Report Title:

Hawaiian Autonomy Trust

 

Description:

Authorizes the creation of a Hawaiian Autonomy Trust, which will be a private non-profit entity composed of Hawaiians elected by Hawaiians. Transfers to the trust, upon approval of Congress, the assets controlled by OHA and DHHL. Abolishes OHA and DHHL.

 

THE SENATE

S.B. NO.

1467

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO THE ESTABLISHMENT OF A HAWAIIAN AUTONOMY TRUST.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The law which annexed Hawaii, the Joint Resolution of Annexation of 1898, 30 Stat. 750 (1898), provided that "all revenues from or proceeds of the [public lands] except [that used or occupied by the United States or assigned to the local government shall be used solely for the benefit of the inhabitants of the Hawaiian Islands for educational and other public purposes." The United States Attorney General interpreted this language to create a "special trust, limiting the revenue from or proceeds of the same to the uses of the inhabitants of the Hawaiian Islands for educational and other purposes.

Congress enacted the Hawaii Homes Commission Act of 1920, holding in trust for Native Hawaiian homesteading about two hundred thousand of the 1.75 million acres of "ceded" government lands. Although some people felt at the time that the lands that were set aside were of marginal value, today, these lands are some of the best and most exclusive lands in Hawaii. Papkolea, the slopes of Haleakala, Waimanalo, and many other lands are assets that constitute a worthy land base for Hawaiians for all time.

In 1959, with the passage of the Hawaii Admission Act, as part of the statehood compact, Hawaiian lands previously held in trust by the United States passed to the trusteeship of Hawaii. In compliance with the statehood compact, the State of Hawaii established the department of Hawaiian home lands directed by the Hawaiian homes commission, as part of the state executive branch. This commission is responsible for administering the Homelands program, and its eight members and chairperson are appointed by the governor. The state also created the office of Hawaiian affairs. These two entities were created politically and have been administered through the political process.

However, as state history has shown, politics has deprived Native Hawaiians of much of the benefits of the land trusts created by law. Problems arising from poor soil, lack of irrigation water and infrastructural improvements have made farming and homesteading difficult. The wait list for Hawaiian Homes Commission Act homesteads is long. Some have been on the wait list for forty years and many others on the list have died waiting.

Misuse of the resources of both land trusts by the State has been well documented over the years. For example, despite the Hawaiian Homes Commission Act, which specifically provides that the governor does not have the power to dispose of trust lands by executive order or proclamation, Hawaii's governors have issued executive orders transferring thousands of acres of Hawaiian home lands for general public purposes without compensation to the trust. Although most of the executive orders were canceled in 1984 after litigation, the Hawaiian homes commission subsequently conveyed much of that land back to the agencies that had been using the land pursuant to executive order.

Historically, department of Hawaiian home lands resorted to leasing out most of the lands to nonbeneficiaries to pay its administrative costs. Of the rents that were collected from the leasing out of trust lands, nearly all of the money went towards department of Hawaiian home lands' administrative costs. This practice of leasing trust lands to non-beneficiaries has created a conflict of interest: the commissioners and other department officials must choose between making land available to homesteading beneficiaries or leasing the land to non-Hawaiians, thus assuring that at least their salaries will be paid. These leases thus are not entered into because they are a prudent investment of the trust beneficiaries' property, as the trust arrangement requires; instead, they are entered into because the state legislature has failed to adequately fund the Hawaiian home lands program.

The State owes conflicting duties to both the Hawaiian people, under the Admission Act and the 1978 constitutional amendments and also to the public under its broadest institutional mandate. The state supreme court and the federal-state task force on the Hawaiian Homes Commission Act (convened in 1980 to address the Hawaiian Homes Commission Act program's effectiveness and future implementation of the Hawaiian Homes Commission Act) have instructed the State not to allow public needs to influence its decisions in administering Hawaiian home lands. However, conflict of interest is inevitable, and thus failure is inherent in the Hawaiian homes program as the State strives to serve the public needs.

The ceded lands trust has also failed to provide an adequate resource base for Native Hawaiians because of mismanagement by the state department of land and natural resources. Like the department of Hawaiian home lands, the department of land and natural resources has failed to keep an accurate accounting of the actual acreage in the ceded lands trust. Moreover, although the department of land and natural resources has been required by statute to segregate moneys obtained through conveyance of ceded lands from moneys received from other public lands, it has not done so. Thus, proceeds from the sale or lease of ceded lands, part of which should have accrued to the benefit of Native Hawaiians, were commingled with general public funds from non-ceded public lands.

For too long the Native Hawaiians and the State of Hawaii have debated, argued, and litigated over a solution to the Hawaiian sovereignty question. The recent Rice v. Cavetano decision by the United States Supreme Court changing Hawaiian-only voting rights for the office of Hawaiian affairs may be a blessing in disguise. However, other suits pending in the courts may resolve the sovereignty question for the Hawaiians. Now is the time to define positive solutions that will settle the debates once and for all.

The problem remains that political action throughout the years has promoted mismanagement, divisiveness and negativism in the system. The purpose of this Act is to establish a Hawaiian Autonomy Trust. The trust would hold all of the assets and be legally responsible for all of the liabilities presently held by the department of Hawaiian home lands under the Hawaiian Homes Commission Act and by the office of Hawaiian affairs. The trust would become the sole owner and become the administrator of these assets and liabilities, thereby removing them from the political arena. This Act would remove federal and state government from ownership and management of the Hawaiian home lands and give it to the Hawaiian Autonomy Trust. All assets from the settlement of all revenue debts to the office of Hawaiian affairs would be transferred to the Trust, free from Hawaii's political system.

This Act would provide for the selection of a special master, as selected by the trustees of the office of Hawaiian affairs and the Hawaiian homes commission, to oversee the trust for a period of two years after the federal government has given its consent to this transfer.

It is intended that all Native Hawaiians will have a say in the creation of the structural framework of this trust and the future ownership, management, and administration of these assets and liabilities. This system of governance would be established by a convention designed by Native Hawaiians. As a private trust, the resources of the trust, election of convention delegates and ratification by beneficiaries would be the business of only those beneficiaries--Native Hawaiians.

The office of Hawaiian affairs currently possesses $394,000,000, and the State of Hawaii owes it much more. This Act requires the State to settle the outstanding debt to the office of Hawaiian affairs, reasonably, once and for all. This cash asset or its equivalent can be used as working capital to benefit the health, education and welfare of Native Hawaiians.

Finally, this Act would benefit all citizens and taxpayers of Hawaii by eliminating two significant agencies from state government.

PART I

SECTION 2. The Constitution of the State of Hawai`i is amended by adding two new sections to be appropriately designated and to read as follows:

"HAWAIIAN AUTONOMY TRUST; TRANSFER OF ASSETS

Section . Upon approval by Congress, the State hereby authorizes the transfer by the State of its trust assets, rights, duties, and obligations owing to the Hawaiian population of this State under the Hawaiian Homes Commission Act, 1920, and the office of Hawaiian affairs to a private non-profit trust, the Hawaiian Autonomy Trust, created as provided by law. The Hawaiian Autonomy Trust shall assume the assets, rights, duties, and obligations of the former office of Hawaiian affairs and the former department of Hawaiian home lands. Upon this transfer, the State shall no longer be involved with or responsible for these assets or these duties.

The Hawaiian Autonomy Trust shall be a private corporate entity and shall not be a sovereign governmental entity. It shall have all of the rights, title, interest, duties, and obligations, as established by law, including any appurtenant authority associated with those rights title, interest, duties, and obligations. The trustees of the Hawaiian Autonomy Trust shall be elected by Hawaiian residents of this State.

The beneficiaries of this trust shall be persons of Hawaiian and native Hawaiian ancestry. "Hawaiian" means a person descended by blood from any of the races inhabiting the Hawaiian Island prior to 1778. "Native Hawaiian" shall have the same meaning as in the Hawaiian Homes Commission Act, 1920.

HAWAIIAN HOME LANDS

Section . The rights, title, interest, duties, and obligations accepted by the State under the Hawaiian Homes Commission Act, 1920, pursuant to compact with the United States of America, as provided by state law and upon the consent of the United States, are transferred to the Hawaiian Autonomy Trust. The management of the "available lands," as defined by section 203 of the Hawaiian Homes Commission Act, 1920, shall be the responsibility of the Hawaiian Autonomy Trust."

SECTION 3. Article XII, section 1, of the Constitution of the State of Hawai`i is amended to read as follows:

"HAWAIIAN HOMES COMMISSION ACT

Section 1. Anything in this constitution to the contrary notwithstanding, the State's rights, title, and interest in assets and the duties and obligations to native Hawaiians under the Hawaiian Homes Commission Act, 1920, enacted by the Congress, as the same has been or may be amended prior to the admission of the State, [is hereby adopted as a law of the State, subject to amendment or repeal by the legislature; provided that if and to the extent that the United States shall so require, such law shall be subject to amendment or repeal only with the consent of the United States and in no other manner; provided further that if the United States shall have been provided or shall provide that particular provisions or types of provisions of such Act may be amended in the manner required for ordinary state legislation, such provisions or types of provisions may be so amended. The proceeds and income from Hawaiian home lands shall be used only in accordance with the terms and spirit of such Act.] and to Hawaiians under section 5(f) of the Admissions Act are transferred, upon approval by Congress, to the Hawaiian Autonomy Trust for any and all purposes, as provided by law. The [legislature] Hawaiian Autonomy Trust shall [make sufficient sums available for] carry out the following purposes: (1) development of home, agriculture, farm and ranch lots; (2) the making of home, agriculture, aquaculture, farm and ranch loans; and (3) rehabilitation projects [to] that shall include, but not be limited to, educational, economic, political, social and cultural processes by which the general welfare and conditions of native Hawaiians are thereby improved[; (4) the administration and operating budget of the department of Hawaiian home lands; in furtherance of (1), (2), (3) and (4) herein, by appropriating the same in the manner provided by law] and any other action that benefits native Hawaiians.

Thirty percent of the state receipts derived from the leasing of cultivated sugarcane lands under any provision of law or from water licenses shall be transferred to the [native Hawaiian rehabilitation fund, section 213 of the Hawaiian Homes Commission Act, 1920, for the purposes enumerated in that section.] Hawaiian Autonomy Trust. Thirty percent of the state receipts derived from the leasing of lands cultivated as sugarcane lands on the effective date of this section shall [continue to] be [so] transferred to the [native Hawaiian rehabilitation fund] Hawaiian Autonomy Trust whenever such lands are sold, developed, leased, utilized, transferred, set aside or otherwise disposed of for purposes other than the cultivation of sugarcane. There shall be no ceiling established for the aggregate amount transferred [into] to the [native Hawaiian rehabilitation fund.] Hawaiian Autonomy Trust."

