§171-36  Lease restrictions; generally. (a)  Except as otherwise provided, the following restrictions shall apply toall leases:

(1)  Options for renewal of terms are prohibited;

(2)  No lease shall be for a longer term thansixty-five years, except in the case of a residential leasehold which mayprovide for an initial term of fifty-five years with the privilege of extensionto meet the requirements of the Federal Housing Administration, FederalNational Mortgage Association, Federal Land Bank of Berkeley, FederalIntermediate Credit Bank of Berkeley, Berkeley Bank for Cooperatives, orVeterans Administration requirements; provided that the aggregate of theinitial term and extension shall in no event exceed seventy-five years;

(3)  No lease shall be made for any land under a leasewhich has more than two years to run;

(4)  No lease shall be made to any person who is inarrears in the payment of taxes, rents, or other obligations owing the State orany county;

(5)  No lease shall be transferable or assignable,except by devise, bequest, or intestate succession; provided that with theapproval of the board of land and natural resources, the assignment andtransfer of a lease or unit thereof may be made in accordance with currentindustry standards, as determined by the board; provided further that prior tothe approval of any assignment of lease, the board shall have the right toreview and approve the consideration to be paid by the assignee and maycondition its consent to the assignment of the lease on payment by the lesseeof a premium based on the amount by which the consideration for the assignment,whether by cash, credit, or otherwise, exceeds the depreciated cost ofimprovements and trade fixtures being transferred to the assignee; providedfurther that with respect to state agricultural leases, in the event offoreclosure or sale, the premium, if any, shall be assessed only after theencumbrances of record and any other advances made by the holder of a securityinterest are paid;

(6)  The lessee shall not sublet the whole or any partof the demised premises except with the approval of the board; provided thatprior to the approval, the board shall have the right to review and approve therent to be charged to the sublessee; provided further that in the case wherethe lessee is required to pay rent based on a percentage of its gross receipts,the receipts of the sublessee shall be included as part of the lessee's grossreceipts; provided further that the board shall have the right to review and,if necessary, revise the rent of the demised premises based upon the rentalrate charged to the sublessee including the percentage rent, if applicable, andprovided that the rent may not be revised downward;

(7)  The lease shall be for a specific use or uses andshall not include waste lands, unless it is impractical to provide otherwise;

(8)  Mineral and metallic rights and surface andground water shall be reserved to the State; and

(9)  No lease of public lands, including submergedlands, nor any extension of any such lease, shall be issued by the State to anyperson to construct, use, or maintain a sunbathing or swimming pier or to usethe lands for such purposes, unless such lease, or any extension thereof,contains provisions permitting the general public to use the pier facilities onthe public lands and requiring that a sign or signs be placed on the pier,clearly visible to the public, which indicates the public's right to the use ofthe pier.  The board, at the earliest practicable date, and where legally possible,shall cause all existing leases to be amended to conform to this paragraph. The term "lease", for the purposes of this paragraph, includesmonth-to-month rental agreements and similar tenancies.

(b)  The board, from time to time, upon theissuance or during the term of any intensive agricultural, aquaculture,commercial, mariculture, special livestock, pasture, or industrial lease, may:

(1)  Modify or eliminate any of the restrictionsspecified in subsection (a);

(2)  Extend or modify the fixed rental period of thelease; or

(3)  Extend the term of the lease

to the extent necessary to qualify the lease formortgage 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 anyprivate lender participates, or to amortize the cost of substantialimprovements to the demised premises that are paid for by the lessee withoutinstitutional financing, such extension being based on the economic life of theimprovements as determined by the board or an independent appraiser; providedthat the approval of any extension shall be subject to the following:

(1)  The demised premises have been used substantiallyfor the purpose for which they were originally leased;

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

(3)  In the event of a reopening, the rental for anyensuing period shall be the fair market rental at the time of reopening;

(4)  Any federal or private lending institution shallbe qualified to do business in the State;

(5)  Proceeds of any mortgage or loan shall be usedsolely for the operations or improvements on the demised premises;

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

(7)  The rules of the board, setting forth anyadditional terms and conditions, which shall ensure and promote the purposes ofthe demised lands.

(c)  The board at any time during the term ofany intensive agricultural, aquaculture, or mariculture lease and whenjustified by sound economic practices or other circumstances, may permit analternative agricultural, aquaculture, or mariculture use or uses for anyportion or portions of the land demised.  As a condition to permittingalternative uses, the board may require such other modifications, includingrental adjustments or changes in the lease as may be necessary to effect oraccommodate the alternative use or uses.  An alternative use or uses may beallowed by the board upon:

(1)  The application of the lessee;

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

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

(d)  The board, from time to time, during theterm of any agriculture, intensive agriculture, aquaculture, commercial,mariculture, special livestock, pasture, or industrial lease, may modify oreliminate any of the [restrictions] specified in subsection (a), extend ormodify the fixed rental period of the lease, or extend the term of the leaseupon a showing of significant economic hardship directly caused by:

(1)  State disaster, pursuant to chapter 209,including seismic or tidal wave, tsunami, hurricane, volcanic eruption,typhoon, earthquake, flood, or severe drought; or

(2)  A taking of a portion of the area of the lease bygovernment action by eminent domain, withdrawal, or conservation easement;provided that the portion taken shall not be less than ten per cent of theentire leased area unless otherwise approved by the board; and provided thatthe board determines that the lessee will not be adequately compensatedpursuant to the lease provisions.

(e)  The approval of any extension grantedpursuant to subsection (d) shall be subject to the following:

(1)  The demised premises has been used substantiallyfor the purposes for which they were originally leased;

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

(3)  The rental shall not be less than the rental forthe preceding term;

(4)  The rules of the board, setting forth anyadditional terms and conditions which shall ensure and promote the purposes ofthe demised lands; and

(5)  The length of the extension shall not exceed areasonable length of time for the purpose of providing relief and shall in nocase exceed five years. [L 1962, c 32, pt of §2; am L 1965, c 239, §18; Supp,§103A-36; am L 1967, c 234, §14; HRS §171-36; am L 1969, c 217, §1; am L 1971,c 19, §1 and c 38, §1; am L 1976, c 196, §1; am L 1978, c 191, §1; am L 1982, c37, §1 and c 55, §1; am L 1988, c 159, §2; am L 1989, c 104, §1; am L 1990, c242, §1; am L 1992, c 283, §1; am L 1994, c 114, §1; am L 1997, c 67, §1, c206, §1, c 258, §6, and c 286, §1; am L 1999, c 160, §21; am L 2000, c 261,§§2, 5; am L 2002, c 68, §2, c 103, §1, and c 180, §1; am L 2005, c 129, §2]

 

Note

 

  L 2005, c 129, §3,provides in part:  "... the department of land and natural resources isurged to commence using the prevailing real property tax assessment value ofthe fast land in determining lease rent for a lease of the state submerged landor land beneath tidal water entered into after July 1, 2006."

 

Cross References

 

  Mineral rights andleases, see chapter 182.