Hawaii 2022 Regular Session

Hawaii House Bill HB1014 Compare Versions

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1-HOUSE OF REPRESENTATIVES H.B. NO. 1014 THIRTY-FIRST LEGISLATURE, 2021 H.D. 2 STATE OF HAWAII A BILL FOR AN ACT RELATING TO AUTHORIZING THE DEPARTMENT OF LAND AND NATURAL RESOURCES TO LEASE PASTURE LANDS ON TERMS THAT PROMOTE COLLABORATIVE BENEFICIAL USE FOR FORESTRY, WILDLIFE, RECREATIONAL, AND FOOD PRODUCTION PURPOSES. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
1+HOUSE OF REPRESENTATIVES H.B. NO. 1014 THIRTY-FIRST LEGISLATURE, 2021 H.D. 1 STATE OF HAWAII A BILL FOR AN ACT RELATING TO AUTHORIZING THE DEPARTMENT OF LAND AND NATURAL RESOURCES TO LEASE PASTURE LANDS ON TERMS THAT PROMOTE COLLABORATIVE BENEFICIAL USE FOR FORESTRY, WILDLIFE, RECREATIONAL, AND FOOD PRODUCTION PURPOSES. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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47- SECTION 1. The legislature finds that many state pasture lessees have requested the department of land and natural resources to transfer their leases to the department of agriculture for management because the department of agriculture has greater flexibility under chapter 166E, Hawaii Revised Statutes, to amend, extend, and issue new leases by negotiation. The department of land and natural resources has not acted on the requests of its pasture lessees because of the high natural resource value of certain pasture lands, their proximity to forest reserves, or their importance in providing access to other public lands for hunting or public recreation purposes. Furthermore, the perceived need to transfer pasture leases to the department of agriculture can be relieved by providing the department of land and natural resources with statutory powers similar to those exercised by the department of agriculture in the management of its leases. Finally, positive advancement in carbon sequestration challenges, wildlife management, wildfire protection and forest health concerns can be best managed through mutually beneficial practices with ranching, wildlife protection, and native forest restoration. The purpose of this Act is to: (1) Authorize the board of land and natural resources to amend and extend existing pasture leases and to issue new pasture leases by negotiation in furtherance of public purposes the department of land and natural resources is responsible for promoting; and (2) Specify that persons with leases be compensated for capital assets when leases are withdrawn. SECTION 2. Section 171-36, Hawaii Revised Statutes, is amended to read as follows: "§171-36 Lease restrictions; generally. (a) Except as otherwise provided, the following restrictions shall apply to all leases: (1) Options for renewal of terms are prohibited; (2) No lease shall be for a longer term than sixty-five years, except in the case of a residential leasehold, which may provide for an initial term of fifty-five years with the privilege of extension to meet the requirements of the Federal Housing Administration, Federal National Mortgage Association, Federal Land Bank of Berkeley, Federal Intermediate Credit Bank of Berkeley, Berkeley Bank for Cooperatives, or Department of Veterans Affairs requirements; provided that the aggregate of the initial term and extension shall in no event exceed seventy-five years; (3) No lease shall be made for any land under a lease which has more than two years to run; (4) No lease shall be made to any person who is in arrears in the payment of taxes, rents, or other obligations owed to the State or any county; (5) No lease shall be transferable or assignable, except by devise, bequest, or intestate succession; provided that with the approval of the board, the assignment and transfer of a lease or unit thereof may be made in accordance with current industry standards, as determined by the board; provided further that prior to the approval of any assignment of lease, the board shall have the right to review and approve the consideration to be paid by the assignee and may condition its consent to the assignment of the lease on payment by the lessee of a premium based on the amount by which the consideration for the assignment, whether by cash, credit, or otherwise, exceeds the depreciated cost of improvements and trade fixtures being transferred to the assignee; provided further that with respect to state agricultural leases, in the event of foreclosure or sale, the premium, if any, shall be assessed only after the encumbrances of record and any other advances made by the holder of a security interest are paid; (6) The lessee shall not sublet the whole or any part of the demised premises, except with the approval of the board; provided that prior to the approval, the board shall have the right to review and approve the rent to be charged to the sublessee; provided further that in the case where the lessee is required to pay rent based on a percentage of its gross receipts, the receipts of the sublessee shall be included as part of the lessee's gross receipts; provided further that the board shall have the right to review and, if necessary, revise the rent of the demised premises based upon the rental rate charged to the sublessee including the percentage rent, if applicable, and provided that the rent may not be revised downward; (7) The lease shall be for a specific use or uses and shall not include waste lands, unless it is impractical to provide otherwise; (8) Mineral and metallic rights and surface and ground water shall be reserved to the State; and (9) No lease of public lands, including submerged lands, or any extension of any lease of public lands shall be issued by the State to any person to construct, use, or maintain a sunbathing or swimming pier or to use the lands for those purposes, unless the lease, or any extension thereof, contains provisions permitting the general public to use the pier facilities on the public lands and requiring that a sign or signs be placed on the pier, clearly visible to the public, that indicates the public's right to the use of the pier. The board, at the earliest practicable date, and where legally possible, shall cause all existing leases to be amended to conform to this paragraph. The term "lease", for the purposes of this paragraph, includes month-to-month rental agreements and similar tenancies. (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; provided that the aggregate of the initial term and any extension granted shall not exceed sixty-five years; or (3) Extend the term 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. (c) Any extension authorized pursuant to subsection (b) shall be based on the economic life of the 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 aggregate of the initial term and any extension granted shall not be for more than sixty-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; (4) Any federal or private lending institution shall be qualified to do business in the State; (5) Proceeds of any mortgage or loan shall be used solely for the operations or improvements on the demised premises; (6) Where improvements are financed by the lessee, the lessee shall submit receipts of expenditures within a time period specified by the board or else the lease extension shall be canceled; and (7) The rules of the board setting forth any additional terms and conditions, which shall ensure and promote the purposes of the demised lands. (d) The board at any time during the term of any intensive agricultural, aquaculture, or mariculture lease and when justified by sound economic practices or other circumstances, may permit an alternative agricultural, aquaculture, or mariculture use or uses for any portion or portions of the land demised. As a condition to permitting alternative uses, the board may require such other modifications, including rental adjustments or changes in the lease as may be necessary to effect or accommodate the alternative use or uses. An alternative use or uses may be allowed by the board upon: (1) The application of the lessee; (2) Consent of each holder of record having a security interest in the leasehold; and (3) A finding by the board that the alternative use or uses are in the public interest. (e) The board, from time to time, during the term of any agriculture, intensive agriculture, aquaculture, commercial, mariculture, special livestock, pasture, or industrial lease, may modify or eliminate any of the restrictions specified in subsection (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; and 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 has been used substantially for the purposes 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) The rental shall not be less than the rental for the preceding term; (4) The rules of the board, setting forth any additional terms and conditions which shall ensure and promote the purposes of the demised lands; and (5) The length of the extension shall not exceed a reasonable length of time for the purpose of providing relief and shall in no case exceed five years. (g) Any provision of this chapter to the contrary notwithstanding, the board may amend and extend pasture leases in furtherance of public purposes that are the responsibility of the department to promote, including and without limitation preserving existing native forest, reforestation for watershed enhancement and forest carbon sequestration opportunities, facilitating public hunting, establishing and maintaining public access to landlocked reserves, enhancement of public recreational opportunities, food production, and protection and propagation of current biological and other significant resources, 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 be for no more than sixty-five years; and (3) The board may consider key characteristics of public lands most likely to benefit from the amendment and extension of pasture leases, identification of public purposes to be promoted through lease amendment and extension, a description of the types of lessee obligations regarding natural resource conservation and stewardship that will serve to achieve the identified public purposes, a statement of the types of lease amendments that are desirable to promote these public purposes, eligibility requirements for pasture lessees, and applicant qualifications. The board may set the lease rent for the period of the lease term occurring after an amendment under this subsection on such terms and conditions as the board may determine, including but not limited to a value that incentivizes or otherwise promotes ranching operations compatible with the public purposes that are the responsibility of the department to promote, including without limitation those specified above in this subsection. (h) In arriving at a rental value for the lease pursuant to subsection (g), an agricultural appraiser shall be procured to determine rent for an amended lease and the board may also consider: (1) The specified use of the land; (2) Any restriction on grazing or other beneficial uses of the land or portions thereof by lessee; (3) Any conservation or stewardship services required to be performed by the lessee under the amended lease; and (4) Any withdrawal of lands from the lease premises. The board may apply a lower rate of return than the rent amount determined by the agricultural appraiser if warranted after consideration of the public purpose served by the lease, use restrictions thereunder, and any obligation of the lessee to provide conservation or stewardship services." SECTION 3. Section 171-37.