SECTION 4. Article XII, sections 5 and 6, of the Constitution of the State of Hawai`i are repealed.

["OFFICE OF HAWAIIAN AFFAIRS; ESTABLISHMENT OF

BOARD OF TRUSTEES

Section 5. There is hereby established an Office of Hawaiian Affairs. The Office of Hawaiian Affairs shall hold title to all the real and personal property now or hereafter set aside or conveyed to it which shall be held in trust for native Hawaiians and Hawaiians. There shall be a board of trustees for the Office of Hawaiian Affairs elected by qualified voters who are Hawaiians, as provided by law. The board members shall be Hawaiians. There shall be not less than nine members of the board of trustees; provided that each of the following Islands have one representative: Oahu, Kauai, Maui, Molokai and Hawaii. The board shall select a chairperson from its members.

POWERS OF BOARD OF TRUSTEES

Section 6. The board of trustees of the Office of Hawaiian Affairs shall exercise power as provided by law: to manage and administer the proceeds from the sale or other disposition of the lands, natural resources, minerals and income derived from whatever sources for native Hawaiians and Hawaiians, including all income and proceeds from that pro rata portion of the trust referred to in section 4 of this article for native Hawaiians; to formulate policy relating to affairs of native Hawaiians and Hawaiians; and to exercise control over real and personal property set aside by state, federal or private sources and transferred to the board for native Hawaiians and Hawaiians. The board shall have the power to exercise control over the Office of Hawaiian Affairs through its executive officer, the administrator of the Office of Hawaiian Affairs, who shall be appointed by the board."]

SECTION 5. Article XVIII, section 8, of the Constitution of the State of Hawai`i is repealed.

["EFFECTIVE DATE FOR OFFICE OF HAWAIIAN AFFAIRS

Section 8. The legislature shall provide for the implementation of the amendments to Article XII in Sections 5 and 6 on or before the first general election following ratification of the amendments to Article XII in Sections 5 and 6."]

SECTION 6. The Hawaiian Homes Commission Act, 1920, is amended by adding two new sections, to be appropriately designated and to read as follows:

"§   . Transfer of lands and administration. After establishment of the Hawaiian Autonomy Trust by law, and upon consent of the United States, the State shall transfer the responsibility for and the title to all lands categorized as Hawaiian home lands. The Hawaiian Homes Commission Act shall be administered and implemented by the Hawaiian Autonomy Trust."

SECTION 7. Section 201, Hawaiian Homes Commission Act, 1920, is amended as follows:

1. By deleting the definition of "commission".

"[(1) The term "commission" means the Hawaiian Homes Commission;]"

2. By adding the definition of "trust" to read:

"(1) The term "trust" means the Hawaiian Autonomy Trust;"

SECTION 8. Section 204, Hawaiian Homes Commission Act, 1920, is amended to read as follows:

"§204. Control [by department] of "available [lands," return to board of land and natural resources, when; other lands, use of.] lands". (a) [Upon the passage of this Act, all available lands shall immediately assume the status of Hawaiian home lands and be under the control of the department to be used and disposed of in accordance with the provisions of this Act, except that:

(1) In case any available land is under lease by the Territory of Hawaii, by virtue of section 73 of the Hawaiian Organic Act, at the time of the passage of this Act, such land shall not assume the status of Hawaiian home lands until the lease expires or the board of land and natural resources withdraws the lands from the operation of the lease. If the land is covered by a lease containing a withdrawal clause, as provided in section 73(d) of the Hawaiian Organic Act, the board of land and natural resources shall withdraw such lands from the operation of the lease whenever the department gives notice to the board that the department is of the opinion that the lands are required by it for the purposes of this Act; and such withdrawal shall be held to be for a public purpose within the meaning of that term as used in section 73(d) of the Hawaiian Organic Act.

(2) Any available land, including lands selected by the department out of a larger area, as provided by this Act, not leased as authorized by section 207(a) of this Act, may be returned to the board of land and natural resources as provided under section 212 of this Act, or may be retained for management by the department. Any Hawaiian home lands general lease issued by the department after June 30, 1985, shall contain a withdrawal clause allowing the department to withdraw the land leased at any time during the term of the lease for the purposes of this Act.

In the management of any retained available lands not required for leasing under section 207(a), the department may dispose of those lands to the public, including native Hawaiians, on the same terms, conditions, restrictions, and uses applicable to the disposition of public lands in chapter 171, Hawaii Revised Statutes; provided that the department may not sell or dispose of such lands in fee simple except as authorized under section 205 of this Act; provided further that the department is expressly authorized to negotiate, prior to negotiations with the general public, the disposition of a lease of Hawaiian home lands to a native Hawaiian, or organization or association owned or controlled by native Hawaiians, for commercial, industrial, or other business purposes, in accordance with the procedure set forth in section 171-59, Hawaii Revised Statutes, subject to the notice requirement of section 171-16(c), Hawaii Revised Statutes, and the lease rental limitation imposed by section 171-17(b), Hawaii Revised Statutes.] The Hawaiian Autonomy Trust may exercise the withdrawal clause in any Hawaiian home lands general lease having a withdrawal clause.

[(3) The department,] (b) The trust, with the approval of the Secretary of the Interior, in order to consolidate its holdings or to better effectuate the purposes of this Act, may exchange the title to available lands for land, privately or publicly owned, of an equal value. All lands so acquired by the [department] trust shall assume the status of available lands as though the land were originally designated as available lands under section 203 of this Act, and all lands so conveyed by the [department] trust shall assume the status of the land for which it was exchanged. The limitations imposed by section 73(l) of the Hawaiian Organic Act and the land laws of Hawaii as to the area and value of land that may be conveyed by way of exchange shall not apply to exchanges made pursuant hereto. [No such exchange of land publicly owned by the State shall be made without the approval of two-thirds of the members of the board of land and natural resources.] For the purposes of this paragraph, lands "publicly owned" means land owned by a county or the State or the United States.

[(b) Unless expressly provided elsewhere in this Act, lands or an interest therein acquired by the department pursuant to section [213(e)], 221(c), or 225(b), or any other section of this Act authorizing the department to acquire lands or an interest therein, may be managed and disposed of in the same manner and for the same purposes as Hawaiian home lands.]"

SECTION 9. Section 204.5, Hawaiian Homes Commission Act, 1920, is amended to read as follows:

"[[]§204.5.[]] Additional powers. [In addition and supplemental to the powers granted to the department by law, and notwithstanding any law to the contrary, the department may:

(1) With the approval of the governor,] The Hawaiian Autonomy Trust may undertake and carry out the development of any Hawaiian home lands available for lease under and pursuant to section 207 of this Act by assembling these lands in residential developments and providing for the construction, reconstruction, improvement, alteration, or repair of public facilities therein, including, without limitation, streets, storm drainage systems, pedestrian ways, water facilities and systems, sidewalks, street lighting, sanitary sewerage facilities and systems, utility and service corridors, and utility lines, where applicable, sufficient to adequately service developable improvements therein, sites for schools, parks, off-street parking facilities, and other community facilities[;

(2) With the approval of the governor, undertake and carry out the development of available lands for homestead, commercial, and multipurpose projects as provided in section 220.5 of this Act, as a developer under this section or in association with a developer agreement entered into pursuant to this section by providing for the construction, reconstruction, improvement, alteration, or repair of public facilities for development, including, without limitation, streets, storm drainage systems, pedestrian ways, water facilities and systems, sidewalks, street lighting, sanitary sewerage facilities and systems, utility and service corridors, and utility lines, where applicable, sufficient to adequately service developable improvements therein, sites for schools, parks, off- street parking facilities, and other community facilities;

(3) With the approval of the governor, designate by resolution of the commission all or any portion of a development or multiple developments undertaken pursuant to this section an "undertaking" under part III of chapter 39, Hawaii Revised Statutes; and

(4) Exercise the powers granted under section 39-53, Hawaii Revised Statutes, including the power to issue revenue bonds from time to time as authorized by the legislature.

All provisions of part III of chapter 39, Hawaii Revised Statutes, shall apply to the department and all revenue bonds issued by the department shall be issued pursuant to the provisions of that part except these revenue bonds shall be issued in the name of the department, and not in the name of the State.

As applied to the department, the term "undertaking" as used in part III of chapter 39, shall include a residential development or a development of homestead, commercial, or multipurpose projects under this Act. The term "revenue" as used in part III of chapter 39, shall include all or any portion of the rentals derived from the leasing of Hawaiian home lands or available lands, whether or not the property is a part of the development being financed]."

SECTION 10. The Hawaiian Homes Commission Act, 1920, is amended by substituting the word "trust", or like terms, wherever the term "department", or like terms appears, as the context requires.

SECTION 11. Section 202 of the Hawaiian Homes Commission Act, 1920, is repealed.

["§202. Department officers, staff, commission, members, compensation. (a) There shall be a department of Hawaiian home lands which shall be headed by an executive board to be known as the Hawaiian homes commission. The members of the commission shall be nominated and appointed in accordance with section 26-34, Hawaii Revised Statutes. The commission shall be composed of nine members, as follows: three shall be residents of the city and county of Honolulu; two shall be residents of the county of Hawaii one of whom shall be a resident of east Hawaii and the other a resident of west Hawaii; two shall be residents of the county of Maui one of whom shall be a resident from the island of Molokai; one shall be a resident of the county of Kauai; and the ninth member shall be the chairman of the Hawaiian homes commission. All members shall have been residents of the State at least three years prior to their appointment and at least four of the members shall be descendants of not less than one-fourth part of the blood of the races inhabiting the Hawaiian Islands previous to 1778. The members of the commission shall serve without pay, but shall receive actual expenses incurred by them in the discharge of their duties as such members. The governor shall appoint the chairman of the commission from among the members thereof.

The commission may delegate to the chairman such duties, powers, and authority or so much thereof, as may be lawful or proper for the performance of the functions vested in the commission. The chairman of the commission shall serve in a full-time capacity. He shall, in such capacity, perform such duties, and exercise such powers and authority, or so much thereof, as may be delegated to him by the commission as herein provided above.

