REPORT TITLE:
Submerged Lands


DESCRIPTION:
Requires existing unpermitted piers in Kaneohe Bay to be
considered nonconforming uses in the conservation district.
Repeals existing requirement that lessees open their piers to the
public at large.  Establishes a lease rent moratorium on certain
submerged lands and private residential noncommercial piers.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        3168
THE SENATE                              S.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO SUBMERGED LANDS.



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

 1      SECTION 1.  The legislature finds that the State has an
 
 2 interest in regulating submerged lands to protect and preserve
 
 3 their environment and ecosystem.  The legislature further finds
 
 4 that there are currently more than two hundred piers on state
 
 5 submerged land in the Kaneohe and Kahaluu area, of which only
 
 6 approximately twenty are paying rent to the State.
 
 7      Many piers in the affected area were built prior to October
 
 8 1, 1964, the effective date of the first regulatory measures
 
 9 concerning piers.  Other piers built after this date were built
 
10 in compliance with other regulations that were in effect at the
 
11 time of construction.  Piers constructed before October 1, 1964,
 
12 and those built subsequent to that date in compliance with
 
13 regulations adopted after that date are nonconforming uses.   The
 
14 legislature has previously stated that no rules may be adopted,
 
15 which shall prohibit the continued use of such structures.
 
16      Some piers, however, were built without complying with any
 
17 permitting requirements whether at the time of construction or
 
18 any time thereafter.  These piers are illegal.  The legislature
 
19 finds, however, that official records that would help to identify
 

 
Page 2                                                     3168
                                     S.B. NO.           
                                                        
                                                        


 1 nonconforming piers and illegal piers are scattered among various
 
 2 state and federal departments and agencies or have been
 
 3 destroyed.  
 
 4      The legislature finds that pier owners have overwhelmingly
 
 5 expressed their desire to pay a reasonable amount to the State
 
 6 for their continued use of submerged lands.  The auditor has
 
 7 previously found that the cost to account for monthly rent for
 
 8 piers has exceeded the revenues realized to the State.
 
 9      The legislature finds that the State has already sold more
 
10 than fifty agreements for the use of submerged lands, many of
 
11 which are for piers in the same area.  The legislature finds that
 
12 the issuance of leases for a period of not more than sixty-five
 
13 years, pursuant to sections 171-36(a)(2) and 171-53(c), Hawaii
 
14 Revised Statutes, would result in a substantial return to the
 
15 State while significantly reducing the accounting costs to the
 
16 State as provided in sections 171-13 and 190D-21, Hawaii Revised
 
17 Statutes.
 
18      Lessees of state land are required pursuant to chapter 171,
 
19 Hawaii Revised Statutes, to indemnify the State against
 
20 liability.  Section 171-36(a)(9), Hawaii Revised Statutes, as now
 
21 constructed, requires lessees to open their piers to the public
 
22 at large.  This provision creates a problem for pier lessees
 
23 because it makes obtaining liability insurance prohibitively
 

 
Page 3                                                     3168
                                     S.B. NO.           
                                                        
                                                        


 1 expensive and difficult to obtain and moreover interferes with
 
 2 pier owners' ability to maintain their structures and implied
 
 3 right to quiet enjoyment.  The legislature, therefore, finds that
 
 4 repealing this requirement as to private residential
 
 5 noncommercial piers is in the best interests of the State.
 
 6      The purpose of this Act is to protect the piers in the
 
 7 Kaneohe and Kahaluu area by:
 
 8      (1)  Requiring any unpermitted pier in Kaneohe Bay existing
 
 9           in whatever form on the effective date of this Act to
 
10           be considered a nonconforming use in the conservation
 
11           district;
 
12      (2)  Eliminating the requirement in section 171-36(a)(9),
 
13           Hawaii Revised Statutes, that lessees open their piers
 
14           to the public at large;
 
15      (3)  Expediting the issuance of leases for piers by
 
16           including private residential noncommercial piers as
 
17           items not requiring prior legislative and gubernatorial
 
18           approval on lease and easement dispositions;
 
19      (4)  requiring the department of land and natural resources
 
20           to conduct an inventory of all state submerged lands
 
21           being used for private residential noncommercial piers;
 
22      (5)  Requiring the department to grant easement rights to
 
23           use submerged lands for a specified purpose;
 

 
Page 4                                                     3168
                                     S.B. NO.           
                                                        
                                                        


