REPORT TITLE:
Government


DESCRIPTION:
Changes the cost of copying government records from not less than
50 cents per page to not less than 5 cents per page.  Expands the
powers of the Barbers Point NAS Redevelopment Commission.
Expands the responsibilities of the stadium authority to include
Kapolei recreational sports complex.  Establishes the Hawaii
performance partnerships board to encourage intergovernmental
partnerships with federal agencies and state, county, and
community organizations for the purpose of measuring results in
exchange for fiscal and regulatory flexibility in achieving
shared goals.  Authorizes the deposit of fees and fines and other
administrative charges collected under chapter 171 into the
special land and development fund.  Provides additional security
to lenders on land or interest covered by a lease, patent,
license, agreement or other instrument.  Provides flexibility to
the department of land and natural resources to assign or
transfer leases based on current industry standards.  Clarifies
public notice requirements that apply to counties. Authorizes the
department of budget and finance to invest state funds in Federal
Agricultural Mortgage Corporation notes and bonds.  Creates a
structure and appropriates funds for individual development
accounts and requires the Department of Taxation to submit
language to the Legislature establishing a tax credit for
individual development accounts no later than the convening of
the regular session of 2000.  Appropriates funds out of revenues
of the interagency federal revenue maximization revolving fund.
(CD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        646
THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 1999                                H.D. 3
STATE OF HAWAII                                            C.D. 1
                                                        
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO GOVERNMENT.



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

 1                              PART I
 
 2      SECTION 1.  Section 92-21, Hawaii Revised Statutes, is
 
 3 amended to read as follows:
 
 4      "92-21  Copies of records; other costs and fees.  Except as
 
 5 otherwise provided by law, a copy of any government record,
 
 6 including any map, plan, diagram, photograph, photostat, or
 
 7 geographic information system digital data file, which is open to
 
 8 the inspection of the public shall be furnished to any person
 
 9 applying for the same by the public officer having charge or
 
10 control thereof upon the payment of the reasonable cost of
 
11 reproducing such copy.  The cost of reproducing any government
 
12 record, except geographic information system digital data, shall
 
13 not be less than [50] 5 cents per page, sheet, or fraction
 
14 thereof.  The cost of reproducing geographic information system
 
15 digital data shall be in accordance with rules adopted by the
 
16 agency having charge or control of that data.  Such reproduction
 
17 cost shall include, but shall not be limited to, labor cost for
 
18 search and actual time for reproducing, material cost, including
 
19 electricity cost, equipment cost, including rental cost, cost for
 

 
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 1 certification, and other related costs.  All fees shall be paid
 
 2 in by the public officer receiving or collecting the same to the
 
 3 state director of finance, the county director of finance, or to
 
 4 the agency or department by which the officer is employed, as
 
 5 government realizations; provided that fees collected by the
 
 6 public utilities commission pursuant to this section shall be
 
 7 deposited in the public utilities commission special fund
 
 8 established under section 269-33." 
 
 9                              PART II
 
10      SECTION 2.  The purpose of this part is to authorize the
 
11 Barbers Point naval air station redevelopment commission to
 
12 arrange for or provide infrastructure services, including
 
13 utilities, roadway maintenance and repair, security, and other
 
14 services, that may be required by the owners of properties being
 
15 conveyed by the United States Navy under the base realignment and
 
16 closure action and to recoup the costs for these services,
 
17 including maintenance and administrative costs, from the owners
 
18 of the properties, make changes to the composition of the members
 
19 of the commission to reflect the recent reorganization of the
 
20 city and county of Honolulu administration; and authorize the
 
21 commission to establish advisory committees as it deems
 
22 appropriate.
 
23      SECTION 3.  Section 206G-3, Hawaii Revised Statutes, is
 

 
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 1 amended to read as follows:
 
 2      "[[]206G-3[]]  Barbers Point Naval Air Station
 
 3 redevelopment commission; established.(a)  There is
 
 4 established within the department of business, economic
 
 5 development, and tourism, for administrative purposes, the
 
 6 Barbers Point Naval Air Station redevelopment commission, which
 
 7 shall be a body corporate and a public instrumentality of the
 
 8 State for the purpose of implementing this chapter.
 
 9      (b)  The purpose of the commission shall be to act as the
 
10 local redevelopment authority to facilitate the redevelopment of
 
11 Barbers Point Naval Air Station in accordance with the Barbers
 
12 Point Naval Air Station community reuse plan.  The commission's
 
13 duties shall include but not be limited to:
 
14      (1)  Coordinating with the Navy and other entities during
 
15           the preparation of an environmental impact statement
 
16           and conduct of remediation activities for the Barbers
 
17           Point Naval Air Station community reuse plan;
 
18      (2)  Assisting the landholders designated by the plan in the
 
19           marketing of their properties and the preparation and
 
20           processing of conveyance requests;
 
21      (3)  Assisting the Navy by providing "caretaker services"
 
22           after the closure of Barbers Point Naval Air Station as
 
23           necessary;
 

 
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 1      (4)  Working with the Navy and others to ensure that
 
 2           infrastructure support is provided to the existing
 
 3           developed area, which is referred to as the "downtown
 
 4           area" and other federally retained areas;
 
 5      (5)  Developing the infrastructure necessary to support the
 
 6           implementation of the Barbers Point Naval Air Station
 
 7           community reuse plan; and
 
 8      (6)  Providing, to the extent feasible, maximum opportunity
 
 9           for the reuse of surplus property by private enterprise
 
10           or state and local government.
 
11      (c)  The commission shall consist of fifteen voting members
 
12 as follows:
 
13      (1)  The state director of business, economic development,
 
14           and tourism; the chairperson of the board of land and
 
15           natural resources; the adjutant general; the
 
16           chairperson of the Hawaiian homes commission; and the
 
17           director of transportation, or their designated
 
18           representatives, shall serve as ex-officio voting
 
19           members;
 
20      (2)  [The county chief planning officer; the director and
 
21           chief engineer of public works; the director of housing
 
22           and community development; and the director of
 
23           transportation services,] Four county department
 

 
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 1           directors appointed by the mayor or their designated
 
 2           representatives, shall serve as [ex-officio] voting
 
 3           members;
 
 4      (3)  Six voting members shall be appointed for staggered
 
 5           terms as follows:
 
 6           (A)  The governor shall appoint one member from a list
 
 7                of three nominees submitted by the chair of the
 
 8                Makakilo/Kapolei/Honokai Hale neighborhood board;
 
 9           (B)  The governor shall appoint one member from a list
 
10                of three nominees submitted by the chair of the
 
11                Ewa neighborhood board;
 
12           (C)  The governor shall appoint, subject to the advice
 
13                and consent of the senate, two members from the
 
14                general public;
 
15           (D)  The mayor of Honolulu shall select one member from
 
16                the general public; and
 
17           (E)  The Honolulu city council shall select one member
 
18                from the general public.
 
19      (d)  The commission shall select a chairperson and such
 
20 other officers as it may deem necessary from among its members.
 
21      (e)  The commander, naval base Pearl Harbor and commanding
 
22 officer, naval air station Barbers Point may serve as non-voting
 
23 ex-officio members of the commission.
 

 
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 1      (f)  A majority of all voting members shall constitute a
 
 2 quorum to do business, and the concurrence of a majority of all
 
 3 voting members shall be necessary to make any action of the
 
 4 commission valid.  All members shall continue in office until
 
 5 their respective successors, selected in the same manner and
 
 6 representing the same community of interest, have been appointed
 
 7 and qualified.
 
 8      (g)  The commission shall hire an executive director for the
 
 9 commission.  The Hawaii community development authority shall
 
10 [make available employees of the authority to staff] assist the
 
11 commission as the commission deems necessary.
 
12      (h)  Members appointed under subsection (c) shall serve
 
13 without compensation, but each shall be reimbursed for expenses
 
14 including travel expenses incurred in the performance of their
 
15 duties.
 
16      (i)  The commission may establish advisory committees as it
 
17 deems necessary."
 