(b) The provisions of section 76-16, Hawaii Revised Statutes, shall apply to the positions of first deputy and private secretary to the chairman of the commission. The department may hire temporary staff on a contractual basis not subject to chapters 76, 77, and 78, Hawaii Revised Statutes, when the services to be performed will assist in carrying out the purposes of the Act. These positions may be funded through appropriations for capital improvement program projects and by the administration account, operating fund, or native Hawaiian rehabilitation fund. No contract shall be for a period longer than two years, but individuals hired under contract may be employed for a maximum of six years; provided that the six-year limitation shall not apply if the department, with the approval of the governor, determines that such contract individuals are needed to provide critical services for the efficient functioning of the department. All other positions in the department shall be subject to chapters 76 and 77, Hawaii Revised Statutes.

All vacancies and new positions which are covered by chapters 76 and 77, Hawaii Revised Statutes, shall be filled in accordance with sections 76-23 and 76-31, Hawaii Revised Statutes, provided that the provisions of these sections shall be applicable first to qualified persons of Hawaiian extraction."]

SECTION 12. Sections 212 and 213 of the Hawaiian Homes Commission Act, 1920, are repealed.

["§212. Lands returned to control of board of land and natural resources. The department may return any Hawaiian home lands not leased as authorized by the provisions of section 207 of this Act to the control of the board of land and natural resources. Any Hawaiian home lands so returned shall, until the department gives notice as hereinafter in this section provided, resume and maintain the status of public lands in accordance with the provisions of the [Hawaii Revised Statutes]; provided that such lands may not be sold, leased, set aside, used, transferred or otherwise disposed of except under a general lease only. Any lease by the board of land and natural resources hereafter entered into shall contain a withdrawal clause, and the lands so leased shall be withdrawn by the board, for the purpose of this Act, upon the department giving at its option, not less than one nor more than five years' notice of such withdrawal; provided, that the minimum withdrawal-notice period shall be specifically stated in such lease. Each such lease, whether or not stipulated therein, shall be deemed subject to the right and duty of the board of land and natural resources to terminate the lease and return the lands to the department whenever the department gives notice to the board that the department is of the opinion that the lands are required.

Notwithstanding the provisions of section 171-95, Hawaii Revised Statutes, in the leasing of Hawaiian home lands by the board to a public utility or other governmental agency, where such use directly benefits the department of Hawaiian home lands or the homestead lessees, the rental may be nominal; in all other instances, the lease rental shall be no less than the value determined in accordance with section 171-17(b), Hawaii Revised Statutes.

Any general lease of Hawaiian home lands hereafter entered into by the board shall be void unless prior to the disposition of such lease by public auction, direct negotiation or otherwise, approval shall be obtained from the department of Hawaiian home lands.

§213. Funds and accounts. (a) There are established in the treasury of the State two revolving funds, to be known respectively as the Hawaiian home loan fund and the Hawaiian home general loan fund.

(b) Hawaiian home loan fund. The moneys in this fund shall be available for the purposes enumerated in section 214 and for payments provided in section 209 and shall not be expended for any other purpose except as provided in subsection (e).

Any interest or other earnings arising out of investments from this fund shall be credited to and deposited into the Hawaiian home operating fund.

(c) Hawaiian home general loan fund. Moneys appropriated by the legislature for the construction of homes but not otherwise set aside for a particular fund, for construction of replacement homes, for home repairs or additions, or for the development and operation of a farm, ranch, or aquaculture operation; moneys transferred from other funds; and installments of principal paid by the lessees upon loans made to them from this fund, or as payments representing reimbursements on account of advances, but not including interest on such loans or advances, shall be deposited into this fund. The moneys in the fund shall be used for purposes enumerated in section 214 and for payments provided in section 209; provided that, in addition to the conditions enumerated in section 215, farm loans shall be subject to the following conditions:

(1) To be eligible for a farm loan the applicant shall derive, or present an acceptable plan to derive, a major portion of the applicant's income from farming;

(2) Farm loans made for the purpose of soil and water conservation shall not exceed $20,000 and shall be for a term not to exceed ten years;

(3) Subsidies and grants or cost-sharing funds entitled and received by the lessee for soil and water conservation purposes shall be assigned to the department for the repayment of the outstanding farm indebtedness; and

(4) The lessee shall carry out recommended farm management practices approved by a qualified agricultural agency.

The department may create an account within this fund to support the guarantee of repayment of loans made by government agencies or private lending institutions to a holder of a lease under section 207(a) or license issued under section 207(c)(1)(B).

The department may create an account within this fund for moneys borrowed from government agencies or private lending institutions to be used for any of the purposes enumerated in section 214. Installments of principal and that part of the interest equal to the interest charged to the department by the lender paid by the lessees on the loans made to them from this account shall be deposited into the same account. Any additional interest or other earnings arising out of investments from this account shall be credited to and deposited into the Hawaiian home receipts fund.

(d) There are established in the treasury of the State five special funds, to be known respectively as the Hawaiian home operating fund, the Hawaiian home administration account, the Hawaiian home receipts fund, the Hawaiian home trust fund, and the native Hawaiian rehabilitation fund.

(e) Hawaiian home operating fund. The interest transferred from the Hawaiian home loan fund, all moneys received by the department from any other source, and moneys transferred from the Hawaiian home receipts fund, shall be deposited into the Hawaiian home operating fund. The moneys in this fund, without the prior written approval of the governor, shall be available:

(1) For construction and reconstruction of revenue- producing improvements intended to serve principally occupants of Hawaiian home lands, including acquisition or lease therefor of real property and interests therein, such as water rights or other interests;

(2) For payment into the treasury of the State of such amounts as are necessary to meet the interest and principal charges for state bonds issued for such revenue-producing improvements;

(3) For operation and maintenance of such improvements constructed from such funds or other funds;

(4) For the purchase of water or other utilities, goods, commodities, supplies, or equipment needed for services, or to be resold, rented, or furnished on a charge basis to occupants of Hawaiian home lands; and

(5) For appraisals, studies, consultants (including architects and engineers), or any other staff services including those in section 202(b) required to plan, implement, develop, or operate these projects.

The moneys in this fund may be supplemented by other funds available for or appropriated by the legislature for the same purposes. In addition to such moneys, this fund, with the approval of the governor, may be supplemented by transfers, made on a loan basis from the Hawaiian home loan fund for a period not exceeding ten years; provided that the aggregate amount of such transfers outstanding at any one time shall not exceed $500,000.

In addition, moneys of this fund shall be made available with the prior written approval of the governor for offsite improvements and development necessary to serve present and future occupants of Hawaiian home lands; for improvements, additions, and repairs to all assets owned or leased by the department excluding structures or improvements that the department is obligated to acquire under section 209; for engineering, architectural, and planning services to maintain and develop properties; for such consultant services as may be contracted for under this Act; for purchase or lease of necessary equipment; for acquisition or lease of real property and interest therein; and for improvements constructed for the benefit of beneficiaries of this Act and not otherwise permitted in the various loan funds or the administration account.

(f) Hawaiian home administration account. The entire receipts derived from any leasing or other disposition of the available lands pursuant to section [204(a)(2)] and transfers from the Hawaiian home receipts fund shall be deposited into this account. Any interest or other earnings arising out of investments from this fund shall be credited to and deposited into this fund. The moneys in this account shall be expended by the department for salaries and other administration expenses of the department in conformity with general law applicable to all departments of the State, and no sums shall be expended for structures and other permanent improvements. This account shall be subject to the following conditions and requirements:

(1) The department, when required by the governor but not later than November 15 preceding each regular session of the legislature, shall submit to the state director of finance its budget estimates of expenditures for the next fiscal period in the manner required by general law;

(2) The department's budget as approved by the governor shall be included in the governor's budget report and shall be transmitted to the legislature for its approval;

(3) Upon legislative approval of a budget, the amount appropriated shall be made available to the department. If no budget is approved by the legislature prior to its adjournment, sums accruing to this account shall not be expended for any other purpose but shall remain available for future use. Any amount in this account which is in excess of the amount approved by the legislature or made available for the fiscal period may be transferred to the Hawaiian home operating fund.

(g) Hawaiian home receipts fund. All interest moneys from loans or investments received by the department from any fund except as provided for in each respective fund, shall be deposited into this fund. At the end of each quarter, all moneys in this fund may be transferred to the Hawaiian home operating fund, the Hawaiian home administration account, the Hawaiian home trust fund, and any loan fund in accordance with rules adopted by the department.

(h) Hawaiian home trust fund. Except for gifts, bequests, and other moneys given for designated purposes, moneys deposited into this fund shall be available for transfers into any other fund or account authorized by the Act or for any public purpose deemed by the commission to further the purposes of the Act. Public purpose, as used herein, includes the formation of an account within the Hawaiian home trust fund as a reserve for loans insured or guaranteed by the Federal Housing Administration, Department of Veterans Affairs, or any other federal agency and their respective successors and assigns, which are authorized to insure or guarantee loans. Notwithstanding any other law to the contrary, the department is expressly authorized to deposit the reserve for loans in any duly organized bank in the State or elsewhere in the United States with automatic fund transfer capabilities and at such reserve amounts as shall be reasonably required by the federal agencies as a condition for participation in their respective insurance or guarantee programs.

(i) Native Hawaiian rehabilitation fund. Pursuant to Article XII, Section 1, of the State Constitution, thirty per cent of the state receipts, derived from lands previously cultivated as sugarcane lands under any other provision of law and from water licenses, shall be deposited into this fund. The department shall use this money solely for the rehabilitation of native Hawaiians which shall include, but not be limited to, the educational, economic, political, social, and cultural processes by which the general welfare and conditions of native Hawaiians are thereby improved and perpetuated.

Any payment of principal, interest, or other earnings arising out of the loan or investment of money from this fund shall be credited to and deposited into this fund.

Sections 214, 215, 216, and 217 shall not apply to administration of this fund. The department is authorized to adopt rules under chapter 91 necessary to administer and carry out the purposes of this fund."]

SECTION 13. Sections 214, 215, 216, and 217 of the Hawaiian Homes Commission Act, 1920, are repealed.

