Haw. Code R. § 4-153-33 - Lease restrictions; generally

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

(1) Options for renewal of terms shall be prohibited;

(2) No lease shall be for a term of less than fifteen years nor more than fifty-five years, including any extension granted for mortgage lending or guarantee purposes;

(3) No lease shall be made for any land under a lease which 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 owing the State or any of its political subdivisions; or to any person who, during the five years preceding the date of disposition, has had a previous sale, lease, license, permit, or easement covering public lands canceled for failure to satisfy the terms and conditions thereof;

(5) Any transferee, assignee, or sublessee of an agricultural park lease shall first qualify as an applicant under this chapter. No lease or any interest therein, including corporate stock or interest in a partnership or association, shall be transferred or assigned without the consent of the board, except by devise, bequest, or intestate succession and upon the further condition that there is a dwelling on the property in which the devisee or heir resides or that more than fifty per cent of the devisee's or heir's income is derived from the productive use of the property. In the absence of or upon cessation of these conditions, the devisee or heir shall surrender the lease and improvements, or any interest therein, to the board pursuant to section 4-153-29;

(6) With the approval of the board, and subject to the provisions of section 4-153-29, the assignment and transfer of a lease or any interest therein, including stock of a corporation holding the lease or an interest in a partnership or association holding the lease, may be made if:

(A) The lease contains the principal residence of the lessee;

(B) The lessee becomes mentally or physically disabled;

(C) Extreme economic hardship is demonstrated to the satisfaction of the board; or

(D) The assignment is to the corporate successor of the lessee; provided that prior to the approval of any assignment of lease permitted by this section, 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 assignment, whether by cash, credit or otherwise, exceeds the depreciated cost of improvements and trade fixtures being transferred to the assignee; provided further that 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; provided further that the board may adjust the base and additional rental pursuant to the method outlined in section 4-153-18(d);

(7) The lessee shall not sublet the whole or any part of the demised premises without 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 where the lessee is required to pay rent based on a percentage of its gross receipts, the rents paid to the lessee by 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 and percentage rental, if applicable, of the demised premises based upon the rental rate charged to the sublessee; and provided further that the rent and percentage rental may not be revised downward;

(8) The lease shall be for a specific use or uses, and shall not include wastelands unless it is impractical to provide otherwise.

(b) The board may extend the term of the lease to qualify the lease for mortgage lending or guaranty purposes with any federal mortgage lending agency and its respective successors and assigns or to any lending institution authorized to do business in the State; provided further that the approval of any extension shall be subject to the following:

(1) The demised premises are developed and utilized according to a plan of utilization and development approved by the department;

(2) The lessee is otherwise in compliance with lease terms;

(3) The aggregate of the initial term and any extension granted shall not be for more than fifty-five years;

(4) The board may increase the rent and adjust the rental period; and

(5) Additional restrictions, terms and conditions to insure and promote the purposes of the demised lands, to the extent the board has reserved this right in the lease.

(c) The board at any time during the term of any agricultural park lease and when justified by sound agricultural practices and economic or other circumstances, may permit an alternative agricultural or aquacultural use or uses for any portion or portions of the land demised under the lease. As a condition to permitting alternative uses, the board may require such other modifications, including rental adjustments or changes in the lease, as may be necessary to effect or accommodate the alternative use or uses. An alternative use or uses may be allowed by the board upon:

(1) The application of the lessee;

(2) Consent of each holder of record having a security interest in the leasehold; and

(3) A finding by the board that the alternative use or uses are in the public interest.

(d) The land leased under this chapter, or any portion thereof, shall be subject to withdrawal by the State at any time during the term of the lease with reasonable notice and without compensation, except as provided in this section, for public uses or purposes, 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 State 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 base rent shall be reduced in proportion to the value of the land withdrawn or made unusable. 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 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 State pays to the lessee the value of the crops; and provided further that upon withdrawal any lessee 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 of the leased land being withdrawn. In the case of tree crops, the State shall pay to the lessee the residual value of the trees taken and, if there are unharvested crops, the value of the crops also.

Notes

Haw. Code R. § 4-153-33

[Eff 3/6/92; comp] (Auth: HRS §§ 166-6, 166-9) (Imp: HRS §§ 166-6, 166-9)