Bill Text: HI HB2190 | 2020 | Regular Session | Introduced
Bill Title: Relating To Agricultural Enterprises.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2020-02-07 - Passed Second Reading as amended in HD 1 and referred to the committee(s) on JUD with Representative(s) Perruso voting aye with reservations; Representative(s) Thielen voting no (1) and Representative(s) McDermott, Yamashita excused (2). [HB2190 Detail]
Download: Hawaii-2020-HB2190-Introduced.html
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
2190 |
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THIRTIETH LEGISLATURE, 2020 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO AGRICULTURAL ENTERPRISES.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION
1. The Hawaii Revised Statutes is
amended by adding a new chapter to be appropriately designated and to read as
follows:
"CHAPTER
AGRICULTURAL ENTERPRISES
§ -1
Purpose. Article XI, section 3, of the Hawaii State Constitution
establishes in part that the "State shall conserve and protect agricultural
lands, promote diversified agriculture, increase agricultural self-sufficiency
and assure the availability of agriculturally suitable lands."
The
legislature finds that smaller scale farming operations, particularly those
associated with diversified agriculture, usually do not have ready access to,
nor the resources to pay for, their own modern processing, packing, storage,
and distribution enterprises to expand or maximize productivity of their
agricultural operations. Due to global
competition and the recent implementation of national food safety standards,
the department of agriculture has found it necessary to support the growth of
diversified agriculture by encouraging agricultural enterprises on the department
of agriculture's lands through activities including planning, designing,
constructing, operating, and managing agricultural enterprises to ensure the
economic viability of agricultural operations, as well as allowing lessees to
do the same. Therefore, the legislature
finds that it is in the State's best interests to promote and support
diversified agriculture and increase agricultural self-sufficiency by
establishing an agricultural enterprise program within the department of
agriculture, for the purpose of complying with the requirements of article XI,
section 3, of the state constitution.
Accordingly,
the purpose of this chapter is to authorize the department
of agriculture or a lessee to plan, design, construct, operate, manage, maintain,
repair, demolish, and remove infrastructure or improvements on any lands over
which the department has jurisdiction, to support and promote agriculture, and
to accept from the department of land and natural resources the transfer of any
lands that will support an agricultural purpose and to operate or manage those
resources.
§
-2
Definitions. As used in this chapter, unless the context
otherwise requires:
"Agricultural
activities" include:
(1) The care and production of livestock; livestock products; poultry; poultry products; and apiary, horticultural, and floricultural products;
(2) The planting, cultivating, and harvesting of crops or trees; and
(3) Any other activity that is directly associated with agriculture.
"Agricultural
enterprise" means an activity directly and primarily supporting the
production and sale of agriculture in the State.
"Agricultural
enterprise lands" means agricultural lands that are not designated as
agricultural parks or non-agricultural park lands pursuant to chapter 166 or
166E, respectively.
"Aquacultural
activities" means the farming or ranching of any plant or animal species
in a controlled salt, brackish, or freshwater environment; provided that the
farm or ranch is on or directly adjacent to land.
"Board"
means the board of agriculture.
"Department"
means the department of agriculture.
"Lessee"
means a lessee under a lease issued by or transferred to the department, or any
tenant, licensee, grantee, assignee, or other person authorized to conduct an agricultural
enterprise by the board or department.
§ -3
Department's powers in general; agricultural enterprises. In addition to any other powers authorized in
this chapter, to support and promote agriculture, the department may:
(1) Plan, design, construct, operate, manage,
maintain, repair, demolish, and remove infrastructure or improvements on any
lands under the jurisdiction of the department; and
(2) Permit a lessee to plan, design, construct,
operate, manage, maintain, repair, demolish, and remove infrastructure or
improvements on any lands under the jurisdiction of the department.
§ -4 Transfer
and management of agricultural enterprise lands and agricultural enterprises;
agricultural enterprise program.
(a) Upon mutual agreement and
approval by the board and the board of land and natural resources:
(1) The department may accept from the department
of land and natural resources the transfer and management of certain qualifying
agricultural enterprise lands and agricultural enterprises; and
(2) Certain assets, including position counts,
related to the management of existing encumbered and unencumbered agricultural
enterprise lands and agricultural enterprises and related facilities shall be
transferred to the department.
