HOUSE OF REPRESENTATIVES

H.B. NO.

2585

THIRTIETH LEGISLATURE, 2020

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to the office of hawaiian affairs.

 

 

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

 


SECTION 1. The legislature finds that is in the best interests of the office of Hawaiian affairs, its beneficiaries, the State, and all citizens of Hawaii to facilitate further discussions between the governor, legislative leadership, and the office of Hawaiian affairs regarding the office of Hawaiian affairs' share of public land trust revenues.

The legislature recognizes that there is long-standing contention regarding how the office's share should be calculated, based on differing interpretations of the relevant constitutional and statutory language. The state constitutional provisions that grant a pro rata share include article XII, section 4, which establishes the public land trust; and article XII, section 6, which gives the board of trustees of the office of Hawaiian affairs power, as provided by law:

[T]o manage and administer the proceeds from the sale or other disposition of the lands, natural resources, minerals and income derived from whatever sources for native Hawaiians and Hawaiians, including all income and proceeds from that pro rata portion of the trust referred to in section 4 of this article for native Hawaiians.

Additionally, section 10-13.5, Hawaii Revised Statutes, grants to the office of Hawaiian affairs "[t]wenty per cent of all funds derived from the public land trust . . . . "

Since the enactment of section 10-13.5, a series of lawsuits, legislation, and negotiations have attempted to formulate how these shares should be calculated. In Trustees of the Office of Hawaiian Affairs v. Yamasaki, ī69 Haw. 154, 737 P.2d 446 (1987), the Hawaii supreme court found that the calculation was a political question to be determined by the legislature. Act 304, Session Laws of Hawaii 1990 (Act 304), was enacted after lengthy negotiations between the governor's office and the office of Hawaiian affairs as an attempt to clarify which types of funds constituted "revenue" for the purposes of the calculation.

In 1993, the office of Hawaiian affairs challenged the formulation outlined in Act 304, arguing that it excluded several key types of revenues. Specifically, the office sought a share of:

(1) Waikiki Duty Free receipts (in connection with the lease of ceded lands at the Honolulu international airport);

(2) Hilo hospital patient services receipts;

(3) Receipts from the Hawaii housing authority and the housing finance and development corporation for projects situated on ceded lands; and

(4) Interest earned on withheld revenues.

The trial court granted the office of Hawaiian affairs' motion for partial summary judgment, finding that:

(1) The State is required to pay the office of Hawaiian affairs its pro rata portion of rents or fees collected from the Duty Free concessions at the State's airports;

(2) The State's activities of providing affordable housing are proprietary in nature and subject to the office of Hawaiian affairs' pro rata share;

(3) Patient service fees, cafeteria sales, and rental income at Hilo hospital are "clearly a proprietary rather than sovereign exercise of power" which does not shield the Hilo hospital's income from being characterized as revenue, for the purposes of the office of Hawaiian affairs' pro rata share; and

(4) The office of Hawaiian affairs was entitled to a pro rata share of interest earned on ceded land revenues derived from the public trust.

In 2001, the Hawaii supreme court held that Act 304 was invalid, because it conflicted with federal law, which provided that airport revenues could not be used to satisfy the State's obligations in connection with ceded lands.

Because Act 304 was effectively repealed by the court's decision, the legislature enacted Act 178, Session Laws of Hawaii 2006 (Act 178), as an interim measure while they further considered the issue. The intent of Act 178 was to ensure that "an adequate amount of income and proceeds [was] made available to [the office of Hawaiian affairs]." Rather than requiring a calculation of the pro rata share, the temporary measure established a flat rate of $15,100,000 annually, beginning with fiscal year 2005-2006. Act 178 noted that this interim amount should be issued until "further action is taken by the legislature for this purpose." The amount of the payment was based, in part, on certain ancillary receipts from the state airports.

Act 178 also required the department of land and natural resources to provide an annual accounting to the legislature of "revenue-generating public trust lands and the amounts derived from those lands." Based on these accountings, the office of Hawaiian affairs argues that its share for 2015-2016 was approximately $34,963,244, not $15,100,000 as provided by Act 178. The State has conveyed approximately $200,000,000 in land to the office of Hawaiian affairs, in payment of past-due amounts owed to the office. However, based on the possible discrepancies between the moneys allocated by Act 178 and the pro rata share indicated by the department's accountings, the legislature finds that it is necessary to determine an increased amount.

Accordingly, the purpose of this Act is to serve as an interim measure to:

(1) Provide that all grants and contracts awarded by the office of Hawaiian affairs shall be subject to approval by the board of trustees;

(2) Establish a public land trust revenues negotiating committee to determine the increase to the annual amount of the income and proceeds from the public land trust that the office of Hawaiian affairs shall receive annually under the state constitution and other state law; and

(3) Require and appropriate funds for the department of budget and finance to conduct a financial review of the amounts of revenue generated from the public land trust.

