REPORT TITLE:
Relating to Government


DESCRIPTION:
Changes the cost of copying government records from 50 cents to
an unspecified amount.  Expands powers of the Barbers Point NAS
Redevelopment Commission.  Expands responsibilities of Stadium
Authority to include Kapolei Recreational Sports Complex.  Allows
the Attorney General to charge state agencies attorney fees and
costs incurred in the collection of delinquent debts owed the
State.  Establishes the civil recoveries special fund. Exempts
from GET amounts received from foreign diplomats and consular
officials.  Exempts from TAT accommodations furnished to foreign
diplomats and consular officials.  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.  Exempts the
counties from the public notice requirements of 103D and 103F
until December 31, 2000.  Authorizes the department of budget and
finance to invest state funds in Federal Agricultural Mortgage
Corporation notes and bonds.  Exempts from the general excise tax
and use tax amounts from the construction of an air cargo
operations facility.  Creates a structure for individual
development accounts.  (SB646 HD3)

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


                   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.  Chapter 28, Hawaii Revised Statutes, is amended
 
 3 by adding to part I two new sections to be appropriately
 
 4 designated and to read as follows:
 
 5      "28-  Collections fees.  (a)  Notwithstanding any other law
 
 6 to the contrary, the attorney general may set, by agreement with
 
 7 any state agency, including all branches of government,
 
 8 departments, boards, and commissions, fees, charges, or other
 
 9 payments for the pursuit and collection of delinquent accounts;
 
10 provided that all moneys collected less fees, charges, and other
 
11 payments deducted by the attorney general shall be deposited to
 
12 the credit of the respective funds as agreed to in such
 
13 agreement.
 
14      (b)  The attorney general and a state agency may enter into
 
15 agreements regarding the assignment of delinquent accounts to the
 
16 attorney general.  Notwithstanding any other law to the contrary,
 
17 any recoveries from such assignments shall be realizations of the
 
18 civil recoveries special fund.
 

 
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 1      28-    Civil recoveries special fund.  (a)  There is
 
 2 established in the state treasury the civil recoveries special
 
 3 fund, into which shall be deposited:
 
 4      (1)  Fees received pursuant to section 28-   for the
 
 5           collection of delinquent accounts by the attorney
 
 6           general;
 
 7      (2)  Appropriations made by the legislature;
 
 8      (3)  Interest earned on moneys in the fund; and
 
 9      (4)  Any other moneys or property received or recovered by
 
10           the department of the attorney general relating to
 
11           delinquent accounts.
 
12      (b)  The civil recoveries special fund shall be administered
 
13 by the department of the attorney general.  Moneys in the civil
 
14 recoveries special fund shall be used for the following purposes:
 
15      (1)  Fees, charges, or other payments for pursuing and
 
16           collecting delinquent accounts;
 
17      (2)  Personnel costs, equipment acquisition, and operating
 
18           and administrative costs necessary for pursuing and
 
19           collecting delinquent accounts; and
 
20      (3)  Any other purpose deemed necessary by the department
 
21           for the purpose of pursuing and collecting delinquent
 
22           accounts."
 

 
 
 
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 1      SECTION 2.  Chapter 40, Hawaii Revised Statutes, is amended
 
 2 by adding a new section to be appropriately designated and to
 
 3 read as follows:
 
 4      "40-    Delinquent accounts; collection costs.  Fees,
 
 5 charges, or other payments incurred for the pursuit and
 
 6 collection of delinquent accounts from any fund shall be a
 
 7 permitted expenditure of that fund."
 
 8      SECTION 3.  Section 36-27, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "36-27  Transfers from special funds for central service
 
11 expenses.  Except as provided in this section, and
 
12 notwithstanding any other law to the contrary, from time to time
 
13 the director of finance, for the purpose of defraying the
 
14 prorated estimate of central service expenses of government in
 
15 relation to all special funds, except the:
 
16      (1)  Special summer school and intersession fund under
 
17           section 302A-1310;
 
18      (2)  School cafeteria special funds of the department of
 
19           education;
 
20      (3)  Special funds of the University of Hawaii;
 
21      (4)  State educational facilities improvement special fund;
 
22      (5)  Convention center capital special fund under section
 
23           206X-10.5 and the convention center operations special
 
24           fund under section 206X-10.6;
 

 
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 1      (6)  Special funds established by section 206E-6;
 
 2      (7)  Housing loan program revenue bond special fund;
 
 3      (8)  Housing project bond special fund;
 
 4      (9)  Aloha Tower fund created by section 206J-17;
 
 5     (10)  Domestic violence prevention special fund under section
 
 6           321-1.3;
 
 7     (11)  Spouse and child abuse special account under section
 
 8           346-7.5;
 
 9     (12)  Spouse and child abuse special account under section
 
10           601-3.6;
 
11     (13)  Funds of the employees' retirement system created by
 
12           section 88-109;
 
13     (14)  Unemployment compensation fund established under
 
14           section 383-121;
 
15     (15)  Hawaii hurricane relief fund established under chapter
 
16           431P;
 
17     (16)  Hawaii health systems corporation special funds;
 
18     (17)  Boiler and elevator safety revolving fund established
 
19           under section 397-5.5;
 
20     (18)  Tourism special fund established under section [[]201B-
 
21           11[]]; [and]
 
22     (19)  Department of commerce and consumer affairs' special
 
23           funds; and
 

 
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 1     (20)  Civil recoveries special fund established under section
 
 2           28-   ; 
 
 3 shall deduct five percent of all receipts of all other special
 
 4 funds; which deduction shall be transferred to the general fund
 
 5 of the State and become general realizations of the State.  All
 
 6 officers of the State and other persons having power to allocate
 
 7 or disburse any special funds shall cooperate with the director
 
 8 in effecting these transfers.  To determine the proper revenue
 
 9 base upon which the central service assessment is to be
 
10 calculated, the director shall adopt rules pursuant to chapter 91
 
11 for the purpose of suspending or limiting the application of the
 
12 central service assessment of any fund.  No later than twenty
 
13 days prior to the convening of each regular session of the
 
14 legislature, the director shall report all central service
 
15 assessments made during the preceding fiscal year."
 
16      SECTION 4.  Section 36-30, Hawaii Revised Statutes, is
 
17 amended by amending subsection (a) to read as follows:
 
18      "(a)  Each special fund, except the:
 
19      (1)  Transportation use special fund established by section
 
20           261D-1;
 
21      (2)  Special summer school and intersession fund under
 
22           section 302A-1310;
 
23      (3)  School cafeteria special funds of the department of
 
24           education;
 

 
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 1      (4)  Special funds of the University of Hawaii;
 
 2      (5)  State educational facilities improvement special fund;
 
 3      (6)  Special funds established by section 206E-6;
 
 4      (7)  Aloha Tower fund created by section 206J-17;
 
 5      (8)  Domestic violence prevention special fund under section
 
 6           321-1.3;
 
 7      (9)  Spouse and child abuse special account under section
 
 8           346-7.5;
 
 9     (10)  Spouse and child abuse special account under section
 
10           601-3.6;
 
11     (11)  Funds of the employees' retirement system created by
 
12           section 88-109;
 
13     (12)  Unemployment compensation fund established under
 
14           section 383-121;
 
15     (13)  Hawaii hurricane relief fund established under chapter
 
16           431P;
 
17     (14)  Convention center capital special fund established
 
18           under section 206X-10.5 and the convention center
 
19           operations special fund established under section 206X-
 
20           10.6;
 
21     (15)  Hawaii health systems corporation special funds; [and]
 
22     (16)  Tourism special fund established under section
 
23           [[]201B-11[]]; and
 

 
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 1     (17)  Civil recoveries special fund established under section
 
 2           28-  ; 
 
 3 shall be responsible for its pro rata share of the administrative
 
 4 expenses incurred by the department responsible for the
 
 5 operations supported by the special fund concerned."
 
 6      SECTION 5.  Act 216, Session Laws of Hawaii 1997, is amended
 
 7 by amending section 13 to read as follows:
 
 8      "SECTION 13.  This Act shall take effect on July 1, 1997,
 
 9 and shall be repealed on June 30, 2000; provided that [any]:
 
10      (1)  Any statutory or session law material in this Act in
 
11           existence on June 30, 1997, shall be reenacted on
 
12           July 1, 2000, in the same form in which it existed on
 
13           June 30, 1997[.]; and
 
14      (2)  Sections 36-27 and 36-30, Hawaii Revised Statutes,
 
15           shall be reenacted in the form in which they read as of
 
16           June 30, 1997, as further amended by sections 3 and 4
 
17           of Act  , Session Laws of Hawaii 1999."
 
18      SECTION 6.  There is appropriated out of the general
 
19 revenues of the State of Hawaii the sum of $         or so much
 
20 thereof as may be necessary for fiscal year 1999-2000 to be
 
21 deposited into the civil recoveries special fund for the purposes
 
22 of the fund.
 

 
 
 
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 1      SECTION 7.  There is appropriated out of the civil
 
 2 recoveries special fund the sum of $         or so much thereof
 
 3 as may be necessary for fiscal year 1999-2000 for the purposes of
 
 4 the fund.
 
 5      SECTION 8.  The sums appropriated shall be expended by the
 
 6 department of the attorney general for the purposes of this Act.  
 