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows: "(a) Upon a withdrawal or taking of leased land pursuant to section 171-37(3) that causes any portion of the land to become unusable for the specific use or uses for which it was leased, the lease rent shall be reduced in proportion to the value of the land withdrawn or made unusable; provided that if any permanent improvement made to or constructed upon the land by the lessee is destroyed or made unusable in the process of the withdrawal or taking, the proportionate value thereof shall be paid to the lessee based upon the unexpired term of the lease. No land that is under cultivation shall be withdrawn or taken until the crops are harvested, unless the board pays the lessee the value of the crops. Upon a withdrawal, any person with a long-term lease shall be compensated for the present value of all [permanent]: (1) Permanent improvements in place at the time of the withdrawal that were legally made to or constructed upon the land by the lessee of the leased land being withdrawn[.]; and (2) Capital assets located on the land at the time of withdrawal. In the case of tree-crops, as defined in section 171-37, the board shall pay to the lessee the residual value of the trees taken and, if there are unharvested crops, the value of the crops. In the case of breeding livestock that cannot be relocated or marketed for the breeding value, the board shall pay to the lessee the difference between the appraised breeding value and the salvage value, including the cost of transportation to a market on the island on which the leased land is located. If there is disagreement between the board and the lessee as to the number of breeding livestock that cannot be relocated or marketed for breeding value, the issue shall be submitted to the department of agriculture to make a determination, which shall be final. The appraised breeding value shall be the fair market value of the livestock, as opposed to net present value, at the time the board approves the withdrawal or taking of a portion or all of the leased land. The fair market value shall be determined by: (1) An employee of the department of agriculture qualified to appraise livestock; or (2) A disinterested livestock appraiser whose services shall be contracted for by the board, and the lessee shall be promptly notified of the determination; provided that should the lessee fail to agree upon the fair market value, the lessee may appoint the lessee's own livestock appraiser who together with the board's appraiser shall appoint a third appraiser and the fair market value shall be determined by arbitration as provided in chapter 658A. The lessee shall pay for the lessee's own livestock appraiser, the board shall pay for the board's livestock appraiser, and the cost of the third livestock appraiser shall be borne equally by the lessee and the board. Whenever more than one livestock appraiser is appointed, each shall prepare and submit an independent appraisal report." SECTION 4. Section 171-59, Hawaii Revised Statutes, is amended to read as follows: "§171-59 Disposition by negotiation. (a) A lease of public land may be disposed of through negotiation upon a finding by the board of land and natural resources that the public interest demands it. Where the public land is being sought under this section by a sugar or pineapple company, and the company is the owner or operator of a mill or cannery, then, for the purposes of this section, the economic unit shall be that acreage of public land which when taken together with the lands already owned or controlled or available to the company, when cultivated is found by the board to be necessary for the company's optimum mill or cannery operation. In all other cases, public land to be sold under this section shall be an economic unit as provided in section 171-33(3). After a determination is made to negotiate the disposition of a lease, the board shall: (1) Give public notice as in public auction, in accordance with the procedure set forth in section 171-16(a), of its intention to lease public land through negotiation setting forth the minimum conditions thereunder, the use for which the public land will be leased. Any person interested in securing the lease shall file an application with the board not later than forty-five days after the first publication of the notice; (2) Establish reasonable criteria for the selection of the lessee; provided that where the intended use of the land is agriculture, the department of agriculture shall establish the criteria; and (3) Determine the applicants who meet the criteria for selection set by the board or the department of agriculture, as the case may be, and notify all applicants of its determination. Any applicant may examine the basis of the determination, which shall be in writing, to ascertain whether or not the conditions and criteria established by the board or the department of agriculture were followed; provided that if any applicant does not notify the board of the applicant's objections, and the grounds therefor, in writing, within twenty days of the receipt of the notice, the applicant shall be barred from proceeding to seek legal remedy for any alleged failure of the board to follow the conditions and criteria. If only one applicant meets the criteria for selection of the lessee, the board may, after notice as provided in (3), above, dispose of the lease by negotiation. If two or more applicants meet the criteria for the selection of the lessee, the board shall select the lessee who submits the highest offer contained in a sealed bid deposited with the board. (b) Disposition of public lands for airline, aircraft, airport-related, agricultural processing, cattle feed production, aquaculture, marine, maritime, and maritime-related operations may be negotiated without regard to the limitations set forth in subsection (a) and section 171-16(c); provided that: (1) The disposition encourages competition within the aeronautical, airport-related, agricultural, aquaculture, maritime, and maritime-related operations; (2) The disposition shall not exceed a maximum term of thirty-five years, except in the case of: (A) Maritime and maritime-related operations, which may provide for a maximum term of seventy years; and (B) Aquaculture operations, which may provide for a maximum term of sixty-five years; provided that aquaculture operations in good standing may seek to renew a lease issued under this section and, during the lease term, may engage in supportive activities that are related to or integrated with aquaculture; and (3) The method of disposition of public lands for cattle feed production as set forth in this subsection shall not apply after December 31, 1988. For the purposes of this subsection: "Agricultural processing" means the processing of agricultural products, including dairying, grown, raised, or produced in Hawaii. "Airport-related" means a purpose or activity that requires air transportation to achieve that purpose or activity; or an activity that generates revenue for the airport system as provided in section 261-7. "Aquaculture" means the propagation, cultivation, or farming of aquatic plants and animals in controlled or selected environments for research, commercial, or stocking purposes, including aquaponics or any growing of plants or animals with aquaculture effluents. "Maritime-related" means a purpose or activity that requires and is directly related to the loading, off-loading, storage, or distribution of goods and services of the maritime industry. (c) Any provision of this chapter to the contrary notwithstanding, the board may issue pasture leases by negotiation for lands already under pasture use when doing so will further public purposes that are the responsibility of the department to promote, including, without limitation, preserving existing native forest, reforestation for watershed enhancement and forest carbon sequestration opportunities, facilitating public hunting, establishing and maintaining public access to landlocked reserves, enhancement of public recreational opportunities, food production, and protection and propagation of current biological and other significant resources, subject to the following: (1) The term of any pasture lease issued under this subsection shall be for no more than sixty-five years; and (2) The board may consider key characteristics of public lands most likely to benefit from the negotiation of pasture leases, identification of public purposes to be promoted through negotiation of pasture leases, a description of the types of lessee obligations regarding natural resource conservation, and stewardship that will serve to achieve the identified public purposes, eligibility requirements for pasture lessees, and applicant qualifications. The board may set the rent for pasture leases issued under this subsection on such terms and conditions as the board may determine, including but not limited to a value that incentivizes or otherwise promotes ranching operations compatible with the public purposes that are the responsibility of the department to promote, including without limitation those specified above in this subsection. (d) In arriving at a rental value for the lease pursuant to subsection (c), an agricultural appraiser shall be procured to determine rent for an amended lease and the board may also consider: (1) The specified use of the land; (2) Any restriction on grazing or other beneficial uses of the land or portions thereof by lessee; and (3) Any conservation or stewardship services required to be performed by the lessee under the lease. The board may apply a lower rate of return than the rent amount determined by the agricultural appraiser if warranted after consideration of the public purpose served by the lease, use restrictions thereunder, and any obligation of the lessee to provide conservation or stewardship services." SECTION 5. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date. SECTION 6. New statutory material is underscored. SECTION 7. This Act shall take effect on January 1, 2050.
