DHHL Lands, No Sublease

Prohibits the practice of allowing lessees to sell their
interests in awarded lands to Hawaiians who may or may not be on
the wait list; provides for the recovery of lessees'

HOUSE OF REPRESENTATIVES                H.B. NO.1591       
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  Findings and purpose.  The legislature finds
 2 that the practice of allowing lessees to sell their interests in
 3 awarded lands to Hawaiians who may or may not be on the wait list
 4 not only circumvents the normal award process but that the huge
 5 personal gains realized by lessees who do not contribute to land
 6 costs (site preparation and infrastructure) contradicts the
 7 intent of the Hawaiian Homes Commission Act of 1920.  The
 8 purposes of this Act are to:
 9      (A)  Prohibit the sale of a lessee's interest, and require
10           that the transfer of a parcel not utilized by the
11           lessee require recovery by the department for
12           subsequent award to the next qualified applicant; and
13      (B)  Provide lessees the opportunity to recover the costs
14           and appreciated value of constructed improvements
15           excluding the land and infrastructure values.
16      SECTION 2.  Section 208, Hawaiian Homes Commission Act,
17 1920, is amended to read as follows:
18      "208.  Conditions of leases.  Each lease made under the
19 authority granted the department by section 207 of this Act, and

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 1 the tract in respect to which the lease is made, shall be deemed
 2 subject to the following conditions, whether or not stipulated in
 3 the lease:
 4      (1)  The original lessee shall be a native Hawaiian, not
 5           less than eighteen years of age.  In case two lessees
 6           either original or in succession marry, they shall
 7           choose the lease to be retained, and the remaining
 8           lease shall be transferred, quitclaimed, or canceled in
 9           accordance with the provisions of succeeding sections.
10      (2)  The lessee shall pay a rental of $1 a year for the
11           tract and the lease shall be for a term of ninety-nine
12           years; except that the department may extend the term
13           of any lease provided that the approval of any
14           extension shall be subject to the condition that the
15           aggregate of the initial ninety-nine year term and any
16           extension granted shall not be for more than one
17           hundred ninety-nine years.
18      (3)  The lessee may be required to occupy and commence to
19           use or cultivate the tract as the person's home or farm
20           or occupy and commence to use the tract for aquaculture
21           purposes, as the case may be, within one year after the
22           commencement of the term of the lease.
23      (4)  The lessee shall thereafter, for at least such part of

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 1           each year as the department shall prescribe by rules,
 2           so occupy and use or cultivate the tract on the
 3           person's own behalf.
 4      (5)  The lessee shall not sell, assign, or in any manner
 5           transfer to[,] or sublet or otherwise hold for the
 6           benefit of, any other person or group of persons or
 7           organizations of any kind, [except] including a native
 8           Hawaiian or Hawaiians, [and then only upon the approval
 9           of the department, or agree so to transfer, or
10           otherwise hold, the person's interest in the tract.
11           Such interest shall not, except in pursuance of such a
12           transfer to or holding for or agreement with a native
13           Hawaiian or Hawaiians approved of by the department, or
14           for any indebtedness due the department or for taxes,
15           or for any other indebtedness the payment of which has
16           been assured by the department, including loans from
17           other agencies where such loans have been approved by
18           the department, be subject to attachment, levy, or sale
19           upon court process.]  The lessee shall not sublet [the
20           person's] any interest in the tract or improvements
21           thereon; provided that a lessee may be permitted, with
22           the approval of the department, to rent to a native
23           Hawaiian or Hawaiians lodging either within the

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                                     H.B. NO.1591       

 1           lessee's existing home or in a separate residential
 2           dwelling unit constructed on the premises.  Should the
 3           lessee for any reason, not utilize or not continue to
 4           utilize the tract, the department shall recover the
 5           parcel and award such interest to the longest waiting,
 6           qualified applicant on its list.  The lessee shall be
 7           permitted to recover the cost and any appreciation of
 8           personally invested improvements from the department or
 9           the subsequent awardee in a manner prescribed by the
10           department or the commission.  Under no circumstance
11           shall the departing lessee derive any benefits accruing
12           from the appreciated land for which the department
13           assumed all site preparation and infrastructure costs.
14           Any indebtedness due the department or for taxes, or
15           for any other indebtedness the payment of which has
16           been assured by the department, including loans from
17           other agencies where such loans have been approved by
18           the department, shall subject the assets of the
19           departing lessee to attachment, levy, or sale upon
20           court process unless approved by the department.
21      (6)  Notwithstanding [the provisions of] paragraph (5), the
22           lessee, with the consent and approval of the
23           commission, may mortgage or pledge the lessee's