 7      SECTION 9.  All moneys not expended or encumbered from the
 
 8 civil recoveries special fund by June 30, 2001, shall be
 
 9 deposited in the general fund.
 
10      SECTION 10.  In printing this Act, the revisor of statutes
 
11 shall insert the appropriate number of this Act in section 5. 
 
12                              PART II
 
13      SECTION 11.  Section 92-21, Hawaii Revised Statutes, is
 
14 amended to read as follows:
 
15      "92-21  Copies of records; other costs and fees.  Except as
 
16 otherwise provided by law, a copy of any government record,
 
17 including any map, plan, diagram, photograph, photostat, or
 
18 geographic information system digital data file, which is open to
 
19 the inspection of the public shall be furnished to any person
 
20 applying for the same by the public officer having charge or
 
21 control thereof upon the payment of the reasonable cost of
 
22 reproducing such copy.  The cost of reproducing any government
 
23 record, except geographic information system digital data, shall
 

 
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 1 not be less than [50] _____ cents per page, sheet, or fraction
 
 2 thereof.  The cost of reproducing geographic information system
 
 3 digital data shall be in accordance with rules adopted by the
 
 4 agency having charge or control of that data.  Such reproduction
 
 5 cost shall include, but shall not be limited to, labor cost for
 
 6 search and actual time for reproducing, material cost, including
 
 7 electricity cost, equipment cost, including rental cost, cost for
 
 8 certification, and other related costs.  All fees shall be paid
 
 9 in by the public officer receiving or collecting the same to the
 
10 state director of finance, the county director of finance, or to
 
11 the agency or department by which the officer is employed, as
 
12 government realizations; provided that fees collected by the
 
13 public utilities commission pursuant to this section shall be
 
14 deposited in the public utilities commission special fund
 
15 established under section 269-33." 
 
16      SECTION 12.  Section 231-16, Hawaii Revised Statutes, is
 
17 amended to read as follows:
 
18      "231-16  Copies of returns.  Except as otherwise provided
 
19 by law, copies of any tax return filed with the department of
 
20 taxation shall be furnished to the taxpayer filing the return or
 
21 to the taxpayer's representative who has written authorization to
 
22 be provided such copies upon the payment of [$1 per page] the fee
 
23 specified in section 92-21 and $1 for any certification thereof
 
24 by the department."
 

 
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 1                             PART III
 
 2      SECTION 13.  The purpose of this part is to authorize the
 
 3 Barbers Point naval air station redevelopment commission to
 
 4 arrange for or provide infrastructure services, including
 
 5 utilities, roadway maintenance and repair, security, and other
 
 6 services, that may be required by the owners of properties being
 
 7 conveyed by the United States Navy under the base realignment and
 
 8 closure action and to recoup the costs for these services,
 
 9 including maintenance and administrative costs, from the owners
 
10 of the properties, make changes to the composition of the members
 
11 of the commission to reflect the recent reorganization of the
 
12 city and county of Honolulu administration; and authorize the
 
13 commission to establish advisory committees as it deems
 
14 appropriate.
 
15      SECTION 14.  Section 206G-3, Hawaii Revised Statutes, is
 
16 amended to read as follows:
 
17      "[[]206G-3[]]  Barbers Point Naval Air Station
 
18 redevelopment commission; established.(a)  There is
 
19 established within the department of business, economic
 
20 development, and tourism, for administrative purposes, the
 
21 Barbers Point Naval Air Station redevelopment commission, which
 
22 shall be a body corporate and a public instrumentality of the
 
23 State for the purpose of implementing this chapter.
 

 
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 1      (b)  The purpose of the commission shall be to act as the
 
 2 local redevelopment authority to facilitate the redevelopment of
 
 3 Barbers Point Naval Air Station in accordance with the Barbers
 
 4 Point Naval Air Station community reuse plan.  The commission's
 
 5 duties shall include but not be limited to:
 
 6      (1)  Coordinating with the Navy and other entities during
 
 7           the preparation of an environmental impact statement
 
 8           and conduct of remediation activities for the Barbers
 
 9           Point Naval Air Station community reuse plan;
 
10      (2)  Assisting the landholders designated by the plan in the
 
11           marketing of their properties and the preparation and
 
12           processing of conveyance requests;
 
13      (3)  Assisting the Navy by providing "caretaker services"
 
14           after the closure of Barbers Point Naval Air Station as
 
15           necessary;
 
16      (4)  Working with the Navy and others to ensure that
 
17           infrastructure support is provided to the existing
 
18           developed area, which is referred to as the "downtown
 
19           area" and other federally retained areas;
 
20      (5)  Developing the infrastructure necessary to support the
 
21           implementation of the Barbers Point Naval Air Station
 
22           community reuse plan; and
 

 
 
 
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 1      (6)  Providing, to the extent feasible, maximum opportunity
 
 2           for the reuse of surplus property by private enterprise
 
 3           or state and local government.
 
 4      (c)  The commission shall consist of fifteen voting members
 
 5 as follows:
 
 6      (1)  The state director of business, economic development,
 
 7           and tourism; the chairperson of the board of land and
 
 8           natural resources; the adjutant general; the
 
 9           chairperson of the Hawaiian homes commission; and the
 
10           director of transportation, or their designated
 
11           representatives, shall serve as ex-officio voting
 
12           members;
 
13      (2)  The county [chief planning officer; the director and
 
14           chief engineer of public works; the director of housing
 
15           and community development; and the director of
 
16           transportation services,] director of parks and
 
17           recreation and three additional county department
 
18           directors designated by the mayor or their designated
 
19           representatives, shall serve as [ex-officio] voting
 
20           members;
 
21      (3)  Six voting members shall be appointed for staggered
 
22           terms as follows:
 

 
 
 
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 1           (A)  The governor shall appoint one member from a list
 
 2                of three nominees submitted by the chair of the
 
 3                Makakilo/Kapolei/Honokai Hale neighborhood board;
 
 4           (B)  The governor shall appoint one member from a list
 
 5                of three nominees submitted by the chair of the
 
 6                Ewa neighborhood board;
 
 7           (C)  The governor shall appoint, subject to the advice
 
 8                and consent of the senate, two members from the
 
 9                general public;
 
10           (D)  The mayor of Honolulu shall select one member from
 
11                the general public; and
 
12           (E)  The Honolulu city council shall select one member
 
13                from the general public.
 
14      (d)  The commission shall select a chairperson and such
 
15 other officers as it may deem necessary from among its members.
 
16      (e)  The commander, naval base Pearl Harbor and commanding
 
17 officer, naval air station Barbers Point may serve as non-voting
 
18 ex-officio members of the commission.
 
19      (f)  A majority of all voting members shall constitute a
 
20 quorum to do business, and the concurrence of a majority of all
 
21 voting members shall be necessary to make any action of the
 
22 commission valid.  All members shall continue in office until
 
23 their respective successors, selected in the same manner and
 

 
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 1 representing the same community of interest, have been appointed
 
 2 and qualified.
 
 3      (g)  The commission shall hire an executive director for the
 
 4 commission.  The Hawaii community development authority shall
 
 5 [make available employees of the authority to staff] assist the
 
 6 commission as the commission deems necessary.
 
 7      (h)  Members appointed under subsection (c) shall serve
 
 8 without compensation, but each shall be reimbursed for expenses
 
 9 including travel expenses incurred in the performance of their
 
10 duties.
 
11      (i)  The commission may establish advisory committees as it
 
12 deems necessary."
 
13      SECTION 15.  Section 206G-4, Hawaii Revised Statutes, is
 
14 amended to read as follows:
 
15      "[[]206G-4[]]  Powers; generally.  In its role as the local
 
16 redevelopment authority for the redevelopment of the Kalaeloa
 
17 community development district, and except as otherwise limited
 
18 by this chapter, the commission may:
 
19      (1)  Sue and be sued;
 
20      (2)  Have a seal and alter the same at pleasure;
 
21      (3)  Make and execute contracts and all other instruments
 
22           necessary or convenient for the exercise of its powers
 
23           and functions under this chapter;
 

 
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 1      (4)  Make and alter bylaws for its organization and internal
 
 2           management;
 
 3      (5)  Make rules with respect to its projects, operations,
 
 4           properties, and facilities, in conformance with chapter
 
 5           91;
 
 6      (6)  Through its executive director appoint officers,
 
 7           agents, and employees, prescribe their duties and
 
 8           qualifications, and fix their salaries, without regard
 
 9           to chapters 76 and 77;
 
10      (7)  Acquire, reacquire, or contract to acquire or reacquire
 
11           by grant, lease, or purchase real, personal, or mixed
 
12           property or any interest therein; to own, hold, clear,
 
13           improve, and rehabilitate, and to sell, assign,
 
14           exchange, transfer, convey, lease, or otherwise dispose
 
15           of or encumber the same;
 
16      (8)  Acquire or reacquire by condemnation real, personal, or
 
17           mixed property or any interest therein for public
 
18           facilities, including but not limited to streets,
 
19           sidewalks, parks, schools, utility systems, and other
 
20           public improvements;
 
21      (9)  By itself, or in partnership with qualified persons,
 
22           acquire, reacquire, construct, reconstruct,
 
23           rehabilitate, improve, alter, or repair or provide for
 

 
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 1           the construction, reconstruction, improvement,
 
 2           alteration, or repair of any project; own, hold, sell,
 
 3           assign, transfer, convey, exchange, lease, or otherwise
 
 4           dispose of or encumber any project, and in the case of
 
 5           the sale of any project, accept a purchase money
 
 6           mortgage in connection therewith; and repurchase or
 
 7           otherwise acquire any project which the commission has
 
 8           theretofore sold or otherwise conveyed, transferred, or
 
 9           disposed of;
 
10     (10)  Arrange or contract for the planning, replanning,
 
11           opening, grading, or closing of streets, roads,
 
12           roadways, alleys, or other places, or for the
 
13           furnishing of facilities or for the acquisition of
 
14           property or property rights or for the furnishing of
 
15           property or services in connection with a project;
 
16     (11)  Grant options to purchase any project or to renew any
 
17           lease entered into by it in connection with any of its
 
18           projects, on such terms and conditions as it deems
 
19           advisable;
 
20     (12)  Prepare or cause to be prepared plans, specifications,
 
21           designs, and estimates of costs for the construction,
 
22           reconstruction, rehabilitation, improvement,
 
23           alteration, or repair of any project, and from time to
 

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

 
 
 
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 1    [(15)] (16)  Do any and all things necessary to carry out its
 
 2           purposes and exercise the powers given and granted in
 
 3           this chapter."
 