18      SECTION 4.  Section 206G-4, Hawaii Revised Statutes, is
 
19 amended to read as follows:
 
20      "[[]206G-4[]]  Powers; generally.  In its role as the local
 
21 redevelopment authority for the redevelopment of the Kalaeloa
 
22 community development district, and except as otherwise limited
 
23 by this chapter, the commission may:
 

 
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 1      (1)  Sue and be sued;
 
 2      (2)  Have a seal and alter the same at pleasure;
 
 3      (3)  Make and execute contracts and all other instruments
 
 4           necessary or convenient for the exercise of its powers
 
 5           and functions under this chapter;
 
 6      (4)  Make and alter bylaws for its organization and internal
 
 7           management;
 
 8      (5)  Make rules with respect to its projects, operations,
 
 9           properties, and facilities, in conformance with chapter
 
10           91;
 
11      (6)  Through its executive director appoint officers,
 
12           agents, and employees, prescribe their duties and
 
13           qualifications, and fix their salaries, without regard
 
14           to chapters 76 and 77;
 
15      (7)  Acquire, reacquire, or contract to acquire or reacquire
 
16           by grant, lease, or purchase real, personal, or mixed
 
17           property or any interest therein; to own, hold, clear,
 
18           improve, and rehabilitate, and to sell, assign,
 
19           exchange, transfer, convey, lease, or otherwise dispose
 
20           of or encumber the same;
 
21      (8)  Acquire or reacquire by condemnation real, personal, or
 
22           mixed property or any interest therein for public
 
23           facilities, including but not limited to streets,
 

 
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 1           sidewalks, parks, schools, utility systems, and other
 
 2           public improvements;
 
 3      (9)  By itself, or in partnership with qualified persons,
 
 4           acquire, reacquire, construct, reconstruct,
 
 5           rehabilitate, improve, alter, or repair or provide for
 
 6           the construction, reconstruction, improvement,
 
 7           alteration, or repair of any project; own, hold, sell,
 
 8           assign, transfer, convey, exchange, lease, or otherwise
 
 9           dispose of or encumber any project, and in the case of
 
10           the sale of any project, accept a purchase money
 
11           mortgage in connection therewith; and repurchase or
 
12           otherwise acquire any project which the commission has
 
13           theretofore sold or otherwise conveyed, transferred, or
 
14           disposed of;
 
15     (10)  Arrange or contract for the planning, replanning,
 
16           opening, grading, or closing of streets, roads,
 
17           roadways, alleys, or other places, or for the
 
18           furnishing of facilities or for the acquisition of
 
19           property or property rights or for the furnishing of
 
20           property or services in connection with a project;
 
21     (11)  Grant options to purchase any project or to renew any
 
22           lease entered into by it in connection with any of its
 
23           projects, on such terms and conditions as it deems
 

 
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 1           advisable;
 
 2     (12)  Prepare or cause to be prepared plans, specifications,
 
 3           designs, and estimates of costs for the construction,
 
 4           reconstruction, rehabilitation, improvement,
 
 5           alteration, or repair of any project, and from time to
 
 6           time to modify such plans, specifications, designs, or
 
 7           estimates;
 
 8     (13)  Provide advisory, consultative, training, and
 
 9           educational services, technical assistance, and advice
 
10           to any person, partnership, or corporation, either
 
11           public or private, in order to carry out the purposes
 
12           of this chapter, and engage the services of consultants
 
13           on a contractual basis for rendering professional and
 
14           technical assistance and advice;
 
15     (14)  Contract for and accept gifts [or], grants, utility
 
16           systems, roadway systems, or other improvements in any
 
17           form from any public agency or from any other source;
 
18           [and]
 
19     (15)  Arrange for or provide interim services, including but
 
20           not limited to utilities, roadway maintenance and
 
21           repair, security, and other services to the owners of
 
22           properties being conveyed by the Navy under the base
 
23           realignment and closure action; and recoup the costs
 

 
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 1           for these services including maintenance and
 
 2           administrative costs from the owners of the properties
 
 3           in proportion to their use of the services or benefits
 
 4           therefrom; and
 
 5    [(15)] (16)  Do any and all things necessary to carry out its
 
 6           purposes and exercise the powers given and granted in
 
 7           this chapter."
 
 8                             PART III
 
 9      SECTION 5.  Chapter 109, Hawaii Revised Statutes, is amended
 
10 by adding a new section to be appropriately designated and to
 
11 read as follows:
 
12      "109-     Kapolei recreational sports complex special fund.
 
13 There is created a special fund to be known as the Kapolei
 
14 recreational sports complex special fund into which funds
 
15 appropriated by the legislature, received pursuant to a
 
16 management contract under section 109-2(3), or collected by the
 
17 authority from the operations of the Kapolei recreational sports
 
18 complex shall be deposited subject to contracts entered into
 
19 pursuant to section 109-2(3); provided that all funds received
 
20 pursuant to this section shall be kept completely separate from
 
21 the stadium special fund.  Moneys may not be transferred between
 
22 the Kapolei recreational sports complex special fund and the
 
23 stadium special fund.  The Kapolei recreation and sports complex
 

 
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 1 special fund shall be applied, used, and disposed of for the
 
 2 payment of:
 
 3      (1)  The expenses of the operation, maintenance, promotion,
 
 4           and management of; and
 
 5      (2)  All or a portion of the cost of financing any capital
 
 6           improvement project for;
 
 7 the Kapolei recreational sports complex; provided that all
 
 8 services required for the Kapolei recreational sports complex
 
 9 shall be performed by persons hired on contract or otherwise,
 
10 without regard for chapters 76 and 77; provided further that the
 
11 authority shall report annually to the legislature all receipts
 
12 and expenditures of the Kapolei recreational complex special fund
 
13 account no later than twenty days prior to the convening of each
 
14 regular session."
 
15      SECTION 6.  Chapter 109, Hawaii Revised Statutes, is amended
 
16 by amending the title to read as follows:
 
17              "STADIUMS AND RECREATIONAL FACILITIES"
 
18      SECTION 7.  Section 109-1, Hawaii Revised Statutes, is
 
19 amended by amending subsection (a) to read as follows:
 
20      "(a)  There shall be within the department of accounting and
 
21 general services for administrative purposes only, a stadium
 
22 authority whose responsibility shall be to maintain, operate, and
 
23 manage the stadium and facilities attached thereto[.] and to
 

 
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 1 provide for the maintenance, operation, management, and promotion
 
 2 of the Kapolei recreational sports complex.  The authority shall
 
 3 consist of nine members who shall be appointed by the governor in
 
 4 the manner prescribed by section 26-34.  Each member of the
 
 5 authority shall have been a citizen of the United States and a
 
 6 resident of the State for at least five years next preceding the
 
 7 member's appointment.  The president of the University of Hawaii
 
 8 and the superintendent of education shall be ex officio members
 
 9 of the authority but shall not vote."
 
10      SECTION 8.  Section 109-2, Hawaii Revised Statutes, is
 
11 amended to read as follows:
 
12      "109-2 Stadium authority; powers and duties.  The powers
 
13 and duties of the stadium authority shall be as follows:
 
14      (1)  To maintain, operate, and manage the stadium and
 
15           related facilities[;], and to provide for the
 
16           maintenance, operation, management, and promotion of
 
17           the Kapolei recreational sports complex;
 
18      (2)  To prescribe and collect rents, fees, and charges for
 
19           the use or enjoyment of the stadium or any of its
 
20           facilities;
 
21      (3)  To make and execute contracts and other instruments
 
22           necessary or convenient to exercise its powers under
 
23           this chapter and subject to any limitations in this
 

 
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 1           chapter, to exercise all powers necessary, incidental,
 
 2           or convenient to carry out and effectuate the purposes
 
 3           and provisions of this chapter[;], including entering
 
 4           into contracts under chapter 102 or 103D for the
 
 5           management of the Kapolei recreational sports complex,
 
 6           to include but not be limited to the operation,
 
 7           maintenance, and promotion of the complex in a manner
 
 8           that is beneficial to both the State and the
 
 9           contractor.  These contracts may contain revenue
 
10           sharing incentives based on increased usage of the
 
11           complex;
 
12      (4)  To adopt, amend, and repeal in accordance with chapter
 
13           91 rules it may deem necessary to effectuate this
 
14           chapter and in connection with its projects,
 
15           operations, and facilities;
 
16      (5)  To appoint a manager and a deputy manager who shall
 
17           have such qualifications as the authority deems
 
18           necessary and who shall hold their respective offices
 
19           at the pleasure of the authority.  The manager and
 
20           deputy manager shall be exempt from the requirements of
 
21           chapters 76, 77, and 89.  Effective January 1, 1989,
 
22           and January 1, 1990, the salary of the manager shall be
 
23           set by the governor within the range from $69,748 to
 

 
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 1           $74,608 and $72,886 to $77,966 a year, respectively.
 
 2           Effective January 1, 1989, and January 1, 1990, the
 
 3           salary of the deputy manager shall be $62,854 and
 
 4           $65,683 a year, respectively.  The manager shall have
 
 5           full power to administer the affairs of the stadium and
 
 6           related facilities, and to provide for a management
 
 7           contract for the Kapolei recreational sports complex,
 
 8           subject to the direction and approval of the authority.
 
