2017-03-17 Letter to Karl Rhoades re HB 575 relating to Public Lands

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Karl Rhoads March 17, 2017 Page 2 solution by providing lessees the opportunity to extend the terms of their lease for up to fifteen years with the commitment on the side of the lessee to make substantial improvements to the premises. The language in HB575 HD1 attempted to balance the interests of the lessee with the interests of the State and community. Please note, however, that requiring an investment of 50% of the market value seemed to focus on those properties that are dilapidated and might in fact punish those who have kept their property in good condition. The proposed HB575 HD1 SD1 provides the option for a lease-holder to push their leased property to public auction if there are ten years or less remaining on the lease. The lessees may, if they choose, place the winning bid at auction and be re- awarded the lease on the property. This option might give the lessees security in the length of their leases and a better opportunity to secure financing for desired improvements, but it does not address the current state of the improvements nor require any reinvestment in the property. If the problem really is two-fold, which we believe it to be, and a desired outcome includes an improvement to the buildings and infrastructure, then HB575 HD1 SD1 should include provisions to that end. In order to give DNLR the most tools to make its leases work, maybe a hybrid version of the bills can be developed. Preserve the idea of a special district, keep some 15-year lease extension provisions AND add in the ability to have the lessee bring the property to auction during the last 10-year period. Our suggestion is to use the language of SB 1292 as Part I of a new draft of HB 575, and then add the proposed SD1 new language as Part II. The two concepts are not incompatible, and if such a bill were to continue on to conference, it would give the stakeholders' time to fully evaluate the options and collaborate on a final approach. Lessees might appreciate having two or three options, or reject one or more out of hand, but the hard work of building consensus would be rewarded rather than lost. Thank you for your consideration. Respectfully submitted, Harry Mayor County of Hawai'i is an Equal Opportunity Provider and Employer.