Commercial, industrial, resort, mixed-use, or government leases; extension of term
HRS §171-36.5
in effect171-36.5. Commercial, industrial, resort, mixed-use, or government leases; extension of term
(a) Notwithstanding section 171-36, for leases that have not been assigned or transferred within ten years prior to receipt of an application for a lease extension submitted pursuant to this section, the board may extend the rental period of a lease of public lands for commercial use, industrial use, resort use, mixed-use, or government use upon the board's approval of a development agreement proposed by the lessee or by the lessee and developer to make substantial improvements to the existing improvements. For the purposes of this subsection, "assigned or transferred" shall not include:
(1) A sale or change in ownership of a lessee that is
a company or entity; or
(2) A collateral assignment of lease or other security
granted to a leasehold mortgagee in connection with leasehold financing by a lessee.
(b) Before entering into
a development agreement, the lessee or the lessee and developer shall submit to
the board the plans and specifications for the total development proposed. The
board shall review the plans and specifications and determine:
(1) Whether the development proposed in the development
agreement is of sufficient worth and value to justify the extension of the lease;
(2) The estimated period of
time necessary to complete the improvements and expected date of completion of the
improvements; and
(3) The minimum revised annual
rent based on the fair market value of the lands to be developed, as determined
by an appraiser for the board and, if deemed appropriate by an appraiser, the appropriate
percentage of rent where gross receipts exceed a specified amount.
No lease extension shall
be approved until the board and the lessee or the lessee and developer mutually
agree to the terms and conditions of the development agreement.
(c) No construction shall
commence until the lessee or the lessee and developer have filed with the board
a sufficient bond conditioned upon the full and faithful performance of all the
terms and conditions of the development agreement.
(d) Any extension of
a lease pursuant to this section shall be based upon the substantial improvements
to be made and shall be for a period no longer than forty years. No lease shall
be transferable or assignable throughout the first ten years of the extended term,
except by devise, bequest, intestate succession, a collateral assignment of lease
or other security granted to a leasehold mortgagee in connection with leasehold
financing by a lessee, a change in direct ownership of less than fifty per cent
of a lessee that is a company or entity, a change in indirect ownership of a lessee
that is a company or entity, or by operation of law. The prohibition on assignments
and transfer of leases shall include a prohibition on conveyances of leases. During
subsequent periods of the extended term of the lease, the lease may be assigned
or transferred, subject to approval by the board.
(e) The applicant for
a lease extension shall pay all costs and expenses incurred by the department in
connection with processing, analyzing, or negotiating any lease extension request,
lease document, or development agreement under this section.
(f) As used in this section:
"Government use"
means a development undertaken under a lease held by any agency or department of
the State or its political subdivisions other than the University of Hawaii or any
department, agency, or administratively attached entity of the University of Hawaii
system.
"Mixed-use"
means a development that combines two or more of the following uses in a single
project: commercial use, resort use, multifamily residential use, or government
use.
"Resort use"
means a development that:
(1) Provides transient accommodations as defined in section
237D-1 and related services, which may include a front desk, housekeeping, food
and beverage, room service, and other services customarily associated with transient
accommodations; and
(2) Where at least seventy-five per cent of the living
or sleeping quarters are used solely for transient accommodations for the term of
any lease extension.
"Substantial improvements"
means any renovation, rehabilitation, reconstruction, or construction of existing
improvements, including minimum requirements for off-site and on-site improvements,
the cost of which equals or exceeds thirty per cent of the market value of the existing
improvements, that the lessee or the lessee and developer installs, constructs,
and completes by the date of completion of the total development.
[L 2021, c
236, §2]
Source: Hawaii State Legislature (capitol.hawaii.gov), via Internet Archive capturesURL: http://www.capitol.hawaii.gov/hrscurrent/Vol03_Ch0121-0200D/HRS0171/HRS_0171-0036_0005.htmFetched: 11/10/2026