(b) The department shall administer an
agricultural enterprise program to manage the transferred agricultural
enterprise lands and agricultural enterprises under rules adopted by the board
pursuant to chapter 91. The program and
its rules shall be separate and distinct from the respective programs and rules
for agricultural parks and non-agricultural parks. Agricultural enterprise lands and
agricultural enterprises shall not be the same as, and shall not be selected or
managed as, lands under agricultural park or non-agricultural park leases. Notwithstanding any other law to the contrary,
the agricultural enterprise program shall include the following conditions
pertaining to the transfer of encumbered or unencumbered agricultural
enterprise lands and agricultural enterprises:
(1) As of the time of transfer:
(A) The lessee or permittee shall be in full
compliance with the existing lease or permit;
(B) The lessee or permittee shall not be in
arrears in the payment of taxes, rents, or other obligations owed to the State
or any county; and
(C) The lessee's or permittee's agricultural operation
shall be economically viable as determined by the board;
(2) No encumbered or unencumbered agricultural
enterprise lands and agricultural enterprises with soils classified by the land
study bureau's detailed land classification as overall (master) productivity
rating class A or B shall be transferred for the use or development of golf
courses, golf driving ranges, or country clubs; and
(3) The board shall determine the manner of transfer
of agricultural enterprise lands and agricultural enterprises.
(c) For any encumbered or unencumbered
agricultural enterprise lands and agricultural enterprises transferred to the
department that are not being utilized or required for the public purpose
stated in an executive order issued by the governor to the department pursuant to
section 171-11, the order setting aside the lands shall be withdrawn and the
lands shall be returned to the department of land and natural resources.
§ -5 Conversion of qualified and encumbered other
agricultural lands. The department shall establish criteria and
rules pursuant to chapter 91 and, subject to approval by the board, may convert
qualified and encumbered agricultural enterprise lands and agricultural
enterprises to department leases or other forms of encumbrance.
§
-6 Extension of qualified and encumbered
agricultural enterprise lands and agricultural enterprises. Notwithstanding chapter 171, the board
shall establish criteria and rules to allow the cancellation, renegotiation,
and extension of transferred encumbrances by the department. Notwithstanding any law to the contrary,
qualified and encumbered agricultural enterprise lands and agricultural
enterprises transferred to the department shall not have the respective length
of term of the lease or rents reduced over the remaining fixed term of the
applicable encumbrances.
§
-7 Board rules. The board shall adopt rules pursuant to
chapter 91, including eligibility requirements for each disposition and
applicant qualification, to effectuate the purposes of this chapter.
§ -8 Agricultural
enterprise special fund; established. (a) There is established in the state treasury
the agricultural enterprise special fund to be administered by the department,
into which shall be deposited:
(1) Legislative appropriations to the fund; and
(2) All lease rent, fees, penalties, and any other
revenue or funds collected from agricultural enterprise lands and agricultural
enterprises, together with the revenue or funds collected from agricultural enterprise
lands and agricultural enterprises that are transferred, or in the process of being
transferred, to the department under this chapter.
(b) Moneys in the special fund shall be used for
planning, designing, constructing, operating, maintaining, managing, repairing,
demolishing, and removing infrastructure or improvements on agricultural
enterprise lands and for agricultural enterprises under this chapter.
§
-9 Disposition. (a)
Notwithstanding any provision of this chapter and chapter 171 to the
contrary, the department may dispose of the following by negotiation, drawing
of lots, conversion, or public auction:
(1) Public lands and related enterprises set aside
and designated for use pursuant to this chapter; and
(2) Other lands and enterprises under the jurisdiction
of the department pursuant to section -10.
Except
as provided by subsection (d), the department shall dispose of public lands by
lease.
