Haw. Code R. § 4-158-19 - Lease restrictions, generally

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

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

(2) 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 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;

(3) Any transferee, assignee, or sublessee of a non-agricultural park land 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 4-158-35;

(4) With the approval of the board, and subject to the provisions of section 4-158-35, 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 lessee becomes mentally or physically disabled;

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

(C) The assignment is to the corporate successor of the lessee;

(5) 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 4-15-21;

(6) The lessee shall not sublet the whole or any part of the demised premised without the approval of the board; provided that:

(A) Prior to the approval, the board shall have the right to review and approve the rent to be charged to the sublessee;

(B) In the case where the lessee is required to pay rent based on a percentage of its gross receipts, the rents paid by the sublessee shall be included as part of the lessee's gross receipts; and

(C) 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; and

(7) 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 allow commercial agricultural operations for the processing, marketing, and displaying of agricultural crops or commodities, which may include any product created through value-added processes. The commercial activity may sell to the general public provided that the operations shall be owned and operated by a lessee in good standing with the department, provided that:

(1) The demised premises shall be developed and utilized in accordance with the plan of utilization and development approved by the department;

(2) The lessee shall derive the majority of the lessee's annual gross income from the cultivation of agricultural commodities on the demised premises; and

(3) All products for sale from the premises must have at least fifty per cent of its contents made from commodities cultivated, grown, or produced on the demised premises.

Notes

Haw. Code R. § 4-158-19

[Eff DEC 06 2007] (Auth: HRS § 166E-6; § 166E-8) (Imp: HRS § 166E-6; § 166E-8)