Report Title:

Agribusiness Development Corporation; Department of Land and Natural Resources; Agricultural Leases

Description:

Transfers the administration of agricultural leases in the Department of Land and Natural Resources to the Agribusiness Development Corporation. (SD1)

THE SENATE

S.B. NO.

3079

TWENTY-THIRD LEGISLATURE, 2006

S.D. 1

STATE OF HAWAII

  

 

A BILL FOR AN ACT

 

RELATING TO AGRICULTURAL LEASES.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Chapter 163D, Hawaii Revised Statutes, is amended by adding twenty new sections to be appropriately designated and to read as follows:

"§163D-A Auction pre-qualification; agricultural and pasture leases. (a) Whenever used in this section, unless otherwise apparent from the context:

"Farm" also means "ranch" and "farmer" also means "rancher."

"Individual" means a natural person who is not a part of a partnership, corporation, or joint venture which is a potential bidder under this section.

"Nonindividual concern" means a partnership, corporation, or joint venture properly formed under law and which is a potential bidder under this section.

(b) Any other law to the contrary notwithstanding, to be eligible to bid in an auction for agricultural or pasture lease, a potential bidder shall be a bona fide individual farmer or a nonindividual farm concern:

(1) Who has spent not less than two years, full-time, in farming operations;

(2) Who is an owner-operator of an established farm conducting a substantial farming operation;

(3) Who for a substantial period of the individual's adult life resided on a farm and depended on farm income for a livelihood;

(4) Who is an individual who has been a farm tenant or farm laborer or other individual, who has for the two years last preceding the auction obtained the major portion of their income from farming operations;

(5) Is an individual with a college degree in agriculture;

(6) Is an individual who by reason of ability, experience, and training as a vocational trainee is likely to successfully operate a farm;

(7) Who has qualified for and received a commitment for a loan under the Bankhead-Jones Farm Tenant Act as amended, or as may hereafter be amended, for the acquisition of a farm;

(8) Who is an individual who is displaced from employment in an agricultural production enterprise;

(9) Who is a member of the Hawaii Young Farmer Association or a Future Farmer of America graduate with two years of training with farming projects;

(10) Who possesses the qualifications under the new farmer program pursuant to section 155-1; or

(11) Who possesses other qualifications as the corporation may prescribe pursuant to section 171-6 and this section.

§163D-B Drawing. Whenever public lands are to be sold or leased by drawing, the corporation shall notify by publication of applications for the drawing with details concerning the drawing as it shall deem necessary and desirable. Applications to participate in the drawing shall be filed with the corporation within two weeks after the last publication date. Within forty-five days after the closing date for applications, the corporation shall screen the qualifications of the applicants, select those qualified to participate, notify all applicants of the selection and conduct a drawing. The date of the drawing shall be published. The award shall be made within one week and all applicants shall be notified of the result of the drawing. The lease or patent shall be issued within ninety days after the drawing or when conditions of sale are fulfilled.

§163D-C Notices. (a) Public notice of any proposed disposition by auction shall be given at least once statewide and once in the county where the land being disposed of is located. Notice of the auction shall contain the following:

(1) Time and place of the auction;

(2) General description of the land, including the address and tax map key;

(3) Specific use for which the disposition is intended; and

(4) Upset price or rental to be charged.

The maps showing the metes and bounds description and the classification of the land shall be kept in the office of the corporation and of its land agent in the county in which the land is situated, and shall be open for inspection at all reasonable hours.

(b) Whenever a disposition by drawing of lots is proposed, public notice inviting applications to participate in the drawing shall be given once statewide and once in the county where the land being disposed of is located. The notice shall contain:

(1) The qualifications required of applicants;

(2) A general description of the land, including the address and tax map key;

(3) Specific use for which the disposition is intended; and

(4) Date by which all applications must be filed, which date shall be not less than fourteen days after the last notice.

Within forty-five days after the closing date for applications, the corporation shall select those qualified to participate in the drawing, notify all applicants as to whether or not they qualified, and conduct the drawing.

The notice of selection of applicants qualified to participate in the drawing, together with the notice of drawing, shall be mailed to each applicant, whether or not the applicant, in fact, qualified. The notice of the drawing shall state the time and place of the drawing. Upon completion of the drawing, the award shall be announced within one week, and the lease issued within ninety days after the drawing or when the conditions of the sale are fulfilled.

(c) Public notice of a proposed disposition by negotiation shall be given at least once statewide and once in the county where the land being disposed of is located; provided that the notices are not required for permits and dispositions of remnants. The notice shall invite proposals and state in general terms the size, location, and prices or rental of lots to be leased, the terms of the lease, and the last date on which application will be received by the corporation, which date shall not be less than thirty days after the last date of the notice. The notice shall also state the times and places at which more detailed information with respect to the lease may be secured by interested persons.

