HB 491: RELATING TO LAND LEASES.

A BILL FOR AN ACT

RELATING TO LAND LEASES.

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

     SECTION 1.  The legislature finds that most landlords require their tenants to be in good standing, especially before renewing a lease.  This includes ensuring that the tenant has met all financial, contractual, and legal obligations.  Standard lease agreements also allow a landlord to terminate a lease when the tenant commits a crime on the property.  Where the State leases out public lands, lessees' obligations include paying all moneys owed to the State, carrying out environmental maintenance and necessary remediations on the subject lands, and refraining from criminal activity.  The legislature believes that, as a landlord, the State should ensure that all of its lessees meet these obligations, whether the lessees are private individuals, corporations, or the federal government.  The legislature also believes that the State should exercise its right to terminate a lease when a lessee engages in criminal activity on the property.

     Accordingly, the purpose of this Act is to prohibit the State from leasing any public lands, or extending the lease of any public lands, to any individual, corporation, or federal agency that is not in good standing with the State or that has not met all financial, contractual, and legal obligations.

     SECTION 2.  Section 171-36, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Except as otherwise provided, the following restrictions shall apply to all leases:

     (1)  Options for renewal of terms are prohibited;

     (2)  No lease shall be for a longer term than sixty-five years, except in the case of a residential leasehold, which may provide for an initial term of fifty-five years with the privilege of extension to meet the requirements of the Federal Housing Administration, Federal National Mortgage Association, Federal Land Bank of Berkeley, Federal Intermediate Credit Bank of Berkeley, Berkeley Bank for Cooperatives, or Department of Veterans Affairs requirements; provided that the aggregate of the initial term and extension shall in no event exceed seventy-five years;

     (3)  No lease shall be made for any land under a lease that has more than two years to run;

     (4)  No lease shall be made to any person who is in arrears in the payment of taxes, rents, or other obligations owed to the State or any county;

     (5)  No lease shall be transferable or assignable, except by devise, bequest, or intestate succession; provided that with the approval of the board, the assignment and transfer of a lease or unit thereof may be made in accordance with current industry standards, as determined by the board; provided further that prior to the approval of any assignment of lease, the board shall have the right to review and approve the consideration to be paid by the assignee and may condition its consent to the assignment of the lease on payment by the lessee of a premium based on the amount by which the consideration for the assignment, whether by cash, credit, or otherwise, exceeds the depreciated cost of improvements and trade fixtures being transferred to the assignee; provided further that with respect to state agricultural leases, in the event of foreclosure or sale, the premium, if any, shall be assessed only after the encumbrances of record and any other advances made by the holder of a security interest are paid;

     (6)  The lessee shall not sublet the whole or any part of the demised premises, except with the approval of the board; provided that prior to the approval, the board shall have the right to review and approve the rent to be charged to the sublessee; provided further that in the case where the lessee is required to pay rent based on a percentage of its gross receipts, the receipts of the sublessee shall be included as part of the lessee's gross receipts; provided further that the board shall have the right to review and, if necessary, revise the rent of the demised premises based upon the rental rate charged to the sublessee, including the percentage rent, if applicable, and provided that the rent may not be revised downward;

     (7)  The lease shall be for a specific use or uses and shall not include waste lands, unless it is impractical to provide otherwise;

     (8)  Mineral and metallic rights and surface and ground water shall be reserved to the State; [and]

     (9)  No lease of public lands, including submerged lands, or any extension of any lease of public lands shall be issued by the State to any person to construct, use, or maintain a sunbathing or swimming pier or to use the lands for those purposes, unless the lease, or any extension thereof, contains provisions permitting the general public to use the pier facilities on the public lands and requiring that a sign or signs be placed on the pier, clearly visible to the public, that indicates the public's right to the use of the pier.  The board, at the earliest practicable date, and where legally possible, shall cause all existing leases to be amended to conform to this paragraph.  The term "lease", for the purposes of this paragraph, includes month-to-month rental agreements and similar tenancies[.]; and

