STAND. COM. REP. NO. 287-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 1909
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committees on Tourism and Water and Land Use, to which
was referred H.B. No. 1909 entitled: 

     "A BILL FOR AN ACT RELATING TO PUBLIC LANDS,"

beg leave to report as follows:

     The purpose of this bill is to stimulate tourism in east
Hawaii by creating incentives for reinvestment in the resort and
other infrastructure of the Banyan Drive resort area in Hilo,
Hawaii.

     Specifically, this bill authorizes the Department of Land
and Natural Resources (DLNR) to issue new leases to existing
lessees of the Banyan Drive Resort area, subject to certain
conditions.

     The Chamber of Commerce of Hawaii, Bay Clinic, Inc., the
Hawaii Naniloa Hotel, and two individuals testified in support of
this measure.  The International Longshore & Warehouse Union
testified and submitted testimony in support of the intent of the
measure.  The Office of Hawaiian Affairs testified in opposition
to the measure.  Comments were submitted by DLNR.

     Your Committees note that there are fifteen total leases in
the Banyan Drive resort area.  Of the fifteen leases, there are
ten leases covering three resort facilities (Naniloa, Hilo Bay,
and Hilo Hawaiian), three leases for each of three
apartment/condominium facilities (Country Club, Bayview Banyan,
and Reed's Bay), one golf course lease, and one restaurant lease.

 
 
                                 STAND. COM. REP. NO. 287-00
                                 Page 2

 
With the majority of the leases in the Banyan Drive resort area
expiring in 2015, these affected lessees are faced with the
uncertainty of continued tenancy.  As the end of the lease term
nears, these lessees will have less and less incentive to make
major investments to improve their resort infrastructure and
ensure the long-term maintenance of their resorts.  It is your
Committees' belief that this bill provides a necessary incentive
to ensure the continued reinvestment in the Banyan Drive resort
area.

     Your Committees have amended this bill by:

     (1)  Requiring that the lease issuance process take into
          account the current fair market value, rather than the
          residual replacement value, of the tenant-owned
          improvements; and

     (2)  Making technical, nonsubstantive amendments for
          purposes of clarity and style.

     As affirmed by the records of votes of the members of your
Committees on Tourism and Water and Land Use that are attached to
this report, your Committees are in accord with the intent and
purpose of H.B. No. 1909, as amended herein, and recommend that
it pass Second Reading in the form attached hereto as H.B. No.
1909, H.D. 1, and be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Tourism and
                                   Water and Land Use,

                                   
                                   
                                   
                                   
______________________________     ______________________________
ROMY M. CACHOLA, Chair             JERRY L. CHANG, Chair