 4                              PART IV
 
 5      SECTION 16.  Chapter 109, Hawaii Revised Statutes, is
 
 6 amended by adding two new sections to be appropriately designated
 
 7 and to read as follows:
 
 8      "109-     Kapolei recreational sports complex special fund.
 
 9 There is established in the state treasury the Kapolei
 
10 recreational sports complex special fund, into which shall be
 
11 deposited:
 
12      (1)  Funds appropriated by the legislature;
 
13      (2)  Funds received pursuant to a management contract under
 
14           section 109-2(3); and
 
15      (3)  Funds collected by the authority from the operations of
 
16           the Kapolei recreational sports complex.
 
17 All funds received pursuant to this section shall be kept
 
18 completely separate from the stadium special fund.  Moneys may
 
19 not be transferred between the Kapolei recreational sports
 
20 complex special fund and the stadium special fund.  The Kapolei
 
21 recreation and sports complex special fund shall be applied,
 
22 used, and disposed of for the payment of:
 
23      (1)  The expenses of the operation, maintenance, promotion,
 
24           and management of; and
 

 
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 1      (2)  All or a portion of the cost of financing any capital
 
 2           improvement project for;
 
 3 the Kapolei recreational sports complex; provided that all
 
 4 services required for the Kapolei recreational sports complex
 
 5 shall be performed by persons hired on contract or otherwise,
 
 6 without regard for chapters 76 and 77; provided further that the
 
 7 authority shall report annually to the legislature all receipts
 
 8 and expenditures of the Kapolei recreational complex special fund
 
 9 account no later than twenty days prior to the convening of each
 
10 regular session.
 
11      109-     Lost and found money or property at the Kapolei
 
12 recreational sports complex.  (a)  All money or property found at
 
13 the Kapolei recreational sports complex shall be reported or
 
14 delivered by the finder to the complex office, and when delivered
 
15 shall be held by the Kapolei recreational sports complex
 
16 management for forty-five days or until claimed by the person who
 
17 establishes title or right of custody thereto to the satisfaction
 
18 of the management, whichever is shorter.  In the event of
 
19 establishment of title or right of custody, the money or property
 
20 shall be delivered to the claimant by the management or the
 
21 management's agent.  If after forty-five days no claimant
 
22 establishes a right to the money or property, the money or
 
23 property may be claimed by the person who delivered it to the
 

 
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 1 complex lost and found; provided that if the person who delivered
 
 2 it to the complex lost and found fails to claim the money or
 
 3 property within thirty days after being notified by the
 
 4 management, the management shall deposit the money into the
 
 5 Kapolei recreational sports complex special fund or shall dispose
 
 6 of the property by public auction.
 
 7      The management shall give public notice, giving details as
 
 8 to time and place of the auction and giving notice to all persons
 
 9 interested in claiming the property that unless claims are made
 
10 by persons who can provide satisfactory proof of ownership before
 
11 a specified date, the property will be sold at public auction to
 
12 the highest bidder; provided that if the management considers the
 
13 highest bid to be insufficient, the management shall have the
 
14 right to decline the sale to the highest bidder and may reoffer
 
15 the property at a subsequent public auction.  On the day and at
 
16 the place specified in the notice, all property for which no
 
17 satisfactory proof of ownership is made shall be sold by auction
 
18 by or under the direction of the management.
 
19      (b)  If any property which is of a perishable nature or
 
20 which is unreasonably expensive to keep or safeguard remains
 
21 unclaimed at the complex, the management may sell that property
 
22 at public auction, at a time and after notice that is reasonable
 
23 under the circumstances.  If the management determines that any
 

 
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 1 property delivered to the management pursuant to this section has
 
 2 no apparent commercial value, the management at any time
 
 3 thereafter may destroy or otherwise dispose of the property.
 
 4      (c)  The management shall deposit into the Kapolei
 
 5 recreational sports complex special fund all moneys received from
 
 6 the sale, destruction, or disposition of any property.  No action
 
 7 or proceeding shall be brought or maintained against the State or
 
 8 any officer thereof on account of that sale, destruction, or
 
 9 disposition.  The purchaser of property at any sale conducted by
 
10 the management pursuant to this section shall receive good title
 
11 to the property purchased and shall take possession of the
 
12 property free from any and all claims of the owner, prior owners,
 
13 and any person claiming title.
 
14      (d)  For purposes of this section, notice by regular mail to
 
15 the last known address of the person who delivered the money or
 
16 property to the complex lost and found shall be deemed
 
17 sufficient."
 
18      SECTION 17.  Chapter 109, Hawaii Revised Statutes, is
 
19 amended by amending the title to read as follows:
 
20              "STADIUMS AND RECREATIONAL FACILITIES"
 
21      SECTION 18.  Section 109-1, Hawaii Revised Statutes, is
 
22 amended by amending subsection (a) to read as follows:
 

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

 
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 1      (3)  To make and execute contracts and other instruments
 
 2           necessary or convenient to exercise its powers under
 
 3           this chapter and subject to any limitations in this
 
 4           chapter, to exercise all powers necessary, incidental,
 
 5           or convenient to carry out and effectuate the purposes
 
 6           and provisions of this chapter[;], including entering
 
 7           into contracts under chapter 102 or 103D for the
 
 8           management of the Kapolei recreational sports complex,
 
 9           to include the operation, maintenance, and promotion of
 
10           the complex in a manner that is beneficial to both the
 
11           State and the contractor.  These contracts may contain
 
12           revenue sharing incentives based on increased usage of
 
13           the complex;
 
14      (4)  To adopt, amend, and repeal in accordance with chapter
 
15           91 rules it may deem necessary to effectuate this
 
16           chapter and in connection with its projects,
 
17           operations, and facilities;
 
18      (5)  To appoint a manager and a deputy manager who shall
 
19           have such qualifications as the authority deems
 
20           necessary and who shall hold their respective offices
 
21           at the pleasure of the authority.  The manager and
 
22           deputy manager shall be exempt from the requirements of
 
23           chapters 76, 77, and 89.  Effective January 1, 1989,
 

 
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 1           and January 1, 1990, the salary of the manager shall be
 
 2           set by the governor within the range from $69,748 to
 
 3           $74,608 and $72,886 to $77,966 a year, respectively.
 
 4           Effective January 1, 1989, and January 1, 1990, the
 
 5           salary of the deputy manager shall be $62,854 and
 
 6           $65,683 a year, respectively.  The manager shall have
 
 7           full power to administer the affairs of the stadium and
 
 8           related facilities, and to provide for a management
 
 9           contract for the Kapolei recreational sports complex,
 
10           subject to the direction and approval of the authority.
 