["§214. Purposes of loans; authorized actions. (a) The department may make loans from revolving funds to any lessee or native Hawaiian to whom, or any cooperative association to which, a lease has been issued under section 207(a) of this Act or a license has been issued under section 207(c)(1)(B) of this Act. Such loans may be made for the following purposes:

(1) The repair or maintenance or purchase or erection of dwellings on any tract, and the undertaking of other permanent improvements thereon;

(2) The purchase of livestock, swine, poultry, fowl, aquaculture stock, and farm and aquaculture equipment;

(3) Otherwise assisting in the development of tracts and of farm, ranch, and aquaculture operations, including:

(A) The initial and on-going development, improvement, operation, and expansion of homestead farms, ranches, and aquaculture enterprises;

(B) The liquidation of indebtedness incurred for any of the foregoing purposes relating to farm loans aged less than five years;

(C) The payment of normal and reasonable living expenses of a full-time farmer;

(D) The planning, layout, and installation of soil and water conservation practices; and

(E) Providing relief and rehabilitation to homestead farmers and ranchers due to damage by rain and windstorms, droughts, tidal wave, earthquake, volcanic eruption, and other natural catastrophies, and for livestock disease, epidemics, crop blights, and serious effects of prolonged shipping and dock strikes;

(4) The cost of breaking up, planting, and cultivating land and harvesting crops, the cost of excavating or constructing aquaculture ponds and tanks, the purchase of seeds, fertilizers, feeds, insecticides, medicines, and chemicals for disease and pest control for animals, fish, shellfish, and crops, and the related supplies required for farm, ranch, and aquaculture operations, the erection of fences and other permanent improvements for farm, ranch, and aquaculture purposes and the expense of marketing; and

(5) To assist licensees in the operation or erection of theaters, garages, service stations, markets, stores, and other mercantile establishments, all of which shall be owned by native Hawaiians or by organizations formed and controlled by native Hawaiians.

(b) In addition the department may:

(1) Use moneys in the Hawaiian home operating fund, with the prior approval of the governor, to match federal, state, or county funds available for the same purposes and to that end, enter into such undertaking, agree to such conditions, transfer funds therein available for such expenditure, and do and perform such other acts and things, as may be necessary or required, as a condition to securing matching funds for such projects or works;

(2) Loan or guarantee the repayment of or otherwise underwrite any authorized loan or portion thereof to lessees in accordance with section 215;

(3) Loan or guarantee the repayment of or otherwise underwrite any authorized loan or portion thereof to a cooperative association in accordance with section 215;

(4) Permit and approve loans made to lessees by government agencies or private lending institutions, where the department assures the payment of such loans; provided that upon receipt of notice of default in the payment of such assured loans, the department may, upon failure of the lessee to cure the default within sixty days, cancel the lease and pay the outstanding balance in full or may permit the new lessee to assume the outstanding debt; and provided further that the department shall reserve the following rights: the right of succession to the lessee's interest and assumption of the contract of loan; the right to require that written notice be given to the department immediately upon default or delinquency of the lessee; and any other rights enumerated at the time of assurance necessary to protect the monetary and other interests of the department;

(5) Secure, pledge, or otherwise guarantee the repayment of moneys borrowed by the department from government agencies or private lending institutions and pay the interim interest or advances required for loans; provided that the State's liability, contingent or otherwise, either on moneys borrowed by the department or on departmental guarantees of loans made to lessees under this paragraph and paragraphs (2), (3), and (4) of this subsection, shall at no time exceed $50,000,000; the department's guarantee of repayment shall be adequate security for a loan under any state law prescribing the nature, amount, or form of security or requiring security upon which loans may be made;

(6) Use available loan fund moneys or other funds specifically available for such purposes as cash guarantees when required by lending agencies;

(7) Exercise the functions and reserved rights of a lender of money or mortgagee of residential property in all direct loans made by government agencies or by private lending institutions to lessees the repayment of which is assured by the department. The functions and reserved rights shall include but not be limited to, the purchasing, repurchasing, servicing, selling, foreclosing, buying upon foreclosure, guaranteeing the repayment, or otherwise underwriting, of any loan, the protecting of security interest, and after foreclosures, the repairing, renovating, or modernization and sale of property covered by the loan and mortgage;

(8) Pledge receivables of loan accounts outstanding as collateral to secure loans made by government agencies or private lending institutions to the department, the proceeds of which shall be used by the department to make new loans to lessees or to finance the development of available lands for purposes permitted by this Act; provided that any loan agreement entered into under this paragraph by the department shall include a provision that the money borrowed by the department is not secured directly or indirectly by the full faith and credit or the general credit of the State or by any revenues or taxes of the State other than the receivables specifically pledged to repay the loan; provided further that in making loans or developing available lands out of money borrowed under this paragraph, the department may establish, revise, charge, and collect fees, premiums, and charges as necessary, reasonable, or convenient, to assure repayment of the funds borrowed, and the fees, premiums, and charges shall be deposited into the Hawaiian home trust fund; and provided further that no moneys of the Hawaiian home loan fund may be pledged as security under this paragraph; and

(9) Notwithstanding any other provisions of this Act to the contrary, transfer into the Hawaiian home trust fund any available and unpledged moneys from any loan funds, the Hawaiian loan guarantee fund, or any fund or account succeeding thereto, except the Hawaiian home loan fund, for use as cash guarantees or reserves when required by a federal agency authorized to insure or guarantee loans to lessees.

§215. Conditions of loans. Except as otherwise provided in [section 213(c)], each contract of loan with the lessee or any successor or successors to the lessee's interest in the tract or with any agricultural, mercantile, or aquacultural cooperative association composed entirely of lessees shall be held subject to the following conditions whether or not stipulated in the contract loan:

(1) At any one time, the outstanding amount of loans made to any lessee, or successor or successors in interest, for the repair, maintenance, purchase, and erection of a dwelling and related permanent improvements shall not exceed fifty per cent of the maximum single residence loan amount allowed in Hawaii by the United States Department of Housing and Urban Development's Federal Housing Administration (FHA), for the development and operation of a farm, ranch, or aquaculture operation shall not exceed $50,000, except that when loans are made to an agricultural or aquacultural cooperative association for the purposes stated in section 214(a)(4), the loan limit shall be determined by the department on the basis of the proposed operations and the available security of the association, and for the development and operation of a mercantile establishment shall not exceed the loan limit determined by the department on the basis of the proposed operations and the available security of the lessee or of the organization formed and controlled by lessees; provided that upon the death of a lessee leaving no relative qualified to be a lessee of Hawaiian home lands, or the cancellation of a lease by the department, or the surrender of a lease by the lessee, the department shall make the payment provided for by section 209(a), the amount of any such payment shall be considered as part or all, as the case may be, of any such loan to the successor or successors, without limitation as to the above maximum amounts; provided further that in case of the death of a lessee, or cancellation of a lease by the department, or the surrender of a lease by the lessee, the successor or successors to the tract shall assume any outstanding loan or loans thereon, if any, without limitation as to the above maximum amounts but subject to paragraph (3).

(2) The loans shall be repaid in periodic installments, such installments to be monthly, quarterly, semiannual, or annual as may be determined by the department in each case. The term of any loan shall not exceed thirty years. Payments of any sum in addition to the required installments, or payment of the entire amount of the loan, may be made at any time within the term of the loan. All unpaid balances of principal shall bear interest at the rate of two and one-half per cent a year for loans made directly from the Hawaiian home loan fund, or at the rate of two and one-half per cent or higher as established by law for other loans, payable periodically or upon demand by the department, as the department may determine. The payment of any installment due shall be postponed in whole or in part by the department for such reasons as it deems good and sufficient and until such later date as it deems advisable. Such postponed payments shall continue to bear interest on the unpaid principal at the rate established for the loan.

(3) In the case of the death of a lessee the department shall, in any case, permit the successor or successors to the tract to assume the contract of loan subject to paragraph (1). In case of the cancellation of a lease by the department or the surrender of a lease by the lessee, the department may, at its option declare all installments upon the loan immediately due and payable, or permit the successor or successors to the tract to assume the contract of loan subject to paragraph (1). The department may, in such cases where the successor or successors to the tract assume the contract of loan, waive the payment, wholly or in part, of interest already due and delinquent upon the loan, or postpone the payment of any installment thereon, wholly or in part, until such later dates as it deems advisable. Such postponed payments shall, however, continue to bear interest on the unpaid principal at the rate established for the loan. Further, the department may, if it deems it advisable and for the best interests of the lessees, write off and cancel, wholly or in part, the contract of loan of the deceased lessee, or previous lessee, as the case may be, where such loans are delinquent and deemed uncollectible. Such write off and cancellation shall be made only after an appraisal of all improvements and growing crops or improvements and aquaculture stock, as the case may be, on the tract involved, such appraisal to be made in the manner and as provided for by section 209(a). In every case, the amount of such appraisal, or any part thereof, shall be considered as part or all, as the case may be, of any loan to such successor or successors, subject to paragraph (1).

(4) No part of the moneys loaned shall be devoted to any purpose other than those for which the loan is made.

(5) The borrower or the successor to his interest shall comply with such other conditions, not in conflict with any provision of this Act, as the department may stipulate in the contract of loan.

(6) The borrower or the successor to his interest shall comply with the conditions enumerated in section 208, and with section 209 of this Act in respect to the lease of any tract.

(7) Whenever the department shall determine that a borrower is delinquent in the payment of any indebtedness to the department, it may require such borrower to execute an assignment to it, not to exceed, however, the amount of the total indebtedness of such borrower, including the indebtedness to others the payment of which has been assured by the department of all moneys due or to become due to such borrower by reason of any agreement or contract, collective or otherwise, to which the borrower is a party. Failure to execute such an assignment when requested by the department shall be sufficient ground for cancellation of the borrower's lease or interest therein.

§216. Insurance by borrowers; acceleration of loans; lien and enforcement thereof. (a) The department may require the borrower to insure, in such amount as the department may prescribe, any livestock, aquaculture stock, swine, poultry, fowl, machinery, equipment, dwellings, and permanent improvements purchased or constructed out of any moneys loaned or assured by the department; or, in lieu thereof, the department may directly take out such insurance and add the cost thereof to the amount of principal payable under the loan.

(b) Whenever the department has reason to believe that the borrower has violated any condition enumerated in paragraph (2), (4), (5), or (6) of section 215 of this Act, the department shall give due notice and afford opportunity for a hearing to the borrower or the successor or successors to his interest, as the case demands. If upon such hearing the department finds that the borrower has violated the condition, the department may declare all principal and interest of the loan immediately due and payable notwithstanding any provision in the contract of loan to the contrary.

