demised lands.

For the purposes of this subsection, "special circumstances" means severe weather including high winds, floods, drought, and hurricanes, and the following acts or omissions by the State:

(1) Taking of portions of the lessee's leased land by eminent domain; or

(2) Inadequate maintenance of state facilities that are relied upon by the lessee to productively utilize the leased land including irrigation systems."

SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________