Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Agriculture and Water, Land, & Ocean Resources, to which was referred H.B. No. 167 entitled:

beg leave to report as follows:

The purpose of this bill is to stabilize state agricultural lease rents by requiring lease rents established at lease reopenings to be based on non-compounded inflation, instead of fair market value.

The Hawaii Farm Bureau Federation supported this bill. The Department of Land and Natural Resources opposed this bill. The Department of Agriculture offered comments.

In light of concerns regarding the financial impact of this bill on state revenue, your Committees have amended this measure by deleting its contents and inserting language establishing that, for rental reopenings of state agricultural leases, fair market rental shall be determined through an income capitalization approach that considers the potential agricultural yield from the property. In addition, other technical, nonsubstantive amendments were made for clarity, consistency, and style.

Your Committees find that using the income capitalization approach to determine fair market rental for rental reopenings is a reasonable way to balance the interests of farmers and the State.

Your Committees also find that it is in the best interests of the State that agricultural land being considered in this bill be used productively.

In addition, your Committees recognize that measures designed to assist farmers should be viewed within a broader framework that emphasizes sustainability and preservation of agricultural land.

As affirmed by the records of votes of the members of your Committees on Agriculture and Water, Land, & Ocean Resources that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 167, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 167, H.D. 1, and be referred to the Committee on Finance.