 1      (6)  Establishing a lease rent moratorium on the submerged
 
 2           lands and the private residential noncommercial piers
 
 3           thereon in Kaneohe Bay, located offshore of property
 
 4           between Kealohi Point and Nuupia Pond, until the
 
 5           department of land and natural resources adopts a
 
 6           residential pier lease rent formula.  The lease rent
 
 7           formula is to be based on the fair market value of
 
 8           submerged lands being used for private residential
 
 9           noncommercial piers; and
 
10      (7)  Requiring the department of land and natural resources
 
11           to establish an equitable solution for lessees who have
 
12           been paying lease rent on submerged lands and the
 
13           private residential noncommercial piers thereon in
 
14           Kaneohe Bay, located offshore of property between
 
15           Kealohi Point and Nuupia Pond, which may include the
 
16           issuance of a lease rent credit.
 
17      SECTION 2.  Section 171-36, Hawaii Revised Statutes, is
 
18 amended by amending subsection (a) to read as follows:
 
19      "(a)  Except as otherwise provided, the following
 
20 restrictions shall apply to all leases:
 
21      (1)  Options for renewal of terms are prohibited;
 
22      (2)  No lease shall be for a longer term than sixty-five
 
23           years, except in the case of a residential leasehold
 

 
Page 5                                                     3168
                                     S.B. NO.           
                                                        
                                                        


 1           which may provide for an initial term of fifty-five
 
 2           years with the privilege of extension to meet the
 
 3           requirements of the Federal Housing Administration,
 
 4           Federal National Mortgage Association, Federal Land
 
 5           Bank of Berkeley, Federal Intermediate Credit Bank of
 
 6           Berkeley, Berkeley Bank for Cooperatives, or Veterans
 
 7           Administration requirements; provided that the
 
 8           aggregate of the initial term and extension shall in no
 
 9           event exceed seventy-five years;
 
10      (3)  No lease shall be made for any land under a lease which
 
11           has more than two years to run;
 
12      (4)  No lease shall be made to any person who is in arrears
 
13           in the payment of taxes, rents, or other obligations
 
14           owing the State or any county;
 
15      (5)  No lease shall be transferable or assignable, except by
 
16           devise, bequest, or intestate succession; provided that
 
17           with the approval of the board of land and natural
 
18           resources, the assignment and transfer of a lease or
 
19           unit thereof may be made in accordance with current
 
20           industry standards, as determined by the board;
 
21           provided further that prior to the approval of any
 
22           assignment of lease, the board shall have the right to
 
23           review and approve the consideration to be paid by the
 

 
Page 6                                                     3168
                                     S.B. NO.           
                                                        
                                                        


 1           assignee and may condition its consent to the
 
 2           assignment of the lease on payment by the lessee of a
 
 3           premium based on the amount by which the consideration
 
 4           for the assignment, whether by cash, credit, or
 
 5           otherwise, exceeds the depreciated cost of improvements
 
 6           and trade fixtures being transferred to the assignee;
 
 7           provided further that with respect to state
 
 8           agricultural leases, in the event of foreclosure or
 
 9           sale, the premium, if any, shall be assessed only after
 
10           the encumbrances of record and any other advances made
 
11           by the holder of a security interest are paid;
 
12      (6)  The lessee shall not sublet the whole or any part of
 
13           the demised premises except with the approval of the
 
14           board; provided that prior to the approval, the board
 
15           shall have the right to review and approve the rent to
 
16           be charged to the sublessee; provided further that in
 
17           the case where the lessee is required to pay rent based
 
18           on a percentage of its gross receipts, the receipts of
 
19           the sublessee shall be included as part of the lessee's
 
20           gross receipts; provided further that the board shall
 
21           have the right to review and, if necessary, revise the
 
22           rent of the demised premises based upon the rental rate
 
23           charged to the sublessee including the percentage rent,
 

 
Page 7                                                     3168
                                     S.B. NO.           
                                                        
                                                        


 1           if applicable, and provided that the rent may not be
 
 2           revised downward;
 
 3      (7)  The lease shall be for a specific use or uses and shall
 
 4           not include waste lands, unless it is impractical to
 
 5           provide otherwise; and
 
 6      (8)  Mineral and metallic rights and surface and ground
 
 7           water shall be reserved to the State[; and
 
 8      (9)  No lease of public lands, including submerged lands,
 
 9           nor any extension of any such lease, shall be issued by
 
10           the State to any person to construct, use, or maintain
 
11           a sunbathing or swimming pier or to use the lands for
 
12           such purposes, unless such lease, or any extension
 
13           thereof, contains provisions permitting the general
 
14           public to use the pier facilities on the public lands
 
15           and requiring that a sign or signs be placed on the
 
16           pier, clearly visible to the public, which indicates
 
17           the public's right to the use of the pier.  The board,
 
18           at the earliest practicable date, and where legally
 
19           possible, shall cause all existing leases to be amended
 
20           to conform to this paragraph.  The term "lease", for
 
21           the purposes of this paragraph, includes month-to-month
 
22           rental agreements and similar tenancies]."
 