(b) In all dispositions, the department shall be
subject to the requirements set forth in rules adopted by the board consistent
with section -7 and subject to the following:
(1) All land and enterprises shall be disposed of in
a manner that supports or promotes agricultural or aquacultural activities;
(2) Each lessee shall derive a major portion of the
lessee's total annual income earned from the lessee's activities on the
premises; provided that this restriction shall not apply if:
(A) Failure to meet the restriction results from
mental or physical disability of the lessee or the loss of the lessee's spouse;
or
(B) The premises are fully used to support or
promote the agricultural or aquacultural activities 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:
(A) Determine the specific uses for which the
disposition is intended;
(B) Parcel the land into minimum size economic
units sufficient for the intended uses;
(C) Make, or require the lessee to make,
improvements that are necessary to achieve the intended uses;
(D) Set the upset price or lease rent based upon
an appraised evaluation of the property value, adjustable to the specified use
of the lot;
(E) Set the term of the lease, which shall not be less
than fifteen years or more than sixty-five years, including any extension granted
for mortgage lending or guarantee purposes; and
(F) Establish other terms and conditions that it
deems necessary, including restrictions against alienation and provisions for
withdrawal by the board; and
(5) Any transferee, assignee, or sublessee of an agricultural
enterprise 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, by any legal entity that holds an agricultural enterprise lease shall
be treated as a transfer of the agricultural enterprise lease and shall be
subject to the approval of the board, reasonable terms and conditions consistent
with this chapter, and rules adopted pursuant to this chapter. No transfer shall be approved by the board if
the disposition of the stock or assets or other interest of the applicant would
result in the failure of the person to qualify for an agricultural enterprise
lease.
(c) A violation of any provision in this section
shall be cause for the board to cancel the lease and take possession of the
land, or take other action as the board, in its sole discretion, deems
appropriate; provided that the board shall provide notice to the lessee of the violation
in accordance with rules adopted pursuant to section -7.
(d) The board may issue easements, licenses,
permits, and rights-of-entry for uses that are consistent with the purposes for
which the lands were set aside or are otherwise subject to the authority of the
department pursuant to section -10.
§ -10
Authority to plan, design, develop, and manage agricultural enterprise
lands and agricultural enterprises. The department, or its lessees subject to the
department's approval, may plan, design, develop, and manage agricultural enterprise
lands and agricultural enterprises on:
(1) Public lands set aside by executive order
pursuant to section 171-11 for use as agricultural enterprise lands and
agricultural enterprises;
(2) Other lands with the approval of the board
that may be subject to a joint venture partnership agreement pursuant to
section -11; and
(3) Lands acquired by the department by way of
foreclosure, voluntary surrender, or otherwise pursuant to section 155-4(11).
§
-11 Agricultural enterprise lands and agricultural
enterprise development. On behalf of
the State or in partnership with a federal agency, a county, or a private
party, the department may develop agricultural enterprise lands and
agricultural enterprises.
§
-12 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;
provided that the department shall notify in writing those 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.
(b) Lands eligible for lease negotiations under this
section are limited to lands that are:
(1) Determined to be sufficiently capable of serving
agricultural purposes;
(2) Set aside for agricultural or agricultural-related
uses, 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.
(c) In negotiating and executing a lease pursuant
to this section, the board shall:
(1) Require the appraisal of the parcel using the
Uniform Standards of Professional Appraisal Practice to determine the rental amount,
including percentage rent;
(2) Require the payment of a premium, computed as
twenty-five per cent of the annual lease rent; provided that the premium to be
added to the annual lease rent for each year of the lease shall be equal to the
number of years the lessee has occupied the land; provided further that the
premium period shall not exceed seven years; and
(3) Recover from the lessee the costs of
expenditures required by the department to convert the parcel into leasehold.
§ -13 Policy. Notwithstanding
chapter 171, disposition of lands set aside for use pursuant to this chapter
shall not be subject to the prior approval of the board of land and natural
resources.
§ -14
Rights of holders of security interests. (a) Prior board action shall be required when an
institutional lender acquires the lessee's interest through a foreclosure sale,
judicial or nonjudicial, or by way of assignment in lieu of foreclosure, or
when the institutional lender sells or causes the sale of the lessee's interest
in a lease by way of a foreclosure sale, judicial or nonjudicial. The institutional lender shall convey a copy
of the sale or assignment as recorded in the bureau of conveyances.
