Report Title:

Agricultural Leases; Disposition; Current Tenants



Allows a qualified tenant whose agricultural lease is nearing expiration to petition the DLNR to issue a public notice to determine whether other persons are interested in bidding for a lease on the land. (SD2)


H.B. NO.



H.D. 1


S.D. 2




relating to agricultural leases.



SECTION 1. 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, and maritime 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, and maritime industries;

(2) The disposition shall not exceed a maximum term of thirty-five years; 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 purpose of this subsection "agricultural processing" means the processing of agricultural products, including dairying, grown, raised, or produced in Hawaii and "airport related" means a purpose or activity that requires air transportation to achieve that purpose or activity.

(c) Except as provided in subsection (d), a qualified tenant whose agricultural lease of public land is nearing expiration may petition the department to issue a public notice to determine whether there are other persons interested in bidding for a lease on the property.

The tenant may petition the department to issue a public notice at any time within five years of the expiration of the lease. The public notice shall be made in a manner consistent with section 171-16(a), and the tenant shall bear the cost of the public notice.

If the department decides to hold an auction, and the existing tenant does not place the highest bid, the existing tenant shall be compensated for the residual value of any improvements by the new tenant, amortized over what would have been the remaining period of the lease. If no other persons are interested in bidding for the lease after issuance of the public notice, the department shall negotiate a new lease to commence upon expiration of the existing lease with the tenant. The new lease term shall not exceed the term length of the previous lease.

The procedure provided for in this subsection shall be available to tenants whose leases have already expired and are on revocable permits. The procedure, however, shall not apply to revocable permits for parcels where:

(1) No prior long-term lease existed;

(2) A new lease cannot be issued because of a lack of access to the land; or

(3) Questions concerning the continued agricultural use of the land exist.

(d) Subsection (c) shall not apply if the department determines that the lease should not be renewed or auctioned and the land should be used for a public purpose.

For the purposes of this subsection, "qualified tenant" means a tenant who would be qualified under section 171-14.5 and who is not in default under the terms of the existing lease."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval.