The original version of this document exists at:
http://www.capitol.hawaii.gov/noframes/ecase.htm

REPORT TITLE:
Native Hawn. Autonomy Act


DESCRIPTION:
Proposes constitutional amendment to authorize the creator of the
native Hawaiian trust corporation, a private nonprofit entity to
assume responsibilities for Kaho`olawe, and the responsibilities
associated with the office of Hawaiian affairs, and the
department of Hawaiian home lands.  Repeals OHA and DHHL.






































HB LRB 98-0270





                                                           
HOUSE OF REPRESENTATIVES                H.B. NO.           
NINETEENTH LEGISLATURE, 1998                               
STATE OF HAWAII                                            
                                                                


                      A  BILL  FOR  AN  ACT

RELATING TO NATIVE HAWAIIANS.



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

     SECTION 1.  This Act shall be known as the "Native Hawaiian

Autonomy Act".

     SECTION 2.  Findings.  The legislature finds as follows:

     (1)  The descendants of the inhabitants of the Hawaiian

          Islands prior to 1778, by many measures, have not

          prospered in their native land.

     (2)  While there are many explanations for this condition,

          the central theme are a loss of control over land and

          other assets, an inability to provide adequately for

          native Hawaiian betterment, and an erosion of social

          and cultural roots.

     (3)  A native Hawaiian renaissance has occurred over the

          past decades, aided and evidenced by such diverse

          developments as the voyages of Hokulea, the founding

          and maturing of the office of Hawaiian affairs and

          other native Hawaiian entities, the pending return of

          Kahoolawe, the federal apology and resolution of

          historic claims, and the success of Hawaiian language

          immersion education.






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     (4)  It is fitting that, on the one hundredth anniversary of

          Hawaii's annexation to the United States of America,

          all of Hawaii's people of whatever ethnic background

          acknowledge and reaffirm that Hawaii is the only

          homeland of the native Hawaiians and pledge themselves

          to support the continued economic, social, and cultural

          rebirth of the indigenous peoples of Hawaii.

     (5)  It is equally fitting that all of Hawaii's people pause

          at this time in Hawaii's history to reflect on what

          obstacles exist to the continuation of the native

          Hawaiian renaissance and how best to overcome them and

          proceed together.

     (6)  It is further appropriate at this point to recognize

          and acknowledge that any failure to resolve issues of

          longstanding concern to native Hawaiians and to provide

          for a permanent and mutually acceptable relationship

          and understanding between native Hawaiians and the

          other peoples of Hawaii will have negative economic,

          social, and cultural consequences to all of Hawaii's

          people.

     (7)  While many specific obstacles to further progress have

          been articulated, the common thread is a continued








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          dependence by native Hawaiians on others which prevents

          the development of the full potential of the native

          Hawaiian people.

     (8)  This continued development can only be fostered by

          ending a relationship of wardship or dependence by

          native Hawaiians on others and replacing it with a

          relationship based wherever appropriate on self-

          sufficiency and self-determination for native

          Hawaiians.

     (9)  Although some believe that the relationship of the

          native Hawaiian peoples to the State should be that of

          a separate sovereign government, the great majority of

          Hawaii's people, both native Hawaiian and non-native

          Hawaiian, desire that the goals of native Hawaiians be

          pursued and realized within Hawaii's existing

          government context.

    (10)  It is the overriding purpose of this Act to provide for

          greater native Hawaiian autonomy through the

          consolidation of existing native Hawaiian entities into

          one autonomous entity directed and managed by the

          native Hawaiian people, the devolution to that entity

          of rights and responsibilities currently undertaken by








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          the State which are or should be specific to native

          Hawaiians, and the transfer to and creation in that

          entity of a land and money-based corpus which provides

          sufficient resources for that entity to carry out

          whatever missions it determines are appropriate for the

          advancement of the native Hawaiian peoples.

    (11)  It is the further purpose of this Act to bring closure

          to certain historic claims by native Hawaiians against

          the State without precluding the maintenance of

          comparable claims against other government entities.

    (12)  It is the public policy of this State that, in the

          interpretation of this Act, these overall goals of

          decreased dependence and wardship and increased

          autonomy for the indigenous peoples of Hawaii and the

          resolution of outstanding or future claims be fully

          implemented, all for the benefit of all of Hawaii's

          people.

                             PART I

        POWERS, DUTIES, AND SCOPE OF THE NATIVE HAWAIIAN

                        TRUST CORPORATION

     SECTION 3.  The Constitution of the State of Hawaii is

amended by adding two new sections to be appropriately designated








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and to read as follows:

        "NATIVE HAWAIIAN TRUST CORPORATION; AUTHORIZATION

     Section  .  The State hereby authorizes the transfer by the

State of its trust responsibilities and other rights accruing and

obligations owed to the Hawaiian population of this State to a

non-profit corporation, the Native Hawaiian Trust Corporation,

created as provided by law.  The Native Hawaiian Trust

Corporation shall assume the rights and responsibilities of the

former office of Hawaiian affairs and the former department of

Hawaiian homelands except as provided by law, as well as other

rights and responsibilities transferred to it by the State by

law.

     The Native Hawaiian Trust Corporation shall be a corporate

entity and shall not be a sovereign governmental entity.  It

shall have only the rights and responsibilities as established by

law, including any appurtenant authority associated with those

rights and responsibilities.  The trustees of the Native Hawaiian

Trust Corporation shall be Hawaiian by blood and shall be elected

by Hawaiian residents of this State as provided by law.  There

shall be a minimum of thirteen trustees, with representation from

the islands of Hawai'i, Kaua'i, Maui, Moloka'i, and O'ahu, as

provided by law.