 9           The manager shall, subject to the approval of the
 
10           authority, have power to appoint, suspend, and
 
11           discharge a secretary who shall be exempt from the
 
12           requirements of chapters 76, 77, and 89, and such other
 
13           employees, subordinates, and assistants as may be
 
14           necessary for the proper conduct of the business of the
 
15           authority.  Except for persons hired on contract or
 
16           otherwise as provided in section 109-3 and except for
 
17           the manager, deputy manager, and secretary, all
 
18           appointments, suspensions, or discharges shall be made
 
19           in conformity with the applicable provisions of
 
20           chapters 76 and 77; and
 
21      (6)  To plan, promote, and market the stadium [and], its
 
22           related facilities[.], and the Kapolei recreational
 
23           sports complex."
 

 
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 1      SECTION 9.  Section 109-3, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "109-3 Stadium special fund.  There is created a special
 
 4 fund to be known as the stadium special fund into which funds
 
 5 collected by the authority shall be deposited[.]; provided that
 
 6 all funds received pursuant to this section shall be kept
 
 7 completely separate from the Kapolei recreational sports complex
 
 8 special fund.  Moneys may not be transferred between the stadium
 
 9 special fund and the Kapolei recreational sports complex special
 
10 fund.  The stadium special fund shall be applied, used, and
 
11 disposed of for the payment of:
 
12      (1)  The expenses of the operation, maintenance, promotion,
 
13           and management of; and
 
14      (2)  All or a portion of the cost of financing any capital
 
15           improvement project for;
 
16 the stadium and related facilities; provided that all services
 
17 required for the stadium and related facilities shall be
 
18 performed by persons hired on contract or otherwise, without
 
19 regard for chapters 76 and 77; provided further that the
 
20 authority shall report to the legislature all receipts and
 
21 expenditures of the stadium special fund account twenty days
 
22 prior to the convening of each regular session."
 
23      SECTION 10.  Section 109-5, Hawaii Revised Statutes, is
 

 
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 1 amended to read as follows:
 
 2      "[[]109-5[]]  Security personnel, powers.  The person
 
 3 employed as the chief security officer by the authority shall
 
 4 have all of the powers of police officers, including the power of
 
 5 arrest; provided that such powers shall remain in force and in
 
 6 effect only while the person is in the actual performance of the
 
 7 person's duties at the stadium[.] or the Kapolei recreational
 
 8 sports complex." 
 
 9      SECTION 11.  Section 109-7, Hawaii Revised Statutes, is
 
10 amended by amending subsections (b) and (c) to read as follows:
 
11      "(b)  Any person violating any rule of the stadium authority
 
12 regulating conduct on the stadium or Kapolei recreational sports
 
13 complex premises shall be guilty of a petty misdemeanor
 
14 punishable by a fine not exceeding $1,000, or imprisonment not
 
15 exceeding thirty days, or both.
 
16      (c)  Any person violating any rule of the stadium authority
 
17 regulating parking or traffic on the stadium or Kapolei
 
18 recreational sports complex premises shall have committed a
 
19 traffic infraction as set forth in chapter 291D, the adjudication
 
20 of which shall be subject to the provisions contained therein."
 
21                              PART IV
 
22      SECTION 12.  Findings and purpose.  (a)  The legislature
 
23 finds that the federal government has empowered federal agencies
 

 
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 1 that award grants or that enter into intergovernmental agreements
 
 2 with state agencies to provide incentives, such as decreased
 
 3 state matching funds, waived regulations, or additional federal
 
 4 funds, in exchange for measuring progress towards shared goals.
 
 5      (b)  The purpose of this part is to establish a Hawaii
 
 6 performance partnerships board on a special and temporary basis
 
 7 within the office of the governor for administrative purposes.
 
 8      SECTION 13.  Hawaii performance partnerships board;
 
 9 establishment.  (a)  There is established within the office of
 
10 the governor, on a special and temporary basis, the Hawaii
 
11 performance partnerships board.
 
12      (b)  The board shall consist of the following nine members
 
13 who shall be appointed by the governor in accordance with section
 
14 26-34, Hawaii Revised Statutes:
 
15      (1)  Three members representing business;
 
16      (2)  Three members representing philanthropy; and
 
17      (3)  Three members representing government.
 
18      (c)  Members shall serve for five-year terms, except for
 
19 appointed state officials, who shall serve for the length of
 
20 their appointments.
 
21      (d)  The members of the board shall serve without
 
22 compensation and without reimbursement for expenses, including
 
23 travel expenses.
 

 
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 1      (e)  The governor shall designate a chairperson from among
 
 2 the members of the board.
 
 3      SECTION 14.  Duties of the board.  The board shall:
 
 4      (1)  Propose key community outcomes of well-being for the
 
 5           residents of the State to the legislature, and report
 
 6           to the legislature and the citizens of Hawaii on
 
 7           progress in attaining the outcomes adopted by the
 
 8           legislature;
 
 9      (2)  Execute an agreement between the federal government,
 
10           the state executive branch, and representatives of
 
11           philanthropy and community service organizations to
 
12           encourage intergovernmental partnerships with federal
 
13           agencies and state, county, and community organizations
 
14           for the purpose of measuring results in exchange for
 
15           fiscal and regulatory flexibility in achieved shared
 
16           goals;
 
17      (3)  Increase the use of performance measurement initiatives
 
18           in each state agency through the governor's cabinet;
 
19           and
 
20      (4)  Increase the number of performance partnerships between
 
21           federal, state, county, and community-based agencies
 
22           through the governor's cabinet.
 
23      SECTION 15.  Annual report.  The board shall prepare an
 

 
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 1 annual report on progress towards key community outcomes adopted
 
 2 by the legislature, which shall be transmitted to the governor,
 
 3 the legislature, and the public.
 
 4                              PART V
 
 5      SECTION 16.  Section 171-19, Hawaii Revised Statutes, is
 
 6 amended by amending subsection (a) to read as follows:
 
 7      "(a)  There is created in the department a special fund to
 
 8 be designated as the "special land and development fund".
 
 9 Subject to the Hawaiian Homes Commission Act of 1920, as amended,
 
10 and section 5(f) of the Admission Act of 1959, and except as
 
11 provided under section 171-138 for the industrial park special
 
12 fund, all proceeds of sale of public lands, including interest on
 
13 deferred payments; all rents from leases, licenses, and permits
 
14 derived from public lands; all fees, fines, and other
 
15 administrative charges collected under this chapter; a portion of
 
16 the highway fuel tax collected under chapter 243; fees charged by
 
17 the department for the commercial use of public trails and trail
 
18 accesses under the jurisdiction of the department; and private
 
19 contributions for the management, maintenance, and development of
 
20 trails and accesses shall be set apart in the fund and shall be
 
21 used only as authorized by the legislature for the following
 
22 purposes:
 
23      (1)  To reimburse the general fund of the State for advances
 

 
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 1           made that are required to be reimbursed from the
 
 2           proceeds derived from sales, leases, licenses, or
 
 3           permits of public lands;
 
 4      (2)  For the planning, development, management, operations,
 
 5           or maintenance of all lands and improvements under the
 
 6           control and management of the board, [including repairs
 
 7           or improvements thereon; provided that the department
 
 8           shall not expend in excess of $500,000 in any fiscal
 
 9           year without the prior approval of the governor;]
 
10           including but not limited to permanent or temporary
 
11           staff positions who may be appointed without regard to
 
12           chapter 76 and 77;
 
13      (3)  To repurchase any land, including improvements, in the
 
14           exercise by the board of any right of repurchase
 
15           specifically reserved in any patent, deed, lease, or
 
16           other documents or as provided by law;
 
17      (4)  For the payment of all appraisal fees; provided that
 
18           all fees reimbursed to the board shall be deposited in
 
19           the fund;
 
20      (5)  For the payment of publication notices as required
 
21           under this chapter; provided that all or a portion of
 
22           the expenditures may be charged to the purchaser or
 
23           lessee of public lands or any interest therein under
 

 
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 1           rules adopted by the board;
 
 2      (6)  For the management, maintenance, and development of
 
 3           trails and trail accesses under the jurisdiction of the
 
 4           department not to exceed $500,000 in any fiscal year;
 
 5           [and]
 
 6      (7)  For the payment to private land developers who have
 
 7           contracted with the board for development of public
 
 8           lands under section 171-60[.]; and
 
 9      (8)  For other purposes of this chapter."
 
10      SECTION 17.  The director of finance shall transfer the
 
11 unexpended balance, including encumbrances and accrued
 
12 liabilities, of the industrial park special fund as of the close
 
13 of business on June 30, 1999, to the credit of the special land
 
14 and development fund.  Encumbered moneys shall continue to be
 
15 encumbered until paid out or released from prior encumbrances.
 
16                              PART VI
 
17      SECTION 18.  The purpose of this part is to provide
 
18 additional security for lenders on land or interests covered by a
 
19 lease, patent, license, agreement, or other instrument and
 
20 provides flexibility to the department of land and natural
 
21 resources to assign or transfer leases based on current industry
 
22 standards.
 
23      SECTION 19.  Chapter 166, Hawaii Revised Statutes, is
 

 
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 1 amended by adding a new section to be appropriately designated
 
 2 and to read as follows:
 
 3      "166-    Rights of holders of security interests.  (a) For
 
 4 the purpose of this section:
 
 5      "Institutional lender" means a federal, state, or private
 
 6 lending institution licensed to do business in the State of
 
 7 Hawaii in making loans to qualified applicants under section
 
 8 166-7 on the basis of a lease for security, in whole or in part,
 
 9 together with any other entity who acquires all or substantially
 
10 all of an institutional lender's loan portfolio.
 
11      "Making a loan" means lending of new money after the
 
12 effective date of this Act or the renewal or extension of
 
13 indebtedness owing by a qualified applicant to an institutional
 
14 lender.
 
15      "Security interest" means any interest created or perfected
 
16 by a mortgage, assignment by way of mortgage, or by a financing
 
17 statement and encumbering a lease, land demised by the lease, or
 
18 personal property located at, affixed or to be affixed to, or
 
19 growing or to be grown upon the demised land.
 
20      (b)  Board action shall be required when an institutional
 
21 lender acquires the lessee's interest through a foreclosure sale,
 
22 judicial or nonjudicial, or by way of assignment in lieu of
 
23 foreclosure, or when the institutional lender sells or causes the
 

 
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 1 sale of the lessee's interest in a lease by way of a foreclosure
 
 2 sale, judicial or nonjudicial.  The institutional lender shall
 
 3 convey a copy of the sale or assignment as recorded in the bureau
 
 4 of conveyances.
 
 5      (c)  Notwithstanding any provisions of this chapter or any
 
 6 law to the contrary, if any lease is subject to a security
 
 7 interest held by an institutional lender, and provided the
 
 8 institutional lender has given to the board a copy of such
 
 9 encumbrance as recorded in the bureau of conveyances:
 
10      (1)  If the lease is cancelled for violation of any non-
 
11           monetary lease term or condition, or if the lease is
 
12           deemed terminated or rejected under bankruptcy laws,
 
13           than in either event, the institutional lender shall be
 
14           entitled to issuance of a new lease in its name for a
 
15           term equal to the term of the lease remaining
 
16           immediately prior to the cancellation, termination, or
 
17           rejection, with all terms and conditions being the same
 
18           as in the cancelled, terminated, or rejected lease,
 
19           except only for such liens, claims, and encumbrances,
 
20           if any, which were superior to the institutional lender
 
21           prior to the cancellation, termination, or rejection.
 
22           If a lease is rejected or deemed rejected under
 
23           bankruptcy law, the lease shall be deemed to be
 

 
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 1           cancelled and terminated for all purposes under state
 
 2           law;
 
 3      (2)  If the lessee's interest under a lease is transferred
 
 4           to an institutional lender, including by reason of the
 
 5           provisions of paragraph (1) by reason of acquisition of
 
 6           lessee's interest pursuant to a foreclosure sale,
 
 7           judicial or nonjudicial, and by reason of an assignment
 
 8           in lieu of foreclosure, then:
 
 9           (A)  The institutional lender shall be liable for the
 
10                obligations of the lessee under the lease for the
 
11                period of time during which the institutional
 
12                lender is the holder of lessee's interest but
 
13                shall not be liable for any obligations of the
 
14                lessee arising after the institutional lender has
 
15                assigned the lease;
 
16           (B)  The provisions of subsections 166-6 (a)(1) and (2)
 
17                shall not apply to the lease or the demised land
 
18                during such time the institutional lender holds
 
19                the lease; provided, however, that for non-
 
20                monetary lease violations, the institutional
 
21                lender shall first remedy the lease terms which
 
22                caused the cancellation, termination, or rejection
 
23                to the satisfaction of the board; provided further
 

 
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 1                that the new lease issued to the institutional
 
 2                lender shall have a sunset date (one hundred
 
 3                twenty days from the effective date of issuance),
 
 4                when the institutional lender shall either sell or
 
 5                assign the lease, after which date the provisions
 
 6                of subsection 166-6 (a) shall become applicable to
 
 7                the new lease;
 
 8      (3)  As long as there is a delinquent loan balance secured
 
 9           by a security interest, the lease may not be cancelled
 
10           or terminated, except for cancellation by reason of
 
11           default of the lessee, and no increase over and above
 
12           the fair market rent, based upon the actual use of the
 
13           land demised and subject to the use restrictions
 
14           imposed by the lease and applicable laws, may be
 
15           imposed or become payable, and no lands may be
 
16           withdrawn from the lease, except by eminent domain
 
17           proceedings beyond the control of the board, except
 
18           with prior written consent by the institutional lender
 
19           and such consent shall not be unreasonably withheld;
 
20           and
 
21      (4)  If the lease contains any provision requiring the
 
22           payment of a premium to the lessor on assignment of the
 
23           lease, any premium shall be assessed only after all
 

 
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 1           amounts owing by any debt secured by a security
 
 2           interest held by a institutional lender shall have been
 
 3           paid in full.
 
 4      (d)  Ownership of both the lease and the security interest
 
 5 by an institutional lender shall not effect or cause a merger
 
 6 thereof, and both interests shall remain distinct and in full
 
 7 force and effect unless the institutional lender elects in
 
 8 writing to merge said estates with the consent of the board.
 
 9      (e)  The board may include in any consent form or document
 
10 such provisions not inconsistent with the intent of this section
 
11 as may be required to make a lease mortgageable or more
 
12 acceptable for mortgageability by an institutional lender.
 
13      (f)  The purchaser, including junior lien holder, of the
 
14 institutional lender's security interest, and the same is
 
15 assigned to such purchaser, then the rights herein shall be
 
16 exercisable by such transferee as successor in interest to the
 
17 institutional lender, except that such purchase shall conform
 
18 with subsection (c)(4) and, further, the transfer of such rights
 
19 shall be reserved unto and exercisable only to an institutional
 
20 lender.  Other purchasers may not be precluded in acquiring the
 
21 institutional lender's security interest but cannot have
 
22 exercisable rights as successor in interest to the original
 
23 institutional lender."
 

 
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 1      SECTION 20.  Section 171, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "171-21  Rights of holder of security interest.  Whenever
 
 4 any notice of breach or default is given to any party under
 
 5 section 171-20, or under the terms of any lease, patent, license,
 
 6 agreement, or other instrument issued or to be issued under this
 
 7 chapter, a copy of the notice shall be delivered by the board of
 
 8 land and natural resources to all holders of record of any
 
 9 security interest in the land or interest covered by the lease,
 
10 patent, license, agreement, or other instrument whose security
 
11 interest has been recorded with the board.  Should the board seek
 
12 to forfeit the privilege, interest, or estate created by the
 
13 lease, license, agreement, patent, or other instrument, each
 
14 holder may, at its option, cure or remedy the breach or default,
 
15 if the same can be cured or remedied, by the payment of money or,
 
16 if such is not the case, by performing or undertake in writing to
 
17 perform all the terms, covenants, restrictions, or conditions of
 
18 any lease, patent, license, agreement, or other instrument
 
19 capable of performance by the holder, as determined by the board,
 
20 within the time period provided in section 171-20 or within such
 
21 additional period as the board may allow for good cause and add
 
22 the cost thereof to the mortgage debt and the lien of the
 
23 mortgage. Any lease, patent, license, agreement, or other
 

 
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 1 instrument transferred pursuant to this section shall not be
 
 2 subject to the requirements in section 171-14. Upon failure of
 
 3 the holder to exercise its option, the board may:
 
 4      (1)  Pay to the holder from any moneys at its disposal,
 
 5           including the special land and development fund, which
 
 6           is made available for that purpose, the amount of the
 
 7           mortgage debt, together with interest and penalties,
 
 8           and secure an assignment of the debt and mortgage from
 
 9           the holder, or if ownership of the interest or estate
 
10           shall then have vested in the holder by way of
 
11           foreclosure or action in lieu thereof the board shall
 
12           be entitled to a conveyance of the interest or estate
 
13           upon payment to the holder of the amount of the
 
14           mortgage debt, including interest and penalties, and
 
15           all reasonable expenses incurred by the holder in
 
16           connection with the foreclosure and preservation of its
 
17           security interest, less appropriate credits, including
 
18           income received from the privilege, interest, or estate
 
19           subsequent to the foreclosure; or
 
20      (2)  If the property cannot be reasonably reassigned without
 
21           loss to the State, then terminate the outstanding
 
22           privilege, interest, or estate without prejudice to any
 
23           other right or remedy for arrears of rent or for any
 

 
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 1           preceding or other breach or default, and use its best
 
 2           efforts to redispose of the affected land to a
 
 3           qualified and responsible person free and clear of the
 
 4           mortgage and the debt thereby secured; provided that a
 
 5           reasonable delay by the board in instituting or
 
 6           prosecuting any right or remedy it may have under this
 
 7           section shall not operate as a waiver of the right or
 
 8           to deprive it of the remedy when it may still hope
 
 9           otherwise to resolve the problems created by the breach
 
10           or default involved.
 
