HOUSE OF REPRESENTATIVES

H.B. NO.

1266

THIRTY-FIRST LEGISLATURE, 2021

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO PUBLIC LAND TRUST funds.

 

 

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

 


SECTION 1. The legislature finds that in 1978, the state constitution was amended to include article XII, sections 4, 5, and 6, which established the Office of Hawaiian Affairs and its board of trustees.

The legislature further finds that Act 273, Session Laws of Hawaii 1980, enacted as section 10‑13.5, Hawaii Revised Statutes, implements the Office of Hawaiian Affairs' pro rata share and provides that "[t]wenty per cent of all funds derived from the public land trust . . . shall be expended by the office of Hawaiian affairs . . . for the purposes of this chapter."

This legislative directive has led to a series of lawsuits concerning the Office of Hawaiian Affairs' constitutional pro rata share and the statutory allocation of twenty per cent of all funds that the legislature established to implement article XII, sections 4 and 6, of the state constitution. In Trustees of the Office of Hawaiian Affairs v. Yamasaki, 737 P.2d 446 (1987), the Hawaii supreme court concluded that it was unable to determine the parameters of section 10-13.5, Hawaii Revised Statutes, because the issue of how the twenty per cent apportionment is formulated was a political question for the legislature to determine.

In response to the Yamasaki decision, the Office of Hawaiian Affairs and the governor's office entered into lengthy negotiations and submitted to the legislature an agreement to clarify the extent and scope of the twenty per cent portion. The legislature, based on this agreement, enacted Act 304, Session Laws of Hawaii 1990.

In a memorandum dated April 28, 1993, the Office of Hawaiian Affairs and the State memorialized the results of their negotiations and noted that the office of state planning and the Office of Hawaiian Affairs "recognize and agree that the amount specified does not include several matters regarding revenue which [the Office of Hawaiian Affairs] has asserted is due [the Office of Hawaiian Affairs] and which the [office of state planning] has not accepted and agreed to."

These disagreements led to litigation. The Office of Hawaiian Affairs specified that it was seeking its pro rata share of revenues received by the State based on:

(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. On October 24, 1996, the trial court granted the Office of Hawaiian Affairs' motion for partial summary judgment on each of its aforementioned claims. The State appealed.

On September 12, 2001, the Hawaii supreme court ruled in Office of Hawaiian Affairs v. State of Hawaii, 31 P.3d 901 (2001)("OHA I"), that Act 304 was effectively repealed by its own terms, so that once again, it was necessary for the legislature to clarify the Office of Hawaiian Affairs' constitutional pro rata share and the statutory allocation of twenty per cent of all funds to be managed and administered by the Office of Hawaiian Affairs. In its decision, the Hawaii supreme court affirmed Yamasaki, observing:

"[T]he State's obligation to native Hawaiians is firmly established in our constitution. How the State satisfies that constitutional obligation requires policy decisions that are primarily within the authority and expertise of the legislative branch. As such, it is incumbent upon the legislature to enact legislation that gives effect to the right of native Hawaiians to benefit from the ceded lands trust. See Haw. Const. art. XVI, section 7 . . . [W]e trust that the legislature will re-examine the State's constitutional obligation to native Hawaiians and the purpose of HRS 10‑13.5 and enact legislation that most effectively and responsibly meets those obligations. Office of Hawaiian Affairs v. State of Hawaii, 31 P.3d at 914 (citations omitted)."

On April 28, 2006, the Hawaii supreme court ruled in Office of Hawaiian Affairs v. State of Hawaii, 133 P.3d 767, 795 (2006) (OHA II), that consistent with its ruling in OHA I, "it is incumbent upon the legislature to enact legislation that gives effect to the right of native Hawaiians to benefit from the ceded lands trust."

Subsequently, Act 178, Session Laws of Hawaii 2006 (Act 178), which took effect on June 7, 2006, stated:

"The legislature acknowledges that the State's obligation to native Hawaiians is firmly established in the state constitution. (See Haw. Const. art XII)."

While finding that "many complex issues require the legislature's further attention and consideration in the wake of the repeal of Act 304," Act 178 was enacted with a stated purpose of providing "interim measures to ensure that an adequate amount of income and proceeds is made available to the Office of Hawaiian Affairs from the pro rata portion of the public land trust, for the betterment of the conditions of native Hawaiians." Act 178 carried out this purpose by requiring:

"[Until] further action is taken by the legislature for this purpose, the income and proceeds from the pro rata portion of the public land trust under article XII, section 6, of the state constitution for expenditure by the office of Hawaiian affairs for the betterment of the conditions of native Hawaiians for each fiscal year beginning with fiscal year 2005-2006 shall be $15,100,000."

