HB426

Report Title:

Public Lands; Kauai Leases

Description:

Authorize the department of land and natural resources to issue new leases to existing lessees for specific parcels on Kauai.

HOUSE OF REPRESENTATIVES	H.B. NO.	426
TWENTY-SECOND LEGISLATURE, 2003
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO PUBLIC LANDS.

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

SECTION 1. The legislature recognizes that, in view of the current economic downturn that the State of Hawaii is experiencing, it must take certain measures to stimulate the state economy. The legislature further recognizes that, since the county of Kauai has been particularly impacted, having experienced the devastating effect of Hurricane Iniki a few years ago, and the economic repercussions of the September 11th tragedy, the county of Kauai would greatly benefit from any measures taken to revitalize its local economy.

SECTION 2. Notwithstanding any law to the contrary, the department of land and natural resources is authorized to issue new leases to the existing lessee of those certain properties situated at Wailua, Lihue, Kauai, Hawaii, identified as parcels A-1, A-2 (parts 1 and 2), and B, being a portion of the Government (Crown) Land of Wailua and covered by General Lease Nos. S-3840, S-3831, and S-4647, respectively, subject to the following:

(1) Each new lease shall contain those conditions deemed appropriate by the department to carry out the purposes of this Act;

(2) The department may issue a request for proposal or other means to ensure that a fair, open, and competitive process is used to determine competition for the parcel subject to the requirement that the site be used for hotel purposes. This process shall take into account the current fair market value of the tenant-owned improvements under the terms of each existing lease. The current fair market value shall be negotiated and agreed to between the lessee and the lessor. If the current fair market value is agreed upon, the department may initiate a request for proposal process to reveal whether there are other entities seriously interested in obtaining the lease subject to the requirement that the site be used for hotel purposes. If this process shows a willing and able bidder, the department shall go out for auction with the understanding that the successful bidder shall pay the existing lessee the current fair market value of all tenant-owned improvements in full at closing. If there are no qualified entities, or if the lessee is the successful bidder, then new leases may be issued to the existing lessee for a term not to exceed sixty-five years; and

(3) If new leases are issued, then the following may be contained in each lease:

(A) Fair market rent, excluding tenant-owned improvements;

(B) Percentage rent where gross receipts from the for-profit activities on the property exceed a certain level; and

SECTION 3. It is the express intent of this Act to ensure that the State is receiving a fair return from public lands and that investment is made into the infrastructure associated with the leases, and the legislature not interfere with market forces by subsidizing these uses.

SECTION 4. The lands eligible for lease under section 2 of this Act shall be limited to the existing leases with infrastructure identified as General Lease Nos. S-3840, S-3831, and S-4647.

SECTION 5. All costs for the issuance of each new lease, including determining the current fair market value and the request for proposals, shall be paid for by the lessee interested in acquiring the new lease.

SECTION 6. This Act shall take effect on July 1, 2003.

INTRODUCED BY:	_____________________________