TWENTY-NINTH LEGISLATURE, 2018
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO PUBLIC LANDS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Findings; purpose. (a) The legislature finds that:
(1) Because of the policies guiding the management of urbanized public lands with commercial, industrial, hotel, and resort uses, there has been little incentive for the lessees of those properties to make major investments in improvements to their infrastructure, resulting in the deterioration of infrastructure and facilities;
(2) The lack of improvement to property in many of these areas has resulted in dilapidation, deterioration, age, or obsolescence of the buildings and structures in those areas; and
(3) The department of land and natural resources has the responsibility of planning for the disposition of commercial, industrial, hotel, and resort classes of public lands to determine:
(A) Specific use or uses;
(B) Minimum size of parcels;
(C) Required building construction or improvements; and
(D) Lease terms and requirements.
(b) The purpose of this Act is to:
(1) Establish a ten-year pilot project for the redevelopment of:
(A) The Banyan drive region; and
(B) The Kanoelehua industrial area; and
(2) Establish and implement guidelines for the pilot project in the areas in paragraph (1) that will:
(A) Define the policies for the management of public lands in a designated area;
(B) Establish a plan for a designated area, including district-wide improvements, that is coordinated with state and county land use and planning policies;
(C) Implement asset and property management concepts that can optimize income from the public lands and evolve in response to changing principles of property administration; and
SECTION 2. Definitions. As used in this Act, unless the context indicates otherwise:
"Board" means the board of land and natural resources.
"Department" means the department of land and natural resources.
"Designated district" means the area of public lands designated for development or redevelopment within the Kanoelehua industrial area.
"Planning committee" or "committee" means the policy-making committee established for the redevelopment district and designated district.
"Public facilities" include streets and highways, storm drainage systems, water systems, street lighting systems, off-street parking facilities, and sanitary sewerage systems.
"Redevelopment district" means the area of public lands designated for redevelopment within the Banyan drive region.
SECTION 3. Redevelopment district pilot project, Banyan drive region; designated district pilot project, Kanoelehua industrial area; established. (a) The Banyan drive region shall be established as a redevelopment district until June 30, 2028.
(b) The Kanoelehua industrial area shall be established as a designated district until June 30, 2028.
SECTION 4. Planning committee; district administrator; repeal. (a) A single planning committee for both the redevelopment district and designated district shall be established and placed in the department for administrative purposes.
(b) The committee shall be a policy-making committee for the redevelopment district and designated district and shall consist of the following nine members.
(1) The chairperson of the board of land and natural resources, or the chairperson's designee, who shall be an ex-officio, voting member of the committee;
(2) The director of planning of the county in which the redevelopment district and designated district are located, or the director of planning's designee, who shall be an ex-officio, voting member of the committee; and
(3) Seven public, voting members appointed by the governor pursuant to section 26-34, Hawaii Revised Statutes; provided that of the members appointed pursuant to this paragraph:
(A) Three members shall be selected from a list of six names submitted by the president of the senate and speaker of the house of representatives in collaboration with the legislators from the county in which the redevelopment district and designated district are located;
(B) Two members shall be selected from a list of four names submitted by the mayor of the county in which the redevelopment district and designated district are located;
(C) The seven members shall be selected on the basis of their knowledge, experience, and expertise in:
(i) Management of small or large businesses;
(ii) Economics, banking, investment, or finance;
(iii) Real estate development or management;
(iv) Cultural and historical matters;
(v) Marketing; or
(vi) Hotel and resort management; and
(D) All seven members shall be residents of the county of Hawaii.
(c) The committee shall elect its chairperson from among its public, voting members.
(d) The members of the committee shall serve without compensation but shall be reimbursed for reasonable expenses, including travel expenses, incurred in the performance of their duties.