23      SECTION 3.  Section 171-53, Hawaii Revised Statutes, is
 

 
Page 8                                                     3168
                                     S.B. NO.           
                                                        
                                                        


 1 amended by amending subsection (c) to read as follows:
 
 2      "(c)  The board, with the prior approval of the governor and
 
 3 the prior authorization of the legislature by concurrent
 
 4 resolution, may lease state submerged lands and lands beneath
 
 5 tidal waters under the terms, conditions, and restrictions
 
 6 provided in this chapter; provided that the authorization of the
 
 7 legislature shall not be required for leases issued under chapter
 
 8 190D; and provided further that the approval of the governor and
 
 9 authorization of the legislature shall not be required for any
 
10 grant of easement or lease of state submerged lands or lands
 
11 beneath tidal waters used for private residential noncommercial
 
12 piers, docks, moorings, cables, or pipelines; provided further
 
13 that this exemption shall not apply to easements for cables used
 
14 for interisland electrical transmission or slurry pipelines used
 
15 for transportive materials, mined at sea, or waste products from
 
16 the processing of the same.
 
17      The lease shall provide that the lands shall be reclaimed at
 
18 the expense of the lessee.  Title to the reclaimed lands shall
 
19 remain in the State."
 
20      SECTION 4.  Notwithstanding any law to the contrary, any
 
21 existing private residential noncommercial pier in Kaneohe Bay,
 
22 located offshore of property between Kealohi Point and Nuupia
 
23 Pond, on the effective date of this Act, shall be considered
 

 
Page 9                                                     3168
                                     S.B. NO.           
                                                        
                                                        


 1 nonconforming for the purposes of chapter 183C, Hawaii Revised
 
 2 Statutes; provided that the owner of the pier obtains all
 
 3 necessary approvals and land disposition from the department of
 
 4 land and natural resources.  Any penalties assessed under section
 
 5 183C-7(b), Hawaii Revised Statutes, against an owner of a pier
 
 6 deemed nonconforming under this section for violations under
 
 7 section 183C-5, Hawaii Revised Statutes, prior to the effective
 
 8 date of this Act shall be expunged.
 
 9      SECTION 5.  (a)  Notwithstanding any law to the contrary,
 
10 upon the effective date of this Act, there is established a lease
 
11 rent moratorium on all leases of submerged lands and the private
 
12 residential noncommercial piers thereon in Kaneohe Bay, located
 
13 offshore of property between Kealohi Point and Nuupia Pond.  The
 
14 moratorium shall remain in force until such time that the
 
15 department of land and natural resources adopts a private
 
16 residential noncommercial pier lease rent formula.  The lease
 
17 rent formula shall be based on the fair market value of submerged
 
18 lands being used for private residential noncommercial piers.
 
19      (b)  The department of land and natural resources shall:
 
20      (1)  Conduct an inventory of all state submerged lands being
 
21           used for private residential noncommercial piers;
 
22      (2)  Grant easement rights to use submerged lands for a
 
23           specified purpose; and
 

 
Page 10                                                    3168
                                     S.B. NO.           
                                                        
                                                        


 1      (3)  Establish an equitable solution for lessees who have
 
 2           been paying lease rent on submerged lands and the
 
 3           private residential noncommercial piers thereon in
 
 4           Kaneohe Bay, located offshore of property between
 
 5           Kealohi Point and Nuupia Pond, while the moratorium
 
 6           established under subsection (a) is in effect.  In
 
 7           developing a solution under this subsection, the
 
 8           department of land and natural resources may consider
 
 9           the issuance of a lease rent credit to qualified
 
10           lessees affected by the moratorium established under
 
11           subsection (a).
 
12      SECTION 6.  Statutory material to be repealed is bracketed.
 
13 New statutory material is underscored.
 
14      SECTION 7.  This Act shall take effect upon its approval.
 
15 
 
16                              INTRODUCED BY:______________________