(c) The department shall have a first lien upon the borrower's or lessee's interest in any lease, growing crops, aquacultural stock, either on his tract or share in any collective contract or program, livestock, swine, poultry, fowl, aquaculture stock, machinery, and equipment purchased with moneys loaned by the department, and in any dwellings or other permanent improvements on any leasehold tract, to the amount of all principal and interest due and unpaid and of all taxes and insurance and improvements paid by the department, and any other indebtedness of the borrower, the payment of which has been assured by the department. Such lien shall have priority over any other obligation for which the property subject to the lien may be security.

(d) The department may, subject to this Act and procedures established by rule, enforce any lien by declaring the borrower's interest in the property subject to the lien to be forfeited, any lease held by the borrower canceled, and shall thereupon order such leasehold premises vacated and the property subject to the lien surrendered within a reasonable time. The right to the use and occupancy of the Hawaiian home lands contained in such lease shall thereupon revest in the department, and the department may take possession of the premises covered therein and the improvements and growing crops or improvements and aquaculture stock thereon; provided that the department shall pay to the borrower any difference which may be due him after the appraisal provided for in section 209 has been made.

§217. [Ejectment, when: loan to new lessee for improvements.] In case the lessee or borrower or the successor to his interest in the tract, as the case may be, fails to comply with any order issued by the department under the provisions of section 210 or 216 of this title, the department may (1) bring action of ejectment or other appropriate proceedings, or (2) invoke the aid of the circuit court of the State for the judicial circuit in which the tract designated in the department's order is situated. Such court may thereupon order the lessee or his successor to comply with the order of the department. Any failure to obey the order of the court may be punished by it as contempt thereof. Any tract forfeited under the provisions of section 210 or 216 of this title may be again leased by the department as authorized by the provisions of section 207 of this title, except that the value, in the opinion of the department, of all improvements made in respect to such tract by the original lessee or any successor to his interest therein shall constitute a loan by the department to the new lessee. Such loan shall be subject to the provisions of this section and sections 215, except paragraph (1), and 216 to the same extent as loans made by the department from the Hawaiian loan fund."]

SECTION 14. Sections 219, 219.1, 220, 220.5, and 222 of the Hawaiian Homes Commission Act, 1920, are repealed.

["§219. Agricultural and aquacultural experts. The department is authorized to employ agricultural and aquacultural experts at such compensation and in such number as it deems necessary. It shall be the duty of such agricultural and aquacultural experts to instruct and advise the lessee of any tract or the successor to the lessee's interest therein as to the best methods of diversified farming and stock raising and aquaculture operations and such other matters as will tend successfully to accomplish the purposes of this title.

§219.1. General assistance. (a) The department is authorized to carry on any activities it deems necessary to assist the lessees in obtaining maximum utilization of the leased lands, including taking any steps necessary to develop these lands for their highest and best use commensurate with the purposes for which the land is being leased as provided for in section 207, and assisting the lessees in all phases of farming, ranching, and aquaculture operations and the marketing of their agricultural [or] aquacultural produce and livestock.

(b) Notwithstanding any law to the contrary, the department either alone or together with any other governmental agency, may:

(1) Form an insurance company, association (nonprofit or otherwise), pool, or trust;

(2) Acquire an existing insurance company;

(3) Enter into arrangements with one or more insurance companies; or

(4) Undertake any combination of the foregoing; upon such terms and conditions and for such periods, as the commission shall approve, to provide homeowner protection, including hurricane coverage, for lessees participating in such undertaking. Such undertaking shall be subject to the provisions of chapter 431P, including but not limited to section 431P-10(b), and chapter 431.

(c) The department, if experiencing any of the power as authorized under subsection (b) may:

(1) Issue revenue bonds under and pursuant to part III of chapter 39, Hawaii Revised Statutes, to establish necessary reserves to provide for the payment of claims in excess of reserves and for other related purposes; or to pay any liability incurred that is self-insured or uninsured by the commission including without limitations, liabilities for damage to property, comprehensive liability, environmental, or other losses; and

(2) Invest funds held in reserve, which are not required for immediate disbursement, in property or securities in which savings banks may legally invest funds subject to their control or as the commission may authorize by resolution.

§220. Development projects; appropriations by legislature; bonds issued by legislature; mandatory reservation of water. (a) Subject to subsection (d), the department is authorized directly to undertake and carry on general water and other development projects in respect to Hawaiian home lands and to undertake other activities having to do with the economic and social welfare of the homesteaders, including the authority to derive revenue from the sale, to others than homesteaders, of water and other products of such projects or activities, or from the enjoyment thereof by others than homesteaders, where such sale of products or enjoyment of projects or activities by others does not interfere with the proper performance of the duties of the department; provided that roads through or over Hawaiian home lands, other than federal-aid highways and roads, shall be maintained by the county in which the particular road or roads to be maintained are located.

(b) The legislature is authorized to appropriate out of the treasury of the State such sums as it deems necessary to augment the funds of the department and to provide the department with funds sufficient to execute and carry on such projects and activities. The legislature is further authorized to issue bonds to the extent required to yield the amount of any sums so appropriated for the payment of which, if issued for revenue- producing improvements, the department shall provide, as set forth in section 213.

(c) To enable the construction of irrigation projects which will service Hawaiian home lands, either exclusively or in conjunction with other lands served by such projects, the department is authorized, with the approval of the governor, and subject to subsection (d), to:

(1) Grant to the board of land and natural resources, or to any other agency of the government of the State or the United States undertaking the construction and operation of such irrigation projects, licenses for rights-of-way for pipelines, tunnels, ditches, flumes, and other water conveying facilities, reservoirs, and other storage facilities, and for the development and use of water appurtenant to Hawaiian home lands;

(2) Exchange available lands for public lands, as provided in section 204 of this Act, for sites for reservoirs and subsurface water development wells and shafts;

(3) Request any such irrigation agency to organize irrigation projects for Hawaiian home lands and to transfer irrigation facilities constructed by the department to any such irrigation agency;

(4) Agree to pay the tolls and assessments made against community pastures for irrigation water supplied to such pastures; and

(5) Agree to pay the costs of construction of projects constructed for Hawaiian home lands at the request of the department, in the event the assessments paid by the homesteaders upon lands are not sufficient to pay such costs;

provided that licenses for rights-of-way for the purposes and in the manner specified in this section may be granted for a term of years longer than is required for amortization of the costs of the project or projects requiring use of such rights-of-way only if authority for such longer grant is approved by an act of the legislature of the State. Such payments shall be made from, and be a charge against the Hawaiian home operating fund.

(d) For projects pursuant to this section, sufficient water shall be reserved for current and foreseeable domestic, stock water, aquaculture, and irrigation activities on tracts leased to native Hawaiians pursuant to section 207(a).

§220.5. Development by contract; development by project developer agreement. (a) Notwithstanding any law to the contrary, the department is authorized to enter into and carry out contracts to develop available lands for homestead, commercial, and multipurpose projects; provided that the department shall not be subject to the requirements of competitive bidding if no state funds are to be used in the development of the project.

(b) Notwithstanding any law to the contrary, the department is authorized to enter into project developer agreements with qualified developers for, or in connection with, any homestead, commercial, or multipurpose project, or portion of any project; provided that prior to entering into a project developer agreement with a developer, the department shall:

(1) Set by appraisal the minimum rental of the lands to be disposed of on the basis of the fair market value of the lands;

(2) Give notice of the proposed disposition in accordance with applicable procedures and requirements of section 171-60(a)(3), Hawaii Revised Statutes;

(3) Establish reasonable criteria for the selection of the private developer; and

(4) Determine within forty-five days of the last day for filing applications the applicant or applicants who meet the criteria for selection, and notify all applicants of its determination within seven days of such determination. If only one applicant meets the criteria for selection as the developer, the department then may negotiate the details of the project developer agreement with the developer; provided that the terms of the project developer agreement shall not be less than those proposed by the developer in the application. If two or more applicants meet the criteria for selection, the department shall consider all of the relevant facts of the disposition or contract, the proposals submitted by each applicant, and the experience and financial capability of each applicant and, within forty-five days from the date of selection of the applicants that met the criteria, shall select the applicant who submitted the best proposal. The department then may negotiate the details of the disposition with the developer, including providing benefits to promote native Hawaiian socio-economic advancement; provided that the terms of the project developer agreement shall not be less than those proposed by the developer in the application.

(c) Any project developer agreement entered into pursuant to this section shall include the following terms and conditions, wherever appropriate:

(1) A requirement that the developer file with the department a good and sufficient bond conditioned upon the full and faithful performance of all the terms, covenants, and conditions of the project developer agreement;

(2) The use or uses to which the land will be put;

(3) The dates on which the developer must submit to the department for approval preliminary plans and final plans and specifications for the total development. No construction shall commence until the department has approved the final plans and specifications; provided that construction on an incremental basis may be permitted by the department;

(4) The date of completion of the total development, including the date of completion of any permitted incremental development;

(5) The minimum requirements for off-site and on-site improvements that the developer must install, construct, and complete by the date of completion of the total development. The department may permit incremental development and establish the minimum requirements for off-site and on-site improvements that must be installed, constructed, and completed prior to the date of completion of the total development; and

(6) Any other terms and conditions deemed necessary by the department to protect the interests of the State and the department.

(d) Any project developer agreement entered into pursuant to this section may provide for options for renewal of the term of the project developer agreement; provided that:

(1) The term of any one project developer agreement shall not exceed sixty-five years;

(2) Any lands disposed of under a project developer agreement shall be subject to withdrawal at any time during the term of the agreement, with reasonable notice; and

(3) The rental shall be reduced in proportion to the value of the portion withdrawn and the developer shall be entitled to receive from the department the proportionate value of the developer's permanent improvements so taken in the proportion that they bear to the unexpired term of the agreement, with the value of the permanent improvements determined on the basis of fair market value or depreciated value, whichever is less; or the developer, in the alternative, may remove and relocate the developer's improvements to the remainder of the lands occupied by the developer.

(e) The project developer agreement may permit the developer, after the developer has completed construction of any required off-site improvement, to assign or sublease with the department's approval portions of the leased lands in which the construction of any required off-site improvement has been completed to a purchaser or sublessee who shall assume the obligations of the developer relative to the parcel being assigned or subleased, including the construction of any on-site improvement. The department may permit a developer to share in the lease rent from the assigned lease for a fixed period in order to recover costs and profit.

(f) Whenever the department enters into a project developer agreement to develop a homestead project, the department shall provide for the purchase of the completed project or that portion of a completed project developed for disposition to native Hawaiians, and shall dispose of the lands in accordance with this Act; provided that the project developer agreement shall not encumber any existing homestead lease in the project area.