    (10)  Notwithstanding the exceptions listed in paragraphs (1) and (4) through (15) of section 171-2, no lease of public lands, including submerged lands, or any extension of any lease of public lands, shall be issued by the State to any individual, corporation, or federal agency that:

          (A)  Is in arrears in the payment of any moneys owed to the State, including:

              (i)  Impact aid owed to the State pursuant to section 3 of Public Law 81-874, calculated based on the full cost recovery methodology in compliance with Government Accountability Office guidelines, in an amount determined by the office of the governor; or

             (ii)  Reimbursement to the State for actual costs incurred by the State pursuant to any compact of free association, in an amount determined by the office of the governor;

          (B)  Is noncompliant with any order, consent decree, or memorandum of agreement requiring the individual, corporation, or federal agency to perform environmental maintenance or remediation activities with regard to the subject public lands; or

          (C)  Is or has been found to be in violation of federal or state laws aimed at protecting the environment;

          provided that the board shall request and obtain certification from the office of the governor before the issuance or extension of any lease to an individual, corporation, or federal agency that the individual, corporation, or federal agency is in good standing with the State pursuant to this section; provided further that, if the individual, corporation, or federal agency is not in good standing with the State, the governor shall not certify the lease or lease extension until the individual, corporation, or federal agency has remitted full payment of any unpaid balances owed to the State, carried out any required environmental maintenance or remediation activities on the subject lands, or completed any adjudicated penalties for any relevant criminal activity; provided further that this paragraph shall not apply to leases and dispositions made by the department of transportation."

     SECTION 3.  If any existing lessee of public lands is found not to be in good standing with the State as of the effective date of this Act, the lessee shall have three years, or until the end of the lease term, whichever is sooner, to correct the violation, including remitting full payment of any unpaid balances owed to the State, carrying out any required environmental maintenance or remediation activities on the subject lands, or completing any adjudicated penalties for any relevant criminal activity, or the lease shall be terminated.

     SECTION 4.  This Act does not waive the right of the State to terminate a lease at any time for any other grounds identified in the lease.

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect on July 1, 3000.

Report Title:

Office of the Governor; Board of Land and Natural Resources; Impact Aid; Public Lands; Leases

Description:

Prohibits the State from leasing any public lands, or extending the lease of any public lands, to any individual, corporation, or federal agency that is in arrears in the payment of certain moneys to the State, is noncompliant with a consent decree or memoranda of agreement with the State that requires environmental maintenance or remediation with regard to the subject public lands, or has been found to be in violation of federal or state laws aimed at protecting the environment.  Requires certification by the Office of the Governor before the issuance or extension of any federal lease that the individual, corporation, or federal agency is in good standing with the State.  Provides that, if any existing lessee of public lands is found not to be in good standing with the State as of the effective date of this Act, the lessee shall have three years, or until the end of the lease term, whichever is sooner, to correct the violation or the lease shall be terminated.  Effective 7/1/3000.  (HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO LAND LEASES.

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

     SECTION 1.  The legislature finds that most landlords require their tenants to be in good standing, especially before renewing a lease.  This includes ensuring that the tenant has met all financial, contractual, and legal obligations.  Standard lease agreements also allow a landlord to terminate a lease when the tenant commits a crime on the property.  Where the State leases out public lands, lessees' obligations include paying all moneys owed to the State, carrying out environmental maintenance and necessary remediations on the subject lands, and refraining from criminal activity.  The legislature believes that, as a landlord, the State should ensure that all of its lessees meet these obligations, whether the lessees are private individuals, corporations, or the federal government.  The legislature also believes that the State should exercise its right to terminate a lease when a lessee engages in criminal activity on the property.

     Accordingly, the purpose of this Act is to prohibit the State from leasing any public lands, or extending the lease of any public lands, to any individual, corporation, or federal agency that is not in good standing with the State or that has not met all financial, contractual, and legal obligations.

