Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Water, Land, and Agriculture, to which was referred H.C.R. No. 262, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to request the Department of Land and Natural Resources (DLNR) to establish a training program in conjunction with the local real estate appraisers' national organization to train real estate appraisers to use the income capitalization approach to set lease rent rates for state agricultural lease reopening.

The Department of Land and Natural Resources submitted testimony in support of this measure.

In many parts of Hawaii, state lands are used for agricultural purposes, and as state agricultural leases are reopened, appraisals of lands are used to determine appropriate lease rents. A common way to appraise agricultural land is by comparing the appraised property with other land sales; however, this method leads to problems, as this approach tends to inflate lease rents.

Your Committee finds that the income capitalization approach is a more accurate application as it appraises the value of the agricultural land based on its agricultural yield; however, there is a shortage of appraisers who are capable of using this approach. Thus, this measure requests the Department of Land and Natural Resources to:

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 concurs with the intent and purpose of H.C.R. No. 262, H.D. 1, and recommends its adoption.