(g) As used in this section, the following words and terms shall have the following meanings unless the context indicates another or different meaning or intent:

"Commercial project" means a project or that portion of a multipurpose project, including single-family or multiple-family residential, agricultural, pastoral, aquacultural, industrial, business, hotel and resort, or other commercial uses designed and intended to generate revenues as authorized by this Act;

"Developer" means any person, partnership, cooperative, firm, nonprofit or for-profit trust, or public agency possessing the competence, expertise, experience, and resources, including financial, personal, and tangible resources, required to carry out a project;

"Homestead project" means a project or that portion of a multipurpose project, including residential, agricultural, pastoral, or aquacultural uses designed and intended for disposition to native Hawaiians under this Act; provided that this term shall also include community facilities for homestead areas;

"Multipurpose project" means a combination of a commercial project and a homestead project;

"Project" means a specific undertaking to develop, construct, reconstruct, rehabilitate, renovate, or to otherwise improve or enhance land or real property;

"Project developer agreement" means any lease, sublease, conditional leasing agreement, disposition agreement, financing agreement, or other agreement or combination of agreement, entered into under this section by the department, for the purpose of developing one or more projects.

(h) The department is authorized to adopt rules in accordance with chapter 91, Hawaii Revised Statutes, to implement and carry out the purposes of this section.

§222. Administration. (a) The department shall adopt rules and regulations and policies in accordance with chapter 91, Hawaii Revised Statutes. The department may make such expenditures as are necessary for the efficient execution of the functions vested in the department by this Act. All expenditures of the department and all moneys necessary for loans made by the department, in accordance with the provisions of this Act, shall be allowed and paid upon the presentation of itemized vouchers approved by the chairman of the commission or the chairman's designated representative. The department shall make an annual report to the legislature of the State upon the first day of each regular session and such special reports as the legislature may from time to time require. The chairman and members of the commission shall give bond as required by law. The sureties upon the bond and the conditions thereof shall be approved annually by the governor.

(b) When land originally leased by the department is, in turn, subleased by the department's lessee or sublessee, the department shall submit, within ten days of the convening of any regular session, a written report to the legislature which shall cover the sublease transactions occurring in the calendar year prior to the regular session and shall contain the names of the persons involved in the transaction, the size of the area under lease, the purpose of the lease, the land classification of the area under lease, the tax map key number, the lease rental, the reason for approval of the sublease by the department, and the estimated net economic result accruing to the department, lessee and sublessee."]

SECTION 15. Sections 224, 225, 226, and 227 of the Hawaiian Homes Commission Act, 1920, are repealed.

["§224. Sanitation and reclamation expert. The Secretary of the Interior shall designate from his Department someone experienced in sanitation, rehabilitation, and reclamation work to reside in the State and cooperate with the department in carrying out its duties. The salary of such official so designated by the Secretary of the Interior shall be paid by the department while he is carrying on his duties in the State.

§225. Investment of funds; disposition. (a) The department shall have the power and authority to invest and reinvest any of the moneys in any of its funds, not otherwise immediately needed for the purposes of the funds, in such bonds and securities as authorized by state law for the investment of state sinking fund moneys.

(b) (1) The department may receive, manage, and invest moneys or other property, real, personal or mixed, or any interest therein, which may be given, bequeathed, or devised, or in any manner received from sources other than the legislature or any federal appropriation, for the purposes of the Act.

(2) All moneys received by or on behalf of the department shall be deposited into the state treasury to be expended according to law and for purposes in accordance with the terms and conditions of the gift. All moneys shall be appropriated for purposes enumerated in such gifts and if no specific purpose is enumerated, shall be appropriated to the Hawaiian home trust fund.

(3) The department is authorized to sell, lease, or in any way manage such real, personal, or mixed property or any interest therein, in the manner and for the purposes enumerated in the gift. If no conditions are enumerated, the gift may be sold, leased, managed, or disposed of and the income or proceeds therefrom shall be deposited into the Hawaiian home trust fund.

(4) The real property or any interest therein received by the department through contributions or grants shall not attain the status of Hawaiian home lands as defined in section 201(a)(5).

(5) The department shall cause to be kept suitable books of account wherein shall be recorded each gift, the essential facts of the management thereof, and the expenditure of income.

(6) Any action to be taken with respect to gifts shall be made in a public meeting where any pertinent information and reasons for any decisions shall be fully disclosed.

§226. Qualification for federal programs. The department shall be qualified to participate in any federal program that renders assistance in program areas that the department is mandated by the Act to implement.

[§227.] Enterprise zones. The department is authorized to participate in any federal or state program that permits the establishment of one or more enterprise zones on available lands, provided that participation in the program will result in economic benefits to native Hawaiians. The administration of the program shall be governed by rules adopted by the department in accordance with chapter 91, Hawaii Revised Statutes."]

PART III

SECTION 16. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

HAWAIIAN AUTONOMY TRUST

§   -1 Purpose. The State recognizes the desire of Hawaiians for greater control over the Hawaiian home lands and other ceded lands and their revenues that have been the foundation of support for the office of Hawaiian affairs. The State believes that transferring these assets to a private non-profit trust whose members are selected by Hawaiians, to be used for the betterment of the Hawaiian people, will provide the Hawaiian community with a measure of the autonomy for which they seek.

§   -2 Definitions. As used in this chapter:

"Hawaiian" means any descendant of the races inhabiting the Hawaiian Islands prior to 1778.

"Native Hawaiian" has the same meaning as in the Hawaiian Homes Commission Act.

"Public land trust" means those lands:

(1) Which were ceded to the United States by the Republic of Hawaii under the joint resolution of annexation, approved July 7, 1898 (30 Stat. 750), or acquired in exchange for lands so ceded, and which were conveyed to the State of Hawaii by virtue of section 5(b) of the Act of March 18, 1959 (73 Stat. 4, the Admission Act), (excluding therefrom lands and all proceeds and income from the sale, lease, or disposition of lands defined as "available lands" by section 203 of the Hawaiian Homes Commission Act, 1920, as amended);

(2) Retained by the United States under section 5(c) and 5(d) of the Act of March 18, 1959, and later conveyed to the State under section 5(e) of the Act of March 18, 1959; and

(3) Which were ceded to and retained by the United States under section 5(c) and 5(d) of the Act of March 18, 1959, and later conveyed to the State pursuant to the Act of December 23, 1963 (Public Law 88-233, 77 Stat. 472).

"Trust" means the Hawaiian Autonomy Trust.

§   -3 Hawaiian Autonomy Trust, creation, authorized. (a) This chapter shall become effective upon approval by Congress of the transfer of:

(1) The state responsibilities over Hawaiian home lands;

(2) The right to twenty per cent of the revenue under section 5(f) of the Admission Act dedicated to the betterment of the conditions of native Hawaiians to a private non-profit corporation to be entitled the Hawaiian Autonomy Trust to act as trustee for the benefit of Hawaiians and native Hawaiians.

(b) Within two years of the effective date of this Act, the Hawaiian residents of the State shall legally create a nonprofit trust, the beneficiaries of which are the Hawaiian residents of this State, to serve as the Hawaiian Autonomy Trust and assume the rights and responsibilities of this chapter.

(c) Upon determination by the attorney general that:

(1) The trust has been created in accordance with the laws of this State; and

(2) The bylaws of the trust comport with the duties and responsibilities of the trust as enumerated in this chapter,

the assets, rights, title, interest, duties, obligations, and liabilities specified in this chapter shall be transferred to the Hawaiian Autonomy Trust.

§   -4 Rights, responsibilities, and purposes. (a) The purpose of the Hawaiian Autonomy Trust shall be to benefit Hawaiians and the Hawaiian culture by:

(1) Administering the Hawaiian Homes Commission Act, 1920, as amended;

(2) Managing the assets of the former office of Hawaiian affairs and the former department of Hawaiian home lands for the benefit of Hawaiians and native Hawaiians, including continuing any negotiations with the State over ceded land issues; and

(3) Undertaking any other action that will directly improve the conditions of Hawaiians.

(b) The rights and responsibilities of the trust shall be such rights and responsibilities as are designated under this chapter and such other rights and responsibilities as are subsequently undertaken and assumed by the trust, and shall include ownership and management of:

(1) All assets formerly owned or managed by the office of Hawaiian affairs, including the right to future revenues; and

(2) All assets formerly owned or managed by the department of Hawaiian home lands; and

(3) All assets acquired or generated by the trust.

(c) The trust may provide for compensation of the board of trustees.

§   -5 Powers of the trust. In addition to specific powers granted by law, the trust shall have all the usual powers associated with corporations, including the power to enter into contracts and to sue and be sued.

§   -6 Applicable law. (a) Except as otherwise specified in this chapter or other specific law, general law applicable to non-profit corporations shall apply. Except as provided in subsection (b), the board members shall be immune from civil liability in any action on the basis of any act or omission resulting in damage or injury if the board member was acting in good faith and within the scope of the board member's official functions and duties, and the damage or injury was not caused by wilful and wanton misconduct of the board member. In the event of damage or injury caused by wilful and wanton misconduct, the individual board member, and not the trust, shall be held responsible.

(b) When allegations are made of mismanagement of funds and resources by board members in breach of fiduciary duty, board members shall be subject to suit as established by law for charitable trusts."

PART IV

SECTION 17. Section 26-17, Hawaii Revised Statutes, is repealed.

["§26-17 Department of Hawaiian home lands. The department of Hawaiian home lands shall be headed by an executive board to be known as the Hawaiian homes commission.

The commission shall be composed of nine members. The appointment, tenure, and removal of the members and the filling of vacancies on the commission shall be in accordance with section 26-34 and section 202(a) of the Hawaiian Homes Commission Act of 1920, as amended. The governor shall appoint the chairperson of the commission from among the members thereof.

The commission may delegate to the chairperson such duties, powers, and authority, or so much thereof as may be lawful or proper, for the performance of the functions vested in the commission.

The chairperson of the board shall serve in a full time capacity and shall perform such duties, and exercise such powers and authority, or so much thereof as may be delegated to the chairperson by the board.

The department shall administer the Hawaiian Homes Commission Act of 1920 as set forth in the Constitution of the State and by law.

The functions and authority heretofore exercised by the Hawaiian homes commission as heretofore constituted are transferred to the department of Hawaiian home lands established by this chapter."]

