§171-60 - Development through private developer.

§171-60 Development through privatedeveloper. (a) Leasehold projects. Notwithstanding anything in thischapter to the contrary, the board, by negotiation and without recourse topublic auction, with the prior approval of the governor and authorization ofthe legislature by concurrent resolution approving a development project, theconcurrent resolution to be adopted by each house no earlier than forty-eighthours after printed copies thereof have been made available to members of thathouse, may lease public lands, including submerged lands to be reclaimed at thedeveloper's or developers' expense, to a private developer or developers, orenter into a development agreement with a private developer or developers, fordevelopment and subdivision of the lands as a leasehold project foragricultural, industrial, single-family or multiple-family residential,commercial, business, or hotel and resort uses, as provided in this subsection.

Prior to leasing any public land to, orentering into a development contract with, a developer or developers, the boardshall:

(1) Determine:

(A) Whether the lands shall be developed bydisposition or contract;

(B) The location, area, and size of the landsto be developed;

(C) The use or uses to which the lands shall beput, which shall be in conformity with the applicable state, city and county,or county zoning and subdivision laws, ordinances, or regulations;

(D) The estimated period of time to constructand complete the development;

(E) Minimum requirements for on-site andoff-site improvements, if any;

(F) Whether any beach rights-of-way or publicgame preserves should be established; and

(G) Other terms and conditions that are deemednecessary by the board;

(2) Set the minimum rental of the lands to be developedon the basis of an appraisal report prepared by an appraiser for the boarddetermining the fair market value of the lands to be developed;

(3) Give public notice of the proposed disposition orcontract at least once in each of three successive weeks statewide and, inaddition, in the appropriate county, if the land is situated in the first,second, and fourth districts. The notice shall invite interested persons tosubmit applications to be selected as the developer or developers for theproject and sealed bids for the development of the lands. The notice shallalso state in general terms the size, location, and minimum rental of the areato be leased to the developer or developers, the minimum requirements for anyrequired off-site and on-site improvement, the maximum estimated period of timeto install and complete the construction of any required improvement, the useor uses to which the lands shall be put, the last date on which applicationsand sealed bids will be received by the board, which date shall not be lessthan thirty days or more than ninety days after the last notice, and the timesand places at which more detailed information with respect to the dispositionor contract may be secured by interested persons.

Each applicant shall include, together withthe applicant's sealed bid, a financial statement, and performance andexperience records in real estate development; provided that the board, in itsdiscretion, may require the applicant to submit answers, under oath, toquestions contained in a questionnaire prepared by the board; the applicant'ssealed bid shall include a development plan in as much detail as possible andincluding but not limited to the following: the applicant's proposal as to howand when the applicant intends to develop the land, including any permittedincremental development, the amount of money the applicant intends to commit tothe total project, the method of recovery of the applicant's costs and profits,the amount the applicant agrees to pay to lease or contract to develop theland, and the income the State will receive from leases;

(4) Establish reasonable criteria for the selectionof the private developer or developers; and

(5) Determine within forty-five days of the last dayfor filing applications the applicant or applicants who meet the criteria forselection set by the board, and notify all applicants of its determinationwithin seven days of a determination. Any applicant may examine the basis ofthe determination, which shall be in writing, to ascertain whether or not theconditions and criteria established by the board were followed; provided thatif any applicant does not notify the board of any objections and the groundstherefor, in writing, within ten days of the receipt of a notice, the applicantshall be barred from proceeding to seek legal remedy for an alleged failure ofthe board to follow the conditions and criteria.

If only one applicant meets the criteriafor selection as the developer, the board then may negotiate the details of thedisposition of the public lands to, or enter into a development contract with,the developer; provided that the terms of the disposition or contract shall notbe less than those proposed by the developer in the application and shall besubject to the concurrence of the governor. If two or more applicants meet thecriteria for selection, the board shall consider all of the relevant facts ofthe disposition or contract, the proposals submitted by each applicant, theexperience and financial capability of each applicant, and within forty-fivedays from the date of selection of the applicants that met the criteria, shallselect the applicant who submitted the best offer. The board then maynegotiate the details of the disposition of the public lands or enter into adevelopment contract with the developer; provided that the terms of thedisposition or contract shall not be less than those proposed by the developerin the application and shall be subject to the concurrence of the governor.

