Required terms in agricultural park leases

In addition to the standard County lease provisions, each agricultural park lease must contain the following provisions: A. A lease term of fifty years. B. The lease rental rate to be paid quarterly by the first of January, April, July, and October, except that the lessee may pre-pay rent without penalty. C. The general agricultural use or uses to which the land is to be employed. D. A provision that the lessee must remain current in payment of all taxes, rents, or other obligations to the United States, the State, or any of its political subdivisions, including the County. E. A provision that the lessee must pay or cause to be paid, when due, the amount of all taxes, rate assessments, and other outgoings of every description as to which the demised premises or any part of the premises, or any improvements on the premises, or the County or lessee with respect to the premises, may be assessed or become liable by authority of law during the term of the lease; except that for any government assessment that may be payable in installments, the lessee may be required to pay only the installments, together with interest, as they become due and payable during the term. F. A provision that the lessee may sublease once for a period not to exceed five consecutive years, the whole or any portion of the demised premises to a sublessee, except that the sublease agreement must be year-to-year and approved by the director, after approval by the committee, and that the sublessee cannot hold any financial interest in one or more lots or sixty or more acres in the agricultural park at any time. G. A provision that a lessee may assign the lease, after approval by the committee, for the remainder of the lease term to a person, except the assignee cannot hold any financial interest in one or more lots or sixty or more acres in the agricultural park at any time. H. A provision that the lessee may mortgage or create a security interest in the demised premises or any portion of the premises with the director's approval, except that in the case of default the leasehold interest may only be foreclosed via judicial action under chapter 667, Hawaiʻi Revised Statutes, and the leasehold interest must be transferred via assignment of lease for the remainder of the lease term only. I. A provision that the lessee may sell capital improvements at any time with director approval during the lease term and within a ninety-day period after expiration or termination of the lease. J. The lessee must use the land for agricultural and related purposes in accordance with the following schedule: 1. Not less than 50 percent of useable agricultural land within the first two years of the lease term and the remainder within the first five years. 2. The above use schedules must be made a part of the plan of development and use that must be submitted to the County. K. A provision that the lessee must keep the demised premises and improvements in a strictly clean, sanitary, and orderly condition. L. A provision that the lessee must not commit, suffer, or permit to be committed any waste, nuisance, strip, or unlawful, improper, or offensive use of the demised premises. M. A provision that the lessee must not engage in any activity that may result in soil erosion, except in accordance with chapter 20.08 . N. A provision that the lessee must use best management practices at all times. O. A provision that the lessee must comply with all requirements of County, state, and federal authorities, and observe all County rules, regulations, and ordinances and state and federal statutes pertaining to the premises. P. A provision that the lessee must permit the County and its agents to enter the demised premises and examine its condition at all reasonable times during the term of the lease. Q. A provision that, to the extent permitted by law, the lessee must indemnify, release, defend, and hold the County harmless from and against any claim or demand for loss, liability, or damage that arises from the lessee's action, omission, or use of the property and that the provision remains valid and binding against lessee notwithstanding expiration or termination of the lease. R. A provision that the lessee fully understands that any water made available to the demised premises must be for agricultural purposes only and not for human consumption, and that the lessee must post signs adequate to provide notice to anyone entering upon the lot that the water is not for human consumption. S. A provision that only the following pesticides and fertilizers are allowed for use on lots in the Kula agricultural park phase I expansion area: 1. Pesticides and fertilizers listed as "allowed" on the National List of Allowed and Prohibited Substances as listed in title 7 Code of Federal Regulations 205.601, 205.603, 205.605, and 205.606, which identifies substances that may or may not be used in organic crop and livestock production. 2. "Minimum risk pesticides" exempt from registration under the Federal Insecticide, Fungicide, and Rodenticide Act, as provided in title 40 Code of Federal Regulations section 152.25(f). 3. The following, when used in compliance with manufacturer specifications: a. Disinfectants, germicides, bactericides, miticides, and virucides. b. Insect repellents, and rat and rodent extermination products. c. General use paints, stains, and wood preservatives, and sealants. d. Citric acid. T. A provision that Kula agricultural park phase I expansion area tenants must submit annually to the committee a report of all inputs—such as fertilizer, pesticides, and soil amendments—on farms for the year, including date and product used, to ensure compliance with the provision required by subsection S. U. A provision that failure to comply with all provisions of the lease is cause for termination of the lease. V. Before any lease is executed, the prospective lessee must give security against damage and to ensure compliance with the lease by deposit of an amount equal to two months' rental cost. In lieu of the deposit, the director of finance may accept good and sufficient bond for the amount, naming the County as obligee, the prospective lessee as principal, and a surety company authorized to do business in this state as surety. W. Financial statements. Upon completing the second year of operation, the tenant must provide the following information: 1. Sources and uses of capital. 2. Income statements. 3. Balance sheets. 4. Cash flow statement on a monthly basis for the first two years of the lease, sublease, or assignment. 5. Federal and state tax returns for the first two years of operation. The tax return for the second year of operation must be provided within thirty days of filing with the Internal Revenue Service. ( Ord. No. 5495 , § 9, 2023; Ord. 4336, § 1, 2016 ; Ord. 3133 § 2 (part), 2003)