Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2006

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 3086 entitled:

begs leave to report as follows:

The purpose of this measure is to stabilize agricultural park lease rent rates by requiring the use of a fairer method of calculating rates during a lease rent reopening.

Specifically, lease rent would be determined during a reopening by an appraisal that is based on the highest and best use of the agricultural park that is determined by an income capitalization approach that considers the potential agricultural yield from the agricultural park.

Your Committee finds that the booming Hawaii real estate market has fueled substantial increases in the lease rent rates for state agricultural leases. Lessees are faced with significant increases because lease rent rates are based on the highest and best use of the agricultural park, which may include considerations other than agriculture.

This bill addresses this problem by requiring the consideration of the potential agricultural yield from the agricultural park in determining the highest and best use of the agricultural park.

Your Committee has amended the measure by making technical nonsubstantive amendments for the purposes of clarity and style.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3086, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 3086, S.D. 1.