HOUSE OF REPRESENTATIVES |
H.B. NO. |
499 |
THIRTY-FIRST LEGISLATURE, 2021 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO LEASE EXTENSIONS ON PUBLIC LAND.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The
legislature finds that many of the leases for commercial, industrial, resort,
and government properties on public land statewide may be nearing the end of
the lease term. Faced with the
uncertainty of continued tenancy, lessees have little incentive to make major
investments in infrastructural improvements and to ensure the long-term
maintenance of the facilities. As a
result, the infrastructure on these properties has been deteriorating.
The legislature finds that business
lessees typically sell or assign their leases that are nearing the end of the
lease terms at a discount. The
legislature further finds that it would be unfair to the prior assignors of the
leases if the State granted extensions of leases that previously could not be
extended under existing law or lease terms to the newly assigned lessees who
acquired their leases at a discount due to short remaining lease terms.
The purpose of this Act is to authorize
the board of land and natural resources to extend commercial, industrial,
resort, or governmental leases, other than those to which the University of
Hawaii is a party, that have not been sold or assigned within the last ten years,
for lessees who commit to substantial improvement to the existing improvements.
SECTION 2. Chapter 171, Hawaii Revised Statutes, is amended by adding a new section to part II to be appropriately designated and to read as follows:
"§171‑ Commercial,
industrial, resort, or government leases; extension of term. (a) Notwithstanding section 171-36, for leases that
have not been assigned or transferred within ten years prior to receipt of an
application for a lease extension submitted pursuant to this section, the board
may extend the rental period of a lease of public lands for commercial use, industrial
use, resort use, or government use upon the board's approval of a development
agreement proposed by the lessee or by the lessee and developer to make
substantial improvements to the existing improvements. For the purposes of this paragraph, the terms "assigned
or transferred", shall not include:
(1) A sale or change
in ownership of a lessee that is a company or entity; or
(2) A collateral assignment
of lease or other security granted to a leasehold mortgagee in connection with leasehold
financing by a lessee.
(b) Prior to entering into a development agreement,
the lessee or the lessee and developer shall submit to the board the plans and
specifications for the total development proposed. The board shall review the plans and
specifications and determine:
(1) Whether the development proposed in the development agreement is of sufficient worth and value to justify the extension of the lease;
(2) The
estimated period of time to complete the improvements and expected date of
completion of the improvements; and
(3) The
minimum revised annual rent based on the fair market value of the lands to be
developed, as determined by an appraiser for the board and, if deemed
appropriate by an appraiser, the appropriate percentage of rent where gross
receipts exceed a specified amount.
No lease extension shall be approved until the board and the
lessee or the lessee and developer mutually agree to the terms and conditions
of the development agreement.
(c) No construction shall commence until the
lessee or the lessee and developer have filed with the board a sufficient bond conditioned
upon the full and faithful performance of all the terms and conditions of the
development agreement.
(d) Any extension of a lease pursuant to this
section shall be based upon the substantial improvements to be made and shall
be for a period not longer than forty years. No lease shall be transferable or assignable
throughout the first ten years of the extended term, except by devise, bequest,
intestate succession, a collateral assignment of lease or other security granted
to a leasehold mortgagee in connection with leasehold financing by a lessee, a change
in direct ownership of less than fifty per cent of a lessee that is a company or
entity, a change in indirect ownership of a lessee that is a company or entity,
or by operation of law. The prohibition on
assignments and transfer of leases shall include a prohibition on conveyances of
leases. During subsequent periods of the
extended term of the lease, the lease may be assigned or transferred, subject
to approval by the board.
(e) The applicant for a lease extension shall pay
all costs and expenses incurred by the department in connection with processing,
analyzing, or negotiating any lease extension request, lease document, or
development agreement under this section.
(f) As used in this section:
"Government
use" means a development undertaken under a lease held by any agency or
department of the State or its political subdivisions other than the University
of Hawaii or any department, agency, or administratively attached entity of the
University of Hawaii system.
"Resort use"
means a development that provides transient accommodations as defined in section
237D-1 and related services, which may include a front desk, housekeeping, food
and beverage, room service, and other services customarily associated with
transient accommodations; provided that no development shall qualify as a resort
use under this section unless at least seventy-five per cent of the living or
sleeping quarters in the development are used solely for transient accommodations
for the term of any lease extension.
"Substantial
improvements" means any renovation, rehabilitation, reconstruction, or
construction of existing improvements, including minimum requirements for
off-site and on-site improvements, the cost of which equals or exceeds thirty
per cent of the market value of the existing improvements, that the lessee or the
lessee and developer installs, constructs, and completes by the date of
completion of the total development."
SECTION 3. New statutory material is underscored.
SECTION 4. This Act shall take effect upon its approval.
INTRODUCED BY: |
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Report Title:
Public Lands; Lease Extension; Development Agreement
Description:
Authorizes the Board of Land and Natural Resources to extend certain leases of public lands for commercial, industrial, resort, or government use upon approval of a proposed development agreement to make substantial improvements to the existing improvements.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.