(d) Whenever it is proposed to exchange public lands for private land, quitclaim public land, or any interests of the State in private land; dispose of submerged or reclaimed public land; dispose of a land license by negotiation; or dispose of reserved rights and easements, public notice of the disposition shall be given at least once statewide and once in the county where the land or other interests being disposed of are located. The notice shall state in general terms the size and location of the public lands proposed to be disposed.

(e) In addition to giving public notice, any public notice required under this section shall also be posted on the Internet in an easily located manner.

§163D-D Appraisals. (a) The appraisal of public lands for lease at public auction for the determination of the upset price may be performed by an employee of the corporation qualified to appraise lands or by one but not more than three disinterested appraisers whose services shall be contracted for by the corporation; provided that the upset rental shall be determined by disinterested appraisal whenever prudent management dictates. No lands shall be leased for a sum less than the value fixed by appraisal; provided that for any lease at public auction, the corporation may establish the rental price at less than the appraisal value set by an employee of the corporation and the land may be leased at that price. The corporation shall be reimbursed by the lessee for the cost of any appraisal required to be made by a disinterested appraiser or appraisers contracted for by the corporation.

(b) The lease rental of lands to be disposed of by drawing or negotiation shall be no less than the value determined by:

(1) An employee of the corporation qualified to appraise lands; or

(2) A disinterested appraiser or appraisers whose services shall be contracted for by the corporation, and with the approval of the corporation, shall be paid by the purchaser;

provided that the lease rental shall be determined by disinterested appraisal whenever prudent management dictates; provided further that should the purchaser fail to agree upon the lease rental, the purchaser may appoint an appraiser who together with the corporation's appraiser shall appoint a third appraiser, and the lease rental shall be determined by arbitration which shall be final and binding. The purchaser shall pay for all appraisal costs, except that the cost of the third appraiser shall be borne equally by the purchaser and the corporation.

(c) In the event of reopening of the rental to be paid on a lease, the rental for any ensuing period shall be the fair market rental at the time of reopening. At least six months prior to the time of reopening, the fair market rental shall be determined by:

(1) An employee of the corporation qualified to appraise lands; or

(2) A disinterested appraiser whose services shall be contracted for by the corporation;

and the lessee shall be promptly notified of the determination; provided that should the lessee fail to agree upon the fair market rental, the lessee may appoint the lessee's own appraiser who together with the corporation's appraiser shall appoint a third appraiser and the fair market rental shall be determined by arbitration. The lessee shall pay for the lessee's own appraiser, the corporation shall pay for its appraiser, and the cost of the third appraiser shall be borne equally by the lessee and the corporation. Any language in present leases to the contrary notwithstanding, the provisions of this subsection, when possible and notwithstanding the six-month notice required, shall apply to leases with original lease rental reopening dates effective                     .

(d) Whenever more than one appraiser is appointed, each shall prepare and submit an independent appraisal. All appraisal reports shall be available for study by the public.

§163D-E Public land trust. All funds derived from the lease or other disposition of public lands shall be appropriated by the laws of the State; provided that all proceeds and income from the lease, or other disposition of lands ceded to the United States by the Republic of Hawaii under the joint resolution of annexation, approved July 7, 1898 (30 Stat. 750), or acquired in exchange for lands so ceded, and returned to the State of Hawaii by virtue of section 5(b) of the Act of March 18, 1959 (73 Stat. 6), and all proceeds and income from the lease or other disposition of lands retained by the United States under sections 5(c) and 5(d) of the Act and later conveyed to the State under section 5(e) shall be held as a public trust for the support of the public schools and other public educational institutions, for the betterment of the conditions of native Hawaiians as defined in the Hawaiian Homes Commission Act, 1920, as amended, for the development of farm and home ownership on as widespread a basis as possible, for the making of public improvements, and for the provision of lands for public use.

§163D-F Notice of breach or default. Except as otherwise provided in this chapter, in the event of a breach or default of any term, covenant, restriction, or condition of any lease issued under this chapter, the corporation shall deliver a written notice of the breach or default by personal service or by registered or certified mail to the party in default and to each holder of record having any security interest in the land covered by or subject to the lease making demand upon the party to cure or remedy the breach or default within sixty days from the date of receipt of the notice; provided that where the breach involves a failure to make timely rental payments pursuant to the lease issued under this chapter, the written notice shall include a demand upon the party to cure the breach within less than sixty days, but not less than five business days, after receipt of the notice. Upon failure of the party to cure or remedy the breach or default within the time period provided herein or within an additional period as the corporation may allow for good cause, the corporation may exercise the rights under the law or as provided in the lease.