11 Section 171-19 to the contrary notwithstanding, the proceeds of
 
12 any redisposition under paragraph (2) shall be applied:  first,
 
13 to reimburse the board for costs and expenses in connection with
 
14 the redisposition; second, to discharge in full any unpaid
 
15 purchase price or other indebtedness owing the State in
 
16 connection with the privilege, interest, or estate terminated;
 
17 third, to the mortgagee to the extent of the value received by
 
18 the State upon redisposition which exceeds the fair market lease
 
19 value of the land as previously determined by the State's
 
20 appraiser; and fourth, to the owner of the privilege, interest,
 
21 or estate.  Nothing contained in this section shall be construed
 
22 in a manner as to infringe upon or prejudice in any way the
 
23 rights of a holder of record having a security interest which
 

 
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 1 shall have vested prior to the effective date hereof, and to the
 
 2 extent that this section and section 171-98 shall or may conflict
 
 3 and adversely affect such interests, the same shall be of no
 
 4 force and effect. 
 
 5      SECTION 21.  Section 171-36, Hawaii Revised Statutes, is
 
 6 amended by amending subsection (a) to read as follows:
 
 7      "(a)  Except as otherwise provided, the following
 
 8 restrictions shall apply to all leases:
 
 9      (1)  Options for renewal of terms are prohibited;
 
10      (2)  No lease shall be for a longer term than sixty-five
 
11           years, except in the case of a residential leasehold
 
12           which may provide for an initial term of fifty-five
 
13           years with the privilege of extension to meet the
 
14           requirements of the Federal Housing Administration,
 
15           Federal National Mortgage Association, Federal Land
 
16           Bank of Berkeley, Federal Intermediate Credit Bank of
 
17           Berkeley, Berkeley Bank for Cooperatives, or Veterans
 
18           Administration requirements; provided that the
 
19           aggregate of the initial term and extension shall in no
 
20           event exceed seventy-five years;
 
21      (3)  No lease shall be made for any land under a lease which
 
22           has more than two years to run;
 
23      (4)  No lease shall be made to any person who is in arrears
 

 
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 1           in the payment of taxes, rents, or other obligations
 
 2           owing the State or any county;
 
 3      (5)  No lease shall be transferable or assignable, except by
 
 4           devise, bequest, or intestate succession; provided that
 
 5           with the approval of the board of land and natural
 
 6           resources, the assignment and transfer of a lease or
 
 7           unit thereof may be made in accordance with current
 
 8           industry standards, as determined by the board [if:
 
 9           (A)  It contains the personal residence of the lessee;
 
10           (B)  In the case of commercial, industrial, hotel,
 
11                resort, apartment, and other business uses, the
 
12                lessee was required to put in substantial building
 
13                improvements;
 
14           (C)  The lessee becomes mentally or physically
 
15                disabled;
 
16           (D)  Extreme economic hardship is demonstrated to the
 
17                satisfaction of the board;
 
18           (E)  It is to the corporate successor of the lessee; or
 
19           (F)  In the case of agricultural uses, the assignee
 
20                meets the qualifications of a bona fide individual
 
21                farmer or a nonindividual farm concern pursuant to
 
22                section 171-14.5, in addition to or
 
23                notwithstanding the other conditions of this
 

 
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 1                paragraph];
 
 2           provided further that prior to the approval of any
 
 3           assignment of lease, the board shall have the right to
 
 4           review and approve the consideration to be paid by the
 
 5           assignee and may condition its consent to the
 
 6           assignment of the lease on payment by the lessee of a
 
 7           premium based on the amount by which the consideration
 
 8           for the assignment, whether by cash, credit, or
 
 9           otherwise, exceeds the depreciated cost of improvements
 
10           and trade fixtures being transferred to the assignee;
 
11           provided further that with respect to state
 
12           agricultural leases, in the event of foreclosure or
 
13           sale, the premium, if any, shall be assessed only after
 
14           the encumbrances of record and any other advances made
 
15           by the holder of a security interest are paid;
 
16      (6)  The lessee shall not sublet the whole or any part of
 
17           the demised premises except with the approval of the
 
18           board; provided that prior to the approval, the board
 
19           shall have the right to review and approve the rent to
 
20           be charged to the sublessee; provided further that in
 
21           the case where the lessee is required to pay rent based
 
22           on a percentage of its gross receipts, the receipts of
 
23           the sublessee shall be included as part of the lessee's
 

 
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 1           gross receipts; provided further that the board shall
 
 2           have the right to review and, if necessary, revise the
 
 3           rent of the demised premises based upon the rental rate
 
 4           charged to the sublessee including the percentage rent,
 
 5           if applicable, and provided that the rent may not be
 
 6           revised downward;
 
 7      (7)  The lease shall be for a specific use or uses and shall
 
 8           not include waste lands, unless it is impractical to
 
 9           provide otherwise;
 
10      (8)  Mineral and metallic rights and surface and ground
 
11           water shall be reserved to the State; and
 
12      (9)  No lease of public lands, including submerged lands,
 
13           nor any extension of any such lease, shall be issued by
 
14           the State to any person to construct, use, or maintain
 
15           a sunbathing or swimming pier or to use the lands for
 
16           such purposes, unless such lease, or any extension
 
17           thereof, contains provisions permitting the general
 
18           public to use the pier facilities on the public lands
 
19           and requiring that a sign or signs be placed on the
 
20           pier, clearly visible to the public, which indicates
 
21           the public's right to the use of the pier.  The board,
 
22           at the earliest practicable date, and where legally
 
23           possible, shall cause all existing leases to be amended
 

 
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 1           to conform to this paragraph.  The term "lease", for
 
 2           the purposes of this paragraph, includes month-to-month
 
 3           rental agreements and similar tenancies.
 
 4      (b)  The board, from time to time, upon the issuance or
 
 5 during the term of any intensive agricultural, aquaculture,
 
 6 commercial, mariculture, special livestock, pasture, or
 
 7 industrial lease, may:
 
 8      (1)  Modify or eliminate any of the restrictions specified
 
 9           in subsection (a);
 
10      (2)  Extend or modify the fixed rental period of the lease;
 
11           or
 
12      (3)  Extend the term of the lease
 
13 to the extent necessary to qualify the lease for mortgage lending
 
14 or guaranty purposes with the Federal Housing Administration,
 
15 Federal National Mortgage Association, Department of Veterans
 
16 Affairs, Small Business Administration, United States Department
 
17 of Agriculture, Federal Land Bank of Berkeley, Federal
 
18 Intermediate Credit Bank of Berkeley, Berkeley Bank for
 
19 Cooperatives, or any other federal mortgage lending agency
 
20 qualified to do business in the State, and their respective
 
21 successors and assignees, or to qualify the lessee for any state
 
22 or private lending institution loan, private loan guaranteed by
 
23 the State, or any loan in which the State and any private lender
 

 
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 1 participates; provided that the private lender shall be qualified
 
 2 to do business in the State; provided further that the approval
 
 3 of any extension shall be subject to the following:
 
 4      (1)  The demised premises have been used substantially for
 
 5           the purpose for which they were originally leased;
 
 6      (2)  The aggregate of the initial term and any extension
 
 7           granted shall not be for more than fifty-five years;
 
 8      (3)  In the event of a reopening, the rental for any ensuing
 
 9           period shall be the fair market rental at the time of
 
10           reopening; and
 
11      (4)  The rules of the board, setting forth any additional
 
12           terms and conditions, which shall ensure and promote
 
13           the purposes of the demised lands.
 
14      (c)  The board at any time during the term of any intensive
 
15 agricultural, aquaculture, or mariculture lease and when
 
16 justified by sound economic practices or other circumstances, may
 
17 permit an alternative agricultural, aquaculture, or mariculture
 
18 use or uses for any portion or portions of the land demised.  As
 
19 a condition to permitting alternative uses, the board may require
 
20 such other modifications, including rental adjustments or changes
 
21 in the lease as may be necessary to effect or accommodate the
 
22 alternative use or uses.  An alternative use or uses may be
 
23 allowed by the board upon:
 

 
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 1      (1)  The application of the lessee;
 
 2      (2)  Consent of each holder of record having a security
 
 3           interest in the leasehold; and
 
 4      (3)  A finding by the board that the alternative use or uses
 
 5           are in the public interest.
 