(b) Notwithstanding any other provision of this
chapter, for any lease that is subject to a security interest held by an
institutional lender who has given to the board a copy of the encumbrance as
recorded in the bureau of conveyances:
(1) If the lease is canceled for violation of any
non-monetary lease term or condition, or if the lease is deemed terminated or
rejected under bankruptcy laws, the institutional lender shall be entitled to
issuance of a new lease in its name for a term equal to the term of the lease
remaining immediately prior to the cancellation, termination, or rejection,
with all terms and conditions being the same as in the canceled, terminated, or
rejected lease, except only for the liens, claims, and encumbrances, if any,
that were superior to the institutional lender before the cancellation, termination,
or rejection; provided that a lease that is rejected or deemed rejected under
bankruptcy law shall be deemed canceled and terminated for all purposes under
state law;
(2) If the lessee's interest under a lease is
transferred to an institutional lender, including by reason of paragraph (1), acquisition
of the lessee's interest pursuant to a judicial or nonjudicial foreclosure
sale, or an assignment in lieu of foreclosure:
(A) The institutional lender shall be liable for
the obligations of the lessee under the lease for the period of time during
which the institutional lender is the holder of the lessee's interest; provided
that the institutional lender shall not be liable for any obligations of the
lessee arising after the institutional lender has assigned the lease; and
(B) Section -9(b)(1) and (2)
shall not apply to the lease or the demised land during the time the
institutional lender holds the lease; provided that:
(i) For non-monetary lease violations, the institutional
lender shall first remedy the lease terms that caused the cancellation,
termination, or rejection to the satisfaction of the board; and
(ii) The new lease issued to the institutional
lender shall terminate one hundred twenty days from the effective date of
issuance, at which time the institutional lender shall either sell or assign
the lease and section -9(b)(1) and (2) shall apply to the new
lease;
(3) If there is a delinquent loan balance secured
by a security interest:
(A) The lease shall not be canceled or terminated, except for cancellation by reason of default of the lessee;
(B) No increase over and above the fair market rent, based upon the actual use of the land demised and subject to the use restrictions imposed by the lease and applicable laws, shall be imposed or become payable; and
(C) No lands shall be withdrawn from the lease, except either by eminent domain proceedings beyond the control of the board or with prior written consent of the institutional lender which shall not be unreasonably withheld; and
(4) If the lease contains any provision requiring
the payment of a premium to the lessor on assignment of the lease, any premium
shall be assessed only after all amounts owing by any debt secured by a
security interest held by an institutional lender have been paid in full.
(c) Ownership of both the lease and the security
interest by an institutional lender shall not effect or cause a merger thereof,
and both interests shall remain distinct and in full force and effect unless the
institutional lender elects in writing to merge the lease and security interest
with the consent of the board.
(d) The board may include in any consent form or
document provisions consistent with the intent of this section as may be required
to make a lease mortgageable or more acceptable for mortgageability by an
institutional lender.
(e) The rights of a purchaser, assignee, or
transferee of an institutional lender's security interest, including a junior
lien holder, shall be exercisable by the purchaser, assignee, or transferee as
successor in interest to the institutional lender; provided that:
(1) The purchase, assignment, or transfer shall
conform with subsection (b)(4); and
(2) The purchase, assignment, or transfer of the
rights shall be reserved for and exercisable only by an institutional lender.
Other purchasers shall not be
precluded from acquiring the institutional lender's security interest but shall
not have exercisable rights as successor in interest to the original institutional
lender.
(f) For the purposes of this section:
"Institutional
lender" means a federal, state, or private lending institution, licensed
to do business in the State, that makes loans to qualified applicants on the
basis of a lease awarded for security, in whole or in part, together with any
other entity that acquires all or substantially all of an institutional
lender's loan portfolio.
"Makes
loans" means lends new money or renews or extends indebtedness owing by a
qualified applicant to an institutional lender, after June 30, 2006.
"Security
interest" means any interest created or perfected by a mortgage,
assignment by way of mortgage, or by a financing statement and encumbering a
lease, land demised by the lease, or personal property located at, affixed or
to be affixed to, or growing or to be grown upon the demised land."
SECTION 2. Section 141-1, Hawaii Revised Statutes, is amended to read as follows:
"§141-1 Duties in general.