11           The manager shall, subject to the approval of the
 
12           authority, have power to appoint, suspend, and
 
13           discharge a secretary who shall be exempt from the
 
14           requirements of chapters 76, 77, and 89, and such other
 
15           employees, subordinates, and assistants as may be
 
16           necessary for the proper conduct of the business of the
 
17           authority.  Except for persons hired on contract or
 
18           otherwise as provided in section 109-3 and except for
 
19           the manager, deputy manager, and secretary, all
 
20           appointments, suspensions, or discharges shall be made
 
21           in conformity with the applicable provisions of
 
22           chapters 76 and 77; and
 

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

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

 
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 1                              PART V
 
 2      SECTION 23.  Section 237-24.3, Hawaii Revised Statutes, is
 
 3 amended to read as follows:
 
 4      "237-24.3  Additional amounts not taxable.  In addition to
 
 5 the amounts not taxable under section 237-24, this chapter shall
 
 6 not apply to:
 
 7      (1)  Amounts received from the loading, transportation, and
 
 8           unloading of agricultural commodities shipped for a
 
 9           producer or produce dealer on one island of this State
 
10           to a person, firm, or organization on another island of
 
11           this State.  The terms "agricultural commodity",
 
12           "producer", and "produce dealer" shall be defined in
 
13           the same manner as they are defined in section 147-1;
 
14           provided that agricultural commodities need not have
 
15           been produced in the State;
 
16      (2)  Amounts received from sales of:
 
17           (A)  Intoxicating liquor as the term "liquor" is
 
18                defined in chapter 244D;
 
19           (B)  Cigarettes and tobacco products as defined in
 
20                chapter 245; and
 
21           (C)  Agricultural, meat, or fish products grown,
 
22                raised, or caught in Hawaii, to any person or
 
23                common carrier in interstate or foreign commerce,
 

 
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 1                or both, whether ocean-going or air, for
 
 2                consumption out-of-state on the shipper's vessels
 
 3                or airplanes;
 
 4      (3)  Amounts received by the manager or board of directors
 
 5           of:
 
 6           (A)  An association of apartment owners of a
 
 7                condominium property regime established in
 
 8                accordance with chapter 514A; or
 
 9           (B)  A nonprofit homeowners or community association
 
10                incorporated in accordance with chapter 415B or
 
11                any predecessor thereto and existing pursuant to
 
12                covenants running with the land,
 
13           in reimbursement of sums paid for common expenses;
 
14      (4)  Amounts received or accrued from:
 
15           (A)  The loading or unloading of cargo from ships,
 
16                barges, vessels, or aircraft, whether or not the
 
17                ships, barges, vessels, or aircraft travel between
 
18                the State and other states or countries or between
 
19                the islands of the State;
 
20           (B)  Tugboat services including pilotage fees performed
 
21                within the State, and the towage of ships, barges,
 
22                or vessels in and out of state harbors, or from
 
23                one pier to another; and
 

 
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 1           (C)  The transportation of pilots or governmental
 
 2                officials to ships, barges, or vessels offshore;
 
 3                rigging gear; checking freight and similar
 
 4                services; standby charges; and use of moorings and
 
 5                running mooring lines;
 
 6      (5)  Amounts received by an employee benefit plan by way of
 
 7           contributions, dividends, interest, and other income;
 
 8           and amounts received by a nonprofit organization or
 
 9           office, as payments for costs and expenses incurred for
 
10           the administration of an employee benefit plan;
 
11           provided that this exemption shall not apply to any
 
12           gross rental income or gross rental proceeds received
 
13           after June 30, 1994, as income from investments in real
 
14           property in this State; and provided further that gross
 
15           rental income or gross rental proceeds from investments
 
16           in real property received by an employee benefit plan
 
17           after June 30, 1994, under written contracts executed
 
18           prior to July 1, 1994, shall not be taxed until the
 
19           contracts are renegotiated, renewed, or extended, or
 
20           until after December 31, 1998, whichever is earlier.
 
21           For the purposes of this paragraph, "employee benefit
 
22           plan" means any plan as defined in section 1002(3) of
 
23           title 29 of the United States Code, as amended;
 

 
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 1      (6)  Amounts received for purchases made with United States
 
 2           Department of Agriculture food coupons under the
 
 3           federal food stamp program, and amounts received for
 
 4           purchases made with United States Department of
 
 5           Agriculture food vouchers under the Special
 
 6           Supplemental Foods Program for Women, Infants and
 
 7           Children;
 
 8      (7)  Amounts received by a hospital, infirmary, medical
 
 9           clinic, health care facility, pharmacy, or a
 
10           practitioner licensed to administer the drug to an
 
11           individual for selling prescription drugs or prosthetic
 
12           devices to an individual; provided that this paragraph
 
13           shall not apply to any amounts received for services
 
14           provided in selling prescription drugs or prosthetic
 
15           devices.  As used in this paragraph:
 
16           (A)  "Prescription drugs" are those drugs defined under
 
17                section [[]328-1[]] and dispensed by filling or
 
18                refilling a written or oral prescription by a
 
19                practitioner licensed under law to administer the
 
20                drug and sold by a licensed pharmacist under
 
21                section 328-16 or practitioners licensed to
 
22                administer drugs; and
 

 
 
 
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 1           (B)  "Prosthetic device" means any artificial device or
 
 2                appliance, instrument, apparatus, or contrivance,
 
 3                including their components, parts, accessories,
 
 4                and replacements thereof, used to replace a
 
 5                missing or surgically removed part of the human
 
 6                body, which is prescribed by a licensed
 
 7                practitioner of medicine, osteopathy, or podiatry
 
 8                and which is sold by the practitioner or which is
 
 9                dispensed and sold by a dealer of prosthetic
 
10                devices; provided that "prosthetic device" shall
 
11                not mean any auditory, ophthalmic, dental, or
 
12                ocular device or appliance, instrument, apparatus,
 
13                or contrivance;
 
14      (8)  Taxes on transient accommodations imposed by chapter
 
15           237D and passed on and collected by operators holding
 
16           certificates of registration under that chapter;
 
17      (9)  Amounts received as dues by an unincorporated merchants
 
18           association from its membership for advertising media,
 
19           promotional, and advertising costs for the promotion of
 
20           the association for the benefit of its members as a
 
21           whole and not for the benefit of an individual member
 
22           or group of members less than the entire membership;
 
23           [and]
 

 
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 1     (10)  Amounts received by a labor organization for real
 
 2           property leased to:
 
 3           (A)  A labor organization; or
 
 4           (B)  A trust fund established by a labor organization
 
 5                for the benefit of its members, families, and
 
 6                dependents for medical or hospital care, pensions
 
 7                on retirement or death of employees,
 
 8                apprenticeship and training, and other membership
 
 9                service programs.
 
10           As used in this paragraph, "labor organization" means a
 
11           labor organization exempt from federal income tax under
 
12           section 501(c)(5) of the Internal Revenue Code, as
 
13           amended[.]; and 
 
14     (11)  Amounts received from foreign diplomats and consular
 
15           officials who are holding cards issued or authorized by
 
16           the United States Department of State granting them an
 
17           exemption from state taxes."
 
18      SECTION 24.  Section 237D-3, Hawaii Revised Statutes, is
 
19 amended to read as follows:
 
20      "237D-3 Exemptions.  This chapter shall not apply to:
 
21      (1)  Health care facilities including all such facilities
 
22           enumerated in section 321-11(10)[.];
 

 
 
 
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 1      (2)  School dormitories of a public or private educational
 
 2           institution providing education in grades kindergarten
 
 3           through twelve, or of any institution of higher
 
 4           education[.];
 
 5      (3)  Lodging provided by nonprofit corporations or
 
 6           associations for religious, charitable, or educational
 
 7           purposes; provided that this exemption shall apply only
 
 8           to the activities of the religious, charitable, or
 
 9           educational corporation or association as such and not
 
10           to any rental or gross rental the primary purpose of
 
11           which is to produce income even if the income is used
 
12           for or in furtherance of the exempt activities of such
 
13           religious, charitable, or educational corporation or
 
14           association[.];
 
15      (4)  Living accommodations for persons in the military on
 
16           permanent duty assignment to Hawaii, including the
 
17           furnishing of transient accommodations to those
 
18           military personnel who receive temporary lodging
 
19           allowances while seeking accommodations in Hawaii or
 
20           while awaiting reassignment to new duty stations
 
21           outside the State[.];
 
22      (5)  Low-income renters receiving rental subsistence from
 
23           the state or federal governments and whose rental
 
24           periods are for durations shorter than sixty days[.];
 

 
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 1      (6)  Operators of transient accommodations who furnish
 
 2           accommodations to full-time students enrolled in an
 
 3           institution offering post-secondary education.  The
 
 4           director of taxation shall determine what shall be
 
 5           deemed acceptable proof of full-time enrollment.  This
 
 6           exemption shall also apply to operators who furnish
 
 7           transient accommodations to students during summer
 
 8           employment[.];
 
 9      (7)  Accommodations furnished without charge such as, but
 
10           not limited to, complimentary accommodations,
 
11           accommodations furnished to contract personnel such as
 
12           physicians, golf or tennis professionals, swimming and
 
13           dancing instructors, and other personnel to whom no
 
14           salary is paid or to employees who receive room and
 
15           board as part of their salary or compensation[.]; and
 
16      (8)  Accommodations furnished to foreign diplomats and
 
17           consular officials who are holding cards issued or
 
18           authorized by the United States Department of State
 
19           granting them an exemption from state taxes."
 
20                              PART VI
 
21      SECTION 25.  Findings and purpose.  (a)  The legislature
 
22 finds that the federal government has empowered federal agencies
 
23 that award grants or that enter into intergovernmental agreements
 

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

 
 
 
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 1      (e)  The governor shall designate a chairperson from among
 
 2 the members of the board.
 
 3      SECTION 27.  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.
 

 
 
 
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 1      SECTION 28.  Annual report.  The board shall prepare an
 
 2 annual report on progress towards key community outcomes adopted
 
 3 by the legislature, which shall be transmitted to the governor,
 
 4 the legislature, and the public.
 
 5                             PART VII
 
 6      SECTION 29.  Section 171-19, Hawaii Revised Statutes, is
 
 7 amended by amending subsection (a) to read as follows:
 
 8      "(a)  There is created in the department a special fund to
 
 9 be designated as the "special land and development fund".
 