 6                             PART VII
 
 7      SECTION 22.  Section 1-28.5, Hawaii Revised Statutes, is
 
 8 amended to read as follows:
 
 9      "[[]1-28.5[]]  Publication of notice.(a)  [Whenever]
 
10 Notwithstanding any other statute, law, charter provision,
 
11 ordinance, or rule to the contrary, whenever a government agency
 
12 is required to give public notice or to publish notice, the
 
13 notice shall be given [by advertisement] only as follows:
 
14      (1)  For statewide publication:
 
15           (A)  In a daily or weekly publication of statewide
 
16                circulation; or
 
17           (B)  By publication in separate daily or weekly
 
18                publications whose combined circulation is
 
19                statewide[.];
 
20           and
 
21      (2)  For county-wide publication, by publication in a daily
 
22           or weekly publication in the affected county.
 
23 Additional supplemental notice may also be given through Hawaii
 

 
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 1 FYI, the State's interactive computer system.
 
 2      (b)  For purposes of this section, the comptroller pursuant
 
 3 to chapter 103D shall determine a [consistent] publication
 
 4 [procedure] for all government agencies to enable the public to
 
 5 go to one source of publication for published public notice on
 
 6 each island.
 
 7      (c)  Whenever a public notice is published in a newspaper or
 
 8 other publication described in subsection (a), proof of the
 
 9 publication shall be the affidavit of the printer, publisher,
 
10 principal clerk, or business manager of the newspaper or other
 
11 publication or of the designated agent of the group that
 
12 published the notice.
 
13      (d)  This section shall not apply to notices required by
 
14 chapters 103D and 103F.
 
15      (e) For purposes of this section, "government agency" means
 
16 each department, board, commission, or officer of the State or
 
17 any of its political subdivisions."
 
18                             PART VIII
 
19      SECTION 23.  Section 36-21, Hawaii Revised Statutes, is
 
20 amended to read as follows:
 
21      "36-21  Short-term investment of state moneys.  The
 
22 director of finance may invest any moneys of the State which in
 
23 the director's judgment are in excess of the amounts necessary
 

 
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 1 for meeting the immediate requirements of the State and where in
 
 2 the director's judgment the action will not impede or hamper the
 
 3 necessary financial operations of the State in:
 
 4      (1)  Any bonds or interest-bearing notes or obligations:
 
 5           (A)  Of the State (including state director of
 
 6                finance's warrant notes issued pursuant to chapter
 
 7                40);
 
 8           (B)  Of the United States;
 
 9           (C)  For which the faith and credit of the United
 
10                States are pledged for the payment of principal
 
11                and interest;
 
12      (2)  Federal land bank bonds;
 
13      (3)  [Joint stock farm loan bonds;] Federal Agricultural
 
14           Mortgage Corporation notes and bonds;
 
15      (4)  Federal Home Loan Bank notes and bonds;
 
16      (5)  Federal Home Loan Mortgage Corporation bonds;
 
17      (6)  Federal National Mortgage Association notes and bonds;
 
18      (7)  Securities of a mutual fund whose portfolio is limited
 
19           to bonds or securities issued or guaranteed by the
 
20           United States or an agency thereof;
 
21      (8)  Repurchase agreements fully collateralized by any such
 
22           bonds or securities;
 
23      (9)  Federally insured savings accounts;
 

 
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 1     (10)  Time certificates of deposit;
 
 2     (11)  Certificates of deposit open account;
 
 3     (12)  Repurchase agreements with federally insured banks,
 
 4           savings and loan associations, and financial services
 
 5           loan companies;
 
 6     (13)  Student loan resource securities including:
 
 7           (A)  Student loan auction rate securities;
 
 8           (B)  Student loan asset-backed notes;
 
 9           (C)  Student loan program revenue notes and bonds; and
 
10           (D)  Securities issued pursuant to Rule 144A of the
 
11                Securities Act of 1933, including any private
 
12                placement issues;
 
13           issued with either bond insurance or
 
14           overcollateralization guaranteed by the United States
 
15           Department of Education; provided all insurers maintain
 
16           a triple-A rating by Standard & Poor's, Moody's, Duff &
 
17           Phelps, Fitch, or any other major national securities
 
18           rating agency;
 
19     (14)  Commercial paper with an A1/P1 or equivalent rating by
 
20           any national securities rating service; and
 
21     (15)  Bankers' acceptances with an A1/P1 or equivalent rating
 
22           by any national securities rating service;
 
23 provided that the investments are due to mature not more than
 

 
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 1 five years from the date of investment.  Income derived from
 
 2 those investments shall be a realization of the general fund;
 
 3 provided that income earned from moneys invested by the general
 
 4 funds, special funds, bond funds, and trust and agency funds on
 
 5 an investment pool basis shall be paid into and credited to the
 
 6 respective funds based on the contribution of moneys into the
 
 7 investment pool by each fund.  As used in this section,
 
 8 "investment pool" means the aggregate of state treasury moneys
 
 9 that are maintained in the custody of the director of finance for
 
10 investment and reinvestment without regard to fund designation.
 
11      Except with respect to an early withdrawal penalty on an
 
12 investment permitted by this section, the amount of such penalty
 
13 being mutually agreed at the time of acquisition of such
 
14 investment, no investment permitted by this section shall require
 
15 or may in the future require payments by the State, whether
 
16 unilateral, reciprocal, or otherwise, including margin payments,
 
17 or shall bear interest at a variable rate which causes or may
 
18 cause the market price of such investment to fluctuate; provided
 
19 that such limitation shall not apply to money market mutual funds
 
20 which:
 
21      (1)  [invest] Invest solely in:
 
22      (A)  [direct] Direct and general obligations of the United
 
23           States of America; or
 

 
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 1      (B)  [obligations] Obligations of any agency or
 
 2           instrumentality of the United States of America the
 
 3           payment of the principal and interest on which are
 
 4           unconditionally guaranteed by the full faith and credit
 
 5           of the United States of America[,]
 
 6      (2)  [are] Are rated at the time of purchase "AAAm-G" or its
 
 7           equivalent by Standard & Poor's Ratings Group[,]; and
 
 8      (3)  [are] Are open-end management investment companies
 
 9           regulated under the Investment Company Act of 1940, as
 
10           amended, which calculate their current price per share
 
11           pursuant to Rule 2a-7 (17 Code of Federal Regulations
 
12           section 270.2a-7) promulgated under such act.
 
13      Furthermore, the State shall not acquire any investment or
 
14 enter into any agreement in connection with the acquisition of
 
15 any investment or related to any existing investment held by the
 
16 State, which would require or may in the future require any
 
17 payment by the State, whether unilateral, reciprocal, or
 
18 otherwise, such as swap agreements, hedge agreements, or other
 
19 similar agreements.  For purposes of this section, a swap or
 
20 hedge payment is any payment made by the State in consideration
 
21 or in exchange for a reciprocal payment by any person, such as a
 
22 variable rate payment in exchange for a fixed rate payment, a
 
23 fixed rate payment in exchange for a variable rate payment, a
 

 
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 1 payment when a cap or a floor amount is exceeded, or other
 
 2 similar payment."
 
 3                              PART IX
 
 4      SECTION 24.  The legislature finds that an individual
 
 5 development account (IDA) is a special savings account program
 
 6 designed to:
 
 7      (1)  Provide individuals and families, especially those with
 
 8           limited financial means, an opportunity to accumulate
 
 9           assets;
 
10      (2)  Facilitate and mobilize savings;
 
11      (3)  Promote post-secondary education, vocational training,
 
12           homeownership, and micro-enterprise development;
 
13      (4)  Stabilize families; and
 
14      (5)  Build communities.
 