     SECTION 2.  Section 171-36, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Except as otherwise provided, the following restrictions shall apply to all leases:

     (1)  Options for renewal of terms are prohibited;

     (2)  No lease shall be for a longer term than sixty-five years, except in the case of a residential leasehold, which may provide for an initial term of fifty-five years with the privilege of extension to meet the requirements of the Federal Housing Administration, Federal National Mortgage Association, Federal Land Bank of Berkeley, Federal Intermediate Credit Bank of Berkeley, Berkeley Bank for Cooperatives, or Department of Veterans Affairs requirements; provided that the aggregate of the initial term and extension shall in no event exceed seventy-five years;

     (3)  No lease shall be made for any land under a lease that has more than two years to run;

     (4)  No lease shall be made to any person who is in arrears in the payment of taxes, rents, or other obligations owed to the State or any county;

     (5)  No lease shall be transferable or assignable, except by devise, bequest, or intestate succession; provided that with the approval of the board, the assignment and transfer of a lease or unit thereof may be made in accordance with current industry standards, as determined by the board; provided further that prior to the approval of any assignment of lease, the board shall have the right to review and approve the consideration to be paid by the assignee and may condition its consent to the assignment of the lease on payment by the lessee of a premium based on the amount by which the consideration for the assignment, whether by cash, credit, or otherwise, exceeds the depreciated cost of improvements and trade fixtures being transferred to the assignee; provided further that with respect to state agricultural leases, in the event of foreclosure or sale, the premium, if any, shall be assessed only after the encumbrances of record and any other advances made by the holder of a security interest are paid;

     (6)  The lessee shall not sublet the whole or any part of the demised premises, except with the approval of the board; provided that prior to the approval, the board shall have the right to review and approve the rent to be charged to the sublessee; provided further that in the case where the lessee is required to pay rent based on a percentage of its gross receipts, the receipts of the sublessee shall be included as part of the lessee's gross receipts; provided further that the board shall have the right to review and, if necessary, revise the rent of the demised premises based upon the rental rate charged to the sublessee, including the percentage rent, if applicable, and provided that the rent may not be revised downward;

     (7)  The lease shall be for a specific use or uses and shall not include waste lands, unless it is impractical to provide otherwise;

     (8)  Mineral and metallic rights and surface and ground water shall be reserved to the State; [and]

     (9)  No lease of public lands, including submerged lands, or any extension of any lease of public lands shall be issued by the State to any person to construct, use, or maintain a sunbathing or swimming pier or to use the lands for those purposes, unless the lease, or any extension thereof, contains provisions permitting the general public to use the pier facilities on the public lands and requiring that a sign or signs be placed on the pier, clearly visible to the public, that indicates the public's right to the use of the pier.  The board, at the earliest practicable date, and where legally possible, shall cause all existing leases to be amended to conform to this paragraph.  The term "lease", for the purposes of this paragraph, includes month-to-month rental agreements and similar tenancies[.]; and

    (10)  Notwithstanding the exceptions listed in paragraphs (1) and (4) through (15) of section 171-2, no lease of public lands, including submerged lands, or any extension of any lease of public lands, shall be issued by the State to any individual, corporation, or federal agency that is:

          (A)  In arrears in the payment of any moneys owed to the State, including:

              (i)  Impact aid owed to the State pursuant to section 3 of Public Law 81-874, calculated based on the full cost recovery methodology in compliance with Government Accountability Office guidelines, in an amount determined by the office of the governor; or

             (ii)  Reimbursement to the State for actual costs incurred by the State pursuant to any compact of free association, in an amount determined by the office of the governor;

          (B)  Noncompliant with any order, consent decree, or memoranda of agreement requiring the individual, corporation, or federal agency to perform environmental maintenance or remediation activities with regard to the subject public lands; or

          (C)  Convicted of a crime;

          provided that the board shall request and obtain certification from the office of the governor before the issuance or extension of any lease to an individual, corporation, or federal agency that the individual, corporation, or federal agency is in good standing with the State pursuant to this section; provided further that, if the individual, corporation, or federal agency is not in good standing with the State, the governor shall not certify the lease or lease extension until the individual, corporation, or federal agency has remitted full payment of any unpaid balances owed to the State, carried out any required environmental maintenance or remediation activities on the subject lands, or completed any adjudicated penalties for any relevant criminal activity; provided further that this paragraph shall not apply to leases and dispositions made by the department of transportation."