(e) The committee shall appoint a district administrator, with the approval of the board, who shall be the chief executive officer for the pilot projects. The district administrator shall have experience and expertise in engineering, planning, architecture, real estate, or law. The committee shall set the district administrator's duties, responsibilities, holidays, vacations, leaves, hours of work, and working conditions. The committee shall set the salary of the district administrator, who shall serve at the pleasure of the committee and shall be exempt from chapter 76, Hawaii Revised Statutes.
(f) The committee shall hold committee meetings which shall be open to the public and livestreamed.
(g) The committee shall be dissolved on June 30, 2028, and the position of district administrator shall cease to exist on June 30, 2028.
SECTION 5. Planning committee; powers and duties; generally. The committee shall have the powers and duties related to its functions in the redevelopment district and designated district that are delegated to the committee by the board. In addition, the committee may:
(1) Through its district administrator, appoint staff and employees, prescribe their duties and qualifications, and fix their salaries, without regard to chapter 76, Hawaii Revised Statutes;
(2) Through its district administrator, allocate space or spaces that are to be occupied by the committee and appropriate staff, and purchase necessary supplies, equipment, or furniture;
(3) Prepare a redevelopment plan for the redevelopment district and a redevelopment plan for the designated district and consider any plans for the redevelopment district and the designated district previously established by any existing redevelopment agency established under chapter 53, Hawaii Revised Statutes;
(4) Notwithstanding any other law to the contrary, make recommendations to the board regarding renewal or renegotiation of leases, or reduction or waiver of lease rents, with the current lessee of any public land lease in connection with any project contained in the redevelopment plan for the redevelopment district or the redevelopment plan for the designated district, on terms and conditions as the committee deems advisable; provided that the reduction or waiver of lease rents shall not exceed one year;
(5) Prepare or cause to be prepared plans, design criteria, landscaping, and estimates of costs for the construction, rehabilitation, or repair of any project contained in the redevelopment plan for the redevelopment district or the redevelopment plan for the designated district, and from time to time to modify the plans or estimates;
(6) Conduct studies in conjunction with county and state agencies, to include third party studies coordinated with county and state agencies, necessary to determine the appropriate activities for redevelopment in the redevelopment district or the designated district;
(7) Make and execute all contracts and instruments that are necessary for the exercise of the committee's powers and functions relating to the redevelopment district and the designated district, including the engaging of the services of consultants for the rendering of professional and technical assistance and advice; provided that any contract with a contractor furnishing construction work shall require compliance with the wage and hour requirements of chapter 104, Hawaii Revised Statutes, and shall require the contractor to furnish weekly payroll reports to the committee to ensure compliance;
(8) Work closely and communicate with the county government to coordinate the execution of the redevelopment district's and designated district's planning, incremental projects, work schedules, public works, and budget; and
(9) Do any and all things necessary to carry out the committee's purposes and exercise the powers established pursuant to this Act.
SECTION 6. District redevelopment plans. (a) The committee shall prepare a redevelopment plan for the redevelopment district and a redevelopment plan for the designated district. Each redevelopment plan shall include district development policies, the district improvement program, necessary public facilities, and the development guidelines and rules for the redevelopment district and the designated district, respectively. In carrying out its planning activities, the committee shall comply with applicable state and county statutes, ordinances, and rules. The committee shall liaise with any existing redevelopment authority established by chapter 53, Hawaii Revised Statutes, in preparing and implementing each plan.