Subsequently, addressing past-due amounts owed to the Office of Hawaiian Affairs, Act 15, Session Laws of Hawaii 2012 (Act 15), was enacted to implement an agreement between the State and the Office of Hawaiian Affairs for the State to convey certain lands in Kakaako Makai on Oahu valued at approximately $200,000,000 to allow the State to give effect to the right of native Hawaiians to benefit from the public land trust and to fulfill its constitutional obligations under article XII, sections 4 and 6 of the state constitution for the period between November 7, 1978, up to and including June 30, 2012, relating to the Office of Hawaiian Affairs' portion of the income and proceeds from the public land trust.

However, Act 15 did not address the State's constitutional obligations under article XII, sections 4 and 6 relating to the Office of Hawaiian Affairs' pro rata share of the income and proceeds from the public land trust after June 30, 2012.

Act 178 remained in effect as a purely interim legislative measure setting the Office of Hawaiian Affairs' annual income and proceeds from the public land trust for the betterment of the conditions of native Hawaiians at $15,100,000 beginning in fiscal year 2005-2006, pending further legislative action on the subject.

The second purpose of Act 178 was the identification of "revenue-generating public trust lands and the amounts derived from those lands by requiring that the department of land and natural resources provide an annual accounting to the legislature." For fiscal years 2011-2012, 2012-2013, and 2013-2014, the State reported to the legislature total gross public land trust revenues in the amounts of $150,939,203, $159,971,589, and $163,322,176 respectively, or an average of $158,077,656 over the three fiscal years. Twenty per cent of the average reported gross revenue for fiscal years 2011-12 through 2013-2014 is $31,615,531.

The legal basis for the establishment of the department of Hawaiian home lands is the Hawaiian Homes Commission Act (HHCA). The HHCA provides for the rehabilitation of the native Hawaiian people through a government-sponsored homesteading program. Native Hawaiians are beneficiaries under the HHCA are defined as individuals having at least fifty per cent of Hawaiian blood quantum.

The department of Hawaiian home lands provides direct benefits to native Hawaiians in the form of ninety nine-year homestead leases at an annual rent of $1. Homestead leases are for residential, agricultural, or pastoral purposes. The intent of the homesteading program is to provide for economic self-sufficiency of native Hawaiians through the provision of land.

Despite constitutional obligations to the department of Hawaiian home lands and Hawaiian homes commission, the State has failed to provide sufficient funds to the department of Hawaiian home lands to minimize the number and waiting time on its waiting lists for homesteads to a reasonable level. The State has provided $20,000,000 in its actual appropriation for fiscal year 2021, despite its budget request for $145,900,000.

The department of Hawaiian home lands does not currently receive sufficient funding to develop house lots for all applicants on the waiting list. Additionally, the department of Hawaiian home lands does not currently receive sufficient funding to reduce the waiting list by ninety per cent over the next decade. The department of Hawaiian home lands has stated that it would take one hundred eighty-two years to meet the demand of the waitlist at its current rate. The department has provided a conservative estimate of $4,500,000,000 of infrastructure costs alone to develop twenty-eight thousand lots, without accounting for new land acquisition.

The legislature finds that it is now in the best interests of the Office of Hawaiian Affairs, the department of Hawaiian home lands, its beneficiaries, the State, and all citizens of Hawaii to enact another purely interim legislative measure regarding the Office of Hawaiian Affairs' constitutional pro rata share of the public land trust for the betterment of the conditions of native Hawaiians, in light of the information, data, and facts provided to the legislature by state agencies over the last nine fiscal years.