47+ SECTION 1. Many state pasture lessees have requested the department of land and natural resources to transfer their leases to the department of agriculture for management because the department of agriculture has greater flexibility under chapter 166E, Hawaii Revised Statutes, to amend, extend, and issue new leases by negotiation. The department of land and natural resources has not acted on the requests of its pasture lessees because of the high natural resource value of certain pasture lands, their proximity to forest reserves, or their importance in providing access to other public lands for hunting or public recreation purposes. Furthermore, the perceived need to transfer pasture leases to the department of agriculture can be relieved by providing the department of land and natural resources with statutory powers similar to those exercised by the department of agriculture in the management of its leases. Finally, positive advancement in carbon sequestration challenges, wildlife management, wildfire protection and forest health concerns can be best managed through mutually beneficial practices with ranching, wildlife protection, and native forest restoration. SECTION 2. Chapter 171, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows: "§171- Transfer of land; priority use. (a) Notwithstanding any law to the contrary, if at any time land transferred pursuant to this chapter is in productive agricultural use under the department of agriculture's authority and the department seeks to alter or convert the existing use to its reserved uses or priorities, preference to the department's use shall be given; provided that: (1) Prior to the alteration or conversion, the department has completed a plan of utilization or project plan for its intended use that is approved by the board; (2) Prior to the alteration or conversion, the department has secured sufficient funding to successfully implement the plan; (3) The department shall be solely responsible for all costs for identification, mapping, designation, and subdivision of the land or any portions thereof that is required for implementation of its approved plan; (4) The department has given prior written notice to the department of agriculture and the lessee no later than one year prior to alteration or conversion; provided that the lessee shall be responsible for the costs of relocating its operations ordinarily associated with reconfiguring existing operations to accommodate the loss of areas removed for the benefit of the department; (5) The department shall return the land to agricultural practices if the alteration or conversion is not completed within the timeframe specified in the approved plan; (6) The lessee shall be justly compensated by rent credit for interruptions of its business operations as a result of non-ranching activities on the leased premises, including but not limited to: (A) Managing public access; and (B) Allowances for public hunting; provided that the rent credits shall be determined at the time of the appraisal and may be amended as needed; (7) The State shall indemnify any lessee required by the department to provide certain other activities and provide the lessee with proof of indemnity to a degree acceptable with the level of exposure; and (8) The department may not encumber the property nor any part of its management to another entity without concurrence of the lessee. (b) In the event that the management of lands are disputed, the board of land and natural resources shall establish a third-party advisory committee prior to any disposition or transfer of the lands. The third-party advisory committee shall consist of members from the following: (1) The department; (2) The department of agriculture; (3) An organization who represents the interests of cattle producers in the State; (4) An organization who represents the interests of agricultural producers in the State; (5) An organization who represents the conservation districts in the State; (6) An organization who represents the watershed partnerships in the State; and (7) The University of Hawaii college of tropical agriculture and human resources. (c) The third-party advisory committee established pursuant to subsection (b) shall review the disputed lands proposed for disposition or transfer and assess the resources values according to the following criteria: (1) Percentage of the land that is growing grass, invasive tree, and native trees; (2) Presence of endangered species; (3) Presence of access, trails, and hunting resources; (4) Traditional and customary native Hawaiian practices using a Ka Paakai analysis; (5) Food production for local consumption and export; (6) Proposed rent, including methodology and statutory justification; and (7) Proposed measures to protect public trust values. The third-party advisory committee shall submit findings to the board and the board of agriculture for review and consideration before the approval of any disposition or transfer of disputed lands. (d) For the purposes of this section, "disputed lands" means state lands managed by the department of land and natural resources that may qualify for transfer to the department of agriculture under Act 90, Session Laws of Hawaii 2003, but have not been transferred because of a disagreement between the department of land and natural resources and department of agriculture as to whether or not the land should be transferred." SECTION 3. Section 171-36, Hawaii Revised Statutes, is amended to read as follows: "§171-36 Lease restrictions; generally. (a) Except as otherwise provided, the following restrictions shall apply to all leases: (1) Options for renewal of terms are prohibited; (2) No lease shall be for a longer term than sixty-five years, except in the case of a residential leasehold, which may provide for an initial term of fifty-five years with the privilege of extension to meet the requirements of the Federal Housing Administration, Federal National Mortgage Association, Federal Land Bank of Berkeley, Federal Intermediate Credit Bank of Berkeley, Berkeley Bank for Cooperatives, or Department of Veterans Affairs requirements; provided that the aggregate of the initial term and extension shall in no event exceed seventy-five years; (3) No lease shall be made for any land under a lease which has more than two years to run; (4) No lease shall be made to any person who is in arrears in the payment of taxes, rents, or other obligations owed to the State or any county; (5) No lease shall be transferable or assignable, except by devise, bequest, or intestate succession; provided that with the approval of the board, the assignment and transfer of a lease or unit thereof may be made in accordance with current industry standards, as determined by the board; provided further that prior to the approval of any assignment of lease, the board shall have the right to review and approve the consideration to be paid by the assignee and may condition its consent to the assignment of the lease on payment by the lessee of a premium based on the amount by which the consideration for the assignment, whether by cash, credit, or otherwise, exceeds the depreciated cost of improvements and trade fixtures being transferred to the assignee; provided further that with respect to state agricultural leases, in the event of foreclosure or sale, the premium, if any, shall be assessed only after the encumbrances of record and any other advances made by the holder of a security interest are paid; (6) The lessee shall not sublet the whole or any part of the demised premises, except with the approval of the board; provided that prior to the approval, the board shall have the right to review and approve the rent to be charged to the sublessee; provided further that in the case where the lessee is required to pay rent based on a percentage of its gross receipts, the receipts of the sublessee shall be included as part of the lessee's gross receipts; provided further that the board shall have the right to review and, if necessary, revise the rent of the demised premises based upon the rental rate charged to the sublessee including the percentage rent, if applicable, and provided that the rent may not be revised downward; (7) The lease shall be for a specific use or uses and shall not include waste lands, unless it is impractical to provide otherwise; (8) Mineral and metallic rights and surface and ground water shall be reserved to the State; and (9) No lease of public lands, including submerged lands, or any extension of any lease of public lands shall be issued by the State to any person to construct, use, or maintain a sunbathing or swimming pier or to use the lands for those purposes, unless the lease, or any extension thereof, contains provisions permitting the general public to use the pier facilities on the public lands and requiring that a sign or signs be placed on the pier, clearly visible to the public, that indicates the public's right to the