(b) The committee shall prepare a redevelopment plan for the redevelopment district and a redevelopment plan for the designated district that:
(1) Establishes, if applicable, areas principally for:
(A) Commercial activities;
(B) Processing, construction, manufacturing, transportation, wholesaling, storage, and similar industrial activities;
(C) Resort and hotel activities, including uses that provide facilities and services for visitors; or
(D) Public facilities and recreational facilities, with detailed standards for height, bulk, size, and location of buildings;
(2) Includes a district-wide improvement program for necessary district-wide public facilities within the redevelopment district or designated district, as applicable;
(3) Includes plans, specifications, and estimates of the costs for the development, construction, reconstruction, or improvement of any project in the redevelopment district or designated district, as applicable; provided that the committee may from time to time modify the plans, specifications, or estimates;
(4) If possible, identifies specific uses for areas in the redevelopment district or designated district, as applicable, and the required parceling of land into minimum size areas related to the specific uses;
(5) Determines the lease rental that should be established for the specific uses and the terms and conditions of the leases; and
(6) Establishes recommendations to the board for interim development controls to be implemented during the transition to the execution of the provisions of the redevelopment plan, such as recommending the holdover of a lessee pursuant to section 171-40, Hawaii Revised Statutes, or issuance of permits pursuant to section 171-55, Hawaii Revised Statutes, to existing lessees upon the expiration of their lease terms.
(c) Each district redevelopment plan may provide for the withdrawal or taking for public purposes of the public land or portion of the public land under a lease. The rental shall be reduced in proportion to the value of the portion of the premises condemned, and the lessee shall be entitled to receive the proportionate value of the permanent improvements legally made to or constructed upon the land by the lessee taken in the proportion that it bears to the unexpired term of the lease.
(d) The committee shall hold annual public hearings on a proposed redevelopment plan for the redevelopment district and designated district, and shall consider the comments received and incorporate any revisions to the plan that may be necessary. The committee shall livestream its meetings or shall provide for equivalent means of simultaneous broadcast.
(e) Two years after the date the committee is established, the committee shall submit a report to the board with the redevelopment plan recommended by the committee along with recommendations for appropriations by the legislature, the authorization of bonds, or both, to implement the redevelopment plan in a timely manner. The board shall submit the report to the governor and the legislature, not later than twenty days prior to the convening of the 2020 regular session, with a request for the required appropriations, bond authorization, or both.
(f) The redevelopment district redevelopment plan and the designated district redevelopment plan shall supersede all other inconsistent ordinances and rules relating to the use, planning, development, and construction on public land in the redevelopment district and the designated district.
SECTION 7. Transfer of documents and property. (a) Upon the repeal of this Act, all leases, contracts, agreements, permits, or other documents executed or entered into, by or on behalf of the planning committee shall remain in full force and effect and shall be administered by the department of land and natural resources.
(b) Upon the repeal of this Act, all appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property held by the planning committee shall be transferred to the department of land and natural resources.
SECTION 8. There is appropriated out of the special land and development fund the sum of $ or so much thereof as may be necessary for fiscal year 2018-2019 to carry out the purposes of this Act.
The sum appropriated shall be expended by the department of land and natural resources for the purposes of this Act.
SECTION 9. Section 171-41.6, Hawaii Revised Statutes, is amended as follows:
1. By amending its title to read:
§171-41.6[ ]] Lessees within the last [ ten] twenty years of their lease terms; requests for interest."
2. By amending subsections (a) through (f) to read:
"(a) Notwithstanding any other provision of law to
the contrary, and except as otherwise provided in section 171-36(b) and (d), a
lessee of public land that is classified as hotel, resort, or commercial
and industrial use pursuant to section 171-10, and that is subject to the
management, administration, or control of the board may, during the last [
twenty years of the term of the original lease, submit a written request
together with a disinterested appraisal by a qualified appraiser of the land
and existing leasehold improvements to the board to initiate a request for
interest process as provided in this section.
