RESOLUTION

WHEREAS, the State Constitution mandates that public lands be used for the development of farm and homeownership on a widespread basis, if possible; and

WHEREAS, it is in the best interests of the State that agricultural lands be used productively and in a reasonable way to emphasize sustainability and preservation of state agricultural lands; and

WHEREAS, the Uniform Standards of Professional Appraisal Practice allow appraisers to analyze all information applicable to the appraisal methodology, including sales comparison, cost, and income approaches; and

WHEREAS, determining lease rent rates by sales comparisons may dramatically increase lease rent rates during times when real estate market sales are high; and

WHEREAS, appraisers lack the knowledge or understanding necessary to use the income capitalization approach which factors in the agricultural yield of farmed land; and

WHEREAS, there is a shortage of appraisers who are capable of using the income capitalization approach; and

WHEREAS, there is an urgent need to train appraisers to use the income capitalization approach to establish reasonable lease rent rates for state agricultural lease rent reopenings; and

WHEREAS, the Department of Land and Natural Resources (DLNR) is encouraged to work with the Department of Agriculture (DOA) to maintain the agricultural production statistics necessary to use the income capitalization approach which will stabilize state agricultural lease rent rates; now, therefore,

BE IT RESOLVED, the House of Representatives of the Twenty-third Legislature of the State of Hawaii, Regular Session of 2005, the Senate concurring, that DLNR is requested to establish a training program, in conjunction with the local real estate appraiser's national organization, and, as part of their professional educational seminars, to train real estate appraisers to use the income capitalization approach to set lease rent rates for state agricultural lease reopening; and

BE IT FURTHER RESOLVED that DLNR is requested to establish a pilot program implementing the income capitalization approach using the agricultural yield of the leased land to set lease rent rates for state agricultural lease reopening; and

BE IT FURTHER RESOLVED that DLNR is requested to report its findings and recommendations, including the lease rent amounts resulting from using this methodology, to the Legislature no later than 20 days prior to the convening of the Regular Session of 2007; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Chairperson of the Board of Land and Natural Resources, the Chairperson of the Board of Agriculture, and the local real estate appraiser's national organization.

Report Title:

Pilot Project; Income Capitalization Approach; Appraisers