10 Subject to the Hawaiian Homes Commission Act of 1920, as amended,
 
11 and section 5(f) of the Admission Act of 1959, and except as
 
12 provided under section 171-138 for the industrial park special
 
13 fund, all proceeds of sale of public lands, including interest on
 
14 deferred payments; all rents from leases, licenses, and permits
 
15 derived from public lands; all fees, fines, and other
 
16 administrative charges collected under this chapter; a portion of
 
17 the highway fuel tax collected under chapter 243; fees charged by
 
18 the department for the commercial use of public trails and trail
 
19 accesses under the jurisdiction of the department; and private
 
20 contributions for the management, maintenance, and development of
 
21 trails and accesses shall be set apart in the fund and shall be
 
22 used only as authorized by the legislature for the following
 
23 purposes:
 

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

 
 
 
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 1      (6)  For the management, maintenance, and development of
 
 2           trails and trail accesses under the jurisdiction of the
 
 3           department not to exceed $500,000 in any fiscal year;
 
 4           [and]
 
 5      (7)  For the payment to private land developers who have
 
 6           contracted with the board for development of public
 
 7           lands under section 171-60[.]; and
 
 8      (8)  For other purposes of this chapter."
 
 9                             PART VIII
 
10      SECTION 30.  The purpose of this part is to provide
 
11 additional security for lenders on land or interests covered by a
 
12 lease, patent, license, agreement, or other instrument and
 
13 provides flexibility to the department of land and natural
 
14 resources to assign or transfer leases based on current industry
 
15 standards.
 
16      SECTION 31.  Chapter 166, Hawaii Revised Statutes, is
 
17 amended by adding a new section to be appropriately designated
 
18 and to read as follows:
 
19      "166-    Rights of holders of security interests.  (a) For
 
20 the purpose of this section:
 
21      "Institutional lender" means a federal, state, or private
 
22 lending institution licensed to do business in the State of
 
23 Hawaii in making loans to qualified applicants under section 166-
 
24 7 on the basis of a lease for security, in whole or in part,
 

 
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 1 together with any other entity who acquires all or substantially
 
 2 all of an institutional lender's loan portfolio.
 
 3      "Making a loan" means lending of new money after the
 
 4 effective date of this Act or the renewal or extension of
 
 5 indebtedness owing by a qualified applicant to an institutional
 
 6 lender.
 
 7      "Security interest" means any interest created or perfected
 
 8 by a mortgage, assignment by way of mortgage, or by a financing
 
 9 statement and encumbering a lease, land demised by the lease, or
 
10 personal property located at, affixed or to be affixed to, or
 
11 growing or to be grown upon the demised land.
 
12      (b)  Board action shall be required when an institutional
 
13 lender acquires the lessee's interest through a foreclosure sale,
 
14 judicial or nonjudicial, or by way of assignment in lieu of
 
15 foreclosure, or when the institutional lender sells or causes the
 
16 sale of the lessee's interest in a lease by way of a foreclosure
 
17 sale, judicial or nonjudicial.  The institutional lender shall
 
18 convey a copy of the sale or assignment as recorded in the bureau
 
19 of conveyances.
 
20      (c)  Notwithstanding any provisions of this chapter or any
 
21 law to the contrary, if any lease is subject to a security
 
22 interest held by an institutional lender, and provided the
 
23 institutional lender has given to the board a copy of such
 
24 encumbrance as recorded in the bureau of conveyances:
 

 
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 1      (1)  If the lease is cancelled for violation of any non-
 
 2           monetary lease term or condition, or if the lease is
 
 3           deemed terminated or rejected under bankruptcy laws,
 
 4           than in either event, the institutional lender shall be
 
 5           entitled to issuance of a new lease in its name for a
 
 6           term equal to the term of the lease remaining
 
 7           immediately prior to the cancellation, termination, or
 
 8           rejection, with all terms and conditions being the same
 
 9           as in the cancelled, terminated, or rejected lease,
 
10           except only for such liens, claims, and encumbrances,
 
11           if any, which were superior to the institutional lender
 
12           prior to the cancellation, termination, or rejection.
 
13           If a lease is rejected or deemed rejected under
 
14           bankruptcy law, the lease shall be deemed to be
 
15           cancelled and terminated for all purposes under state
 
16           law;
 
17      (2)  If the lessee's interest under a lease is transferred
 
18           to an institutional lender, including by reason of the
 
19           provisions of paragraph (1) by reason of acquisition of
 
20           lessee's interest pursuant to a foreclosure sale,
 
21           judicial or nonjudicial, and by reason of an assignment
 
22           in lieu of foreclosure, then:
 

 
 
 
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 1           (A)  The institutional lender shall be liable for the
 
 2                obligations of the lessee under the lease for the
 
 3                period of time during which the institutional
 
 4                lender is the holder of lessee's interest but
 
 5                shall not be liable for any obligations of the
 
 6                lessee arising after the institutional lender has
 
 7                assigned the lease;
 
 8           (B)  The provisions of subsections 166-6 (a)(1) and (2)
 
 9                shall not apply to the lease or the demised land
 
10                during such time the institutional lender holds
 
11                the lease; provided, however, that for non-
 
12                monetary lease violations, the institutional
 
13                lender shall first remedy the lease terms which
 
14                caused the cancellation, termination, or rejection
 
15                to the satisfaction of the board; provided further
 
16                that the new lease issued to the institutional
 
17                lender shall have a sunset date (one hundred
 
18                twenty days from the effective date of issuance),
 
19                when the institutional lender shall either sell or
 
20                assign the lease, after which date the provisions
 
21                of subsection 166-6 (a) shall become applicable to
 
22                the new lease;
 

 
 
 
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 1      (3)  As long as there is a delinquent loan balance secured
 
 2           by a security interest, the lease may not be cancelled
 
 3           or terminated, except for cancellation by reason of
 
 4           default of the lessee, and no increase over and above
 
 5           the fair market rent, based upon the actual use of the
 
 6           land demised and subject to the use restrictions
 
 7           imposed by the lease and applicable laws, may be
 
 8           imposed or become payable, and no lands may be
 
 9           withdrawn from the lease, except by eminent domain
 
10           proceedings beyond the control of the board, except
 
11           with prior written consent by the institutional lender
 
12           and such consent shall not be unreasonably withheld;
 
13           and
 
14      (4)  If the lease contains any provision requiring the
 
15           payment of a premium to the lessor on assignment of the
 
16           lease, any premium shall be assessed only after all
 
17           amounts owing by any debt secured by a security
 
18           interest held by a institutional lender shall have been
 
19           paid in full.
 
20      (d)  Ownership of both the lease and the security interest
 
21 by an institutional lender shall not effect or cause a merger
 
22 thereof, and both interests shall remain distinct and in full
 
23 force and effect unless the institutional lender elects in
 
24 writing to merge said estates with the consent of the board.
 

 
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 1      (e)  The board may include in any consent form or document
 
 2 such provisions not inconsistent with the intent of this section
 
 3 as may be required to make a lease mortgageable or more
 
 4 acceptable for mortgageability by an institutional lender.
 
 5      (f)  The purchaser, including junior lien holder, of the
 
 6 institutional lender's security interest, and the same is
 
 7 assigned to such purchaser, then the rights herein shall be
 
 8 exercisable by such transferee as successor in interest to the
 
 9 institutional lender, except that such purchase shall conform
 
10 with subsection (c)(4) and, further, the transfer of such rights
 
11 shall be reserved unto and exercisable only to an institutional
 
12 lender.  Other purchasers may not be precluded in acquiring the
 
13 institutional lender's security interest but cannot have
 
14 exercisable rights as successor in interest to the original
 
15 institutional lender."
 
16      SECTION 32.  Section 171, Hawaii Revised Statutes, is
 
17 amended to read as follows:
 
18      "171-21  Rights of holder of security interest.  Whenever
 
19 any notice of breach or default is given to any party under
 
20 section 171-20, or under the terms of any lease, patent, license,
 
21 agreement, or other instrument issued or to be issued under this
 
22 chapter, a copy of the notice shall be delivered by the board of
 
23 land and natural resources to all holders of record of any
 

 
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 1 security interest in the land or interest covered by the lease,
 
 2 patent, license, agreement, or other instrument whose security
 
 3 interest has been recorded with the board.  Should the board seek
 
 4 to forfeit the privilege, interest, or estate created by the
 
 5 lease, license, agreement, patent, or other instrument, each
 
 6 holder may, at its option, cure or remedy the breach or default,
 
 7 if the same can be cured or remedied, by the payment of money or,
 
 8 if such is not the case, by performing or undertake in writing to
 
 9 perform all the terms, covenants, restrictions, or conditions of
 
10 any lease, patent, license, agreement, or other instrument
 
11 capable of performance by the holder, as determined by the board,
 
12 within the time period provided in section 171-20 or within such
 
13 additional period as the board may allow for good cause and add
 
14 the cost thereof to the mortgage debt and the lien of the
 
15 mortgage. Any lease, patent, license, agreement, or other
 
16 instrument transferred pursuant to this section shall not be
 
17 subject to the requirements in section 171-14. Upon failure of
 
18 the holder to exercise its option, the board may:
 
19      (1)  Pay to the holder from any moneys at its disposal,
 
20           including the special land and development fund, which
 
21           is made available for that purpose, the amount of the
 
22           mortgage debt, together with interest and penalties,
 
23           and secure an assignment of the debt and mortgage from
 

 
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 1           the holder, or if ownership of the interest or estate
 
 2           shall then have vested in the holder by way of
 
 3           foreclosure or action in lieu thereof the board shall
 
 4           be entitled to a conveyance of the interest or estate
 
 5           upon payment to the holder of the amount of the
 
 6           mortgage debt, including interest and penalties, and
 
 7           all reasonable expenses incurred by the holder in
 
 8           connection with the foreclosure and preservation of its
 
 9           security interest, less appropriate credits, including
 
10           income received from the privilege, interest, or estate
 
11           subsequent to the foreclosure; or
 
12      (2)  If the property cannot be reasonably reassigned without
 
13           loss to the State, then terminate the outstanding
 
14           privilege, interest, or estate without prejudice to any
 
15           other right or remedy for arrears of rent or for any
 
16           preceding or other breach or default, and use its best
 
17           efforts to redispose of the affected land to a
 
18           qualified and responsible person free and clear of the
 
19           mortgage and the debt thereby secured; provided that a
 
20           reasonable delay by the board in instituting or
 
21           prosecuting any right or remedy it may have under this
 
22           section shall not operate as a waiver of the right or
 

 
 
 
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 1           to deprive it of the remedy when it may still hope
 
 2           otherwise to resolve the problems created by the breach
 
 3           or default involved.
 