The department of agriculture shall:
(1) Gather,
compile, and tabulate, from time to time, information and statistics
concerning:
(A) Entomology
and plant pathology: Insects, scales,
blights, and diseases injurious or liable to become injurious to trees, plants,
or other vegetation, and the ways and means of exterminating pests and diseases
already in the State and preventing the introduction of pests and diseases not
yet [here;] in the State; and
(B) General
agriculture: Fruits, fibres, and useful
or ornamental plants and their introduction, development, care, and manufacture
or exportation, with a view to introducing, establishing, and fostering new and
valuable plants and industries;
(2) Encourage
and cooperate with the agricultural extension service and agricultural
experiment station of the University of Hawaii and all private persons and
organizations doing work of an experimental or educational character coming
within the scope of the subject matter of chapters 141, 142, and 144 to 150A,
and avoid, as far as practicable, duplicating the work of those persons and organizations;
(3) Enter
into contracts, cooperative agreements, or other transactions with any person,
agency, or organization, public or private, as may be necessary in the conduct
of the department's business and on [such] any terms as the department
may deem appropriate; provided that the department shall not obligate any funds
of the State, except the funds that have been appropriated to the
department. Pursuant to cooperative
agreement with any authorized federal agency, employees of the cooperative agency
may be designated to carry out, on behalf of the State the same as department
personnel, specific duties and responsibilities under chapters 141, 142, 150A,
and rules adopted pursuant to those chapters, for the effective prosecution of
pest control and animal disease control and the regulation of import into the
State and intrastate movement of regulated articles;
(4) Secure
copies of the laws of other states, territories, and countries, and other
publications germane to the subject matters of chapters 141, 142, and 144 to
150A, and make laws and publications available for public information and
consultation;
(5) Provide
buildings, grounds, apparatus, and appurtenances necessary for the examination,
quarantine, inspection, and fumigation provided for by chapters 141, 142, and
144 to 150A; for the obtaining, propagation, study, and distribution of
beneficial insects, growths, and antidotes for the eradication of insects,
blights, scales, or diseases injurious to vegetation of value and for the
destruction of injurious vegetation; and for carrying out any other purposes of
chapters 141, 142, and 144 to 150A;
(6) Formulate
and recommend to the governor and legislature additional legislation necessary
or desirable for carrying out the purposes of chapters 141, 142, and 144 to
150A;
(7) Publish
at the end of each year a report of the expenditures and proceedings of the
department and of the results achieved by the department, together with other
matters germane to chapters 141, 142, and 144 to 150A and that the department
may deem proper;
(8) Administer
a program of agricultural planning and development, including the formulation
and implementation of general and special plans, including but not limited to
the functional plan for agriculture; administer the planning, development, and
management of the agricultural park program; plan, construct, operate, and
maintain the state irrigation water systems; plan, design,
construct, operate, manage, maintain, repair, demolish, and remove infrastructure
or improvements on any lands of which the department
has jurisdiction;
review, interpret, and
make recommendations with respect to public policies and actions relating to
agricultural land and water use; assist in research, evaluation, development,
enhancement, and expansion of local agricultural industries; and serve as
liaison with other public agencies and private organizations for the above
purposes. In the foregoing, the
department shall act to conserve and protect agricultural lands and irrigation water
systems, promote diversified agriculture, increase agricultural
self-sufficiency, and ensure the availability of agriculturally suitable lands;
and
(9) Manage, administer, and exercise control over any public lands, as defined under section 171-2, that are designated important agricultural lands pursuant to section 205-44.5, including but not limited to establishing priorities for the leasing of these public lands within the department's jurisdiction."
SECTION 3. There
is appropriated out of the general revenues of the
State of Hawaii the sum
of $ or so much
thereof as may be necessary for fiscal year 2020-2021 to be deposited into the agricultural
enterprise special fund.
SECTION 4. There
is appropriated out of the agricultural enterprise
special fund the sum of
$ or so much
thereof as may be necessary for fiscal year 2020-2021 for the planning, design, construction, operation, management,
maintenance, repair, demolition, and removal of infrastructure on lands
under the jurisdiction of the department of agriculture to support and promote
agriculture.
The sum appropriated shall be expended by
the department of agriculture for the purposes of this Act.
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, 2020.
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INTRODUCED BY: |
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Report Title:
HDOA; Agricultural Enterprises; Agricultural Enterprise Special Fund; Appropriation
Description:
Authorizes the Department of Agriculture to plan, design, construct, operate, manage, maintain, repair, demolish, and remove infrastructure on any lands under the jurisdiction of the department, to support and promote agriculture. Establishes the agricultural enterprise program. Establishes the Agricultural Enterprise Special Fund. Makes an appropriation. Effective 7/1/2020.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
