Haw. Code R. § 4-158-10 - Term, rent, and condition of extension

(a) Terms of extension shall not be for a longer term period than sixty-five years, that includes the aggregate of the existing term period with the extension term period cumulatively summed.

(b) All extensions shall require the determination of the base rent and additional rents. The rental value of the existing lease shall be based on the appraisal conducted by a disinterested appraiser or appraisers contracted by the administrator. Should the lessee disagree with the rental value, the lessee may invoke provisions of section 4-158-21. In no case shall the base annual rent of the existing encumbrance be reduced from its current rate.

(c) Conditions of the lease extension shall remain the same or not less restrictive than those conditions specified in subchapters four and five. The board may impose certain lease requirements or condition the extension provisions to make whole any holders of security interest in order that any outstanding loan status shall not be jeopardized or foreclosed upon as a result of the extension.

(d) An extension may be granted to extend the term of the lease to the extent necessary to qualify the lease for mortgage lending or guaranty purposes with any federal mortgage lending agency, to qualify the lessee for any state or private lending institution loan, private loan guaranteed by the State, or any loan in which the State and any private lender participates, or to amortize the cost of substantial improvements to the demised premises that are paid for by the lessee without institutional financing, such extension being based on the economic life of the improvements as determined by the administrator or an independent appraiser; provided 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 sixty-five years;

(4) Proceeds of any mortgage or loan shall be used solely for the operations or improvements on the demised premises;

(5) Where improvements are financed by the lessee, the lessee shall submit receipts of expenditures within a time period specified by the board, otherwise the lease extension shall be canceled;

(6) The rules of the board, setting forth any additional terms and conditions, which shall ensure and promote the purposes of the demised lands;

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

(8) 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.

Notes

Haw. Code R. § 4-158-10

[Eff DEC 06 2007] (Auth: HRS § 166E-5) (Imp: HRS § 166E-6)