 4 Section 171-19 to the contrary notwithstanding, the proceeds of
 
 5 any redisposition under paragraph (2) shall be applied:  first,
 
 6 to reimburse the board for costs and expenses in connection with
 
 7 the redisposition; second, to discharge in full any unpaid
 
 8 purchase price or other indebtedness owing the State in
 
 9 connection with the privilege, interest, or estate terminated;
 
10 third, to the mortgagee to the extent of the value received by
 
11 the State upon redisposition which exceeds the fair market lease
 
12 value of the land as previously determined by the State's
 
13 appraiser; and fourth, to the owner of the privilege, interest,
 
14 or estate.  Nothing contained in this section shall be construed
 
15 in a manner as to infringe upon or prejudice in any way the
 
16 rights of a holder of record having a security interest which
 
17 shall have vested prior to the effective date hereof, and to the
 
18 extent that this section and section 171-98 shall or may conflict
 
19 and adversely affect such interests, the same shall be of no
 
20 force and effect. 
 
21      SECTION 33.  Section 171-36, Hawaii Revised Statutes, is
 
22 amended by amending subsection (a) to read as follows:
 

 
 
 
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 1      "(a)  Except as otherwise provided, the following
 
 2 restrictions shall apply to all leases:
 
 3      (1)  Options for renewal of terms are prohibited;
 
 4      (2)  No lease shall be for a longer term than sixty-five
 
 5           years, except in the case of a residential leasehold
 
 6           which may provide for an initial term of fifty-five
 
 7           years with the privilege of extension to meet the
 
 8           requirements of the Federal Housing Administration,
 
 9           Federal National Mortgage Association, Federal Land
 
10           Bank of Berkeley, Federal Intermediate Credit Bank of
 
11           Berkeley, Berkeley Bank for Cooperatives, or Veterans
 
12           Administration requirements; provided that the
 
13           aggregate of the initial term and extension shall in no
 
14           event exceed seventy-five years;
 
15      (3)  No lease shall be made for any land under a lease which
 
16           has more than two years to run;
 
17      (4)  No lease shall be made to any person who is in arrears
 
18           in the payment of taxes, rents, or other obligations
 
19           owing the State or any county;
 
20      (5)  No lease shall be transferable or assignable, except by
 
21           devise, bequest, or intestate succession; provided that
 
22           with the approval of the board of land and natural
 

 
 
 
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 1           resources, the assignment and transfer of a lease or
 
 2           unit thereof may be made in accordance with current
 
 3           industry standards, as determined by the board [if:
 
 4           (A)  It contains the personal residence of the lessee;
 
 5           (B)  In the case of commercial, industrial, hotel,
 
 6                resort, apartment, and other business uses, the
 
 7                lessee was required to put in substantial building
 
 8                improvements;
 
 9           (C)  The lessee becomes mentally or physically
 
10                disabled;
 
11           (D)  Extreme economic hardship is demonstrated to the
 
12                satisfaction of the board;
 
13           (E)  It is to the corporate successor of the lessee; or
 
14           (F)  In the case of agricultural uses, the assignee
 
15                meets the qualifications of a bona fide individual
 
16                farmer or a nonindividual farm concern pursuant to
 
17                section 171-14.5, in addition to or
 
18                notwithstanding the other conditions of this
 
19                paragraph];
 
20           provided further that prior to the approval of any
 
21           assignment of lease, the board shall have the right to
 
22           review and approve the consideration to be paid by the
 
23           assignee and may condition its consent to the
 

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

 
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 1      (7)  The lease shall be for a specific use or uses and shall
 
 2           not include waste lands, unless it is impractical to
 
 3           provide otherwise;
 
 4      (8)  Mineral and metallic rights and surface and ground
 
 5           water shall be reserved to the State; and
 
 6      (9)  No lease of public lands, including submerged lands,
 
 7           nor any extension of any such lease, shall be issued by
 
 8           the State to any person to construct, use, or maintain
 
 9           a sunbathing or swimming pier or to use the lands for
 
10           such purposes, unless such lease, or any extension
 
11           thereof, contains provisions permitting the general
 
12           public to use the pier facilities on the public lands
 
13           and requiring that a sign or signs be placed on the
 
14           pier, clearly visible to the public, which indicates
 
15           the public's right to the use of the pier.  The board,
 
16           at the earliest practicable date, and where legally
 
17           possible, shall cause all existing leases to be amended
 
18           to conform to this paragraph.  The term "lease", for
 
19           the purposes of this paragraph, includes month-to-month
 
20           rental agreements and similar tenancies.
 
21      (b)  The board, from time to time, upon the issuance or
 
22 during the term of any intensive agricultural, aquaculture,
 
23 commercial, mariculture, special livestock, pasture, or
 
24 industrial lease, may:
 

 
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 1      (1)  Modify or eliminate any of the restrictions specified
 
 2           in subsection (a);
 
 3      (2)  Extend or modify the fixed rental period of the lease;
 
 4           or
 
 5      (3)  Extend the term of the lease
 
 6 to the extent necessary to qualify the lease for mortgage lending
 
 7 or guaranty purposes with the Federal Housing Administration,
 
 8 Federal National Mortgage Association, Department of Veterans
 
 9 Affairs, Small Business Administration, United States Department
 
10 of Agriculture, Federal Land Bank of Berkeley, Federal
 
11 Intermediate Credit Bank of Berkeley, Berkeley Bank for
 
12 Cooperatives, or any other federal mortgage lending agency
 
13 qualified to do business in the State, and their respective
 
14 successors and assignees, or to qualify the lessee for any state
 
15 or private lending institution loan, private loan guaranteed by
 
16 the State, or any loan in which the State and any private lender
 
17 participates; provided that the private lender shall be qualified
 
18 to do business in the State; provided further that the approval
 
19 of any extension shall be subject to the following:
 
20      (1)  The demised premises have been used substantially for
 
21           the purpose for which they were originally leased;
 
22      (2)  The aggregate of the initial term and any extension
 
23           granted shall not be for more than fifty-five years;
 

 
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 1      (3)  In the event of a reopening, the rental for any ensuing
 
 2           period shall be the fair market rental at the time of
 
 3           reopening; and
 
 4      (4)  The rules of the board, setting forth any additional
 
 5           terms and conditions, which shall ensure and promote
 
 6           the purposes of the demised lands.
 
 7      (c)  The board at any time during the term of any intensive
 
 8 agricultural, aquaculture, or mariculture lease and when
 
 9 justified by sound economic practices or other circumstances, may
 
10 permit an alternative agricultural, aquaculture, or mariculture
 
11 use or uses for any portion or portions of the land demised.  As
 
12 a condition to permitting alternative uses, the board may require
 
13 such other modifications, including rental adjustments or changes
 
14 in the lease as may be necessary to effect or accommodate the
 
15 alternative use or uses.  An alternative use or uses may be
 
16 allowed by the board upon:
 
17      (1)  The application of the lessee;
 
18      (2)  Consent of each holder of record having a security
 
19           interest in the leasehold; and
 
20      (3)  A finding by the board that the alternative use or uses
 
21           are in the public interest.
 

 
 
 
 
 
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 1                              PART IX
 
 2      SECTION 34.  Section 1-28.5, Hawaii Revised Statutes, is
 
 3 amended:
 
 4      1.  By amending subsection (a) to read as follows:
 
 5     "(a)  [Whenever] Notwithstanding any other law to the
 
 6 contrary, whenever a government agency is required to give public
 
 7 notice or to publish notice, the notice shall be given [by
 
 8 advertisement] only as follows:
 
 9     (1)  For statewide publication:
 
10          (A) In a daily or weekly publication of statewide
 
11              circulation; or
 
12          (B) By publication in separate daily or weekly
 
13              publications whose combined circulation is
 
14              statewide[.]; and
 
15     (2)  For county-wide publication, by publication in a daily
 
16          or weekly publication in the affected county.
 