use of the pier. The board, at the earliest practicable date, and where legally possible, shall cause all existing leases to be amended to conform to this paragraph. The term "lease", for the purposes of this paragraph, includes month-to-month rental agreements and similar tenancies. (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; provided that the aggregate of the initial term and any extension granted shall not exceed sixty-five years; or (3) Extend the term 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. (c) Any extension authorized pursuant to subsection (b) shall be based on the economic life of the 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 aggregate of the initial term and any extension granted shall not be for more than sixty-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; (4) Any federal or private lending institution shall be qualified to do business in the State; (5) Proceeds of any mortgage or loan shall be used solely for the operations or improvements on the demised premises; (6) Where improvements are financed by the lessee, the lessee shall submit receipts of expenditures within a time period specified by the board or else the lease extension shall be canceled; and (7) The rules of the board setting forth any additional terms and conditions, which shall ensure and promote the purposes of the demised lands. (d) The board at any time during the term of any intensive agricultural, aquaculture, or mariculture lease and when justified by sound economic practices or other circumstances, may permit an alternative agricultural, aquaculture, or mariculture use or uses for any portion or portions of the land demised. As a condition to permitting alternative uses, the board may require such other modifications, including rental adjustments or changes in the lease as may be necessary to effect or accommodate the alternative use or uses. An alternative use or uses may be allowed by the board upon: (1) The application of the lessee; (2) Consent of each holder of record having a security interest in the leasehold; and (3) A finding by the board that the alternative use or uses are in the public interest. (e) The board, from time to time, during the term of any agriculture, intensive agriculture, aquaculture, commercial, mariculture, special livestock, pasture, or industrial lease, may modify or eliminate any of the restrictions specified in subsection (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; and 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 has been used substantially for the purposes 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) The rental shall not be less than the rental for the preceding term; (4) The rules of the board, setting forth any additional terms and conditions which shall ensure and promote the purposes of the demised lands; and (5) The length of the extension shall not exceed a reasonable length of time for the purpose of providing relief and shall in no case exceed five years. (g) Any provision of this chapter to the contrary notwithstanding, the board may amend and extend pasture leases in furtherance of public purposes that are the responsibility of the department to promote, including and without limitation preserving existing native forest, reforestation for watershed enhancement and forest carbon sequestration opportunities, facilitating public hunting, establishing and maintaining public access to landlocked reserves, enhancement of public recreational opportunities, and protection and propagation of current biological and other significant resources, 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 be for no more than sixty-five years; and (3) The board may consider key characteristics of public lands most likely to benefit from the amendment and extension of pasture leases, identification of public purposes to be promoted through lease amendment and extension, a description of the types of lessee obligations regarding natural resource conservation and stewardship that will serve to achieve the identified public purposes, a statement of the types of lease amendments that are desirable to promote these public purposes, eligibility requirements for pasture lessees, and applicant qualifications. The chairperson may set the lease rent for the period of the lease term occurring after an amendment under this subsection on such terms and conditions as the chairperson may determine, including but not limited to a value that incentivizes or otherwise promotes ranching operations compatible with the public purposes that are the responsibility of the department to promote, including without limitation those specified above in this subsection. (h) In arriving at a rental value for the lease pursuant to subsection (g), the chairperson may also consider: (1) The specified use of the land; (2) Any restriction on grazing or other beneficial uses of the land or portions thereof by lessee; (3) Any conservation or stewardship services required to be performed by the lessee under the amended lease; and (4) Any withdrawal of lands from the lease premises. If an independent appraisal is procured to determine rent for an amended pasture lease, the chairperson may apply a lower rate of return if warranted after consideration of the public purpose served by the lease, use restrictions thereunder, and any obligation of the lessee to provide conservation or stewardship services." SECTION 4. Section 171-59, Hawaii Revised Statutes, is amended to read as follows: "§171-59 Disposition by negotiation. (a) A lease of public land may be disposed of through negotiation upon a finding by the board of land and natural resources that the public interest demands it. Where the public land is being sought under this section by a sugar or pineapple company, and the company is the owner or operator of a mill or cannery, then, for the purposes of this section, the economic unit shall be that acreage of public land which when taken together with the lands already owned or controlled or available to the company, when cultivated is found by the board to be necessary for the company's optimum mill or cannery operation. In all other cases, public land to be sold under this section shall be an economic unit as provided in section 171-33(3). After a determination is made to negotiate the disposition of a lease, the board shall: (1) Give public notice as in public auction, in accordance with the procedure set forth in section 171-16(a), of its intention to lease public land through negotiation setting forth the minimum conditions thereunder, the use for which the public land will be leased. Any person interested in securing the lease shall file an application with the board not later than forty-five days after the first publication of the notice; (2) Establish reasonable criteria for the selection of the lessee; provided that where the intended use of the land is agriculture, the department of agriculture shall establish the criteria; (3) Determine the applicants who meet the criteria for selection set by the board or the department of agriculture, as the case may be, and notify all applicants of its determination. Any applicant may examine the basis of the determination, which shall be in writing, to ascertain whether or not the conditions and criteria established by the board or the department of agriculture were followed; provided that if any applicant does not notify the board of the applicant's objections, and the grounds therefor, in writing, within twenty days of the receipt of the notice, the applicant shall be barred from proceeding to seek legal remedy for any alleged failure of the board to follow the conditions and criteria. If only one applicant meets the criteria for selection of the lessee, the board may, after notice as provided in (3), above, dispose of the lease by negotiation. If two or more applicants meet the criteria for the selection of the lessee, the board shall select the lessee who submits the highest offer contained in a sealed bid deposited with the board. (b) Disposition of public lands for airline, aircraft, airport-related, agricultural processing, cattle feed production, aquaculture, marine, maritime, and maritime-related operations may be negotiated without regard to the limitations set forth in subsection (a) and section 171-16(c); provided that: (1) The disposition encourages competition within the aeronautical, airport-related, agricultural, aquaculture, maritime, and maritime-related operations; (2) The disposition shall not exceed a maximum term of thirty-five years, except in the case of: (A) Maritime and maritime-related operations, which may provide for a maximum term of seventy years; and (B) Aquaculture operations, which may provide for a maximum term of sixty-five years; provided that aquaculture operations in good standing may seek to renew a lease issued under this section and, during the lease term, may engage in supportive activities that are