one hundred eighty] sixty days of a lessee's
written request to initiate a request for interest, the board shall:
value of the land and any improvements to the land that existed as of the date
of the written request pursuant to section 171-17(a) and] Review for
compliance the appraisal submitted under subsection (a) and require the awardee of a new lease
executed pursuant to this section to reimburse the [ department] lessee
for the appraisal; and
(2) Publish a request for interest and request for qualifications notice inviting persons to express their interest in leasing the land and their qualifications as potential lessees and describing any improvements to the land that exist as of the date of the written request. The notice shall be given at least once statewide and at least once in the county where the land is located and shall contain:
(A) The qualifications
required of eligible lessees[
;] which shall conform to department
policy for new leases;
(B) A general description of the land, including the address and tax map key, the termination date of the existing lease, and of any improvements to the land that existed as of the date of the written request;
(C) That the land to be leased is classified as hotel, resort, or commercial and industrial use pursuant to section 171-10;
(D) The appraised value of the land and of any improvements to the land that existed as of the date of the written request;
(E) The closing date and manner by which a person shall indicate interest and submit a statement of qualifications; and
(F) Notice that a current business plan is a prerequisite to participate at time of auction or direct negotiation, if applicable, and shall be made a term of the lease.
ninety] forty-five days after the closing date
specified in the notice, the board shall determine if any persons have
qualified under the terms of the request for qualifications and shall notify
all persons who expressed interest as to whether they qualified. Qualified bidders shall be required to
deposit an amount equal to one per cent of the value of the leasehold
improvements as determined by appraisal, but not less than $1,000, to be held
in an interest bearing account as deposit by the department and returned to the
applicant at the applicant's cancelation of interest, the applicant's
unsuccessful bid at auction, or as a credit against the applicant's successful
bid at auction. The board shall also
notify the current lessee as to whether any other persons qualified.
The board shall enter into direct negotiation with the current lessee
immediately upon notification if no other qualified persons have expressed
interest in the property[
.]; provided that the terms of the lease
shall conform to the requirements of any federal or private lending institution
qualified to do business in the State.
(e) If the land is not leased pursuant to subsection (d) within three years before the termination date of the lease, or at any time prior to the termination date of the lease at the election of the current lessee with forty-five day notice to the board and previously qualified bidders, the board shall dispose of the land by public auction as provided in this chapter; provided that the board has determined that at least one person, who:
(1) Is not the current lessee;
(2) Has been determined by the board to be qualified; and
(3) Has submitted a business plan prior to the date of the auction,
has expressed interest in leasing the land
and any improvements to the land that existed as of the date of the written
request in subsection (a). The auction
upset price shall be [
the greater of] the current rent [ or the fair
market rent pursuant to section 171-17(d) based upon the appraised value of the
land and any improvements to the land that existed as of the date of the
The current lessee may bid on a new lease at the public auction. The current lessee's business plan shall be deemed acceptable to the board and the current lessee shall not be required to submit a new business plan; provided that the current lessee is in compliance with the terms of the existing lease and has submitted a business plan prior to the date of the auction.
(f) Lease terms for any new lease executed pursuant to this section shall be determined by the board and shall:
(1) Not commence prior to the termination of the current lease;
(2) For the purposes of mortgage or finance shall conform substantially to the guidelines of the Federal Department of Housing and Urban Development Rules for Ground Leases for commercial properties (HUD, 4465.1 CHG) or to qualify for any federal or private lending institution qualified to do business in the State;
(2)] (3) Establish the rent at [ no less than
the greater of the current rent or] the fair market rent pursuant to
section 171-17(d) based upon the appraised value of the land [ and any
improvements to the land that existed as of the date of the written request];
(3)] (4) If
the lease is awarded after public auction to any person other than the current
lessee, include a premium equal to the value of any improvements to the land
made after the date of the written request in subsection (a), which shall be
paid to the current lessee prior to transfer of the land and improvements to
the new lessee; and
(4)] (5) Include the previously submitted
SECTION 10. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.
SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 12. This Act shall take effect on July 1, 2060; provided that this Act shall be repealed on June 30, 2028, and section 171-41.6, Hawaii Revised Statutes, shall be reenacted in the form in which it read on June 30, 2060.
Establishes ten-year redevelopment district and designated district pilot projects within the Kanoelehua Industrial Area and Banyan Drive region until 6/30/2028. Modifies public land lease restrictions. Appropriates funds. (SB3058 HD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.