17 Additional supplemental notice may also be given through Hawaii
 
18 FYI, the State's interactive computer system."
 
19      (2)  By amending subsection (d) to read as follows:
 
20      "(d)  This section shall not apply to notices required by
 
21 chapters 103D and 103F.
 
22      Until December 31, 2000, this section also shall not apply
 
23 to public notices required to be given by a county.  Until that
 

 
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 1 date, a county shall give its public notices in the manner
 
 2 required by the applicable provisions of charter, ordinance,
 
 3 rule, federal law or regulation, or state law other than this
 
 4 section.  After December 31, 2000, each county shall be subject
 
 5 to this section, including the publication procedure established
 
 6 pursuant to subsection (b)."
 
 7                              PART X
 
 8      SECTION 35.  Section 36-21, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "36-21  Short-term investment of state moneys.  The
 
11 director of finance may invest any moneys of the State which in
 
12 the director's judgment are in excess of the amounts necessary
 
13 for meeting the immediate requirements of the State and where in
 
14 the director's judgment the action will not impede or hamper the
 
15 necessary financial operations of the State in:
 
16      (1)  Any bonds or interest-bearing notes or obligations:
 
17           (A)  Of the State (including state director of
 
18                finance's warrant notes issued pursuant to chapter
 
19                40);
 
20           (B)  Of the United States;
 
21           (C)  For which the faith and credit of the United
 
22                States are pledged for the payment of principal
 
23                and interest;
 

 
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 1      (2)  Federal land bank bonds;
 
 2      (3)  [Joint stock farm loan bonds;] Federal Agricultural
 
 3           Mortgage Corporation notes and bonds;
 
 4      (4)  Federal Home Loan Bank notes and bonds;
 
 5      (5)  Federal Home Loan Mortgage Corporation bonds;
 
 6      (6)  Federal National Mortgage Association notes and bonds;
 
 7      (7)  Securities of a mutual fund whose portfolio is limited
 
 8           to bonds or securities issued or guaranteed by the
 
 9           United States or an agency thereof;
 
10      (8)  Repurchase agreements fully collateralized by any such
 
11           bonds or securities;
 
12      (9)  Federally insured savings accounts;
 
13     (10)  Time certificates of deposit;
 
14     (11)  Certificates of deposit open account;
 
15     (12)  Repurchase agreements with federally insured banks,
 
16           savings and loan associations, and financial services
 
17           loan companies;
 
18     (13)  Student loan resource securities including:
 
19           (A)  Student loan auction rate securities;
 
20           (B)  Student loan asset-backed notes;
 
21           (C)  Student loan program revenue notes and bonds; and
 
22           (D)  Securities issued pursuant to Rule 144A of the
 
23                Securities Act of 1933, including any private
 
24                placement issues;
 

 
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 1           issued with either bond insurance or
 
 2           overcollateralization guaranteed by the United States
 
 3           Department of Education; provided all insurers maintain
 
 4           a triple-A rating by Standard & Poor's, Moody's, Duff &
 
 5           Phelps, Fitch, or any other major national securities
 
 6           rating agency;
 
 7     (14)  Commercial paper with an A1/P1 or equivalent rating by
 
 8           any national securities rating service; and
 
 9     (15)  Bankers' acceptances with an A1/P1 or equivalent rating
 
10           by any national securities rating service;
 
11 provided that the investments are due to mature not more than
 
12 five years from the date of investment.  Income derived from
 
13 those investments shall be a realization of the general fund;
 
14 provided that income earned from moneys invested by the general
 
15 funds, special funds, bond funds, and trust and agency funds on
 
16 an investment pool basis shall be paid into and credited to the
 
17 respective funds based on the contribution of moneys into the
 
18 investment pool by each fund.  As used in this section,
 
19 "investment pool" means the aggregate of state treasury moneys
 
20 that are maintained in the custody of the director of finance for
 
21 investment and reinvestment without regard to fund designation.
 
22      Except with respect to an early withdrawal penalty on an
 
23 investment permitted by this section, the amount of such penalty
 

 
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 1 being mutually agreed at the time of acquisition of such
 
 2 investment, no investment permitted by this section shall require
 
 3 or may in the future require payments by the State, whether
 
 4 unilateral, reciprocal, or otherwise, including margin payments,
 
 5 or shall bear interest at a variable rate which causes or may
 
 6 cause the market price of such investment to fluctuate; provided
 
 7 that such limitation shall not apply to money market mutual funds
 
 8 which:
 
 9      (1)  [invest] Invest solely in:
 
10      (A)  [direct] Direct and general obligations of the United
 
11           States of America; or
 
12      (B)  [obligations] Obligations of any agency or
 
13           instrumentality of the United States of America the
 
14           payment of the principal and interest on which are
 
15           unconditionally guaranteed by the full faith and credit
 
16           of the United States of America[,]
 
17      (2)  [are] Are rated at the time of purchase "AAAm-G" or its
 
18           equivalent by Standard & Poor's Ratings Group[,]; and
 
19      (3)  [are] Are open-end management investment companies
 
20           regulated under the Investment Company Act of 1940, as
 
21           amended, which calculate their current price per share
 
22           pursuant to Rule 2a-7 (17 Code of Federal Regulations
 
23           section 270.2a-7) promulgated under such act.
 

 
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 1      Furthermore, the State shall not acquire any investment or
 
 2 enter into any agreement in connection with the acquisition of
 
 3 any investment or related to any existing investment held by the
 
 4 State, which would require or may in the future require any
 
 5 payment by the State, whether unilateral, reciprocal, or
 
 6 otherwise, such as swap agreements, hedge agreements, or other
 
 7 similar agreements.  For purposes of this section, a swap or
 
 8 hedge payment is any payment made by the State in consideration
 
 9 or in exchange for a reciprocal payment by any person, such as a
 
10 variable rate payment in exchange for a fixed rate payment, a
 
11 fixed rate payment in exchange for a variable rate payment, a
 
12 payment when a cap or a floor amount is exceeded, or other
 
13 similar payment."
 
14                              PART XI
 
15      SECTION 36.  Chapter 237, Hawaii Revised Statutes, is
 
16 amended by adding a new section to be appropriately designated to
 
17 read as follows:
 
18      "237-    Air cargo facility.  (a)  This chapter shall not
 
19 apply to amounts from the construction of an air cargo operations
 
20 facility at any airport within the State of Hawaii.
 
21      (b) As used in this section:
 

 
 
 
 
 
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 1      "Air cargo operations facility" means a facility for air
 
 2 cargo operations that is not less than thirty thousand square
 
 3 feet in area, and which may include ancillary space which is
 
 4 integral to the facility, such as related administrative and
 
 5 employee space."
 
 6      "Construction of an air cargo operations facility" includes
 
 7 all design, engineering, labor, and materials costs associated
 
 8 with the construction of the facility, the principal purposes of
 
 9 which is the provision of facilities for air cargo operations."
 
10      SECTION 37. Section 238-1, Hawaii Revised Statutes, is
 
11 amended by amending the definition of "use" to read as follows:
 
12      ""Use" (and any nounal, verbal, adjective, adverbial, and
 
13 other equivalent form of the term) herein used interchangeably
 
14 means any use, whether the use is of such nature as to cause the
 
15 property to be appreciably consumed or not, or the keeping of the
 
16 property for such use or for sale, and shall include the exercise
 
17 of any right or power over tangible personal property incident to
 
18 the ownership of that property, but the term "use" shall not
 
19 include: 
 
20      (1)  Temporary use of property, not of a perishable or
 
21           quickly consumable nature, where the property is
 
22           imported into the State for temporary use (not sale)
 
23           therein by the person importing the same and is not
 

 
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 1           intended to be, and is not, kept permanently in the
 
 2           State (as for example without limiting the generality
 
 3           of the foregoing language:
 
 4      (A)  [in] In the case of a contractor importing permanent
 
 5           equipment for the performance of a construction
 
 6           contract, with intent to remove, and who does remove,
 
 7           the equipment out of the State upon completing the
 
 8           contract;
 
 9      (B)  [in] In the case of moving picture films imported for
 
10           use in theaters in the State with intent or under
 
11           contract to transport the same out of the State after
 
12           completion of such use; and
 
13      (C)  [in] In the case of a transient visitor importing an
 
14           automobile or other belongings into the State to be
 
15           used by the transient visitor while therein but which
 
16           are to be used and are removed upon the transient
 
17           visitor's departure from the State);
 
18      (2)  Use by the taxpayer of property acquired by the
 
19           taxpayer solely by way of gift;
 
20      (3)  Use which is limited to the receipt of articles and the
 
21           return thereof, to the person from whom acquired,
 
22           immediately or within a reasonable time either after
 
23           temporary trial or without trial;
 

 
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 1      (4)  Use of goods imported into the State by the owner of a
 
 2           vessel or vessels engaged in interstate or foreign
 
 3           commerce and held for and used only as ship stores for
 
 4           the vessels;
 
 5      (5)  The use or keeping for use of household goods, personal
 
 6           effects, and private automobiles imported into the
 
 7           State for nonbusiness use by a person who:
 
 8      (A)  [acquired] Acquired them in another state, territory,
 
 9           district, or country[,];
 
10      (B)  [at] At the time of the acquisition was a bona fide
 
11           resident of another state, territory, district, or
 
12           country[,];
 
13      (C)  [acquired] Acquired the property for use outside the
 
14           State[,]; and
 
15      (D)  [made] Made actual and substantial use thereof outside
 
16           this State;
 
17           provided that as to an article acquired less than three
 
18           months prior to the time of its importation into the
 
19           State it shall be presumed, until and unless clearly
 
20           proved to the contrary, that it was acquired for use in
 
21           the State and that its use outside the State was not
 
22           actual and substantial;
 

 
 
 
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 1      (6)  The leasing or renting of any aircraft or the keeping
 
 2           of any aircraft solely for leasing or renting to
 
 3           lessees or renters using the aircraft for commercial
 
 4           transportation of passengers and goods;
 
 5      (7)  The use of oceangoing vehicles for passenger or
 
 6           passenger and goods transportation from one point to
 
 7           another within the State as a public utility as defined
 
 8           in chapter 269; [and]
 
 9      (8)  The use of material, parts, or tools imported or
 
10           purchased by a person licensed under chapter 237 which
 
11           are used for aircraft service and maintenance or the
 
12           construction of an aircraft service and maintenance
 
13           facility as those terms are defined in section 237-
 
14           24.9[.];
 
15      (9)  The construction of an air cargo operations facility as
 
16           those terms are defined in section 237-  ; and
 
17     (10)  The use of property imported by foreign diplomats and
 
18           consular officials who are holding cards issued or
 
19           authorized by the United States Department of State
 
20           granting them an exemption from state taxes."
 