SECTION 18. Section 23-12, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Each revolving and trust fund shall be reviewed every five years as follows:

(1) Beginning 1994 and every five years thereafter, the auditor shall submit a review of the revolving and trust funds of the department of accounting and general services; the department of agriculture; the department of budget and finance; and the department of land and natural resources;

(2) Beginning 1995 and every five years thereafter, the auditor shall submit a review of the revolving and trust funds of the department of the attorney general; the department of business, economic development, and tourism; and the university of Hawaii system;

(3) Beginning 1996 and every five years thereafter, the auditor shall submit a review of the revolving and trust funds within the judiciary and of the department of commerce and consumer affairs; [the department of Hawaiian home lands;] the department of health; and the department of human services;

(4) Beginning 1997 and every five years thereafter, the auditor shall submit a review of the revolving and trust funds of the office of the governor; the office of Hawaiian affairs; and the department of education; and

(5) Beginning 1998 and every five years thereafter, the auditor shall submit a review of the revolving and trust funds of the department of labor and industrial relations; the department of taxation; the department of human resources development; the department of public safety; and all other moneys expended in accordance with section 37-40."

SECTION 19. Section 26-4, Hawaii Revised Statutes, is amended to read as follows:

"§26-4 Structure of government. Under the supervision of the governor, all executive and administrative offices, departments, and instrumentalities of the state government and their respective functions, powers, and duties shall be allocated among and within the following principal departments that are hereby established:

(1) Department of human resources development (Section 26-5)

(2) Department of accounting and general services (Section 26-6)

(3) Department of the attorney general (Section 26-7)

(4) Department of budget and finance (Section 26-8)

(5) Department of commerce and consumer affairs (Section 26-9)

(6) Department of taxation (Section 26-10)

(7) University of Hawaii (Section 26-11)

(8) Department of education (Section 26-12)

(9) Department of health (Section 26-13)

(10) Department of human services (Section 26-14)

(11) Department of land and natural resources (Section 26-15)

(12) Department of agriculture (Section 26-16)

[(13) [Department of Hawaiian home lands (Section 26-17)

(14)] (13) Department of business, economic development, and tourism (Section 26-18)

[(15)] (14) Department of transportation (Section 26-19)

[(16)] (15) Department of labor and industrial relations (Section 26-20)

[(17)] (16) Department of defense (Section 26-21)

[(18)] (17) Department of public safety (Section 26-14.6)"

SECTION 20. Section 26-52, Hawaii Revised Statutes, is amended to read as follows:

"§26-52 Department heads and executive officers. The salaries of the following state officers shall be as follows:

(1) The salary of the superintendent of education shall be set by the board of education at a rate no greater than $150,000 a year;

(2) The salary of the president of the University of Hawaii shall be set by the board of regents;

(3) The salaries of all department heads or executive officers of the departments of accounting and general services, agriculture, attorney general, budget and finance, business, economic development, and tourism, commerce and consumer affairs, [Hawaiian home lands,] health, human resources development, human services, labor and industrial relations, land and natural resources, public safety, taxation, and transportation shall be $85,302 a year; and

(4) The salary of the adjutant general shall be $85,302 a year; provided that if this salary is in conflict with the pay and allowance fixed by the tables of the regular army or air force of the United States, the latter shall prevail."

SECTION 21. Section 6E-8, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The [department of Hawaiian home lands,] Hawaiian Autonomy Trust, prior to any proposed project relating to lands under its jurisdiction, shall consult with the department regarding the effect of the project upon historic property or a burial site."

SECTION 22. Section 88-119, Hawaii Revised Statutes, is amended to read as follows:

"§88-119 Investments. Investments may be made in:

(1) Real estate loans and mortgages. Obligations (as defined in section 431:6-101) of any of the following classes:

(A) Obligations secured by mortgages of nonprofit corporations desiring to build multirental units (ten units or more) subject to control of the government for occupancy by families displaced as a result of government action;

(B) Obligations secured by mortgages insured by the Federal Housing Administration;

(C) Obligations for the repayment of home loans made under the Servicemen's Readjustment Act of 1944 or under Title II of the National Housing Act;

(D) Other obligations secured by first mortgages on unencumbered improved real estate owned in fee simple; provided that the amount of the obligation at the time investment is made therein shall not exceed eighty per cent of the value of the real estate and improvements mortgaged to secure it, and except that the amount of the obligation at the time investment is made therein may exceed eighty per cent but no more than ninety per cent of the value of the real estate and improvements mortgaged to secure it; provided further that the obligation is insured or guaranteed against default or loss under a mortgage insurance policy issued by a casualty insurance company licensed to do business in the State. The coverage provided by the insurer shall be sufficient to reduce the system's exposure to not more than eighty per cent of the value of the real estate and improvements mortgaged to secure it. The insurance coverage shall remain in force until the principal amount of the obligation is reduced to eighty per cent of the market value of the real estate and improvements mortgaged to secure it, at which time the coverage shall be subject to cancellation solely at the option of the board of trustees. Real estate shall not be deemed to be encumbered within the meaning of this subparagraph by reason of the existence of any of the restrictions, charges, or claims described in section 431:6-308;

(E) Other obligations secured by first mortgages of leasehold interests in improved real estate; provided that:

(i) Each such leasehold interest at such time shall have a current term extending at least two years beyond the stated maturity of the obligation it secures; and

(ii) The amount of the obligation at the time investment is made therein shall not exceed eighty per cent of the value of the respective leasehold interest and improvements, and except that the amount of the obligation at the time investment is made therein may exceed eighty per cent but no more than ninety per cent of the value of the leasehold interest and improvements mortgaged to secure it;

provided further that the obligation is insured or guaranteed against default or loss under a mortgage insurance policy issued by a casualty insurance company licensed to do business in the State. The coverage provided by the insurer shall be sufficient to reduce the system's exposure to not more than eighty per cent of the value of the leasehold interest and improvements mortgaged to secure it. The insurance coverage shall remain in force until the principal amount of the obligation is reduced to eighty per cent of the market value of the leasehold interest and improvements mortgaged to secure it, at which time the coverage shall be subject to cancellation solely at the option of the board of trustees;

(F) Obligations for the repayment of home loans guaranteed by the [department of Hawaiian home lands] Hawaiian Autonomy Trust pursuant to section 214(b) of the Hawaiian Homes Commission Act, 1920; and

(G) Obligations secured by second mortgages on improved real estate for which the mortgagor procures a second mortgage on the improved real estate for the purpose of acquiring the leaseholder's fee simple interest in the improved real estate; provided that any prior mortgage does not contain provisions that might jeopardize the security position of the retirement system or the borrower's ability to repay the mortgage loan.

The board of trustees may retain such real estate, including leasehold interests therein, as it may acquire by foreclosure of mortgages or in enforcement of security, or as may be conveyed to it in satisfaction of debts previously contracted; provided that all such real estate, other than leasehold interests, shall be sold within five years after acquiring the same, subject to extension by the governor for additional periods not exceeding five years each, and that all such leasehold interests shall be sold within one year after acquiring the same, subject to extension by the governor for additional periods not exceeding one year each;

(2) Government obligations, etc. Obligations of any of the following classes:

(A) Obligations issued or guaranteed as to principal and interest by the United States or by any state thereof or by any municipal or political subdivision or school district of any of the foregoing; provided that principal of and interest on such obligations are payable in currency of the United States; or sovereign debt instruments issued by agencies of, or guaranteed by foreign governments;

(B) Revenue bonds, whether or not permitted by any other provision hereof, of the State or any municipal or political subdivision thereof, including the board of water supply of the city and county of Honolulu, and street or improvement district bonds of any district or project in the State; and

(C) Obligations issued or guaranteed by any federal home loan bank including consolidated federal home loan bank obligations, the Home Owner's Loan Corporation, the Federal National Mortgage Association, or the Small Business Administration;

(3) Corporate obligations. Below investment grade or nonrated debt instruments, foreign or domestic, in accordance with investment guidelines adopted by the board of trustees;

(4) Preferred and common stocks. Shares of preferred or common stock of any corporation created or existing under the laws of the United States or of any state or district thereof or of any country;

(5) Obligations eligible by law for purchase in the open market by federal reserve banks;

(6) Obligations issued or guaranteed by the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, or the African Development Bank;

(7) Obligations secured by collateral consisting of any of the securities or stock listed above and worth at the time the investment is made at least fifteen per cent more than the amount of the respective obligations;

(8) Insurance company obligations. Contracts and agreements supplemental thereto providing for participation in one or more accounts of a life insurance company authorized to do business in Hawaii, including its separate accounts, and whether the investments allocated thereto are comprised of stocks or other securities or of real or personal property or interests therein;

(9) Interests in real property. Interests in improved or productive real property in which, in the informed opinion of the board of trustees, it is prudent to invest funds of the system. For purposes of this paragraph, "real property" includes any property treated as real property either by local law or for federal income tax purposes. Investments in improved or productive real property may be made directly or through pooled funds, including common or collective trust funds of banks and trust companies, group or unit trusts, limited partnerships, limited liability companies, investment trusts, title-holding corporations recognized under section 501(c) of the Internal Revenue Code of 1986, as amended, similar entities that would protect the system's interest, and other pooled funds invested on behalf of the system by investment managers retained by the system;

(10) Other securities and futures contracts. Securities and futures contracts in which in the informed opinion of the board of trustees it is prudent to invest funds of the system, including currency, interest rate, bond, and stock index futures contracts and options on such contracts to hedge against anticipated changes in currencies, interest rates, and bond and stock prices that might otherwise have an adverse effect upon the value of the system's securities portfolios; covered put and call options on securities; and stock; whether or not the securities, stock, futures contracts, or options on futures are expressly authorized by or qualify under the foregoing paragraphs, and notwithstanding any limitation of any of the foregoing paragraphs (including paragraph (4)); and

(11) Private placements. Investments in institutional blind pool limited partnerships or direct investments that make private debt and equity investments in privately held companies, including but not limited to investments in Hawaii high technology businesses or venture capital investments that, in the informed opinion of the board of trustees, are appropriate to invest funds of the system. In evaluating venture capital investments, the board of trustees shall consider, among other things, the impact an investment may have on job creation in Hawaii and on the state economy."

SECTION 23. Section 167-23, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There is established a Molokai irrigation system water users advisory board, to be appointed by the governor under section 26-34. The advisory board shall consist of six members, as follows:

(1) A homestead farmer user on Molokai;

(2) A nonhomestead farmer user on Molokai;

(3) The designee (by name rather than office) of the Molokai Farm Bureau;

(4) The designee (by name rather than office) of Hikiola Cooperative, Inc.;

(5) The designee (by name rather than office) of the Molokai-Lanai soil and water conservation district; and

(6) The designee (by name rather than office) of the [department of Hawaiian home lands.] Hawaiian Autonomy Trust.

