Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 706
                                     H.D. 1

Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Water and Land Use, to which was referred
H.B. No. 706 entitled: 


begs leave to report as follows:

     The purpose of this bill is to change homestead lease
amounts to $1 and eliminate cash freehold agreements.  

     Your Committee received testimony in support of this bill
from the Office of Hawaiian Affairs and a private citizen, and in
opposition to this bill from the Department of Land and Natural

     Your Committee finds that setting fee purchase amounts for
homestead leases to $1 would be in opposition to the Board of
Land and Natural Resources' mission to uphold the Public Land
Trust.  In addition, your Committee further finds that the most
significant problem for homestead lessees is the financing of
improvements.  Financial institutions are unwilling to lend to
lessees on homestead land because the applicants do not own the
land and the succession provision prevents the land from being
used as security for the loan. 

     Your Committee revised the bill by:  

     1.   Removing the provisions for setting leasehold
          conversion amounts to $1 and elimination of cash
          freehold agreements; 

     2.   Adding a subsection allowing the board of land and
          natural resources to suspend the succession provision
          of the lease for the duration of the loan, in the case
          of the addition of a mortgage; 

                                 STAND. COM. REP. NO. 93
                                 Page 2

     3.   Adding a section stating the purpose of the bill; and 

     4    Making technical, non-substantive changes for the
          purposes of style and clarity.  

     As affirmed by the record of votes of the members of your
Committee on Water and Land Use that is attached to this report,
your Committee is in accord with the intent and purpose of H.B.
No. 706, as amended herein, and recommends that it pass Second
Reading in the form attached hereto as H.B. No. 706, H.D. 1, and
be referred to the Committee on Judiciary and Hawaiian Affairs.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Water and Land

                                   Romy M. Cachola, Chair