Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Water, Land, and Agriculture, to which was referred H.B. No. 426, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to direct the Department of Land and Natural Resources to issue new, long-term leases to certain existing lessees for specific parcels on Kauai.

Testimony in support of this measure was submitted by the Kauai Beachfront Hotel, LLC; Friends of the Forest Koke`e Leaseholders Association; and twenty-two concerned Koke`e and Waimea Canyon State Park lease holders. Testimony in opposition to the measure was submitted by the Board of Land and Natural Resources.

Your Committee finds that Kauai business owners need to reinvest in their properties to help stimulate much needed economic growth on Kauai. Leasehold property owners are having difficulties finding financing for capital improvements when their leases are for fewer than thirty years.

Your Committee has amended the measure to further clarify its purpose and to require the winner of a new lease at public auction to pay the existing lessees the greater of the fair market value or the depreciated cost of their improvements.

As affirmed by the record of votes of the members of your Committee on Water, Land, and Agriculture that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 426, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 426, H.D. 1, S.D. 1, and be referred to the Committee on Ways and Means.