§163D-G Rights of holder of security interest. Whenever any notice of breach or default is given to any party, or under the terms of any lease, agreement, or other instrument issued or to be issued under this chapter, a copy of the notice shall be delivered by the corporation to all holders of record of any security interest in the land or interest covered by the lease, agreement, or other instrument whose security interest has been recorded with the corporation. If the corporation seeks to forfeit the privilege, interest, or estate created by the lease, agreement, or other instrument, each holder may, at its option, cure or remedy the breach or default, if the same can be cured or remedied by the payment of money or by performing or undertaking in writing to perform all the terms, covenants, restrictions, or conditions of any lease, agreement, or other instrument capable of performance by the holder, as determined by the corporation, within a reasonable time period or within an additional period as the corporation may allow for good cause and add the cost thereof to the mortgage debt and the lien of the mortgage. Upon failure of the holder to exercise its option, the corporation may:

(1) Pay to the holder from any moneys at its disposal, the amount of the mortgage debt, together with interest and penalties, and secure an assignment of the debt and mortgage from the holder, or if ownership of the interest or estate shall then have vested in the holder by way of foreclosure or action in lieu thereof, the corporation shall be entitled to a conveyance of the interest or estate upon payment to the holder of the amount of the mortgage debt, including interest and penalties, and all reasonable expenses incurred by the holder in connection with the foreclosure and preservation of its security interest, less appropriate credits, including income received from the privilege, interest, or estate subsequent to the foreclosure; or

(2) If the property cannot be reasonably reassigned without loss to the State, then terminate the outstanding privilege, interest, or estate without prejudice to any other right or remedy for arrears of rent or for any preceding or other breach or default, and use its best efforts to redispose of the affected land to a qualified and responsible person free and clear of the mortgage and the debt thereby secured; provided that a reasonable delay by the corporation in instituting or prosecuting any right or remedy it may have under this section shall not operate as a waiver of the right or to deprive it of the remedy when it may still hope otherwise to resolve the problems created by the breach or default involved.

The proceeds of any redisposition under paragraph (2) shall be applied: first, to reimburse the corporation for costs and expenses in connection with the redisposition; second, to discharge in full any unpaid purchase price or other indebtedness owing the State in connection with the privilege, interest, or estate terminated; third, to the mortgagee to the extent of the value received by the State upon redisposition which exceeds the fair market lease value of the land as previously determined by the State's appraiser; and fourth, to the owner of the privilege, interest, or estate. Nothing contained in this section shall be construed in a manner as to infringe upon or prejudice in any way the rights of a holder of record having a security interest which shall have vested prior to the effective date hereof, and to the extent that this section may conflict and adversely affect such interests, the same shall be of no force and effect.

§163D-H Consent to mortgage. Whenever under this chapter or under any lease, or other instrument issued by the corporation, consent of the State is required as a condition precedent to the mortgage of, or the creation of a security interest in public land, the corporation, upon due application, may grant the consent, and if the mortgage or security interest is to a recognized lending institution authorized to do business as a lending institution in either the State or elsewhere in the United States, the consent may extend to foreclosure and sale at the foreclosure to any purchaser, including the mortgagee, without regard to whether or not the purchaser is qualified under this chapter to lease or otherwise acquire and hold the land or any interest therein. The interest of the mortgagee or holder shall be freely assignable. The term "holder" includes an insurer or guarantor of the obligation or condition of the mortgage, including the Federal Housing Administration, the Federal National Mortgage Association, the Veterans Administration, the Small Business Administration, the United States Department of Agriculture, or any other federal agency and their respective successors and assigns, or any lending institution authorized to do business in the State or elsewhere in the United States; provided that the consent to mortgage to a nongovernmental holder shall not confer any greater rights or powers in the holder than those which would be required by any of the aforementioned federal agencies.

§163D-I Planning; intensive agricultural and pasture uses. (a) If the intended disposition of leased land is for intensive agricultural or pasture uses, the corporation shall:

(1) Make or cause to be made an on-the-ground inspection of the land;

(2) Secure data or information from the land study bureau relating to the land parcel;

(3) Review any other pertinent information with respect to the land and the surrounding area; and

(4) Based upon information obtained, prepare a written report on the land, which report shall include the following:

(A) The class of the land within the specific use for which disposition is intended;

(B) The condition of the land with respect to its state of development;

(C) Existing improvements, if any;

(D) Extent of uncontrolled erosion if any;

(E) Nature of forage; and

(F) Extent of infestation with noxious weeds.

(b) For the purposes of this section "intensive agricultural use" shall have the same meaning as that term is referred to in section 171-10.

