Bill Text: HI SB257 | 2022 | Regular Session | Amended
Bill Title: Relating To Lease Extensions On Public Land.
Spectrum: Partisan Bill (Democrat 5-0)
Status: (Engrossed - Dead) 2021-12-10 - Carried over to 2022 Regular Session. [SB257 Detail]
Download: Hawaii-2022-SB257-Amended.html
THE SENATE |
S.B. NO. |
257 |
THIRTY-FIRST LEGISLATURE, 2021 |
S.D. 2 |
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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, mixed-use,
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 require the
board of land and natural resources to establish a public lands lease extension
pilot project in which the board of land and natural resources may extend
commercial, industrial, resort, mixed-use, 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. (a) Notwithstanding section 171-36, Hawaii Revised Statutes, or any other law to the contrary, the board of land and natural resources shall establish a five-year public lands lease extension pilot project in which the board of land and natural resources may extend the rental period of any lease of public lands for commercial use, industrial use, resort use, mixed-use, or government use upon approval by the board of land and natural resources of a development agreement proposed by the lessee or by the lessee and developer to make substantial improvements to the existing improvements; provided that the leases shall have not been assigned or transferred within ten years prior to receipt of an application for a lease extension submitted pursuant to this Act; provided further that the pilot project shall only include public lands that are located at any of the following within the area designated by zip code 96720:
(2) TMK 2-2-047-066;
(3) TMK 2-2-047-069; or
(4) TMK 2-2-047-073.
For the purposes of this subsection, the terms "assigned" or "transferred" shall not include a sale or change in ownership of a lessee that is a company or entity or 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 the developer shall submit to the board of land and
natural resources the plans and specifications for the total development
proposed. The board of land and natural resources
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 of land and natural resources,
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 of land and natural
resources 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 of land and natural
resources 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 Act
shall be based upon the substantial improvements to be made and shall be for a
period not to exceed 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 of land and natural resources.
(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 Act.
(f) The public lands lease extension pilot project,
including the authority of the board of land and natural resources to approve the
extension of rental periods pursuant to the pilot project, shall end on July 1,
2026; provided that any lease extension executed pursuant to the pilot project shall
run for the full term of the executed lease extension unless shortened by mutual
agreement of the parties.
(g) As used in this Act:
"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.
"Mixed use" means
a development that combines two or more of the following uses in a single project:
commercial use, resort use, multifamily residential use, or governmental use.
"Resort use" means
a development that provides transient accommodations as defined in section
237D-1, Hawaii Revised Statutes, 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 Act 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. This Act shall take effect on July 1, 2050.
Report Title:
BLNR; Public Lands; Lease Extension; Development Agreement
Description:
Requires the board of land and natural resources to establish a public lands lease extension pilot project to extend certain leases of public lands for commercial, industrial, resort, mixed-use, or government use upon approval of a proposed development agreement to make substantial improvements to the existing improvements. Effective 7/1/2050. (SD2)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.