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 S.C.R. No. 209 entitled:

begs leave to report as follows:

The purpose of this measure is to establish a program to train appraisers in income capitalization appraisals and to establish a pilot program to implement and track the income capitalization appraisals for reopenings of state agricultural leases.

The Department of Land and Natural Resources and the Hawaii Farm Bureau Federation 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 is not as accurate, 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 S.C.R. No. 209 and recommends that it be referred to the Committee on Ways and Means.