§163D-J Lease provisions; generally. Every lease issued by the corporation shall contain:

(1) The specific use or uses to which the land is to be employed;

(2) The improvements required; provided that a minimum reasonable time be allowed for the completion of the improvements;

(3) Restrictions against alienation;

(4) The rent, as established by the corporation or at public auction, which shall be payable not more than one year in advance, in monthly, quarterly, semiannual, or annual payments;

(5) Where applicable, adequate protection of forests, watershed areas, game management areas, wildlife sanctuaries, and public hunting areas, reservation of rights-of-way and access to other public lands, public hunting areas, game management areas, or public beaches, and prevention of nuisance and waste; and

(6) Other terms and conditions as the corporation deems advisable to more nearly effectuate the purposes of the state constitution and of this chapter.

§163D-K Lease restrictions; intensive agricultural and pasture uses. The following restrictions shall apply to all leases for intensive agricultural and pasture uses:

(1) The lease term shall be not less than fifteen years nor more than thirty-five years, except that if the type of disposition requires the lessee to occupy the premises as the lessee's own personal residence, it may be longer than thirty-five years, but not in excess of seventy-five years, and except in the case of a tree-crop orchard lease the term shall not be in excess of forty-five years.

(2) If the land being leased is not immediately productive and requires extensive expenditures for clearing, conditioning of the soil, the securing of water, the planting of grasses, or the construction of improvements, as the result of which a longer term is necessary to amortize the lessee's investment, then the lease term may be longer than thirty-five years, but not in excess of fifty-five years.

(3) The land leased hereunder, or any portion thereof, shall be subject to withdrawal by the corporation at any time during the term of the lease with reasonable notice and without compensation, except as provided by the corporation pursuant to rules adopted under chapter 91.

§163D-L Condemnation of leases. The lease shall provide that whenever a portion of the public land under lease is condemned for public purposes by the State, any county, or any other governmental agency or subdivision, the rental shall be reduced in proportion to the value of the portion of the premises condemned, and the lessee shall be entitled to receive from the condemning authority:

(1) The value of growing crops, if any, which the lessee is not permitted to harvest; and

(2) The proportionate value of the lessee's permanent improvements, taken in the proportion that it bears to the unexpired term of the lease; provided that the lessee may, in the alternative, remove and relocate the lessee's improvements to the remainder of the lands occupied by the lessee.

The foregoing rights of the lessee shall not be exclusive of any other to which the lessee may be entitled by law. Where the portion so taken renders the remainder unsuitable for the uses for which the land was leased, the lessee shall have the option to surrender the lessee's lease and be discharged of any further liability therefor; provided that the lessee may remove the lessee's permanent improvements within a reasonable period allowed by the corporation.

§163D-M Leases; forfeiture. Upon the violation of any condition or term of any lease to be observed or performed by the lessee or tenant, the corporation, after the notice of default and subject to the rights of each holder of record having a security interest, shall terminate the lease or tenancy and take possession of the leased land, without demand or previous entry and without legal process, together with all improvements placed thereon and shall retain all rent paid in advance as damages for the violations.

§163D-N Expired leases; holdover. Upon expiration of a lease term, if the leased land is not otherwise disposed of, the corporation may allow the lessee to continue to hold the land for a period not exceeding one year upon such rent, terms, and conditions as the corporation may prescribe; provided that if, immediately prior to the expiration of the lease, the land was cultivated with crops having ratoons for at least one cycle, the corporation may permit the lessee to continue to hold the leased land until the crops from the last remaining cycle have been harvested. The term "cycle" as used in this section means the period required to plant and cultivate the original crop, including the harvesting of the first ratoon, being a period exceeding two years.

Upon expiration of the one-year extension, if the board has not yet decided upon the re-lease of the land for other purposes, the corporation may issue a temporary permit to the lessee and the rent and any other terms and conditions as the corporation may prescribe.

§163D-O Agricultural plots. The corporation, in cooperation with the department of agriculture and the city and county of Honolulu, shall adopt rules in accordance with chapter 91 to allow for use of vacant public lands for farming or agricultural recreation.

§163D-P Leases, leases with option to purchase, sales permitted; when. Land intended for disposition as farm lot for truck crops or for horticultural, pasture, or special livestock use, may be disposed of by lease, lease with option to purchase, or in fee simple. The disposition may be by drawing of lot, without recourse to public auction, notwithstanding any other provision in this chapter to the contrary; provided that the right to any values in the land not attributable to these agricultural uses shall be reserved to the State.

Dispositions under this section shall be made only to individuals who satisfy the requirements established by the corporation, pursuant to rules adopted under chapter 91, and then only if the individual, either oneself or whose spouse, or both, does not already own lands of comparable use in the State; provided that the ownership by the individual or the individual's spouse of lands of comparable use shall not be a disqualification in applying for a lease within an agricultural park.