21                             PART XII
 
22     SECTION 38.  The legislature finds that an individual
 
23 development account (IDA) is a special savings account program
 
24 designed to:
 

 
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 1     (1)   Provide individuals and families, especially those with
 
 2           limited financial means, an opportunity to accumulate
 
 3           assets;
 
 4     (2)   Facilitate and mobilize savings;
 
 5     (3)   Promote post-secondary education, vocational training,
 
 6           homeownership, and micro-enterprise development;
 
 7     (4)   Stabilize families; and
 
 8     (5)   Build communities.
 
 9     Members of Hawaii's private sector, nonprofit organizations,
 
10 and government recognize that IDAs are among the most promising
 
11 anti-poverty ideas to emerge in the last few decades.  In an
 
12 effort to expand awareness of these accounts, these entities have
 
13 joined together to form the Hawaii IDA collaborative.  Partners
 
14 in this new initiative include Parents and Children Together,
 
15 Waimanalo Community Development Corporation, Maui Economic
 
16 Opportunity, Mutual Housing Association of Hawaii, the Consuelo
 
17 Zobel Alger Foundation, Bank of Hawaii, Hawaii Community Loan
 
18 Fund, the Legal Aid Society of Hawaii, American Friends Service
 
19 Committee, the department of human services, WorkHawaii, and the
 
20 department of community services of the city and county of
 
21 Honolulu.
 
22      The legislature further finds that Hawaii residents are
 
23 already beginning to benefit from IDAs, such as:
 

 
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 1      (1)  Through a partnership between the Waimanalo Community
 
 2           Development Corporation and the housing and community
 
 3           development corporation of Hawaii, up to thirty-four
 
 4           public housing residents will be able to purchase a
 
 5           newly reconstructed unit using moneys the residents
 
 6           have saved in these accounts;
 
 7      (2)  The Mutual Housing Association of Hawaii and the
 
 8           Pacific Housing Assistance Corporation have similar
 
 9           programs on Kauai and Oahu, respectively; and
 
10      (3)  Focusing on savings for business start-up, Parents and
 
11           Children Together, in partnership with Bank of Hawaii
 
12           and the city and county of Honolulu, runs a nationally
 
13           recognized IDA program on Oahu.
 
14      The purpose of this part is to promote the growth of IDAs
 
15 by:
 
16      (1)  Establishing IDAs and giving tax incentives to
 
17           encourage private sector support of an IDA match; and
 
18      (2)  Making an appropriation to be used as matching funds.
 
19      SECTION 39.  The Hawaii Revised Statutes is amended by
 
20 adding a new chapter to be appropriately designated and to read
 
21 as follows:
 

 
 
 
 
 
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 1                             "CHAPTER
 
 2                  INDIVIDUAL DEVELOPMENT ACCOUNTS
 
 3         -1  Definitions.  As used in this chapter:
 
 4      "Eligible educational institution" means:
 
 5      (1)  An institution described in sections 481(a)(1) or
 
 6           1201(a) of the Higher Education Act of 1965 (20 U.S.C.
 
 7           1088(a)(1) or 1141(a)), as such sections are in effect
 
 8           on the date of the enactment of this chapter; and
 
 9      (2)  An area vocational education school defined in
 
10           subparagraph (C) or (D) of section 521(4) of the Carl
 
11           D. Perkins Vocational and Applied Technology Education
 
12           Act (20 U.S.C. 2471(4)), as such sections are in effect
 
13           on the date of the enactment of this chapter.
 
14      "Fiduciary organization" means an organization that serves
 
15 as an intermediary between an individual account holder and the
 
16 financial institution holding the individual's individual
 
17 development account account funds.  Fiduciary organizations may
 
18 include: 
 
19      (1)  One or more not-for-profit organizations described in
 
20           section 501(c)(3) of the Internal Revenue Code and
 
21           exempt from taxation under section 501(a) of such Code;
 
22           or 
 

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

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

 
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                                     S.B. NO.           S.D. 2
                                                        H.D. 3
                                                        

 
 1      "Qualified expenditures" means an expense as determined by a
 
 2 fiduciary organization, which may include but not be limited to:
 
 3      (1)  Costs associated with first home-ownership;
 
 4      (2)  Post-secondary education;
 
 5      (3)  Vocational training; and
 
 6      (4)  Small or micro-business capitalization.
 
 7      "Qualified plan" means a business plan or a plan to use a
 
 8 business asset purchased, that:
 
 9      (1)  Is approved by a financial institution, a micro-
 
10           enterprise development organization, or a nonprofit
 
11           loan fund having demonstrated fiduciary integrity; 
 
12      (2)  Includes a description of services or goods to be sold,
 
13           a marketing plan, and projected financial statements;
 
14           and 
 
15      (3)  May require the eligible individual to obtain the
 
16           assistance of an experienced entrepreneurial advisor. 
 
17      "Qualified principal residence" means a principal residence
 
18 (within the meaning of section 1034 of the Internal Revenue Code
 
19 of 1986), the qualified acquisition costs of which do not exceed
 
20 one hundred per cent of the average area purchase price
 
21 applicable to such residence (determined in accordance with
 
22 paragraphs (2) and (3) of section 143(e) of such Code).
 

 
 
 
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                                     S.B. NO.           S.D. 2
                                                        H.D. 3
                                                        

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

 
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                                     S.B. NO.           S.D. 2
                                                        H.D. 3
                                                        

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

 
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                                     S.B. NO.           S.D. 2
                                                        H.D. 3
                                                        

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

 
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                                     S.B. NO.           S.D. 2
                                                        H.D. 3
                                                        

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

 
 
 
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                                     S.B. NO.           S.D. 2
                                                        H.D. 3
                                                        

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

 
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                                     S.B. NO.           S.D. 2
                                                        H.D. 3
                                                        

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

 
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                                     S.B. NO.           S.D. 2
                                                        H.D. 3
                                                        

 
 1      (b)  Each individual development account program shall
 
 2 annually report the number of accounts, the amount of savings and
 
 3 matches for each account, the uses of the account, and the number
 
 4 of businesses, homes, and educations purchased, as well as other
 
 5 information as may be required for responsible operation of the
 
 6 program. 
 
 7      (c)  The fiduciary organization shall submit to the
 
 8 legislature its findings and recommendations no later than twenty
 
 9 days prior to the convening of each legislative session.
 
10      (d)  Selected fiduciary organizations may use no more than
 
11 ten per cent of state funds as appropriated under this Act to
 
12 cover administrative costs in any given year."
 
13      SECTION 40.  There is appropriated out of the general
 
14 revenues of the State of Hawaii the sum of $100,000 or so much
 
15 thereof as may be necessary for fiscal year 1999-2000 and the sum
 
16 of $100,000 or so much thereof as may be necessary for fiscal
 
17 year 2000-2001 to implement and manage the individual development
 
18 account program.
 
19      The sums appropriated shall be expended by the department of
 
20 budget and finance for the purposes of this Act.
 
21                             PART XIII
 
22     SECTION 41.  If any provision of this Act or the application
 
23 thereof to any person or circumstance is held invalid, the
 

 
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                                     S.B. NO.           S.D. 2
                                                        H.D. 3
                                                        

 
 1 invalidity shall not affect the provisions or applications of the
 
 2 Act which can be given effect without the invalid provision or
 
 3 application, and to this end, the provisions of this Act are
 
 4 severable.
 
 5     SECTION 42.  Statutory material to be repealed is bracketed.
 
 6 New statutory material is underscored.
 
 7     SECTION 43.  This Act shall take effect upon its approval;
 
 8 provided that:
 
 9     (1)   Part I, Part II, Part IV, Part VII, and section 40 of
 
10           this Act shall take effect on July 1, 1999;
 
11     (2)   Part V and Part XI of this Act shall be applicable to
 
12           taxable years beginning after December 31, 1999; and
 
13     (3)   Part I of this Act shall be repealed on June 30, 2001.