HOUSE OF REPRESENTATIVES

H.B. NO.

2576

THIRTIETH LEGISLATURE, 2020

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO AGRICULTURAL LEASES.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


SECTION 1. The legislature finds that the current preference rights for agricultural park lots and other agricultural lands do not consider self-financed improvements made by lessees. This discourages lessees from using their own funds to make improvements near the end of a lease term.

The legislature further finds that adding a preference for lessees who have made a significant improvement to their agricultural lands will improve agricultural productivity, promote agriculture, and increase agricultural self-sufficiency in the State.

The purpose of this Act is to:

(1) Add an agricultural park lot preference right for lessees who have made a significant improvement to their lot; and

(2) Require the department of agriculture to consider the same preferences of awarding agricultural park lot leases in the awarding of non-agricultural park land leases.

SECTION 2. Chapter 166E, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"166E- Preference right. Any person who is otherwise qualified to take a lease pursuant to this chapter and who:

(1) Is a veteran with an honorable discharge;

(2) Qualifies as a displaced farmer;

(3) Operates a farm located in a zoning district where that use is a nonconforming use;

(4) Qualifies as a new farmer; or

(5) Pursuant to generally accepted accounting principles or statutory accounting principles, may amortize or depreciate a significant improvement on the land that provides a public benefit and continues a viable agricultural operation,

shall be given preference in obtaining a lease pursuant to this chapter."

SECTION 3. Section 166-6, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Any provision of this chapter to the contrary notwithstanding, the board may by negotiation, drawing of lot, or public auction, directly dispose of public lands and related facilities set aside and designated for use as agricultural parks, and any other lands and facilities under the jurisdiction of the department pursuant to section 166-3 and notwithstanding chapter 171. Except as provided by subsection (c), dispositions may be by lease and shall be subject to the requirements set forth in rules adopted by the board in conformity with section 166-9, and subject also to the following limitations:

(1) The property shall be disposed of for agricultural or aquacultural purposes only;

(2) The lessee shall derive the major portion of the lessee's total annual income from the lessee's activities on the premises; provided that this restriction shall not apply if failure to meet the restriction results from mental or physical disability or the loss of a spouse, or if the premises are fully utilized in the production of crops or products for which the disposition was granted;

(3) The lessee shall comply with all federal and state laws regarding environmental quality control;

(4) The board shall determine the specific uses for which the disposition is intended; parcel the land into minimum size economic units sufficient for the intended uses; make, or require the lessee to make improvements as are required to achieve the intended uses; set the upset price or lease rent based upon an appraised evaluation of the property value adjustable as provided in rules adopted in accordance with chapter 91 to the specified use of the lot; set the term of the lease, which shall be not less than fifteen years nor more than fifty-five years, including any extension granted for a significant improvement made to the property or mortgage lending or guarantee purposes; and establish other terms and conditions as it may deem necessary, including but not limited to restrictions against alienation and provisions for withdrawal by the board;

(5) No lease shall be made to any person who is in arrears in the payment of taxes, rents, or other obligations owing the State or any county; and

(6) Any transferee, assignee, or sublessee of an agricultural park lease shall first qualify as an applicant under this chapter. For the purpose of this paragraph, any transfer, assignment, sale, or other disposition of any interest, excluding a security interest, of any legal entity [which] that holds an agricultural park lease shall be treated as a transfer of the agricultural park lease and shall be subject to the approval of the board of agriculture upon reasonable terms and conditions, not inconsistent with this chapter or rules of the board, [which] that the board may deem necessary. No transfer shall be approved by the board if the disposition of the stock, or assets or other interest of the legal entity would result in the failure of the entity to qualify for an agricultural park lease."

SECTION 4. Section 166-8, Hawaii Revised Statutes, is amended to read as follows:

"166-8 Preference right. Any person who [is]:

(1) Is otherwise qualified to take an agricultural park lot[, who is];

(2) Is a veteran with an honorable discharge[, or who qualifies];

(3) Qualifies as a displaced farmer[, or who operates];

(4) Operates a farm located in a zoning district where [such] that use is a nonconforming use[, or who qualifies];

(5) Qualifies as a new farmer[,]; or

(6) Pursuant to generally accepted accounting principles or statutory accounting principles may amortize or depreciate a significant improvement on the agricultural park lot that provides a public benefit and continues a viable agricultural operation,

shall be given preference in obtaining an agricultural park lot."

SECTION 5. Section 166E-8, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) In all dispositions, the department shall be subject to the requirements set forth in rules adopted by the board consistent with section 166E-6 and subject to the following:

(1) All land and facilities shall be disposed of for purposes of agricultural or aquacultural activities only;

(2) Each lessee shall derive a major portion of the lessee's total annual income earned from the lessee's activities on the premises; provided that this restriction shall not apply if:

(A) Failure to meet the restriction results from mental or physical disability or the loss of a spouse; or

(B) The premises are fully used in the production of crops or products for which the disposition was granted;

(3) The lessee shall comply with all federal and state laws regarding environmental quality control;

(4) The board shall:

(A) Determine the specific uses for which the disposition is intended;

(B) Parcel the land into minimum size economic units sufficient for the intended uses;

(C) Make, or require the lessee to make, improvements that are required to achieve the intended uses;

(D) Set the upset price or lease rent based upon an appraised evaluation of the property value, adjustable to the specified use of the lot;

(E) Set the term of the lease that shall be not less than fifteen years nor more than sixty-five years, including any extension granted for a significant improvement made to the property or mortgage lending or guarantee purposes; and

(F) Establish other terms and conditions it deems necessary, including but not limited to restrictions against alienation and provisions for withdrawal by the board; and

(5) Any transferee, assignee, or sublessee of a non-agricultural park lease shall first qualify as an applicant under this chapter. For the purpose of this paragraph, any transfer, assignment, sale, or other disposition of any interest, excluding a security interest, by any legal entity that holds a non-agricultural park lease shall be treated as a transfer of the non-agricultural park lease and shall be subject to the approval of the board and to reasonable terms and conditions, consistent with this chapter or rules of the board that the board may deem necessary. No transfer shall be approved by the board if the disposition of the stock or assets or other interest of the legal entity would result in the failure of the entity to qualify for a non-agricultural park land lease."

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect upon its approval.

 

INTRODUCED BY:

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Report Title:

Department of Agriculture; Agricultural Park Leases; Non-agricultural Park Land Leases; Qualifications; Terms; Preferences; Improvements

 

Description:

Gives preference rights for an agricultural park lot and a non-agricultural park land lease to lessees who have made a significant improvement. Adds the same preferences for a non-agricultural park land lease as those for an agricultural park lot lease.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.