§163D-Q Planning. Prior to making dispositions under section 163D-P, the corporation shall:

(1) Determine the economic feasibility and need for the proposed disposition;

(2) Determine the minimum economic unit required for the successful undertaking of the specific use intended, taking into consideration soil fertility, soil condition, and availability of water; and

(3) Subdivide the land into economic units and make improvements as are necessary in conformity with applicable county or city and county zoning and subdivision requirements, including the construction of necessary roads and irrigation facilities.

§163D-R Restrictions; conditions. In addition to other restrictions or conditions that may be established by the corporation to carry out the purpose of this chapter and of the provisions of the state constitution, all sale, lease, or lease with option to purchase, of a farm lot shall be subject to the following conditions, which shall be covenants running with the land:

(1) The lot shall be used for farm purposes only;

(2) The purchaser or lessee shall reside on the premises granted; provided that with the consent of the corporation, the purchaser or lessee may live off the premises if the purchaser's or lessee's residence is within a reasonable distance;

(3) The purchaser or lessee shall derive the major portion of the purchaser's or lessee's total annual income from the production of the crops or products for which production the land is granted to the purchaser or lessee; provided that this restriction shall not apply if the purchaser or lessee becomes enfeebled or is widowed;

(4) In the case of a lease, unless otherwise specifically provided in this section;

(5) In the case of a fee simple sale, the improvement required and the specific use or uses intended;

(6) For a period of five years after the issuance of a lease, the purchaser or lessee shall not sell, sublet, assign, transfer, or in other manner dispose or encumber the whole or any part of the farm lot to any person not qualified to take a farm lot except by way of mortgage, testamentary bequest or devise, intestate succession, or except to a purchaser at or after sale upon the foreclosure of a mortgage.

The violation of any restrictions or conditions shall be sufficient for the corporation, upon failure of the purchaser or lessee within a reasonable period of time to remedy the default after notice to take possession of the premises without demand or previous entry and with or without legal process and thereby determine the estate.

§163D-S Applicants; qualifications. (a) A person shall be eligible to apply for a farm if the person has the qualifications as follows:

(1) The person has been a resident in the State at any time for at least three years;

(2) The person is a bona fide farmer:

(A) Who has not less than two years' experience as a full-time farmer; or

(B) Who was an owner-operator of an established farm conducting a substantial farming operation and who for a substantial period of the person's life resided on a farm or depended on farm income for the person's livelihood; or

(C) Who has been a farm tenant or farm laborer or other individual, who has for the two years last preceding the person's application obtained the major portion of the person's income from farming operations; or

(D) Who has a college degree in agriculture; or

(E) Who by reason of ability, experience, and training as a vocational trainee is likely to successfully operate a farm; or

(F) Who has qualified for and received a commitment for a loan under the Bankhead-Jones Farm Tenant Act as amended, or as may hereafter be amended, for the acquisition of a farm; or

(G) Who is displaced from employment in an agricultural production enterprise; or

(H) Who is a member of the Hawaii Young Farmer Association or a Future Farmer of America graduate with two years of training with farming projects; or

(3) The person meets other qualifications as the corporation may prescribe pursuant to rules adopted under chapter 91.

(b) No person shall be entitled to apply for a farm:

(1) Who, or whose husband or wife, has previously taken or held land for farm or homesteading under any certificate, lease, or agreement or under any homestead lease or patent based thereon; or

(2) Who, or whose husband or wife, or both of them, owns in fee simple other land in the State, the combined area of which with the land in question exceeds eighty acres; provided that:

(A) The ownership of a residence lot or tract, not exceeding three acres in area, shall not disqualify any person otherwise qualified from applying for and receiving any form of farm;

(B) Any person who would otherwise qualify to take a farm lot shall not be disqualified by reason of taking, holding, or owning land for farm or homesteading or otherwise, if the land so taken, held, or owned becomes unusable for the purpose of farming.

(c) The terms "farm" and "farmer" as used herein also mean ranch and rancher respectively for the purposes of this section.

§163D-T Preference right. Any person otherwise qualified to take a farm lot shall have preference in any drawing for farm lots, if the person:

(1) Is a veteran (defined herein as a person who served in the military forces of the United States during any war between the United States and any other nation and who was discharged or released therefrom under conditions other than dishonorable); or

(2) Has, within a period of not longer than five years prior to the filing of the person's application, been an owner in possession, or a lessee in possession having an unexpired lease term of more than one year, of farm premises which were taken by any governmental authority for any public purpose and who was displaced by reason of the taking or which became unusable for farm purposes because the use was declared a public nuisance or was displaced by reason of a natural disaster."