     SECTION 3.  If any existing lessee of public lands is found not to be in good standing with the State as of the effective date of this Act, the lessee shall have three years, or until the end of the lease term, whichever is sooner, to correct the violation, including remitting full payment of any unpaid balances owed to the State, carrying out any required environmental maintenance or remediation activities on the subject lands, or completing any adjudicated penalties for any relevant criminal activity, or the lease shall be terminated.

     SECTION 4.  This Act does not waive the right of the State to terminate a lease at any time for any other grounds identified in the lease.

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect upon its approval.

Report Title:

Office of the Governor; Board of Land and Natural Resources; Impact Aid; Public Lands; Leases

Description:

Prohibits the State from leasing any public lands, or extending the lease of any public lands, to any individual, corporation, or federal agency that is in arrears in the payment of certain moneys to the State, noncompliant with a consent decree or memoranda of agreement with the State that requires environmental maintenance or remediation with regard to the subject public lands, or convicted of a crime.  Requires certification by the Office of the Governor before the issuance or extension of any federal lease that the individual, corporation, or federal agency is in good standing with the State.  Provides that, if any existing lessee of public lands is found not to be in good standing with the State as of the effective date of this Act, the lessee shall have three years, or until the end of the lease term, whichever is sooner, to correct the violation or the lease shall be terminated.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO.  195

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 491

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Water & Land, to which was referred H.B. No. 491 entitled:

"A BILL FOR AN ACT RELATING TO LAND LEASES,"

begs leave to report as follows:

     The purpose of this measure is to prohibit the State from leasing any public lands, or extending the lease of any public lands, to any individual, corporation, or federal agency that is not in good standing with the State or that has not met all financial, contractual, and legal obligations.

     Your Committee received testimony in support of this measure from the Sierra Club of Hawai‘i; Chamber of Sustainable Commerce; The Queens Court; Kai Law, LLC; Environmental Caucus of the Democratic Party of Hawai‘i; Kupuna for the Moopuna; Ka Lahui Hawai‘i; Kuleana Ka ‘Aina; Greenpeace Hawaii; Hawai‘i Alliance for Progressive Action; California-Pacific Conference of the United Methodist Church; and numerous individuals.  Your Committee received comments on this measure from the Department of Land and Natural Resources.  

     Your Committee finds that this measure upholds responsible stewardship by prohibiting the leasing or renewal of public lands to entities not in good standing and providing a framework for enforcing compliance, thereby ensuring that public resources are managed in a fair, lawful, and sustainable manner.

     Your Committee has amended this measure by:

     (1)  Specifying that no lease of public lands, or extension of the lease of any public lands, shall be to individuals, corporations, or federal agencies that have been found to be in violation of federal or state laws aimed at protecting the environment, instead of convicted of a crime;

     (2)  Changing the effective date to July 1, 3000, to encourage further discussion; and

     (3)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     Your Committee respectfully requests your Committee on Judiciary & Hawaiian Affairs, should it deliberate on this measure, to consider whether to expand the vendor compliance reporting requirement to include a method of reporting outstanding debts to other agencies.

     As affirmed by the record of votes of the members of your Committee on Water & Land that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 491, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 491, H.D. 1, and be referred to your Committee on Judiciary & Hawaiian Affairs.

Respectfully submitted on behalf of the members of the Committee on Water & Land,