STAND. COM. REP. NO. 403-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 1998
                                     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 Agriculture and Water and Land Use, to
which was referred H.B. No. 1998 entitled: 

     "A BILL FOR AN ACT RELATING TO STATE LEASES,"

beg leave to report as follows:

     The purpose of this bill is to allow the Department of Land
and Natural Resources (DLNR) to extend leases made for
agricultural purposes to lessees in good standing, provided that:

     (1)  The lessee pays a premium equal to two years lease rent
          as a condition of the extension; and

     (2)  DLNR may accept, in lieu of cash payment or a part
          thereof, the value of improvements made (as determined
          by rule) to the leased property within ten years of the
          extension.

     The Big Island Farm Bureau, GARST, Hawaiian Sunshine
Nursery, Inc., H. Eunice Nursery, Inc., the Hawaii Farm Bureau
Federation, the Hawaii Egg Producers Cooperative, and an
individual  testified in support of this measure.  The Hawaii
Agriculture Research Center and the Hawaii Aquaculture
Association testified in support of the intent of this measure.
An individual testified in opposition to the measure.  Comments
were received from DLNR, the Pineapple Growers Association of
Hawaii, and an individual.


 
 
 
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     Your Committees note that within the next ten years, over 30
percent of the State's agricultural leases will expire.  Current
practice requires that these agricultural leases go through an
auction process with the lease given to the highest bidder.  Your
Committees find that existing tenants have no recourse to extend
their leases unless the tenant is the highest bidder in the
auction.  In addition, existing tenants must also bid on the
improvements they have made on their leased land.  This bill
provides farmers with some security for their infrastructure
investment on leased state land.

     Upon consideration, your Committees have amended this bill
by:

     (1)  Deleting the provision relating to the extension of
          leases made for agricultural purposes by DLNR to a
          lessee in good standing;

     (2)  Deleting the payment stipulations;

     (3)  Giving current lessees, at the time of expiration of
          their agricultural leases, a right of first refusal to
          lease their property, provided that the right shall
          lapse unless DLNR is notified in writing of the
          exercise of the right within an unspecified number of
          days after the auction; and

     (4)  Crediting the appraised value of all infrastructure
          directly related to the agriculture operation and
          installed by the current lessee, toward the price the
          current lessee must match in exercising the lessee's
          right of first refusal.

     As affirmed by the records of votes of the members of your
Committees on Agriculture 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. 1998, as amended herein, and
recommend that it pass Second Reading in the form attached hereto
as H.B. No. 1998, H.D. 1, and be referred to the Committee on
Finance.


 
 
 
 
 
 
 
 
                                 STAND. COM. REP. NO. 403-00
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                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Agriculture and
                                   Water and Land Use,

                                   
                                   
                                   
                                   
______________________________     ______________________________
ROMY M. CACHOLA, Chair             FELIPE P. ABINSAY, JR., Chair