HI HB518

Establishes a four-year pilot project within the Department of Land and Natural Resources for counties with populations between 170,000 and 200,000 to allow lessees of public lands to relinquish leases during the second half of the lease term.

Requires lessees to provide 90 days written notice before relinquishment and obtain an appraisal of any improvements to the land, with disputes resolved through arbitration at the lessee's expense.

Exempts relinquishing lessees from removing improvements or restoring the land to vacant condition, except in cases of pollution or contamination with hazardous substances.

Requires the State to dispose of relinquished land through public auction with an upset price equal to the greater of current ground rent or appraised fair market rent of vacant land; if a new lessee other than the original lessee wins, the new lessee pays a premium equal to the improvements' value, which goes to the relinquishing lessee.

Prohibits the pilot project from applying to lessees in arrears on taxes or rent, with prior cancellations within five years, or whose current lease is subject to cancellation; pilot project terminates June 30, 2019, with progress and final reports required to the legislature.