The terms of any disposition ordevelopment contract shall include the following, wherever appropriate:

(A) The development and subdivision shallcomply with appropriate state, county, and city and county zoning andsubdivision requirements;

(B) The developer or developers shall filewith the board a good and sufficient bond conditioned upon the full andfaithful performance of all the terms, covenants, and conditions of thedisposition or development contract;

(C) The use or uses to which the land will beput. Development of large, though economic, tracts of land with multiple butcomplementary uses should be encouraged;

(D) The dates on which the developer mustsubmit preliminary plans and final plans and specifications for the totaldevelopment to the board for approval, which approval shall not be arbitrarilyor capriciously withheld. No construction shall commence until the board hasapproved the final plans and specifications; provided that with board approvalconstruction on an incremental basis may be permitted;

(E) The date of completion of the totaldevelopment, including the date of completion of any permitted incrementaldevelopment;

(F) The minimum requirements for off-site andon-site improvements that the developer must install, construct, and completeby the date of completion of the total development. The board may permitincremental development and establish the minimum requirements for off-site andon-site improvements that must be installed, constructed, and completed priorto the date of completion of the total development;

(G) In the event of a lease the developer maybe permitted, after the developer has completed construction of any requiredoff-site improvement, to assign or sublease with board approval portions of theleased lands in which the construction of any required off-site improvement hasbeen completed to a purchaser or sublessee who shall assume the obligations ofthe developer relative to the parcel being assigned or subleased, including theconstruction of any on-site improvement. The board may permit a developer toshare in the lease rent for a fixed period in order to recover costs andprofit;

(H) A development agreement may provide thatthe board shall issue a lease to the nominee or nominees of the developer,including the developer, pursuant to the terms previously negotiated and agreedupon between the developer and the board, including the lease rent to thelessee and the method of recoupment of expenses and profit by the developer;

(I) The board shall lay out and establish anumber of rights-of-way from proposed or established highways to the publicbeaches and game preserves in order that the right of the people to utilize thepublic beach or beaches and public game preserves shall be protected.

Prior to leasing or enteringinto any development contract, the board shall determine the feasibility ofhunting on the lands, and if any of them is suitable for hunting or during theterm of the lease may become suitable for hunting, the board may reserve thelands as game preserves. Where the board finds that hunting on the lands wouldnot be consistent with the rights of the lessee or for other good cause, theboard need not reserve the lands as game preserves.

The cost of the rights-of-wayand any fencing which may be required shall be borne by the State, lessee, orjointly as the board may deem appropriate prior to the leasing of the lands.

In any disposition ofbeach-front lands, the board shall give consideration to the needs of thepublic for beach area above and below the high-water mark;

(J) The board may include in any developmentcontract or lease, provisions concerning notice of breach or default, rights ofa holder of a security interest, and consent to mortgage as set forth insections 171-20, 171-21, and 171-22, respectively; and

(K) Any other terms and conditions set by theboard.

The term "developer" as used in thissubsection means a person, firm, corporation, partnership, association, trust,or other legal entity, or a combination of any thereof, who or which hasexperience in the development and subdivision of land for single-family,multiple-family, industrial, hotel and resort, business commercial, oragricultural uses and has the financial ability satisfactory to the board todevelop and subdivide land.

(b) Fee simple residential development. Notwithstanding anything in this chapter to the contrary, the board, bynegotiation and without recourse to public auction, with the prior approval ofthe governor and authorization of the legislature by concurrent resolutionapproving the development project, the concurrent resolution to be adopted byeach house no earlier than twenty-four hours after printed copies thereof havebeen made available to the members of that house, may dispose of public lands,including submerged lands to be reclaimed at developer's or developers'expense, by sale of the fee, for single-family or multiple-family residentialuses, as provided in this subsection.

Prior to the sale in fee of any public land toa developer or developers, the board shall:

(1) Determine:

(A) The location, area, and size of the landsto be developed;

(B) The use or uses to which the lands shallbe put, which shall be in conformity with the applicable state, city andcounty, or county zoning and subdivision laws, ordinances, or regulations;

(D) Minimum requirements for on-site andoff-site improvements, if any;

(E) Whether any beach rights-of-way or gamepreserves should be established; and

(F) Any other terms and conditions deemednecessary by the board;

(2) Set the minimum sale price of the lands to bedeveloped on the basis of an appraisal report prepared by an appraiser for theboard determining the fair market value of the lands to be developed;

(3) Give public notice of the proposed disposition atleast once in each of three successive weeks statewide and, in addition, in theappropriate county if the land is situated in the first, second, and fourth districts. The notice shall invite interested persons to submit applications to beselected as the developer or developers for the project and sealed bids for thedevelopment of the lands. The notice shall also state in general terms thesize, location, and minimum sale price of the area to be sold to the developeror developers, the minimum requirements for any required off-site and on-siteimprovements, the maximum estimated period of time to install and complete theconstruction of any required improvements, the use or uses to which the landsshall be put, the last date on which applications and sealed bids will bereceived by the board, which date shall not be less than thirty days or morethan ninety days after the last notice, and the times and places at which moredetailed information with respect to the disposition may be secured byinterested persons.

