Bill Text: HI SB1248 | 2022 | Regular Session | Amended
Bill Title: Relating To Agricultural Enterprises.
Spectrum: Moderate Partisan Bill (Democrat 6-1)
Status: (Engrossed - Dead) 2021-12-10 - Carried over to 2022 Regular Session. [SB1248 Detail]
Download: Hawaii-2022-SB1248-Amended.html
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THE SENATE |
S.B. NO. |
1248 |
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THIRTY-FIRST LEGISLATURE, 2021 |
S.D. 1 |
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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
provides 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, often do not have ready access to, or
the resources to pay for, their own modern processing, packing, storage, and
distribution enterprises to allow them to expand or maximize the 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 lands
under the department's jurisdiction. The department of agriculture encourages activities,
including planning, designing, constructing, operating, and managing agricultural
enterprises, to ensure the economic viability of agricultural operations and allows
lessees to do the same. Therefore, the
legislature finds that it is in the State's best interests and helps meet state
constitutional requirements to promote and support diversified agriculture and
increase agricultural self-sufficiency to establish an agricultural enterprise program
within the department of agriculture.
Accordingly,
the purpose of this chapter is to authorize the department
of agriculture or its lessees to plan, design, construct, operate, manage, maintain,
repair, demolish, and remove infrastructure or improvements on any lands over
which the department has jurisdiction where the activity is necessary to
support and promote agriculture; to accept from the department of land and
natural resources the transfer of any lands that will serve an agricultural purpose;
and to efficiently 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 agricultural products 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, for the purposes of supporting and promoting
agriculture, the department may:
(1) Plan, design, construct, operate, manage,
maintain, repair, demolish, or 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, or 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, the department:
(1) 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) Upon acceptance, shall receive by transfer certain
assets, including position counts, related to the management of existing
encumbered and unencumbered agricultural enterprise lands, agricultural
enterprises, and related facilities.
(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) At the time of transfer, the lessee or permittee:
(A) Shall be in full compliance with the existing
lease or permit;
(B) Shall not be in arrears in the payment of
taxes, rents, or other obligations owed to the State or any county; and
(C) Shall have an economically viable agricultural
operation as determined by the board;
(2) No encumbered or unencumbered agricultural
enterprise lands or agricultural enterprises with soils that are classified by
the land study bureau's detailed land classification as having an overall (master)
productivity rating of 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 other qualified and encumbered agricultural
lands. The department shall establish criteria by rules
adopted 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 special 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 any 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) The 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. The department
may develop agricultural enterprise lands and agricultural enterprises on behalf
of the State or in partnership with a federal agency, county, or private party.
§ -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 of 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 to the department for agricultural
or agricultural-related uses by the governor through an executive order; 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 of 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; and 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 Public
lands exemption. 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 judicial or nonjudicial
foreclosure sale, 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 judicial or nonjudicial foreclosure sale. The institutional lender shall convey to the board
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 any liens, claims, and encumbrances 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 if canceled by reason of the lessee's default;
(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 any provisions consistent with the intent of this section that 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, and 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. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect upon its approval.
Report Title:
Department of Agriculture; Agricultural Enterprises; Agricultural Enterprise Special Fund
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. Requires the board of agriculture to annually report an accounting of non-agricultural park lessees to the legislature. (SD1)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