SECTION 2. Section 163D-5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The corporation shall prepare the Hawaii agribusiness plan which shall define and establish goals, objectives, policies, and priority guidelines for its agribusiness development strategy. The plan shall include but not be limited to:

(1) An inventory of agricultural lands with suitable adequate water resources that are or will become available due to the downsizing of the sugar and pineapple industries that can be used to meet present and future agricultural production needs;

(2) An inventory of agricultural infrastructure that will be abandoned by sugar and pineapple industries such as irrigation systems, drainage systems, processing facilities, and other accessory facilities;

(3) An analysis of imported agricultural products and the potential for increasing local production to replace imported products in a manner that complements existing local producers and increases Hawaii's agricultural self-sufficiency;

(4) Alternatives in the establishment of sound financial programs to promote the development of diversified agriculture;

(5) Feasible strategies for the promotion, marketing, and distribution of Hawaii agricultural products in local, national, and international markets;

(6) Programs to promote and facilitate the absorbing of displaced agricultural workers into alternative agricultural enterprises;

(7) Strategies to insure the provision of adequate air and surface transportation services and supporting facilities to support the agricultural industry in meeting local, national, and international market needs;

(8) Proposals to improve the gathering of data and the timely presentation of information on market demands and trends that can be used to plan future harvests and production; [and]

(9) Strategies for federal and state legislative actions that will promote the development and enhancement of Hawaii's agricultural industries[.]; and

(10) Strategies to administer agricultural leases to provide efficient use of agricultural lands under the jurisdiction of the corporation."

SECTION 3. Section 163D-15.6, Hawaii Revised Statutes, is amended to read as follows:

"[[]§163D-15.6 [Commitment and preservation of agricultural] Agricultural leases[.]; administration, commitment, and preservation. (a) The agribusiness development corporation shall administer state agricultural leases, including but not limited to, any related auctions, drawings, appraisals, mortgages, leases with option to buy, and purchases and sales of leases. The corporation may adopt rules pursuant to chapter 91, not inconsistent with this chapter, to effectuate this section.

[(a)] (b) The agribusiness development corporation shall work toward obtaining commitments from landowners in the leeward and central districts of Oahu that their agricultural leases shall be for a duration of twenty or more years, and shall not be amended or revoked in order to allow for a nonagricultural use of [such] the land.

[(b)] (c) To further ensure the preservation of agriculture in the leeward and central districts of Oahu, the agribusiness development corporation shall monitor the agricultural leases of lands utilizing the water from the Waiahole water system. In the event of any proposed amendment or revocation of any such lease, the corporation shall do all things within its powers under [[]this chapter[]] to protect and defend the interests of the agricultural leaseholders to ensure the continuation of agricultural use for those lands."

SECTION 4. Section 171-14.5, Hawaii Revised Statutes, is repealed.

["§171-14.5 Auction pre-qualification; agricultural and pasture leases. (a) Whenever used in this section, unless otherwise apparent from the context:

"Farm" also means "ranch" and "farmer" also means "rancher".

"Individual" means a natural person who is not a part of a partnership, corporation, or joint venture which is a potential bidder under this section.

"Nonindividual concern" means a partnership, corporation, or joint venture properly formed under law and which is a potential bidder under this section.

(b) Any other law to the contrary notwithstanding, to be eligible to bid in an auction for agricultural or pasture leases, a potential bidder shall be a bona fide individual farmer or a nonindividual farm concern:

(1) Who has spent not less than two years, full-time, in farming operations;

(2) Who is an owner-operator of an established farm conducting a substantial farming operation;

(3) Who for a substantial period of the individual's adult life resided on a farm and depended on farm income for a livelihood;

(4) Who is an individual who has been a farm tenant or farm laborer or other individual, who has for the two years last preceding the auction obtained the major portion of their income from farming operations;

(5) Is an individual with a college degree in agriculture;

(6) Is an individual who by reason of ability, experience, and training as a vocational trainee is likely to successfully operate a farm;

(7) Who has qualified for and received a commitment for a loan under the Bankhead-Jones Farm Tenant Act as amended, or as may hereafter be amended, for the acquisition of a farm;

(8) Who is an individual who is displaced from employment in an agricultural production enterprise;

(9) Who is a member of the Hawaii Young Farmer Association or a Future Farmer of America graduate with two years of training with farming projects;

(10) Who possesses the qualifications under the new farmer program pursuant to section 155-1; or

(11) Who possesses other qualifications as the board of land and natural resources may prescribe pursuant to section 171-6 and this section."]

SECTION 5. Section 171-34, Hawaii Revised Statutes, is repealed.

["§171-34 Planning; intensive agricultural and pasture uses. In addition to the requirements set forth in section 171-33, if the intended disposition is for intensive agricultural or pasture uses, the board of land and natural resources shall:

(1) Make or cause to be made an on-the-ground inspection of the land;

(2) Secure data or information from the land study bureau relating to such parcel;

(3) Review any other pertinent information with respect to the land and the surrounding area; and

(4) Based upon information obtained, prepare a written report on the land, which report shall include the following:

(A) The class of the land within the specific use for which disposition is intended;

(B) The condition of the land with respect to its state of development;

(C) Existing improvements, if any;

(D) Extent of uncontrolled erosion if any;

(E) Nature of forage; and

(F) Extent of infestation with noxious weeds."]