15      Members of Hawaii's private sector, nonprofit organizations,
 
16 and government recognize that IDAs are among the most promising
 
17 anti-poverty ideas to emerge in the last few decades.  In an
 
18 effort to expand awareness of these accounts, these entities have
 
19 joined together to form the Hawaii IDA collaborative.  Partners
 
20 in this new initiative include Parents and Children Together,
 
21 Waimanalo Community Development Corporation, Maui Economic
 
22 Opportunity, Mutual Housing Association of Hawaii, the Consuelo
 
23 Zobel Alger Foundation, Bank of Hawaii, Hawaii Community Loan
 

 
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 1 Fund, the Legal Aid Society of Hawaii, American Friends Service
 
 2 Committee, the department of human services, WorkHawaii, and the
 
 3 department of community services of the city and county of
 
 4 Honolulu.
 
 5      The legislature further finds that Hawaii residents are
 
 6 already beginning to benefit from IDAs, such as:
 
 7      (1)  Through a partnership between the Waimanalo Community
 
 8           Development Corporation and the housing and community
 
 9           development corporation of Hawaii, up to thirty-four
 
10           public housing residents will be able to purchase a
 
11           newly reconstructed unit using moneys the residents
 
12           have saved in these accounts;
 
13      (2)  The Mutual Housing Association of Hawaii and the
 
14           Pacific Housing Assistance Corporation have similar
 
15           programs on Kauai and Oahu, respectively; and
 
16      (3)  Focusing on savings for business start-up, Parents and
 
17           Children Together, in partnership with Bank of Hawaii
 
18           and the city and county of Honolulu, runs a nationally
 
19           recognized IDA program on Oahu.
 
20      The purpose of this part is to promote the growth of IDAs
 
21 by:
 
22      (1)  Establishing IDAs and giving tax incentives to
 
23           encourage private sector support of an IDA match; and
 

 
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 1      (2)  Making an appropriation to be used as matching funds.
 
 2      SECTION 25.  The Hawaii Revised Statutes is amended by
 
 3 adding a new chapter to be appropriately designated and to read
 
 4 as follows:
 
 5                             "CHAPTER
 
 6                  INDIVIDUAL DEVELOPMENT ACCOUNTS
 
 7         -1  Definitions.  As used in this chapter:
 
 8      "Eligible educational institution" means:
 
 9      (1)  An institution described in sections 481(a)(1) or
 
10           1201(a) of the Higher Education Act of 1965 (20 U.S.C.
 
11           1088(a)(1) or 1141(a)), as such sections are in effect
 
12           on the date of the enactment of this chapter; and
 
13      (2)  An area vocational education school defined in
 
14           subparagraph (C) or (D) of section 521(4) of the Carl
 
15           D. Perkins Vocational and Applied Technology Education
 
16           Act (20 U.S.C. 2471(4)), as such sections are in effect
 
17           on the date of the enactment of this chapter.
 
18      "Fiduciary organization" means an organization that serves
 
19 as an intermediary between an individual account holder and the
 
20 financial institution holding the individual's individual
 
21 development account account funds.  Fiduciary organizations may
 
22 include: 
 
23      (1)  One or more not-for-profit organizations described in
 

 
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 1           section 501(c)(3) of the Internal Revenue Code and
 
 2           exempt from taxation under section 501(a) of the Code;
 
 3           or 
 
 4      (2)  State or local government agencies submitting an
 
 5           application jointly with another organization. 
 
 6      Nothing in this definition shall be construed as preventing
 
 7 an organization described in paragraph (2) from cooperating with
 
 8 a financial institution or for-profit community development
 
 9 corporation to carry out the purposes of this chapter.
 
10      The fiduciary organization's responsibilities may include:
 
11      (1)  Marketing participation;
 
12      (2)  Soliciting matching contributions;
 
13      (3)  Counseling program participants; and
 
14      (4)  Conducting required verification and compliance
 
15           activities.
 
16      "Financial institution" means an organization authorized to
 
17 do business pursuant to chapter 412, or under federal laws
 
18 relating to financial institutions, and includes a bank, trust
 
19 company, savings bank, building and loan association, savings and
 
20 loan company or association, and credit union.
 
21      "Household" means adults related by blood, marriage, or
 
22 adoption, or who are unrelated but have maintained a stable
 
23 family relationship together over a period of time, and
 

 
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 1 individuals under eighteen years of age related to the above
 
 2 adults by marriage, blood, or adoption, who are living together.
 
 3 Living together refers to domicile as evidence by the parties'
 
 4 intent to maintain a home for their family and does not include a
 
 5 temporary visit.
 
 6      "Individual development account" means an optional, interest
 
 7 bearing, subsidized, tax-benefitted account used exclusively for
 
 8 the purpose of paying the qualified expenditure of an eligible
 
 9 individual as determined by the fiduciary organization.
 
10      "Post-secondary educational expenses" means:
 
11      (1)  Tuition and fees required for the enrollment or
 
12           attendance of a student at an eligible educational
 
13           institution; and 
 
14      (2)  Fees, books, supplies, and equipment required for
 
15           courses of instruction at an eligible educational
 
16           institution. 
 
17      "Qualified acquisition costs" means the costs of acquiring,
 
18 constructing, or reconstructing a residence and shall include any
 
19 usual or reasonable settlement, financing, or other closing
 
20 costs.
 
21      "Qualified business" means any business that does not
 
22 contravene any law or public policy. 
 
23      "Qualified business capitalization expenses" means qualified
 

 
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 1 expenditures for the capitalization of a qualified business
 
 2 pursuant to a qualified plan.
 
 3      "Qualified expenditures" means an expense as determined by a
 
 4 fiduciary organization, which may include but not be limited to:
 
 5      (1)  Costs associated with first home-ownership;
 
 6      (2)  Post-secondary education;
 
 7      (3)  Vocational training; and
 
 8      (4)  Small or micro-business capitalization.
 
 9      "Qualified plan" means a business plan or a plan to use a
 
10 business asset purchased, that:
 
11      (1)  Is approved by a financial institution, a micro-
 
12           enterprise development organization, or a nonprofit
 
13           loan fund having demonstrated fiduciary integrity; 
 
14      (2)  Includes a description of services or goods to be sold,
 
15           a marketing plan, and projected financial statements;
 
16           and 
 
17      (3)  May require the eligible individual to obtain the
 
18           assistance of an experienced entrepreneurial advisor. 
 
19      "Qualified principal residence" means a principal residence
 
20 (within the meaning of section 1034 of the Internal Revenue Code
 
21 of 1986), the qualified acquisition costs of which do not exceed
 
22 one hundred per cent of the average area purchase price
 
23 applicable to such residence (determined in accordance with
 

 
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 1 paragraphs (2) and (3) of section 143(e) of the Code).
 
 2        -2  Eligible individuals.(a)  The income of the
 
 3 household of the individual development account holder shall not
 
 4 exceed eighty per cent of the area household median income.
 
 5      (b)  The individual shall enter into an individual
 
 6 development account agreement with a fiduciary organization.
 
 7        -3  Fiduciary organizations.(a)  Fiduciary
 
 8 organizations shall serve as an intermediary between individual
 
 9 development account holders and financial institutions holding
 
10 accounts.  The fiduciary organization's responsibilities may
 
11 include:
 
12      (1)  Marketing participation;
 
13      (2)  Soliciting matching contributions;
 
14      (3)  Counseling program participants; and
 
15      (4)  Conducting verification and compliance activities.
 
16      (b)  Locally-based organizations shall enter into a
 
17 competitive process for the right to become fiduciary
 
18 organizations for a portion of the State matching dollars that
 
19 would be authorized initially.  Fiduciary organization proposals
 
20 shall be evaluated and participation rights awarded on the basis
 
21 of such items as:
 
22      (1)  Their ability to market the program to potential
 
23           individual development account holders and potential
 

 
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 1           matching fund contributors; 
 
 2      (2)  Their ability to provide safe and secure investments
 
 3           for individual development accounts;
 
 4      (3)  Their overall administrative capacity, including:
 
 5           (A)  Certifications or verifications required to assure
 
 6                compliance with eligibility requirements;
 
 7           (B)  Authorized uses of the accounts matching
 
 8                contributions by individuals or businesses; and
 
 9           (C)  Penalties for unauthorized distributions; 
 
10      (4)  Their capacity to provide financial counseling and
 
11           other related services to potential participants; and 
 
12      (5)  Their links to other activities designed to increase
 
13           the independence of individuals and families through
 
14           high return investments, including homeownership,
 
15           education and training, and small business development.
 
16      (c)  If the State approves an application to fund an
 
17 individual development account project under this section, the
 
18 State shall, not later than one month after the date of the
 
19 enactment of this Act, authorize the applicant to conduct the
 
20 project with state funds for five project years in accordance
 
21 with the approved application and this section; provided that an
 
22 applicant may apply for funding during future fiscal years for
 
23 five project years if the State lacks the resources to fund an
 

 
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 1 individual development account project pursuant to this
 
 2 subsection.
 
 3      (d)  For each individual development account program
 
 4 approved under this section, the State shall make a grant to the
 
 5 qualified entity or collaboration of entities authorized to
 
 6 conduct the project on the first day of the project year in an
 
 7 amount not to exceed $100,000 per year for five years.
 
 8      (e)  From among the individuals eligible for assistance
 
 9 under the Hawaii individual development account program, each
 
10 selected fiduciary organization shall select the individuals whom
 
11 the fiduciary organization deems to be best suited to receive
 
12 such assistance. 
 
