Honolulu, Hawaii

, 2002

RE: S.B. No. 2242

S.D. 1



Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii


Your Committees on Agriculture and Water, Land, Energy and Environment, to which was referred S.B. No. 2242 entitled:


beg leave to report as follows:

The purpose of this measure is to authorize the Board of Land and Natural Resources to extend an agricultural lessee's lease to amortize the lessee-financed improvements made to the land or to allow the lessee additional time to make productive use of the land when productivity was negatively affected by special circumstances.

Testimony supporting this measure was received from the Hawaii Farm Bureau Federation and Hawaii Cattlemen's Council, Inc. Testimony opposing this measure was received from the Department of Land and Natural Resources.

Your Committees find that current laws regarding the extension of an agricultural public land lease does not adequately address the needs of Hawaii's farmers. Current law requires an agricultural lessee to obtain a loan or mortgage for improvements in order to qualify for a lease extension. This is an unnecessary burden, particularly when the farmer has the necessary capital to make the improvements without the need for a loan or mortgage. Your Committees find that this measure provides for additional opportunities for farmers to obtain an extension to their lease while preserving the State's interests in public land.

Your Committees have amended this measure by:

(1) Providing that a lease extension based on lessee financed improvements shall be determined by the board or an independent appraiser rather than an independent appraiser hired by the lessee and approved by the board;

(2) Eliminating the requirement that the independent appraiser shall account for the economic life of the lessee financed improvements prior to the application for extension;

(3) Replacing the provisions that authorize lease extensions to allow the lessee additional time to make productive use of the land when productivity was substantially and directly hampered by special circumstances with provisions that:

(a) Specify that any agriculture, intensive agriculture, aquaculture, commercial, mariculture, special livestock, pasture, or industrial lease may be extended or modified upon a showing of significant economic hardship directly caused by natural disaster or a taking of a portion of the area of the lease by government action by eminent domain, withdrawal, or conservation easement; and

(b) Require that lease extensions shall require that the demised premises be used substantially for the purposes for which they were originally leased, the aggregate initial term and the extended term shall not exceed fifty-five years, the rental shall not be less than the rental for the preceding term, and that the lease extension complies with rules that ensure and promote the purposes of the demised lands; and

(4) Making technical and nonsubstantive changes for purposes of style and clarity.

Your Committees further find that this measure, as amended, does not change existing laws as to the qualifications of the lenders that provide lessee's with a loan or mortgage to qualify for a lease extension.

As affirmed by the records of votes of the members of your Committees on Agriculture and Water, Land, Energy and Environment that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2242, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2242, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Agriculture and Water, Land, Energy and Environment,