related to or integrated with aquaculture; and (3) The method of disposition of public lands for cattle feed production as set forth in this subsection shall not apply after December 31, 1988. For the purposes of this subsection: "Agricultural processing" means the processing of agricultural products, including dairying, grown, raised, or produced in Hawaii. "Airport-related" means a purpose or activity that requires air transportation to achieve that purpose or activity; or an activity that generates revenue for the airport system as provided in section 261-7. "Aquaculture" means the propagation, cultivation, or farming of aquatic plants and animals in controlled or selected environments for research, commercial, or stocking purposes, including aquaponics or any growing of plants or animals with aquaculture effluents. "Maritime-related" means a purpose or activity that requires and is directly related to the loading, off-loading, storage, or distribution of goods and services of the maritime industry. (c) Any provision of this chapter to the contrary notwithstanding, the board may issue pasture leases by negotiation for lands already under pasture use when doing so will further public purposes that are the responsibility of the department to promote, including, without limitation, preserving existing native forest, reforestation for watershed enhancement and forest carbon sequestration opportunities, facilitating public hunting, establishing and maintaining public access to landlocked reserves, enhancement of public recreational opportunities, and protection and propagation of current biological and other significant resources, subject to the following: (1) The term of any pasture lease issued under this subsection shall be for no more than sixty-five years; and (2) The board may consider key characteristics of public lands most likely to benefit from the negotiation of pasture leases, identification of public purposes to be promoted through negotiation of pasture leases, a description of the types of lessee obligations regarding natural resource conservation, and stewardship that will serve to achieve the identified public purposes, eligibility requirements for pasture lessees, and applicant qualifications. The chairperson may set the rent for pasture leases issued under this subsection on such terms and conditions as the chairperson may determine, including but not limited to a value that incentivizes or otherwise promotes ranching operations compatible with the public purposes that are the responsibility of the department to promote, including without limitation those specified above in this subsection. (d) In arriving at a rental value for the lease pursuant to subsection (c), the chairperson may also consider: (1) The specified use of the land; (2) Any restriction on grazing or other beneficial uses of the land or portions thereof by lessee; and (3) Any conservation or stewardship services required to be performed by the lessee under the lease. If an independent appraisal is procured to determine rent for a pasture lease, the chairperson may apply a lower rate of return if warranted after consideration of the public purpose served by the lease, use restrictions thereunder, and any obligation of the lessee to provide conservation or stewardship services." SECTION 5. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date. SECTION 6. New statutory material is underscored. SECTION 7. This Act shall take effect on January 1, 2050.
4848
49- SECTION 1. The legislature finds that many state pasture lessees have requested the department of land and natural resources to transfer their leases to the department of agriculture for management because the department of agriculture has greater flexibility under chapter 166E, Hawaii Revised Statutes, to amend, extend, and issue new leases by negotiation. The department of land and natural resources has not acted on the requests of its pasture lessees because of the high natural resource value of certain pasture lands, their proximity to forest reserves, or their importance in providing access to other public lands for hunting or public recreation purposes.
49+ SECTION 1. Many state pasture lessees have requested the department of land and natural resources to transfer their leases to the department of agriculture for management because the department of agriculture has greater flexibility under chapter 166E, Hawaii Revised Statutes, to amend, extend, and issue new leases by negotiation. The department of land and natural resources has not acted on the requests of its pasture lessees because of the high natural resource value of certain pasture lands, their proximity to forest reserves, or their importance in providing access to other public lands for hunting or public recreation purposes.
5050
5151 Furthermore, the perceived need to transfer pasture leases to the department of agriculture can be relieved by providing the department of land and natural resources with statutory powers similar to those exercised by the department of agriculture in the management of its leases.
5252
5353 Finally, positive advancement in carbon sequestration challenges, wildlife management, wildfire protection and forest health concerns can be best managed through mutually beneficial practices with ranching, wildlife protection, and native forest restoration.
5454
55- The purpose of this Act is to:
55+ SECTION 2. Chapter 171, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
5656
57- (1) Authorize the board of land and natural resources to amend and extend existing pasture leases and to issue new pasture leases by negotiation in furtherance of public purposes the department of land and natural resources is responsible for promoting; and
57+ "§171- Transfer of land; priority use. (a) Notwithstanding any law to the contrary, if at any time land transferred pursuant to this chapter is in productive agricultural use under the department of agriculture's authority and the department seeks to alter or convert the existing use to its reserved uses or priorities, preference to the department's use shall be given; provided that:
5858
59- (2) Specify that persons with leases be compensated for capital assets when leases are withdrawn.
59+ (1) Prior to the alteration or conversion, the department has completed a plan of utilization or project plan for its intended use that is approved by the board;
6060
61- SECTION 2. Section 171-36, Hawaii Revised Statutes, is amended to read as follows:
61+ (2) Prior to the alteration or conversion, the department has secured sufficient funding to successfully implement the plan;
62+
63+ (3) The department shall be solely responsible for all costs for identification, mapping, designation, and subdivision of the land or any portions thereof that is required for implementation of its approved plan;
64+
65+ (4) The department has given prior written notice to the department of agriculture and the lessee no later than one year prior to alteration or conversion; provided that the lessee shall be responsible for the costs of relocating its operations ordinarily associated with reconfiguring existing operations to accommodate the loss of areas removed for the benefit of the department;
66+
67+ (5) The department shall return the land to agricultural practices if the alteration or conversion is not completed within the timeframe specified in the approved plan;
68+
69+ (6) The lessee shall be justly compensated by rent credit for interruptions of its business operations as a result of non-ranching activities on the leased premises, including but not limited to:
70+
71+ (A) Managing public access; and
72+
73+ (B) Allowances for public hunting;
74+
75+ provided that the rent credits shall be determined at the time of the appraisal and may be amended as needed;
76+
77+ (7) The State shall indemnify any lessee required by the department to provide certain other activities and provide the lessee with proof of indemnity to a degree acceptable with the level of exposure; and
78+
79+ (8) The department may not encumber the property nor any part of its management to another entity without concurrence of the lessee.
80+
81+ (b) In the event that the management of lands are disputed, the board of land and natural resources shall establish a third-party advisory committee prior to any disposition or transfer of the lands. The third-party advisory committee shall consist of members from the following:
82+
83+ (1) The department;
84+
85+ (2) The department of agriculture;
86+
87+ (3) An organization who represents the interests of cattle producers in the State;
88+
89+ (4) An organization who represents the interests of agricultural producers in the State;
90+
91+ (5) An organization who represents the conservation districts in the State;
92+
93+ (6) An organization who represents the watershed partnerships in the State; and
94+
95+ (7) The University of Hawaii college of tropical agriculture and human resources.
96+
97+ (c) The third-party advisory committee established pursuant to subsection (b) shall review the disputed lands proposed for disposition or transfer and assess the resources values according to the following criteria:
98+
99+ (1) Percentage of the land that is growing grass, invasive tree, and native trees;
100+
101+ (2) Presence of endangered species;
102+
103+ (3) Presence of access, trails, and hunting resources;
104+
105+ (4) Traditional and customary native Hawaiian practices using a Ka Paakai analysis;
106+
107+ (5) Food production for local consumption and export;
108+
109+ (6) Proposed rent, including methodology and statutory justification; and
110+
111+ (7) Proposed measures to protect public trust values.
112+
113+The third-party advisory committee shall submit findings to the board and the board of agriculture for review and consideration before the approval of any disposition or transfer of disputed lands.
114+
115+ (d) For the purposes of this section, "disputed lands" means state lands managed by the department of land and natural resources that may qualify for transfer to the department of agriculture under Act 90, Session Laws of Hawaii 2003, but have not been transferred because of a disagreement between the department of land and natural resources and department of agriculture as to whether or not the land should be transferred."
116+
117+ SECTION 3. Section 171-36, Hawaii Revised Statutes, is amended to read as follows:
62118
63119 "§171-36 Lease restrictions; generally. (a) Except as otherwise provided, the following restrictions shall apply to all leases:
64120
65121 (1) Options for renewal of terms are prohibited;
66122
67123 (2) No lease shall be for a longer term than sixty-five years, except in the case of a residential leasehold, which may provide for an initial term of fifty-five years with the privilege of extension to meet the requirements of the Federal Housing Administration, Federal National Mortgage Association, Federal Land Bank of Berkeley, Federal Intermediate Credit Bank of Berkeley, Berkeley Bank for Cooperatives, or Department of Veterans Affairs requirements; provided that the aggregate of the initial term and extension shall in no event exceed seventy-five years;
68124
69125 (3) No lease shall be made for any land under a lease which has more than two years to run;
70126
71127 (4) No lease shall be made to any person who is in arrears in the payment of taxes, rents, or other obligations owed to the State or any county;
72128
73129 (5) No lease shall be transferable or assignable, except by devise, bequest, or intestate succession; provided that with the approval of the board, the assignment and transfer of a lease or unit thereof may be made in accordance with current industry standards, as determined by the board; provided further that prior to the approval of any assignment of lease, the board shall have the right to review and approve the consideration to be paid by the assignee and may condition its consent to the assignment of the lease on payment by the lessee of a premium based on the amount by which the consideration for the assignment, whether by cash, credit, or otherwise, exceeds the depreciated cost of improvements and trade fixtures being transferred to the assignee; provided further that with respect to state agricultural leases, in the event of foreclosure or sale, the premium, if any, shall be assessed only after the encumbrances of record and any other advances made by the holder of a security interest are paid;
74130
75131 (6) The lessee shall not sublet the whole or any part of the demised premises, except with the approval of the board; provided that prior to the approval, the board shall have the right to review and approve the rent to be charged to the sublessee; provided further that in the case where the lessee is required to pay rent based on a percentage of its gross receipts, the receipts of the sublessee shall be included as part of the lessee's gross receipts; provided further that the board shall have the right to review and, if necessary, revise the rent of the demised premises based upon the rental rate charged to the sublessee including the percentage rent, if applicable, and provided that the rent may not be revised downward;
76132
77133 (7) The lease shall be for a specific use or uses and shall not include waste lands, unless it is impractical to provide otherwise;
78134
79135 (8) Mineral and metallic rights and surface and ground water shall be reserved to the State; and
80136
81137 (9) No lease of public lands, including submerged lands, or any extension of any lease of public lands shall be issued by the State to any person to construct, use, or maintain a sunbathing or swimming pier or to use the lands for those purposes, unless the lease, or any extension thereof, contains provisions permitting the general public to use the pier facilities on the public lands and requiring that a sign or signs be placed on the pier, clearly visible to the public, that indicates the public's right to the use of the pier. The board, at the earliest practicable date, and where legally possible, shall cause all existing leases to be amended to conform to this paragraph. The term "lease", for the purposes of this paragraph, includes month-to-month rental agreements and similar tenancies.
82138
83139 (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:
84140
85141 (1) Modify or eliminate any of the restrictions specified in subsection (a);
86142
87143 (2) Extend or modify the fixed rental period of the lease; provided that the aggregate of the initial term and any extension granted shall not exceed sixty-five years; or
88144
89145 (3) Extend the term of the lease,
90146
91147 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.
92148
93149 (c) Any extension authorized pursuant to subsection (b) shall be based on the economic life of the improvements as determined by the board or an independent appraiser; provided that the approval of any extension shall be subject to the following:
94150
95151 (1) The demised premises have been used substantially for the purpose for which they were originally leased;
96152
97153 (2) The aggregate of the initial term and any extension granted shall not be for more than sixty-five years;
98154
99155 (3) In the event of a reopening, the rental for any ensuing period shall be the fair market rental at the time of reopening;
100156
101157 (4) Any federal or private lending institution shall be qualified to do business in the State;
102158
103159 (5) Proceeds of any mortgage or loan shall be used solely for the operations or improvements on the demised premises;
104160
105161 (6) Where improvements are financed by the lessee, the lessee shall submit receipts of expenditures within a time period specified by the board or else the lease extension shall be canceled; and
106162
107163 (7) The rules of the board setting forth any additional terms and conditions, which shall ensure and promote the purposes of the demised lands.
108164
109165 (d) The board at any time during the term of any intensive agricultural, aquaculture, or mariculture lease and when justified by sound economic practices or other circumstances, may permit an alternative agricultural, aquaculture, or mariculture use or uses for any portion or portions of the land demised. As a condition to permitting alternative uses, the board may require such other modifications, including rental adjustments or changes in the lease as may be necessary to effect or accommodate the alternative use or uses. An alternative use or uses may be allowed by the board upon:
110166
111167 (1) The application of the lessee;
112168
113169 (2) Consent of each holder of record having a security interest in the leasehold; and
114170
115171 (3) A finding by the board that the alternative use or uses are in the public interest.
116172
117173 (e) The board, from time to time, during the term of any agriculture, intensive agriculture, aquaculture, commercial, mariculture, special livestock, pasture, or industrial lease, may modify or eliminate any of the restrictions specified in subsection (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:
118174
119175 (1) State disaster, pursuant to chapter 209, including seismic or tidal wave, tsunami, hurricane, volcanic eruption, typhoon, earthquake, flood, or severe drought; or
120176
121177 (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; and provided that the board determines that the lessee will not be adequately compensated pursuant to the lease provisions.
122178
123179 (f) The approval of any extension granted pursuant to subsection (e) shall be subject to the following:
124180
125181 (1) The demised premises has been used substantially for the purposes for which they were originally leased;
126182
127183 (2) The aggregate of the initial term and any extension granted shall not be for more than fifty-five years;
128184
129185 (3) The rental shall not be less than the rental for the preceding term;
130186
131187 (4) The rules of the board, setting forth any additional terms and conditions which shall ensure and promote the purposes of the demised lands; and
132188
133189 (5) The length of the extension shall not exceed a reasonable length of time for the purpose of providing relief and shall in no case exceed five years.