SECTION 2. Section 10-5, Hawaii Revised Statutes, is amended to read as follows:

"10-5 Board of trustees; powers and duties. The board shall have the power in accordance with law to:

(1) Manage, invest, and administer the proceeds from the sale or other disposition of lands, natural resources, minerals, and income derived from whatever sources for native Hawaiians and Hawaiians, including all income and proceeds from that pro rata portion of the trust referred to in section 10-3;

(2) Exercise control over real and personal property set aside to the office by the State of Hawaii, the United States of America, or any private sources, and transferred to the office for native Hawaiians and Hawaiians;

(3) Collect, receive, deposit, withdraw, and invest money and property on behalf of the office;

(4) Formulate policy relating to the affairs of native Hawaiians and Hawaiians, provided that such policy shall not diminish or limit the benefits of native Hawaiians under article XII, section 4, of the state Constitution;

(5) Otherwise act as a trustee as provided by law;

(6) Delegate to the administrator, its officers and employees such powers and duties as may be proper for the performance of the powers and duties vested in the board;

(7) Provide grants to individuals, and public or private organizations to better the conditions of native Hawaiians and Hawaiians consistent with the standards set forth in section 10-17; provided that each grant made or contract entered into pursuant to this section shall be subject to a separate vote of approval by the board;

(8) Make available technical and financial assistance and advisory services to any agency or private organization for native Hawaiian and Hawaiian programs, and for other functions pertinent to the purposes of the office of Hawaiian affairs. Financial assistance may be rendered through contractual arrangements as may be agreed upon by the board and any such agency or organization; and

(9) Adopt and use a common seal by which all official acts shall be authenticated."

SECTION 3. Section 10-17, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

"(e) [Grants] A grant made by the office under this chapter may be made without regard to chapters 103D and 103F[.], and shall be subject to a separate vote of approval by the board."

SECTION 4. (a) There is established a public land trust revenues negotiating committee within the office of planning for administrative purposes. The purpose of the public land trust revenues negotiating committee shall be to determine the increase to the annual amount of the income and proceeds from the public land trust that the office of Hawaiian affairs shall receive annually under the state constitution and other state law.

(b) The public land trust revenues negotiating committee shall consist of:

(1) The governor or the governor's designee, who shall serve as chairperson of the committee;

(2) The president of the senate or the president's designee;

(3) The speaker of the house of representatives or the speaker's designee;

(4) The chairperson of the office of Hawaiian affairs or the chairperson's designee;

(5) The director of finance or the director's designee;

(6) One representative that shall be selected by the president of the senate; and

(7) One representative that shall be selected by the speaker of the house of representatives.

(c) The public land trust revenues negotiating committee shall submit a report to the legislature detailing the status of its discussions no later than twenty days prior to the convening of the regular session of 2021.

(d) The public land trust revenues negotiating committee shall study and submit to the legislature its recommendations, including any proposed legislation, regarding the increase to the annual amount of the income and proceeds from the public land trust that the office of Hawaiian affairs shall receive annually under the state constitution and other state law no later than twenty days prior to the convening of the regular session of 2021.

(e) The public land trust revenues committee shall not be subject to the requirements of chapter 92, Hawaii Revised Statutes.

SECTION 5. The department of budget and finance shall conduct a financial review of the amounts of revenue generated in fiscal year 2018 from the public land trust established pursuant to section 5(f) of the Admission Act, inclusive of those lands conveyed to the State pursuant to Public Law 88-233 ("An Act to Revise the Procedures Established by the Hawaii Statehood Act, Public Law 86-3, for the Conveyance of Certain Lands to the State of Hawaii, and for Other Purposes") and by section 10-13.5, provided that "revenue" shall be defined as provided in section 3 of Act 304, Session Laws of Hawaii 1990. Upon request, the office of Hawaiian affairs, along with any independent auditor selected by the office, shall be provided with all data relating to lands that comprise the public land trust and the revenue derived therefrom, including the methodology for determining this revenue and the office of Hawaiian affairs' pro rata portion.

The department of budget and finance shall submit to the legislature the results of its financial review of the amounts of revenue generated from the public land trust no later than twenty days prior to the convening of the regular session of 2021.

SECTION 6. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2020-2021 to add one full time equivalent (1.0 FTE) position in the department of budget and finance to effectuate the purposes of this Act.

The sum appropriated shall be expended by the department of budget and finance for the purposes of this Act.

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect on July 1, 2020.

 

INTRODUCED BY:

_____________________________

 

 


 


 

Report Title:

OHA; B&F; Public Land Trust; Pro Rata Share; Appropriation

 

Description:

Requires all grants or contracts awarded by the Office of Hawaiian Affairs to be approved by its board of trustees. Establishes a public land trust revenues negotiating committee to determine the increase to the annual amount of the income and proceeds from the public land trust that the Office of Hawaiian Affairs shall receive annually under the state constitution and other state law. Requires the Department of Budget and Finance to conduct a financial review of the amounts of revenue generated from the public land trust. Appropriates funds.

 

 

 

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