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

(1) Remove the annual and quarterly maximum amounts that Act 178 imposed on payments of income and proceeds from the public land trust to the department of Hawaiian home lands or the Office of Hawaiian Affairs;

(2) Return to the department of Hawaiian home lands or the Office of Hawaiian Affairs certain moneys that the Office of Hawaiian Affairs transferred to the State in response to claims by the department of budget and finance that the moneys constituted overpayments of public land trust receipts to the Office of Hawaiian Affairs for fiscal years 2012-2013, 2013-2014, and 2014-2015, 2015-2016, 2016-2017, 2017-2018, 2018-2019, 2019-2020, and 2020-2021; establish that any claimed overpayments to the Office of Hawaiian Affairs for fiscal years 2021-2022 and 2021-2022 are not required to be returned to the State; and ensure that any shortfalls in quarterly amounts paid to the Office of Hawaiian Affairs under this Act are timely paid to the department of Hawaiian home lands or the Office of Hawaiian Affairs upon discovery of the shortfall; and

(3) Establish a public land trust revenues negotiating committee to make recommendations to the legislature for resolving the matter of the amount of the income and proceeds from the public land trust that the department of Hawaiian home lands or Office of Hawaiian Affairs shall receive annually.

SECTION 2. Notwithstanding the provisions of Act 178, Session Laws of Hawaii 2006; chapter 10, Hawaii Revised Statutes, and the requirements of executive order 06-06; beginning in fiscal year 2021-2022:

(1) All departments and agencies that collect receipts for the use, sale, lease, or other disposition of the public land trust shall each fiscal quarter transfer to the department of Hawaiian home lands twenty per cent of each receipt derived from the use, sale, lease, or other disposition of the public land trust; provided that in no event shall the total amount of receipts transferred to the department of Hawaiian home lands for any fiscal quarter be less than $3,775,000. If the department of Hawaiian home lands refuses to accept the offer of the use, sale, lease or other disposition of the public land trust, the funds shall be given to the department of Hawaiian home lands or the Office of Hawaiian Affairs; and

(2) If at any time the department of finance, Office of Hawaiian Affairs, department of Hawaiian home lands, or any other state agency discovers that the total amount of receipts transferred to the department of Hawaiian home lands for any fiscal quarter fell short of the amount required by this Act, the director of finance or the director's designee shall ensure that within ten days of the discovery of the shortfall, an amount equal to the shortfall be transferred to the department of Hawaiian home lands or the Office of Hawaiian Affairs.

SECTION 3. Notwithstanding the provisions of Act 178, Session Laws of Hawaii 2006; chapter 10, Hawaii Revised Statutes, and the requirements of executive order 06-06; the department of budget and finance shall provide to the department of Hawaiian home lands the moneys in the carry-forward trust holding account established pursuant to executive order 06-06 to which the Office of Hawaiian Affairs transferred moneys in response to claims by the department of budget and finance that the moneys constituted overpayments of public-land-trust receipts to the Office of Hawaiian Affairs for fiscal year 2012-2013, fiscal year 2013-2014, fiscal year 2014-2015, fiscal year 2015-2016, fiscal year 2016-2017, fiscal year 2017-2018, fiscal year 2018-2019, fiscal year 2019-2020, and fiscal year 2020-2021, plus any overpayment moneys the Office of Hawaiian Affairs transfers to the carry-forward trust holding account for fiscal year 2021-2022 or fiscal year 2022-2023.

SECTION 4. There is established a public land trust revenues negotiating committee consisting of the president of the senate or the president's designee, the speaker of the house of representatives or the house speaker's designee, the governor or the governor's designee, the chairperson of the Office of Hawaiian Affairs or the chairperson's designee, and the chairperson of the Hawaiian homes commission or the chairperson's designee. The committee shall not be subject to the requirements of chapter 92, Hawaii Revised Statutes.

The committee shall engage in discussions with the purpose of resolving the matter of the amount of the income and proceeds from the public land trust that the department of Hawaiian home lands or the Office of Hawaiian Affairs shall receive annually under the State Constitution and other state law. The committee shall submit a status report on the progress of the committee's discussions to the legislature no later than twenty days prior to the convening of the regular session of 2022, and shall submit a final report containing the committee's findings and recommendations, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2023.

SECTION 5. This Act shall take effect upon its approval.

 

INTRODUCED BY:

_____________________________

 

 


 


 

Report Title:

Office of Hawaiian Affairs; Department of Hawaiian Home Lands; Public Land Trust; Transfer of Moneys; Public Land Trust Revenues Negotiating Committee

 

Description:

Requires agencies that collect receipts for any disposition of the public land trust shall each fiscal quarter transfer to the department of Hawaiian home lands or the Office of Hawaiian Affairs twenty per cent of each receipt from the disposition. Returns to the Office of Hawaiian Affairs certain moneys previously claimed as public land trust overpayments to the office. Establishes a public land trust revenues negotiating committee.

 

 

 

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