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 1           interest in the tract or improvements thereon to a
 2           recognized lending institution authorized to do
 3           business as a lending institution in either the State
 4           or elsewhere in the United States; provided the loan
 5           secured by a mortgage on the lessee's leasehold
 6           interest is insured or guaranteed by the Federal
 7           Housing Administration, Department of Veterans Affairs,
 8           or any other federal agency and their respective
 9           successors and assigns, which are authorized to insure
10           or guarantee such loans, or any acceptable private
11           mortgage insurance as approved by the commission.  The
12           mortgagee's interest in any such mortgage shall be
13           freely assignable.  Such mortgages, to be effective,
14           must be consented to and approved by the commission and
15           recorded with the department.
16                Further, notwithstanding the authorized purposes
17           of loan limitations imposed under section 214 of this
18           Act and the authorized loan amount limitations imposed
19           under section 215 of this Act, loans made by lending
20           institutions as provided in this paragraph, insured or
21           guaranteed by the Federal Housing Administration,
22           Department of Veterans Affairs, or any other federal
23           agency and their respective successors and assigns, may

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                                     H.B. NO.1591       

 1           be for such purposes and in such amounts, not to exceed
 2           the maximum insurable limits, together with such
 3           assistance payments and other fees, as established
 4           under section 421 of the Housing and Urban Rural
 5           Recovery Act of 1983 which amended Title II of the
 6           National Housing Act of 1934 by adding section 247, and
 7           its implementing regulations, to permit the Secretary
 8           of Housing and Urban Development to insure loans
 9           secured by a mortgage executed by the homestead lessee
10           covering a homestead lease issued under section 207(a)
11           of this Act and upon which there is located a one to
12           four family single family residence.
13      (7)  The lessee shall pay all taxes assessed upon the tract
14           and improvements thereon.  The department may pay such
15           taxes and have a lien therefor as provided by section
16           216 of this Act.
17      (8)  The lessee shall perform such other conditions, not in
18           conflict with any provision of this Act, as the
19           department may stipulate in the lease; provided that an
20           original lessee shall be exempt from all taxes for the
21           first seven years after commencement of the term of the
22           lease."
23      SECTION 3.  Section 222, Hawaiian Homes Commission Act,

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                                     H.B. NO.1591       

 1 1920, is amended to read as follows:
 2      "222.  Administration.  [(a)]  The department shall adopt
 3 rules [and regulations] and policies in accordance with chapter
 4 91, Hawaii Revised Statutes.  The department may make such
 5 expenditures as are necessary for the efficient execution of the
 6 functions vested in the department by this Act.  All expenditures
 7 of the department and all moneys necessary for loans made by the
 8 department, in accordance with the provisions of this Act, shall
 9 be allowed and paid upon the presentation of itemized vouchers
10 approved by the chairman of the commission or the chairman's
11 designated representative.  The department shall make an annual
12 report to the legislature of the State upon the first day of each
13 regular session and such special reports as the legislature may
14 from time to time require.  The [chairman] chairperson and
15 members of the commission shall give bond as required by law.
16 The sureties upon the bond and the conditions thereof shall be
17 approved annually by the governor.
18      [(b)  When land originally leased by the department is, in
19 turn, subleased by the department's lessee or sublessee, the
20 department shall submit, within ten days of the convening of any
21 regular session, a written report to the legislature which shall
22 cover the sublease transactions occurring in the calendar year
23 prior to the regular session and shall contain the names of the

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                                     H.B. NO.1591       

 1 persons involved in the transaction, the size of the area under
 2 lease, the purpose of the lease, the land classification of the
 3 area under lease, the tax map key number, the lease rental, the
 4 reason for approval of the sublease by the department, and the
 5 estimated net economic result accruing to the department, lessee
 6 and sublessee.]"
 7      SECTION 4.  The amendments made by this Act are declared to
 8 be severable, and if any of them, or the application thereof to
 9 any person or circumstances is held ineffective because there is
10 a requirement of having the consent of the United States to take
11 effect, then, that portion only shall take effect upon the
12 granting of consent by the United States and the effectiveness of
13 the remainder of these legislative amendments or the application
14 thereof shall not be affected.
15      SECTION 5.  Statutory material to be repealed is bracketed.
16 New statutory material is underscored.
17      SECTION 6.  This Act shall take effect upon its approval.
19                           INTRODUCED BY:  _______________________