SECTION 6. Section 171-37, Hawaii Revised Statutes, is repealed.

["§171-37 Lease restrictions; intensive agricultural and pasture uses. In addition to the restrictions provided in section 171-36, the following restrictions shall apply to all leases for intensive agricultural and pasture uses:

(1) The lease term shall be not less than fifteen years nor more than thirty-five years, except that if the type of disposition requires the lessee to occupy the premises as the lessee's own personal residence, it may be longer than thirty-five years, but not in excess of seventy-five years, and except in the case of a tree-crop orchard lease the term of which shall not be in excess of forty-five years.

(2) If the land being leased is not immediately productive and requires extensive expenditures for clearing, conditioning of the soil, the securing of water, the planting of grasses, or the construction of improvements, as the result of which a longer term is necessary to amortize the lessee's investment, then the lease term may be longer than thirty-five years, but not in excess of fifty-five years.

(3) The land leased hereunder, or any portion thereof, shall be subject to withdrawal by the board of land and natural resources at any time during the term of the lease with reasonable notice and without compensation, except as provided herein, for public uses or purposes, including residential, commercial, industrial, or resort developments, for constructing new roads or extensions, or changes in line or grade of existing roads, for rights-of-way and easements of all kinds, and shall be subject to the right of the board to remove soil, rock, or gravel as may be necessary for the construction of roads and rights-of-way within or without the demised premises; provided that upon the withdrawal, or upon the taking which causes any portion of the land originally demised to become unusable for the specific use or uses for which it was demised, the rent shall be reduced in proportion to the value of the land withdrawn or made unusable, and if any permanent improvement constructed upon the land by the lessee is destroyed or made unusable in the process of the withdrawal or taking, the proportionate value thereof shall be paid based upon the unexpired term of the lease; provided further that no withdrawal or taking shall be had as to those portions of the land which are then under cultivation with crops until the crops are harvested, unless the board pays to the lessee the value of the crops; and provided further that upon withdrawal any person with a long-term lease shall be compensated for the present value of all permanent improvements in place at the time of withdrawal that were legally constructed upon the land by the lessee to the leased land being withdrawn. In the case of tree crops, the board shall pay to the lessee the residual value of the trees taken and, if there are unharvested crops, the value of the crops also.

"Tree-crop", as used in this section, shall be exclusive of papaya and banana."]

SECTION 7. Section 171-55.5, Hawaii Revised Statutes, is repealed

["[§171-55.5] Agricultural plots. The department of land and natural resources, in cooperation with the department of agriculture and the city and county of Honolulu, shall adopt rules in accordance with chapter 91 to allow for use of vacant public lands for farming or agricultural recreation."]

SECTION 8. Section 171-65, Hawaii Revised Statutes, is repealed.

["§171-65 Leases, leases with option to purchase, sales permitted; when. Land intended for disposition as farm lot for truck crops or for horticultural, pasture, or special livestock use, may be disposed of by lease, lease with option to purchase, or in fee simple. Such disposition may be by drawing of lot, without recourse to public auction, notwithstanding any other provision in this chapter to the contrary; provided that the right to any values in the land not attributable to these agricultural uses shall be reserved to the State.

Dispositions under this section shall be made only to individuals who satisfy the requirements established by the board and then only if the individual, either oneself or whose spouse, or both, does not already own lands of comparable use in the State; provided that the ownership by the individual or the individual's spouse of lands of comparable use shall not be a disqualification in applying for a lease within an agricultural park."]

SECTION 9. Section 171-67, Hawaii Revised Statutes, is repealed.

["§171-67 Restrictions; conditions. In addition to such other restrictions or conditions that may be established by the board of land and natural resources to carry out the purpose of this chapter and of the provisions of the state constitution, all sale, lease, or lease with option to purchase, of a farm lot shall be subject to the following conditions, which shall be covenants running with the land:

(1) The lot shall be used for farm purposes only;

(2) The purchaser or lessee shall reside on the premises granted; provided that with the consent of the board, the purchaser or lessee may live off the premises if the purchaser's or lessee's residence is within a reasonable distance therefrom;

(3) The purchaser or lessee shall derive the major portion of the purchaser's or lessee's total annual income from the production of the crops or products for which production the land is granted to the purchaser or lessee; provided that this restriction shall not apply if the purchaser or lessee becomes enfeebled or is widowed;

(4) In the case of a lease, those provisions set forth in sections 171-35, 171-36 and 171-37, unless otherwise specifically provided in this section;

(5) In the case of a fee simple sale, the improvement required and the specific use or uses intended;

(6) For a period of five years after the issuance of a patent or lease, the purchaser or lessee shall not sell, sublet, assign, transfer, or in other manner dispose or encumber the whole or any part of the farm lot to any person not qualified to take a farm lot except by way of mortgage, testamentary bequest or devise, intestate succession, or except to a purchaser at or after sale upon the foreclosure of a mortgage.