134190
135- (g) Any provision of this chapter to the contrary notwithstanding, the board may amend and extend pasture leases in furtherance of public purposes that are the responsibility of the department to promote, including and without limitation preserving existing native forest, reforestation for watershed enhancement and forest carbon sequestration opportunities, facilitating public hunting, establishing and maintaining public access to landlocked reserves, enhancement of public recreational opportunities, food production, and protection and propagation of current biological and other significant resources, subject to the following:
191+ (g) Any provision of this chapter to the contrary notwithstanding, the board may amend and extend pasture leases in furtherance of public purposes that are the responsibility of the department to promote, including and without limitation preserving existing native forest, reforestation for watershed enhancement and forest carbon sequestration opportunities, facilitating public hunting, establishing and maintaining public access to landlocked reserves, enhancement of public recreational opportunities, and protection and propagation of current biological and other significant resources, subject to the following:
136192
137193 (1) The demised premises have been used substantially for the purpose for which they were originally leased;
138194
139195 (2) The aggregate of the initial term and any extension granted shall be for no more than sixty-five years; and
140196
141197 (3) The board may consider key characteristics of public lands most likely to benefit from the amendment and extension of pasture leases, identification of public purposes to be promoted through lease amendment and extension, a description of the types of lessee obligations regarding natural resource conservation and stewardship that will serve to achieve the identified public purposes, a statement of the types of lease amendments that are desirable to promote these public purposes, eligibility requirements for pasture lessees, and applicant qualifications.
142198
143- The board may set the lease rent for the period of the lease term occurring after an amendment under this subsection on such terms and conditions as the board may determine, including but not limited to a value that incentivizes or otherwise promotes ranching operations compatible with the public purposes that are the responsibility of the department to promote, including without limitation those specified above in this subsection.
199+ The chairperson may set the lease rent for the period of the lease term occurring after an amendment under this subsection on such terms and conditions as the chairperson may determine, including but not limited to a value that incentivizes or otherwise promotes ranching operations compatible with the public purposes that are the responsibility of the department to promote, including without limitation those specified above in this subsection.
144200
145- (h) In arriving at a rental value for the lease pursuant to subsection (g), an agricultural appraiser shall be procured to determine rent for an amended lease and the board may also consider:
201+ (h) In arriving at a rental value for the lease pursuant to subsection (g), the chairperson may also consider:
146202
147203 (1) The specified use of the land;
148204
149205 (2) Any restriction on grazing or other beneficial uses of the land or portions thereof by lessee;
150206
151207 (3) Any conservation or stewardship services required to be performed by the lessee under the amended lease; and
152208
153209 (4) Any withdrawal of lands from the lease premises.
154210
155- The board may apply a lower rate of return than the rent amount determined by the agricultural appraiser if warranted after consideration of the public purpose served by the lease, use restrictions thereunder, and any obligation of the lessee to provide conservation or stewardship services."
156-
157- SECTION 3. Section 171-37.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
158-
159- "(a) Upon a withdrawal or taking of leased land pursuant to section 171-37(3) that causes any portion of the land to become unusable for the specific use or uses for which it was leased, the lease rent shall be reduced in proportion to the value of the land withdrawn or made unusable; provided that if any permanent improvement made to or constructed upon the land by the lessee is destroyed or made unusable in the process of the withdrawal or taking, the proportionate value thereof shall be paid to the lessee based upon the unexpired term of the lease. No land that is under cultivation shall be withdrawn or taken until the crops are harvested, unless the board pays the lessee the value of the crops.
160-
161- Upon a withdrawal, any person with a long-term lease shall be compensated for the present value of all [permanent]:
162-
163- (1) Permanent improvements in place at the time of the withdrawal that were legally made to or constructed upon the land by the lessee of the leased land being withdrawn[.]; and
164-
165- (2) Capital assets located on the land at the time of withdrawal.
166-
167- In the case of tree-crops, as defined in section 171-37, the board shall pay to the lessee the residual value of the trees taken and, if there are unharvested crops, the value of the crops.
168-
169- In the case of breeding livestock that cannot be relocated or marketed for the breeding value, the board shall pay to the lessee the difference between the appraised breeding value and the salvage value, including the cost of transportation to a market on the island on which the leased land is located. If there is disagreement between the board and the lessee as to the number of breeding livestock that cannot be relocated or marketed for breeding value, the issue shall be submitted to the department of agriculture to make a determination, which shall be final. The appraised breeding value shall be the fair market value of the livestock, as opposed to net present value, at the time the board approves the withdrawal or taking of a portion or all of the leased land. The fair market value shall be determined by:
170-
171- (1) An employee of the department of agriculture qualified to appraise livestock; or
172-
173- (2) A disinterested livestock appraiser whose services shall be contracted for by the board,
174-
175-and the lessee shall be promptly notified of the determination; provided that should the lessee fail to agree upon the fair market value, the lessee may appoint the lessee's own livestock appraiser who together with the board's appraiser shall appoint a third appraiser and the fair market value shall be determined by arbitration as provided in chapter 658A. The lessee shall pay for the lessee's own livestock appraiser, the board shall pay for the board's livestock appraiser, and the cost of the third livestock appraiser shall be borne equally by the lessee and the board. Whenever more than one livestock appraiser is appointed, each shall prepare and submit an independent appraisal report."
211+ If an independent appraisal is procured to determine rent for an amended pasture lease, the chairperson may apply a lower rate of return if warranted after consideration of the public purpose served by the lease, use restrictions thereunder, and any obligation of the lessee to provide conservation or stewardship services."
176212
177213 SECTION 4. Section 171-59, Hawaii Revised Statutes, is amended to read as follows:
178214
179215 "§171-59 Disposition by negotiation. (a) A lease of public land may be disposed of through negotiation upon a finding by the board of land and natural resources that the public interest demands it. Where the public land is being sought under this section by a sugar or pineapple company, and the company is the owner or operator of a mill or cannery, then, for the purposes of this section, the economic unit shall be that acreage of public land which when taken together with the lands already owned or controlled or available to the company, when cultivated is found by the board to be necessary for the company's optimum mill or cannery operation. In all other cases, public land to be sold under this section shall be an economic unit as provided in section 171-33(3).
180216
181217 After a determination is made to negotiate the disposition of a lease, the board shall:
182218
183219 (1) Give public notice as in public auction, in accordance with the procedure set forth in section 171-16(a), of its intention to lease public land through negotiation setting forth the minimum conditions thereunder, the use for which the public land will be leased. Any person interested in securing the lease shall file an application with the board not later than forty-five days after the first publication of the notice;
184220
185- (2) Establish reasonable criteria for the selection of the lessee; provided that where the intended use of the land is agriculture, the department of agriculture shall establish the criteria; and
221+ (2) Establish reasonable criteria for the selection of the lessee; provided that where the intended use of the land is agriculture, the department of agriculture shall establish the criteria;
186222
187223 (3) Determine the applicants who meet the criteria for selection set by the board or the department of agriculture, as the case may be, and notify all applicants of its determination. Any applicant may examine the basis of the determination, which shall be in writing, to ascertain whether or not the conditions and criteria established by the board or the department of agriculture were followed; provided that if any applicant does not notify the board of the applicant's objections, and the grounds therefor, in writing, within twenty days of the receipt of the notice, the applicant shall be barred from proceeding to seek legal remedy for any alleged failure of the board to follow the conditions and criteria.
