Report Title:
Public Lands; Department of Land and Natural Resources; Kauai Leases; Reissuance of Certain Leases
Description:
Directs the Department of Land and Natural Resources to issue new leases to existing lessees for specific parcels on Kauai.
HOUSE OF REPRESENTATIVES |
H.B. NO. |
2945 |
TWENTY-SECOND LEGISLATURE, 2004 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO PUBLIC LANDS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature recognizes that, in view of the current and prolonged economic downturn that the State of Hawaii is experiencing, it is a priority of the legislature to encourage and support the implementation of rational measures to stimulate the state economy. The legislature further recognizes that the county of Kauai has been particularly impacted, having experienced the devastating effects of Hurricane Iniki and the economic repercussions of the September 11th tragedy, warranting that certain extraordinary measures be taken to revitalize the county economy, and as a by-product thereof, the state economy.
The legislature finds that certain lessees of public lands for hotel uses on Kauai have been severely impacted by prevailing economic conditions, and will be unable to continue their business operations on Kauai without obtaining financing to revitalize and redevelop the improvements associated with their leases. Such financing requires longer lease terms than are available to the lessees under their existing leases or by extension of the term of the leases.
Section 171-61, Hawaii Revised Statutes, authorizes the board of land and natural resources to cancel an existing lease if the lands can be re-leased for the existing use at greater economic benefit to the State. The legislature finds that canceling certain existing hotel leases and issuing new, long-term leases for the same purpose will provide a greater economic benefit to the State by permitting the lessee to continue its hotel operations while making a substantial investment in the improvements to the premises and forestalling the likely immediate negative impacts such as reduced employment, loss of payroll, unemployment expenditures, and loss of state and county tax revenues, that will result if the lessee's operations fail. By contrast, new leases that can be financed create the opportunity for increased economic impact with the following benefits: higher lease rents to the State, increased employment and payroll, and higher tax revenues to the State and county, including taxes on revenues from new construction, airport landing fees, corporate income taxes, transient accommodation taxes, general excise taxes, individual income taxes, property taxes, rental car and tour vehicle surcharge taxes, fuel taxes, and liquor taxes.
The legislature further finds that, under prevailing economic conditions, it is appropriate that the assignment premium be waived by the board for a limited period of time to encourage meaningful investment in certain properties and, ultimately, sustained growth for the county of Kauai and the State.
The purpose of this Act is to direct the department of land and natural resources to issue a new long-term lease as provided in this Act, without the shared appreciation assignment premium, and with the intent that the existing lessee may cancel its leases to have the opportunity to seek a new lease that can be financed. The board of land and natural resources would also have the option to make the new leases available at auction to other prospective lessees willing to satisfy the conditions of the lease, and not just the existing lessee.
SECTION 2. Notwithstanding any law to the contrary, the board of land and natural resources shall issue a new lease to the existing lessee of those certain properties situated at Wailua and Lihue, Kauai, Hawaii, identified as parcels A-1, A-2 (parts 1 and 2), and B, being a portion of the government (crown) land of Wailua and covered by general lease Nos. S-3840, S-3831, and S-4647, respectively, subject to the following:
(1) The new lease shall contain those conditions deemed appropriate by the department to carry out the purposes of this Act, including the requirements that the sites be used for hotel, resort, or timeshare purposes;
(2) The department may issue a request for proposal or other means to ensure that a fair, open, and competitive process is used to determine competition for the parcels. This process shall take into account the current fair market value of the tenant-owned improvements under the terms of each existing lease. The current fair market value shall be negotiated and agreed to between the lessee and the lessor. If the current fair market value is agreed upon, the department may initiate a request for proposal process to reveal whether there are other entities seriously interested in obtaining the lease subject to the requirement that the site be used for the designated purposes. If this process develops a willing and able bidder, the department shall go out for auction with the understanding that the successful bidder shall pay the existing lessee the current fair market value of all tenant-owned improvements in full at closing. If there are no qualified entities, or if the lessee is the successful bidder, then new leases may be issued to the existing lessee for a term not to exceed sixty-five years; and
(3) If a new lease is issued, then the following shall be contained in the lease: "Notwithstanding any provision of law or department policy to the contrary, the consent of the board of land and natural resources to any transfer or assignment of the lease, shall not be conditioned on the lessee's payment to the lessor of any premium, whether based upon the amount by which the consideration for the assignment, whether by cash, credit, or otherwise, exceeds the depreciated cost of improvements and trade fixtures being transferred to the assignee, or upon any other basis."
SECTION 3. It is the express intent of this Act to ensure that the State is receiving a fair return from the subject lands while facilitating the lessee's ability and incentive to obtain financing for meaningful investment into the improvements associated with the existing leases to enhance the economic viability of the leasehold and promote the continued operation of the commercial enterprises thereon for the benefit of the local economy and state economy.
SECTION 4. The lands eligible for lease under section 2 of this Act shall be limited to the existing leases with infrastructure identified as general lease Nos. S-3840, S-3831, and S-4647.
SECTION 5. This Act shall not be interpreted or used to diminish in any respect any approval heretofore obtained or granted by the board to the lessee under general lease Nos.
S-3840, S-3831, and S-4647.
SECTION 6. All costs for the issuance of each new lease, including determining the current fair market value and the request for proposals, shall be paid for by the lessee interested in acquiring the new lease.
SECTION 7. This Act shall take effect on July 1, 2004.
INTRODUCED BY: |
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