The members of the advisory board shall serve without compensation, but shall be entitled to reimbursement for necessary expenses while attending meetings and while in the discharge of their duties. For administrative purposes, and pursuant to section 26-35, the advisory board shall be placed within the department of agriculture."

SECTION 24. Section 171-18.5, Hawaii Revised Statutes, is amended to read as follows:

"§171-18.5 Sugarcane lands conveyed for the development of housing projects. (a) This section applies to the amount to which the [department of Hawaiian home lands] Hawaiian Autonomy Trust is entitled pursuant to Article XII, Section 1 of the State Constitution from land previously cultivated as sugarcane land under any provision of law which is conveyed by the department to the housing and community development corporation of Hawaii for the development of housing projects as defined under section 201G-1. The amount to which the [department of Hawaiian home lands] Hawaiian Autonomy Trust is entitled shall be determined by multiplying the fair market value of the land by thirty per cent. For the purpose of this section, "fair market value" means the amount of money which a purchaser willing but not obliged to buy the land would pay to an owner willing but not obliged to sell it, taking into consideration the highest and best use of the land. For the purpose of this section, "highest and best use" means the most profitable, probable, and legal use to which the land can be put.

(b) Fair market value shall be determined on a per acre basis pursuant to appraisals performed in conformance with the uniform standards of professional appraisal practice as adopted by the department of commerce and consumer affairs, not more than ninety days before the conveyance of the land to the housing and community development corporation of Hawaii. The appraisals shall be performed by two disinterested appraisers each of whose services shall be contracted by the department and the [department of Hawaiian home lands,] Hawaiian Autonomy Trust, respectively. If the land is of sugarcane lands and the public land trust, as defined in section 10-2, the [department of Hawaiian home lands] Hawaiian Autonomy Trust [and the office of Hawaiian affairs] shall contract the services of one appraiser. The parties shall contract the services of the two appraisers within thirty days after the department gives written notice to the [department of Hawaiian home lands,] Hawaiian Autonomy Trust, together with the [office of Hawaiian affairs if the land is of sugarcane lands and the] public land trust, of the proposed conveyance of the land to the housing and community development corporation of Hawaii.

If any party fails or refuses to contract the services of an appraiser, then the other party may petition the presiding judge of the circuit court of the State in the county where the land is located to appoint the other of the two appraisers. If the two appraisers are unable to agree on a fair market value, then within thirty days thereafter, the department and the [department of Hawaiian home lands,] Hawaiian Autonomy Trust, together with the [office of Hawaiian affairs if the land is of sugarcane lands and the] public land trust, shall contract for the services of a mutually selected third appraiser and the decision of the majority of the appraisers shall be final with respect to determination of the fair market value. If the department and [the department of Hawaiian home lands,] Hawaiian Autonomy Trust, together with the [office of Hawaiian affairs if the land is of sugarcane lands and the] public land trust, are unable to agree on the selection of the third appraiser, any party may petition the presiding judge of the circuit court of the State in the county where the land is located to appoint the third appraiser.

(c) The amount due to the [department of Hawaiian home lands] Hawaiian Autonomy Trust shall be due and payable by the State on the date of conveyance of the land to the housing and community development corporation of Hawaii. Payment to the [department of Hawaiian home lands] Hawaiian Autonomy Trust may be in the form of public lands or moneys. If payment is to be made in the form of public lands, the lands shall be mutually agreed upon by the department of land and natural resources and the [department of Hawaiian home lands,] Hawaiian Autonomy Trust, and shall be of value comparable to the amount due to the [department of Hawaiian home lands.] Hawaiian Autonomy Trust. Any monetary payment shall be an obligation of the housing and community development corporation of Hawaii. Any portion of that amount that is not paid on the date of conveyance shall be subject to simple interest annually, established pursuant to the fifteen year treasury rate at the time of the conveyance and payable annually by the State to the [department of Hawaiian home lands.] Hawaiian Autonomy Trust.

(d) Thirty per cent of the revenue received by the housing and community development corporation of Hawaii from commercial, industrial, or other non-residential land shall be paid annually to the [department of Hawaiian home lands,] Hawaiian Autonomy Trust, provided that:

(1) The [department of Hawaiian home lands] Hawaiian Autonomy Trust shall not receive payment under this subsection until the housing and community development corporation of Hawaii recovers all moneys previously paid to the [department of Hawaiian home lands] Hawaiian Autonomy Trust for that portion of land used for commercial, industrial, or other non-residential purposes;

(2) If borrowed moneys are used to finance the development of land for commercial, industrial, or other non-residential purposes, annual payments due to the [department of Hawaiian home lands] Hawaiian Autonomy Trust under this subsection shall be made pursuant to the following order of priority:

(A) The housing and community development corporation of Hawaii satisfies as a first priority the amount computed annually on the pro rata portion (not the total debt service over the life of the debt) of its total debt service on the borrowed moneys;

(B) The housing and community development corporation of Hawaii satisfies as a second priority its operating expense obligations (directly incurred from the development and operating of land used for commercial, industrial, or other non-residential purposes) in an amount not exceeding one per cent of revenues;

(C) After the first and second priorities are satisfied, the housing and community development corporation of Hawaii shall make annual payments due to the [department of Hawaiian home lands] Hawaiian Autonomy Trust under this subsection from any remaining revenues; and

(3) In the event of a sale of land used for commercial, industrial, or other non-residential purposes, the [department of Hawaiian home lands] Hawaiian Autonomy Trust shall receive thirty per cent of the revenue received by the housing and community development corporation of Hawaii."

SECTION 25. Section 171-58, Hawaii Revised Statutes, is amended by amending subsection (g) to read as follows:

"(g) The [department of land and natural resources] Hawaiian Autonomy Trust shall notify the department of Hawaiian home lands of its intent to execute any new lease, or to renew any existing lease of water rights. After consultation with affected beneficiaries, these departments shall jointly develop a reservation of water rights sufficient to support current and future homestead needs. Any lease of water rights or renewal shall be subject to the rights of the [department of Hawaiian home lands] Hawaiian Autonomy Trust as provided by section 221 of the Hawaiian Homes Commission Act."

SECTION 26. Section 174C-49, Hawaii Revised Statutes, is amended by amending subsections (a) and (e) to read as follows:

"(a) To obtain a permit pursuant to this part, the applicant shall establish that the proposed use of water:

(1) Can be accommodated with the available water source;

(2) Is a reasonable-beneficial use as defined in section 174C-3;

(3) Will not interfere with any existing legal use of water;

(4) Is consistent with the public interest;

(5) Is consistent with state and county general plans and land use designations;

(6) Is consistent with county land use plans and policies; and

(7) Will not interfere with the rights of the [department of Hawaiian home lands] Hawaiian Autonomy Trust as provided in section 221 of the Hawaiian Homes Commission Act.

(e) All permits issued by the commission shall be subject to the rights of the [department of Hawaiian home lands] Hawaiian Autonomy Trust as provided in section 221 of the Hawaiian Homes Commission Act, whether or not the condition is explicitly stated in the permit."

PART IV

SECTION 27. Chapter 10, Hawaii Revised Statutes, is repealed.

SECTION 28. Chapter 673, Hawaii Revised Statutes, is repealed.

PART V

SECTION 29. Transfer of assets. Within sixty days after approval of Congress of the transfer of the State's responsibilities over the Hawaiian home lands and the proportionate revenues currently paid to the office of Hawaiian affairs from the Admission Act section 5(f) lands, the State shall transfer to the Hawaiian Autonomy Trust:

(1) Title to lands then owned by the office of Hawaiian affairs, if any, including any land or other assets that may have been transferred to the office;

(2) All assets and debts of the office, including all present and future monetary payments; and

(3) All land under the control of the Hawaiian homes commission and related appurtenances, any moneys, leases, investments, and other similar assets, and the right to any present and future monetary payments; and

(4) All records, files, contracts, books, papers, documents, maps, and other personal property made, used, acquired, or held by the department of Hawaiian home lands and the office of Hawaiian affairs relating to the functions transferred to the Hawaiian Autonomy Trust with the functions to which they relate.

Control over the assets in the trust shall be turned over to the trustees selected by the Hawaiians two years after the effective date of this Act. It is the intent of this section to give eligible Hawaiians time to determine whom the trustees will be and how to set up the terms of the trust. In the interim, a special master shall be appointed by the trustees of the Hawaiian homes commission and the office of Hawaiian affairs to serve as trustee of the trust assets.

SECTION 30. Upon repeal of chapter 10, Hawaii Revised Statutes, all funds, accounts, debts owed and owing, and financial responsibilities and liabilities of the office of Hawaiian affairs shall be transferred to the Hawaiian Autonomy Trust. Upon transfer of the Hawaiian home lands to the Hawaiian Autonomy Trust, all funds, accounts, debts owed and owing, financial responsibilities, and liabilities shall be transferred to the trust.

SECTION 31. The question to be printed on the ballot shall be as follows:

"Upon consent of Congress to do so, shall the assets of the office of Hawaiian affairs and the Hawaiian homes commission be transferred to a private nonprofit corporation, the trustees of which will be elected by state residents of Hawaiian ancestry, to be used for the betterment of Hawaiians, and in place of the State's current obligations under the Hawaiian Homes Commission Act and owed under the office of Hawaiian affairs laws?"

SECTION 32. Provisions not severable. The provisions of this Act are not severable and if any provision of the Act, or the application thereof, is held invalid because it conflicts with any federal or state constitutional provision, any federal law or regulation, or any state law, this Act, in its entirety, shall be invalid, and all sections of the Constitution, Hawaiian Homes Commission Act, and the Hawaii Revised Statutes, that were amended or repealed by this Act, shall be reenacted in the form in which they read on the day before the approval of this Act.

SECTION 33. Constitutional and statutory material to be repealed is bracketed and stricken. New constitutional and statutory material is underscored.

SECTION 34. This Act, upon its approval, shall take effect when the following terms are complied with:

(1) Congress consents to the transfer of the State's responsibilities:

(A) Under the Hawaiian Home Commission Act; and

(B) As to that pro rata portion of section 5(f) land revenues of the Admission Act that relates to the betterment of native Hawaiians; and

(2) Upon compliance with article XVII, section 3, of the Constitution of the State of Hawaii.

INTRODUCED BY:

_____________________________