188224
189225 If only one applicant meets the criteria for selection of the lessee, the board may, after notice as provided in (3), above, dispose of the lease by negotiation.
190226
191227 If two or more applicants meet the criteria for the selection of the lessee, the board shall select the lessee who submits the highest offer contained in a sealed bid deposited with the board.
192228
193229 (b) Disposition of public lands for airline, aircraft, airport-related, agricultural processing, cattle feed production, aquaculture, marine, maritime, and maritime-related operations may be negotiated without regard to the limitations set forth in subsection (a) and section 171-16(c); provided that:
194230
195231 (1) The disposition encourages competition within the aeronautical, airport-related, agricultural, aquaculture, maritime, and maritime-related operations;
196232
197233 (2) The disposition shall not exceed a maximum term of thirty-five years, except in the case of:
198234
199235 (A) Maritime and maritime-related operations, which may provide for a maximum term of seventy years; and
200236
201237 (B) Aquaculture operations, which may provide for a maximum term of sixty-five years; provided that aquaculture operations in good standing may seek to renew a lease issued under this section and, during the lease term, may engage in supportive activities that are related to or integrated with aquaculture; and
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203239 (3) The method of disposition of public lands for cattle feed production as set forth in this subsection shall not apply after December 31, 1988.
204240
205241 For the purposes of this subsection:
206242
207243 "Agricultural processing" means the processing of agricultural products, including dairying, grown, raised, or produced in Hawaii.
208244
209245 "Airport-related" means a purpose or activity that requires air transportation to achieve that purpose or activity; or an activity that generates revenue for the airport system as provided in section 261-7.
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211247 "Aquaculture" means the propagation, cultivation, or farming of aquatic plants and animals in controlled or selected environments for research, commercial, or stocking purposes, including aquaponics or any growing of plants or animals with aquaculture effluents.
212248
213249 "Maritime-related" means a purpose or activity that requires and is directly related to the loading, off-loading, storage, or distribution of goods and services of the maritime industry.
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215- (c) Any provision of this chapter to the contrary notwithstanding, the board may issue pasture leases by negotiation for lands already under pasture use when doing so will further public purposes that are the responsibility of the department to promote, including, without limitation, preserving existing native forest, reforestation for watershed enhancement and forest carbon sequestration opportunities, facilitating public hunting, establishing and maintaining public access to landlocked reserves, enhancement of public recreational opportunities, food production, and protection and propagation of current biological and other significant resources, subject to the following:
251+ (c) Any provision of this chapter to the contrary notwithstanding, the board may issue pasture leases by negotiation for lands already under pasture use when doing so will further public purposes that are the responsibility of the department to promote, including, without limitation, preserving existing native forest, reforestation for watershed enhancement and forest carbon sequestration opportunities, facilitating public hunting, establishing and maintaining public access to landlocked reserves, enhancement of public recreational opportunities, and protection and propagation of current biological and other significant resources, subject to the following:
216252
217253 (1) The term of any pasture lease issued under this subsection shall be for no more than sixty-five years; and
218254
219255 (2) The board may consider key characteristics of public lands most likely to benefit from the negotiation of pasture leases, identification of public purposes to be promoted through negotiation of pasture leases, a description of the types of lessee obligations regarding natural resource conservation, and stewardship that will serve to achieve the identified public purposes, eligibility requirements for pasture lessees, and applicant qualifications.
220256
221- The board may set the rent for pasture leases issued under this subsection on such terms and conditions as the board may determine, including but not limited to a value that incentivizes or otherwise promotes ranching operations compatible with the public purposes that are the responsibility of the department to promote, including without limitation those specified above in this subsection.
257+ The chairperson may set the rent for pasture leases issued under this subsection on such terms and conditions as the chairperson may determine, including but not limited to a value that incentivizes or otherwise promotes ranching operations compatible with the public purposes that are the responsibility of the department to promote, including without limitation those specified above in this subsection.
222258
223- (d) In arriving at a rental value for the lease pursuant to subsection (c), an agricultural appraiser shall be procured to determine rent for an amended lease and the board may also consider:
259+ (d) In arriving at a rental value for the lease pursuant to subsection (c), the chairperson may also consider:
224260
225261 (1) The specified use of the land;
226262
227263 (2) Any restriction on grazing or other beneficial uses of the land or portions thereof by lessee; and
228264
229265 (3) Any conservation or stewardship services required to be performed by the lessee under the lease.
230266
231- The board may apply a lower rate of return than the rent amount determined by the agricultural appraiser if warranted after consideration of the public purpose served by the lease, use restrictions thereunder, and any obligation of the lessee to provide conservation or stewardship services."
267+ If an independent appraisal is procured to determine rent for a pasture lease, the chairperson may apply a lower rate of return if warranted after consideration of the public purpose served by the lease, use restrictions thereunder, and any obligation of the lessee to provide conservation or stewardship services."
232268
233269 SECTION 5. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.
234270
235271 SECTION 6. New statutory material is underscored.
236272
237273 SECTION 7. This Act shall take effect on January 1, 2050.
238274
239- Report Title: Public Lands; Leasing for Pasture Use; Board of Land and Natural Resources; Lease Withdrawal; Compensation Description: Authorizes the board of land and natural resources to amend and extend existing pasture leases and to issue new pasture leases by negotiation in furtherance of public purposes the department of land and natural resources is responsible for promoting. Specifies that persons with leases be compensated for the present value of all capital assets located on the land at the time of a lease withdrawal. Effective 1/1/2050. (HD2) The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
275+ Report Title: Public Lands; Leasing for Pasture Use; Transfer of Lands; Priority Use Description: Authorizes the board of land and natural resources to amend and extend existing pasture leases and to issue new pasture leases by negotiation in furtherance of public purposes the department of land and natural resources is responsible for promoting. Gives priority to the department of land and natural resources to use land that was transferred for productive agricultural uses, subject to certain conditions. Requires a third-party advisory committee to be established before the disposition or transfer of any disputed lands. Effective 1/1/2050. (HD1) The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
276+
277+
240278
241279
242280
243281 Report Title:
244282
245-Public Lands; Leasing for Pasture Use; Board of Land and Natural Resources; Lease Withdrawal; Compensation
283+Public Lands; Leasing for Pasture Use; Transfer of Lands; Priority Use
246284
247285
248286
249287 Description:
250288
251-Authorizes the board of land and natural resources to amend and extend existing pasture leases and to issue new pasture leases by negotiation in furtherance of public purposes the department of land and natural resources is responsible for promoting. Specifies that persons with leases be compensated for the present value of all capital assets located on the land at the time of a lease withdrawal. Effective 1/1/2050. (HD2)
289+Authorizes the board of land and natural resources to amend and extend existing pasture leases and to issue new pasture leases by negotiation in furtherance of public purposes the department of land and natural resources is responsible for promoting. Gives priority to the department of land and natural resources to use land that was transferred for productive agricultural uses, subject to certain conditions. Requires a third-party advisory committee to be established before the disposition or transfer of any disputed lands. Effective 1/1/2050. (HD1)
252290
253291
254292
255293
256294
257295
258296
259297 The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.