STAND. COM. REP. NO. 800-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 1998
                                     H.D. 2




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

Sir:

     Your Committee on Finance, to which was referred H.B. No.
1998, H.D. 1, entitled: 

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

begs leave to report as follows:

     The purpose of this bill is to:

     (1)  Allow a lessee, upon the expiration of an agricultural
          lease and subsequent public auction, a right of first
          refusal;

     (2)  Credit the appraised value of all infrastructure
          directly related to the agricultural operation,
          excluding residences, toward the price the current
          lessee must match in exercising the right of first
          refusal;

     (3)  Allow the Department of Land and Natural Resources
          (DLNR) to adopt rules relating to appraisals, lease
          terms and duration, cost recovery, and other issues;
          and

     (4)  Require DLNR to notify all agricultural lessees of this
          Act within six months of its effective date.

     The Hawaii Farm Bureau Federation, the Big Island Farm
Bureau, Hawaii Agriculture Research Center, Garst Seed Company,
Hawaii Egg Producers Cooperative, Hawaii Cattlemen's Council,

 
 
                                 STAND. COM. REP. NO. 800-00
                                 Page 2

 
Inc., Hawaiian Sunshine Nursery, Inc., Big Island Association of
Nurserymen, and H. Eunice Nursery, Inc. testified in support of
this measure.  The Hawaii Aquaculture Association supported the
intent of the measure.  DLNR and an individual commented on the
measure.

     Upon further consideration, your Committee has amended this
bill by:

     (1)  Adding a findings and purpose section;

     (2)  Requiring that the lessee must exercise the right of
          first preference within 60 days immediately following
          the auction;

     (3)  Specifying that the infrastructure credit be based on
          the fair market value of such improvements;

     (4)  Authorizing DLNR to negotiate long-term leases with
          those farmers who are currently on month-to-month
          tenancies;

     (5)  Replacing the term "right of first refusal" with "right
          of first preference"; and

     (6)  Making technical, nonsubstantive amendments for
          clarity, style, and consistency.

     As affirmed by the record of votes of the members of your
Committee on Finance that is attached to this report, your
Committee is in accord with the intent and purpose of H.B. No.
1998, H.D. 1, as amended herein, and recommends that it pass
Third Reading in the form attached hereto as H.B. No. 1998, H.D.
2.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Finance,



                                   ______________________________
                                   DWIGHT Y. TAKAMINE, Chair