Bill Text: HI SB1195 | 2023 | Regular Session | Amended

Hawaii Senate Bill 1195 (Prior Session Legislation)

Bill Title: Relating To Waiahole Valley.

Spectrum: Slight Partisan Bill (Democrat 2-1)

Status: (Introduced - Dead) 2023-02-17 - Report adopted; Passed Second Reading, as amended (SD 1) and referred to WAM/JDC. [SB1195 Detail]

Download: Hawaii-2023-SB1195-Amended.html

THE SENATE	S.B. NO.	1195
THIRTY-SECOND LEGISLATURE, 2023		S.D. 1
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO WAIAHOLE VALLEY.

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

SECTION 1. The legislature finds that in November 1977, the State of Hawaii acquired seven hundred ninety-five acres of land in Waiahole valley from Elizabeth Low McCandless Marks. In 1998, after a series of protests, discussions, and compromises, the State, as lessor, entered into long-term agricultural and residential leases for lands within the valley. The Hawaii housing finance and development corporation is the current lessor of ninety-two long-term ground leases for residential, agricultural, and commercial lots within the Waiahole subdivision. Generally, the agricultural leases currently set rent at $100 per acre plus 0.9 per cent of the gross agricultural products, and rents of the residential leases are set at $600 per lot plus additional amounts for larger lots. The initial twenty-five-year term of the leases will end on June 29, 2023, and the lessees and Hawaii housing finance and development corporation currently are in negotiations to establish increased rents for the next term of fifteen years.

The legislature further finds that the Hawaii housing finance and development corporation's initial offer for the next term of the lease proposes to increase lease rents by approximately 6.6 times the current rates. A rental rate of 6.6 times the current rate is estimated to be below the current market rate, which is approximately ten times the current lease rent rate. The additional income from a 6.6 times lease rent increase would only offset seventy-nine percent of the State's cost in operating the valley. However, a 6.6 times lease rent increase would mean that many farmers leasing more than ten acres would be forced to pay thousands of dollars in additional rent per year. Consequently, the increased rent may not be affordable for many of these farmers.

The legislature believes that there is no law or policy that requires the Hawaii housing finance and development corporation to increase rent. Leasing land is not within the primary mission of the Hawaii housing finance and development corporation, nor is supporting agriculture. The Hawaii housing finance and development corporation does not provide agricultural support services to the farmers of Waiahole valley, despite the obvious need. The Hawaii housing finance and development corporation's annual expenses for management of Waiahole valley have exceeded revenues, with an estimated deficit of $500,000 in 2016. The deficit is funded from moneys in the dwelling unit revolving fund, which was established to fund housing development programs and regional state infrastructure programs, not agriculture. Part of that operating expense is related to the water supply system, which requires multiple pumps, is reliant on powerlines that run through the forest to fill a faulty reservoir, and requires expensive maintenance. The State has recommended replacing the water supply system with a system based upon the old and deteriorating system, which would not help to reduce the State's operating costs of the valley. A gravity-fed system fed from the waters of the higher elevation Waiahole ditch would require no electricity, would reduce maintenance costs, and could potentially generate electricity.

The legislature further finds that changing the management of the valley to a community-based management system supported by state agencies with expertise in agriculture and leasing could significantly reduce the State's costs while improving farmer productivity. The lessees and the Hawaii housing finance and development corporation are currently in the process of developing a more comprehensive plan for Waiahole valley, but are not expected to complete that plan before the end of the current lease term.

The purpose of this Act is to require the Hawaii housing finance and development corporation to submit a report to the legislature on the progress and ultimate outcome of the ongoing lease rent renegotiations and to recommend whether the management duties for the valley should be transferred from the Hawaii housing finance and development corporation to a different state entity.

SECTION 2. (a) The Hawaii housing finance and development corporation shall submit a report to the legislature no later than twenty days prior to the regular session of 2024 detailing the progress and ultimate outcome of the presently ongoing Waiahole valley lease rent renegotiations, as well as how the Hawaii housing finance and development corporation's approach to the renegotiations furthers the original purpose for which its predecessor acquired the leased lands -- to preserve the rural, agricultural nature of Waiahole valley. At a minimum, the report should contain an analysis of the following items:

(1) The proposed lease rents offered to each lessee by the Hawaii housing finance and development corporation or, if new rents have already been set, the new lease rents set for each lessee during the most recent rent renegotiation;

(2) The fairness of the proposed or actual lease rents offered during the most recent rent renegotiation considering the following factors:

(A) The size of the lot;

(B) The current use or uses of the lot;

(D) Comparable market rents for the area; and

(E) Comparable rents charged by other state or county agencies for similar agricultural or residential ground leases or licenses;

(3) The ability of Waiahole valley lessees to pay their rents when due;

(4) Any eviction or other enforcement action that the Hawaii housing finance and development corporation has taken against Waiahole valley lessees due to nonpayment of rent, and the outcome of that action; and

(5) Any attempt to resolve issues with nonpayment of rents through mediation or other alternative dispute resolution mechanisms, and the outcome of that attempt.

In preparing the report, the Hawaii housing finance and development corporation shall protect the confidentiality of lessees' personal and financial information and may provide de-identified or aggregated data to the extent necessary to protect the privacy of the lessees.

(b) The Hawaii housing finance and development corporation shall recommend as part of its report to the legislature pursuant to subsection (a), whether:

(1) The Hawaii housing finance and development corporation should retain its responsibilities regarding Waiahole valley; or

(2) A different state agency should serve as the landlord of the properties and manager of Waiahole valley, and if so, determining the state agency that is most appropriate.

SECTION 3. This Act shall take effect on July 1, 2050.

Report Title:

Waiahole Valley; HHFDC; Lease Extension; Report

Description:

Requires the Hawaii Housing Finance and Development Corporation to report to the Legislature on the progress and ultimate outcome of the ongoing lease rent renegotiations and to recommend whether the management duties for the valley should be transferred from the Hawaii Housing Finance and Development Corporation to a different state entity. Effective 7/1/2050. (SD1)

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