The violation of any of such restrictions or conditions shall be sufficient for the board, upon failure of the purchaser or lessee within a reasonable period of time to remedy the default after notice thereof as provided in section 171-20 to take possession of the premises without demand or previous entry and with or without legal process and thereby determine the estate, subject to the provisions contained in section 171-21."]

SECTION 10. Section 171-68, Hawaii Revised Statutes, is repealed.

["§171-68 Applicants; qualifications of. (a) A person shall be eligible to apply for a farm if the person has the qualifications as follows:

(1) The person has been a resident in the State at any time for at least three years;

(2) The person is a bona fide farmer:

(A) Who has not less than two years' experience as a full-time farmer; or

(B) Who was an owner-operator of an established farm conducting a substantial farming operation and who for a substantial period of the person's life resided on a farm or depended on farm income for the person's livelihood; or

(C) Who has been a farm tenant or farm laborer or other individual, who has for the two years last preceding the person's application obtained the major portion of the person's income from farming operations; or

(D) Who has a college degree in agriculture; or

(E) Who by reason of ability, experience, and training as a vocational trainee is likely to successfully operate a farm; or

(F) Who has qualified for and received a commitment for a loan under the Bankhead-Jones Farm Tenant Act as amended, or as may hereafter be amended, for the acquisition of a farm; or

(G) Who is displaced from employment in an agricultural production enterprise; or

(H) Who is a member of the Hawaii Young Farmer Association or a Future Farmer of America graduate with two years of training with farming projects; or

(3) The person meets such other qualifications as the board of land and natural resources may prescribe pursuant to section 171-6.

(b) No person shall be entitled to apply for a farm:

(1) Who, or whose husband or wife, has previously taken or held land for farm or homesteading under any certificate, lease, or agreement or under any homestead lease or patent based thereon; or

(2) Who, or whose husband or wife, or both of them, owns in fee simple other land in the State, the combined area of which with the land in question exceeds eighty acres; provided that:

(A) The ownership of a residence lot or tract, not exceeding three acres in area, shall not disqualify any person otherwise qualified from applying for and receiving any form of farm;

(B) Any person who would otherwise qualify to take a farm lot shall not be disqualified by reason of taking, holding or owning land for farm or homesteading or otherwise, if the land so taken, held or owned becomes unusable for the purpose of farming as defined in section 171-65.

(c) The terms "farm" and "farmer" as used herein also mean ranch and rancher respectively for the purposes of this section."]

SECTION 11. Section 171-69, Hawaii Revised Statutes, is repealed.

["§171-69 Preference right. Any person otherwise qualified to take a farm lot shall have preference in any drawing for farm lots, if the person:

(1) Is a veteran (defined herein as a person who served in the military forces of the United States during any war between the United States and any other nation and who was discharged or released therefrom under conditions other than dishonorable); or

(2) Has, within a period of not longer than five years prior to the filing of the person's application, been an owner in possession, or a lessee in possession having an unexpired lease term of more than one year, of farm premises which were taken by any governmental authority for any public purpose and who was displaced by reason of the taking or which became unusable for farm purposes because the use was declared a public nuisance or was displaced by reason of a natural disaster."]

SECTION 12. All rights, powers, functions, and duties of the department of land and natural resources with respect to the administration of agricultural leases are transferred to the agricultural development corporation.

All officers and employees whose functions are transferred by this Act shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

No officer or employee of the State having tenure shall suffer any loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege as a consequence of this Act, and such officer or employee may be transferred or appointed to a civil service position without the necessity of examination; provided that the officer or employee possesses the minimum qualifications for the position to which transferred or appointed; and provided that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.

An officer or employee of the State who does not have tenure and who may be transferred or appointed to a civil service position as a consequence of this Act shall become a civil service employee without the loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefits or privileges and without the necessity of examination; provided that such officer or employee possesses the minimum qualifications for the position to which transferred or appointed.

If an office or position held by an officer or employee having tenure is abolished, the officer or employee shall not thereby be separated from public employment, but shall remain in the employment of the State with the same pay and classification and shall be transferred to some other office or position for which the officer or employee is eligible under the personnel laws of the State as determined by the head of the department or the governor.

SECTION 13. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the department of land and natural resources relating to the functions transferred to the agricultural development corporation shall be transferred with the functions to which they relate.

SECTION 14. In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 15. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 16. This Act shall take effect on January 1, 2060.