Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 706
                                        H.D. 2
                                        S.D. 1

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Water, Land, and Hawaiian Affairs, to
which was referred H.B. No. 706, H.D. 2, entitled: 


begs leave to report as follows:

     The purpose of this measure is to assist homestead lessees
to obtain mortgages to improve their leaseholds by allowing for
the suspension of the succession provision in homestead leases
for the duration of a mortgage on an existing lease.

     The Department of Land and Natural Resources testified in
support of the measure.  The Office of Hawaiian Affairs opposed
the measure.

     Your Committee finds that existing homestead lessees are
unable to secure financing to improve their leasehold property
because of the descendant provision contained in section
171-99(e), Hawaii Revised Statutes.  This has resulted in
homestead lessees having to live in substandard conditions,
unable to secure loans to renovate or replace their dwellings.

     Your Committee believes that the measure, as received by
your Committee, would accomplish the objective of providing
homesteaders with the financial leverage to improve their real
property.  However, your Committee believes the more appropriate
solution to this problem is to allow homesteaders to purchase
their homestead for a nominal fee.

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                                   STAND. COM. REP. NO. 973
                                   Page 2

     In light of this belief, your Committee has amended the
measure by deleting its substance and inserting therefor,
provisions that:

     (1)  Allow a qualified lessee to purchase homestead land for
          $1 instead of at fair market value;

     (2)  Eliminate cash freehold agreements with respect to
          homestead leases; and

     (3)  Amend sections 171-100 and 532-2, Hawaii Revised
          Statutes, to correct internal statutory references.

     Your Committee finds that lessees are required to reside on
the land, pay taxes as if the land was held in fee simple, and
meet the lease conditions regarding clearing and cultivation.
Because the leasehold cannot be used as collateral, lessees have
had difficulty financing home construction and repairs.  The
amended measure enables the lessees to purchase their lease, thus
removing a barrier to improving their property and lifestyle.

     As affirmed by the record of votes of the members of your
Committee on Water, Land, and Hawaiian Affairs that is attached
to this report, your Committee is in accord with the intent and
purpose of H.B. No. 706, H.D. 2, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as H.B. No. 706, H.D. 2, S.D. 1, and be referred to the
Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Water, Land, and
                                   Hawaiian Affairs,

                                   COLLEEN HANABUSA, Chair

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