Each applicant shall include, togetherwith the applicant's sealed bid, a financial statement and the applicant'sperformance and experience records in real estate development; provided thatthe board, in its discretion, may require the applicant to submit answers,under oath, to questions contained in a questionnaire prepared by the board;the applicant's sealed bid shall include a development plan in as much detailas possible and including but not limited to the following: the applicant'sproposal as to how and when the applicant intends to develop the land,including any permitted incremental development, the amount of money theapplicant intends to commit to the total project, the method of recovery of theapplicant's costs and profits, and the amount the applicant agrees to pay topurchase the land;

(4) Establish reasonable criteria for the selectionof the private developer or developers;

(5) Determine within forty-five days of the last dayfor filing applications, the applicant or applicants who meet the criteria forselection set by the board, and notify all applicants of its determinationwithin seven days of its determination. Any applicant may examine the basis ofthe determination, which shall be in writing, to ascertain whether or not theconditions and criteria established by the board were followed; provided thatif any applicant does not notify the board of the applicant's objections andthe grounds therefor, in writing, within ten days of the receipt of the notice,the applicant shall be barred from proceeding to seek legal remedy for anyalleged failure of the board to follow the conditions and criteria.

If only one applicant meets the criteriafor selection as the developer, the board may then negotiate the details of thedisposition of the public lands to the developer; provided that the terms ofthe disposition shall not be less than those proposed by the developer in thedeveloper's application and shall be subject to the concurrence of thegovernor. If two or more applicants meet the criteria for selection, the boardshall consider all of the relevant facts of the disposition, the proposalssubmitted by each applicant, the experience and financial capability of eachapplicant and within forty-five days from the date of selection of theapplicants that met the criteria, shall select the applicant who submitted thebest offer. The board may then negotiate the details of the disposition of thepublic lands with the developer; provided that the terms of the dispositionshall not be less than those proposed by the developer in the developer'sapplication and shall be subject to the concurrence of the governor.

The terms of the disposition shallinclude the following:

(A) The development and subdivision shallcomply with appropriate state, county, and city and county zoning andsubdivision requirements;

(B) The developer or developers shall filewith the board a good and sufficient bond conditioned upon the full andfaithful performance of all the terms, covenants, and conditions of thedisposition;

(E) The date of completion of the totaldevelopment, including the date of completion of any permitted incrementaldevelopment;

(G) The title to the land shall remain in theState until the purchaser has made all payments required in the terms of thesale and has constructed the improvements as agreed; provided that thedeveloper may assign, with the approval of the board, the developer's salesagreement with the board as security for a loan to finance the balance of or apart of either the purchase price of the land or the cost of improvements, orboth; provided further that if incremental development is permitted and thedeveloper has completed construction of the required improvements in theincrement and is able to pay or has paid for the agreed purchase price of theland within the increment, then the developer shall be entitled to a landpatent or a deed to the land within the completed increment;

(H) The board shall lay out and establish overand across the lands a reasonable number of rights-of-way from proposed orestablished highways to the public beaches and game preserves in order that theright of people to utilize the public beach or beaches and public gamepreserves shall be protected.

The board may provide for thereservation of any lands within the lands to be disposed as game preserves ifthe board determines the establishment of the game preserves to be in thepublic interest.

The cost of rights-of-way andfencing which may be required shall be borne by the State, developer, orjointly as the board may deem appropriate prior to the disposition of thelands.

In any disposition ofbeach-front lands, the board shall give consideration to the needs of thepublic for beach area above and below the high-water mark;

(I) The board may include in any sales agreementprovisions concerning notice of breach or default, rights of a holder of asecurity interest, and consent to mortgage as set forth insections 171-20, 171-21, and 171-22, respectively; and

(J) Other terms and conditions set by theboard.

The term "developer" as used in thissubsection means a person, firm, corporation, partnership, association, trust,or other legal entity, or a combination of any thereof, who or which hasexperience in the development and subdivision of land for single-family or multiple-familyresidential uses and has the financial ability satisfactory to the board todevelop and subdivide land. [L 1965, c 239, §39; Supp, §103A-56.1; HRS §171-60;am L 1968, c 68, §2; am L 1970, c 83, §§3, 4; am L 1981, c 199, §3; am L 1983,c 178, §2; gen ch 1985; am L 1998, c 2, §38]

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Beach Access: A Public Right? 23 HBJ 65.