13        -4  Penalties.(a)  The fiduciary organization shall
 
14 establish a grievance committee and a procedure to hear, review,
 
15 and decide in writing any grievance made by an individual
 
16 development account holder who disputes a decision of the
 
17 operating organization that a withdrawal is subject to penalty.
 
18      (b)  Each fiduciary organization shall establish regulations
 
19 as are necessary, including prohibiting eligibility for further
 
20 assistance under an individual development account project
 
21 conducted under this chapter, to ensure compliance with this
 
22 chapter if an individual participating in the individual
 
23 development account project moves from the community in which the
 

 
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 1 project is conducted or is otherwise unable to continue
 
 2 participating in the project. 
 
 3        -5  Death.  In the event of an account holder's death,
 
 4 the account may be transferred to the ownership of a contingent
 
 5 beneficiary.  An account holder shall name contingent
 
 6 beneficiaries at the time the account is established and may
 
 7 change beneficiaries at any time.  If the named beneficiary is
 
 8 deceased or otherwise cannot accept the transfer, the moneys
 
 9 shall be transferred to the individual development account match
 
10 fund of the fiduciary organization.
 
11        -6  Financial institutions.(a)  Financial institutions
 
12 shall be permitted to establish individual development accounts
 
13 pursuant to this chapter.  The financial institution shall
 
14 certify to the fiduciary organization, on forms prescribed by
 
15 same and accompanied by any documentation required by it, that
 
16 such accounts have been established pursuant to all the
 
17 provisions of this chapter and that deposits have been made on
 
18 behalf of the account holder.
 
19      (b)  A financial institution establishing an individual
 
20 development account shall: 
 
21      (1)  Keep the account in the name of the account holder; 
 
22      (2)  Permit deposits to be made in the account by the
 
23           following, subject to the indicated conditions: 
 

 
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 1           (A)  The account holder; or
 
 2           (B)  A contribution made on behalf of the account
 
 3                holder.  Such deposits may include moneys to match
 
 4                the account holder's deposits.
 
 5        -7  Assets; disregarded.  The department of human
 
 6 services and the housing and community development corporation of
 
 7 Hawaii shall collaborate with individual development account
 
 8 fiduciary organizations to ensure that the accounts as provided
 
 9 for in this chapter, including any earned interest, shall be
 
10 disregarded in the determination of benefits or eligibility for
 
11 services account holders may receive from said agencies as
 
12 allowed by federal and state laws and regulations.
 
13      The department of human services shall establish rules to be
 
14 aligned with individual development accounts after the approval
 
15 of this Act.
 
16        -8  Matches.(a)  The State shall match an amount of up
 
17 to $100,000 per calendar year for individual development
 
18 accounts.
 
19      (b)  Not more than a 2:1 match of state funds to account
 
20 holder deposits shall be deposited into any individual
 
21 development account in a given year.  
 
22        -9  Tax exemption.  All moneys contributed into an
 
23 individual development account, including state and private
 

 
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 1 matches, individual savings, and interest earned, shall be exempt
 
 2 from taxation.
 
 3        -10  Tax credit.(a)  Individuals, organizations, or
 
 4 businesses contributing matching funds for individual development
 
 5 accounts shall receive a tax credit equal to fifty per cent of
 
 6 the amount contributed.
 
 7      (b)  Individuals, organizations, and businesses seeking the
 
 8 tax credit can contribute a matching share to designated
 
 9 individuals or contribute to a fiduciary organization and permit
 
10 it to allocate the funds to all of its participants on a
 
11 proportionate basis.
 
12      (c)  The administrator of the fiduciary organization, with
 
13 the cooperation of the participating organizations, shall
 
14 maintain records of the names of contributors and the total
 
15 amount each contributor contributes to an individual development
 
16 account match fund for the calendar year.
 
17      (d)  The state shall provide no more than $1,000,000 in tax
 
18 credits for private individuals, businesses, and organizations
 
19 contributing funds to individual development account programs.
 
20        -11  Administration; evaluation; information; reporting.
 
21 (a)  The fiduciary organization running an individual development
 
22 account program shall have sole authority over the administration
 
23 of the project.  The state may prescribe only such regulations
 

 
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 1 with respect to demonstration projects under this chapter as are
 
 2 necessary to ensure compliance pursuant to this chapter.
 
 3      (b)  Each individual development account program shall
 
 4 annually report the number of accounts, the amount of savings and
 
 5 matches for each account, the uses of the account, and the number
 
 6 of businesses, homes, and educations purchased, as well as other
 
 7 information as may be required for responsible operation of the
 
 8 program. 
 
 9      (c)  The fiduciary organization shall submit to the
 
10 legislature its findings and recommendations no later than twenty
 
11 days prior to the convening of each legislative session.
 
12      (d)  Selected fiduciary organizations may use no more than
 
13 ten per cent of state funds as appropriated under this Act to
 
14 cover administrative costs in any given year."
 
15      SECTION 26.  The department of taxation shall submit
 
16 proposed legislation establishing a tax credit for individual
 
17 development accounts to the legislature no later than twenty days
 
18 prior to the convening of the regular session of 2000.
 
19                              PART X
 
20      SECTION 27.  Section 29-24, Hawaii Revised Statutes, is
 
21 amended by amending subsection (a) to read as follows:
 
22      "(a)  There is established in the state treasury an
 
23 interagency federal revenue maximization revolving fund into
 

 
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 1 which shall be deposited all funds and proceeds collected from
 
 2 the federal government and third-party payors for [reimbursable]
 
 3 costs not previously claimed by the State, with the exception of
 
 4 proceeds collected for services provided by the Hawaii health
 
 5 systems corporation, for reimbursement by federally-funded state
 
 6 programs.  For purposes of this chapter, federally-funded state
 
 7 programs include but shall not be limited to those
 
 8 federally-funded programs within the departments of human
 
 9 services, education, and health.  Expenditures and transfers from
 
10 the fund shall be made by the comptroller in proportional
 
11 allocations established by the comptroller and the director of
 
12 finance.  Transfers shall be made to the department claiming the
 
13 reimbursement for expenses incurred related to federal fund
 
14 reimbursement claims and to the general fund of the State.
 
15 Moneys in the fund may be expended for consultant services
 
16 rendered under subsection (b)."
 
17      SECTION 28.  Act 11, Special Session Laws of Hawaii 1995, is
 
18 amended by amending section 15 to read as follows:
 
19      "SECTION 15.  This Act shall take effect on July 1, 1995;
 
20 provided that:
 
21      (1)  Section 10 shall take effect on June 29, 1995; and
 
22      (2)  Sections 3, 4, and 8 shall take effect on July 1,
 
23           1996[; and
 

 
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 1      (3)  Section 2 shall be repealed on June 30, 1999]."
 
 2      SECTION 29.  There is appropriated out of the revenues of
 
 3 the interagency federal revenue maximization revolving fund the
 
 4 sum of $100,000 or so much thereof as may be necessary for fiscal
 
 5 year 1999-2000 and the sum of $100,000 or so much thereof as may
 
 6 be necessary for fiscal year 2000-2001 to the department of
 
 7 education for expenses, including the creation and hiring of
 
 8 temporary staff, related to the recovery of federal fund
 
 9 reimbursements under section 29-24, Hawaii Revised Statutes.
 
10      The sums appropriated shall be expended by the department of
 
11 education.
 
12      SECTION 30.  There is appropriated out of the revenues of
 
13 the interagency federal revenue maximization revolving fund the
 
14 sum of $150,000 or so much thereof as may be necessary for fiscal
 
15 year 1999-2000 and the sum of $150,000 or so much thereof as may
 
16 be necessary for fiscal year 2000-2001 to the department of
 
17 health for expenses, including the creation and hiring of
 
18 temporary staff, related to the recovery of federal fund
 
19 reimbursements under section 29-24, Hawaii Revised Statutes.
 
20      The sums appropriated shall be expended by the department of
 
21 health.
 
22                              PART XI
 
23      SECTION 31.  If any provision of this Act or the application
 

 
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 1 thereof to any person or circumstance is held invalid, the
 
 2 invalidity shall not affect the provisions or applications of the
 
 3 Act which can be given effect without the invalid provision or
 
 4 application, and to this end, the provisions of this Act are
 
 5 severable.
 
 6      SECTION 32.  Statutory material to be repealed is bracketed.
 
 7 New statutory material is underscored.
 
 8      SECTION 33.  This Act shall take effect upon its approval;
 
 9 provided that:
 
10      (1)  Part I, Part III, and Part V, and sections 29 and 30 of
 
11           this Act shall take effect on July 1, 1999; and
 
12      (2)  Section 28 shall take effect on June 29, 1999.