WHEREAS, over the years, the Territory of Hawaii and the State have been granting permits for recreational-residences in the Kokee and Waimea Canyon State Parks; and

WHEREAS, section 171-44, Hawaii Revised Statutes, provides the following:

WHEREAS, there are now approximately one hundred forty recreation-residence use leases in the Kokee and Waimea Canyon State Parks; and

WHEREAS, the Board of Land and Natural Resources has directed the Department of Land and Natural Resources to conduct a public auction of all of its recreation-residence use leases in the Kokee and Waimea Canyon State Parks when their terms expire in December 2006; and

WHEREAS, many of the existing lessees have made substantial improvements on their leased lots and do not want to abandon these improvements; and

WHEREAS, the Legislature commends the Board and the Department for its long and arduous consideration of every conceivable option to fulfill its trust responsibilities and to arrive at a fair and equitable means of the disposition of residential-recreational lots at Kokee upon the expiration of the existing leases; and

WHEREAS, the Legislature strongly believes, however, that the Board's decision to subject disposition to the public auction process will not achieve the fairness and realistic opportunity that the public auction intends, but will instead severely limit successful awards to the wealthy, especially out-of-state investors, who will acquire and utilize these special properties for selfish or for-profit reasons, including time sharing or such similar arrangements as are already being indicated in the market place; and

WHEREAS, the option to limit initial auction to Kauai and subsequently to statewide residents, even if ruled to be constitutional, would only result in Kauai or state residents to be used as "go-betweens" in the auction; or that any successful Kauai or state resident bidders would soon be made offers "too good to refuse" on the new leases, with the same unintended result; and

WHEREAS, while the Legislature agrees that direct negotiations with existing lessees denies other members of the public an open opportunity to acquire these sought-after leases, the public auction process will not achieve this purpose and will only serve to produce unacceptable consequences, including the undesirable "bidding frenzy" experienced in 1985; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-third Legislature of the State of Hawaii, Regular Session of 2006, that the purpose of this Resolution is to provide legislative policy guidance to the Board of Land and Natural Resources in the administration of residential-recreational leases at Kokee on the island of Kauai; and

BE IT FURTHER RESOLVED that the Board of Land and Natural Resources is requested to provide "first right of refusal" to existing lessees who wish to renew their leases, the majority of whom are local, Kauai residents who desire to retain these leases for the enjoyment of their families, friends, and members of the community; and

BE IT FURTHER RESOLVED that the Legislature intends that the leases be renewed at "fair market value" and that an expired lease shall be auctioned only after reasonable negotiations fail to result in agreement; provided that the new lessee shall compensate the prior lessee for improvements on the lot at the tax assessed valuation of the improvements, unless the prior lessee wishes to exercise the option of an appraisal of the improvements at the prior lessee's own expense, in which case, the new lessee may also secure an appraisal at the new lessee's own expense, and if no agreement on valuation can be reached, a third independent appraiser by the two appraisers and the costs of the third appraiser shall be jointly shared by both the prior and new lessee; and

BE IT FURTHER RESOLVED that the Legislature emphatically believes that the above described policy in the disposition of improvements is both appropriate and fair, notwithstanding existing contracts or policies, as it would be absolutely unfair and illogical for a new successful bidder, bidding only on the land, to gain possession of valued improvements without rendering payment to the prior lessee or to the State, if the reversionary provision were to be applied, and it would be totally unfair for a prior lessee to bid on the land with the improvements on which the prior lessee had paid for in its entirety; and

BE IT FURTHER RESOLVED that the Legislature intends that the Board shall consider the establishment of Kokee, along with designated qualifying cabins, as a historic preservation district as provided in chapter 6E, Hawaii Revised Statutes, and the Code of Federal Regulations, Title 36, Part 60; and

BE IT FURTHER RESOLVED that the Legislature requests that the Board adopt as a primary goal the reduction and eventual elimination of the recreation-residence lots at Kokee through attrition or other appropriate means, including not renewing any lease where the improvements have fallen into disrepair or the value of the improvements do not meet specified criteria or standards as determined by the Board or through administrative rule; and

BE IT FURTHER RESOLVED that the Legislature intends that the Board and Department shall expeditiously pursue the concept of lodges, under privatized construction and management contracts, to enable the public, without benefit of access to one of the few cabins, the enjoyment of the Kokee experience; and

BE IT FURTHER RESOLVED that the Board is requested to implement the policies as outlined in this Resolution or, in the alternative, defer any plans to terminate or auction the Kokee residential-recreational use lots for two years to allow for consideration and implementation of these policies, or to explain to the Legislature why it should not or legally cannot proceed with the policies set forth in this Resolution; and

BE IT FURTHER RESOLVED that the Chairperson of the Board of Land and Natural Resources is requested to provide the respective House and Senate chairs of the committees overseeing water and land use matters with updated status reports of actions taken, or not taken by the Board following its regular monthly meetings on any of these issues, and is further requested to submit a report to the Legislature not later than twenty days prior to the convening of the Regular Session of 2007 on its implementation of the policies set forth in this Resolution; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Chairperson of the Board of Land and Natural Resources, the Attorney General, and the Kokee Leaseholders Association.

Report Title:

Board of Land and Natural Resources; Kokee and Waimea Canyon State Parks