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     The beneficiaries of this trust shall be persons of Hawaiian

blood.  "Hawaiian blood" means a person related by blood to any

of the races inhabiting the Hawaiian Island prior to 1778.

Unless changed by the Native Hawaiian Trust Corporation board to

exclude persons with a blood quantum below a minimum level not to

exceed one-eighth Hawaiian, all persons of Hawaiian blood shall

be the beneficiaries of the Native Hawaiian Trust Corporation.

                       HAWAIIAN HOME LANDS

     Section  .  The responsibilities accepted by the State under

the Hawaiian Homes Commission Act, 1920, pursuant to compact with

the United States of America, as provided by State law and upon

the consent of the United States, are transferred to the Native

Hawaiian Trust Corporation.  The management of the "available

lands," as defined by section 203 of the Hawaiian Homes

Commission Act, 1920, shall be the responsibility of the Native

Hawaiian Trust Corporation.  The State shall retain oversight

responsibility over management of the land."

     SECTION 4.  Article XII, section 1, of the Constitution of

the State of Hawaii is amended to read as follows:

                 "HAWAIIAN HOMES COMMISSION ACT

     Section 1.  Anything in this constitution to the contrary

notwithstanding, the Hawaiian Homes Commission Act, 1920, enacted








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by the Congress, as the same has been or may be amended prior to

the admission of the State, is hereby adopted as a law of the

State, subject to amendment or repeal by the legislature;

provided that if and to the extent that the United States shall

so require, such law shall be subject to amendment or repeal only

with the consent of the United States and in no other manner;

provided further that if the United States shall have been

provided or shall provide that particular provisions or types of

provisions of such Act may be amended in the manner required for

ordinary state legislation, such provisions or types of

provisions may be so amended.  The proceeds and income from

Hawaiian home lands shall be used only in accordance with the

terms and spirit of such Act.  The State's responsibilities under

this Act shall be transferred to the Native Hawaiian Trust

Corporation for administration and implementation, as provided by

law.  The State shall retain oversight responsibility over the

fulfillment of the trust responsibilities regarding the land as

provided by law.  The [legislature] Native Hawaiian Trust

Corporation shall [make sufficient sums available for] carry out

the following purposes:  (1) development of home, agriculture,

farm and ranch lots; (2) the making of home, agriculture,

aquaculture, farm and ranch loans; and (3) rehabilitation








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projects [to] that shall include, but not be limited to,

educational, economic, political, social and cultural processes

by which the general welfare and conditions of native Hawaiians

are thereby improved[; (4) the administration and operating

budget of the department of Hawaiian home lands; in furtherance

of (1), (2), (3) and (4) herein, by appropriating the same in the

manner provided by law].

     Thirty percent of the state receipts derived from the

leasing of cultivated sugarcane lands under any provision of law

or from water licenses shall be transferred to the [native

Hawaiian rehabilitation fund, section 213 of the Hawaiian Homes

Commission Act, 1920, for the purposes enumerated in that

section.] Native Hawaiian Trust Corporation.  Thirty percent of

the state receipts derived from the leasing of lands cultivated

as sugarcane lands on the effective date of this section shall

[continue to] be [so] transferred to the [native Hawaiian

rehabilitation fund] Native Hawaiian Trust Corporation whenever

such lands are sold, developed, leased, utilized, transferred,

set aside or otherwise disposed of for purposes other than the

cultivation of sugarcane.  There shall be no ceiling established

for the aggregate amount transferred [into] to the [native

Hawaiian rehabilitation fund.] Native Hawaiian Trust








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Corporation."

     SECTION 5.  Article VII, section 12, of the Constitution of

the State of Hawaii is amended to read as follows:

             "DEFINITIONS; ISSUANCE OF INDEBTEDNESS

     Section 12.  For the purposes of this article:

     1.  The term "bonds" shall include bonds, notes and other

instruments of indebtedness.

     2.  The term "general obligation bonds" means all bonds for

the payment of the principal and interest of which the full faith

and credit of the State or a political subdivision are pledged

and, unless otherwise indicated, includes reimbursable general

obligation bonds.

     3.  The term "net revenues" or "net user tax receipts" means

the revenues or receipts derived from:

     a.   A public undertaking, improvement or system remaining

          after the costs of operation, maintenance and repair of

          the public undertaking, improvement or system, and the

          required payments of the principal of and interest on

          all revenue bonds issued therefor, have been made; or

     b.   Any payments or return on security under a loan program

          or a loan thereunder, after the costs of operation and

          administration of the loan program, and the required








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          payments of the principal of and interest on all

          revenue bonds issued therefor, have been made.

     4.  The term "person" means an individual, firm,

partnership, corporation, association, cooperative or other legal

entity, governmental body or agency, board, bureau or other

instrumentality thereof, or any combination of the foregoing.

     5.  The term "rates, rentals and charges" means all revenues

and other moneys derived from the operation or lease of a public

undertaking, improvement or system, or derived from any payments

or return on security under a loan program or a loan thereunder;

provided that insurance premium payments, assessments and

surcharges, shall constitute rates, rentals and charges of a

state property insurance program.

     6.  The term "reimbursable general obligation bonds" means

general obligation bonds issued for a public undertaking,

improvement or system from which revenues, or user taxes, or a

combination of both, may be derived for the payment of the

principal and interest as reimbursement to the general fund and

for which reimbursement is required by law, and, in the case of

general obligation bonds issued by the State for a political

subdivision, general obligation bonds for which the payment of

the principal and interest as reimbursement to the general fund








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is required by law to be made from the revenue of the political

subdivision.

     7.  The term "revenue bonds" means all bonds payable from

the revenues, or user taxes, or any combination of both, of a

public undertaking, improvement, system or loan program and any

loan made thereunder and secured as may be provided by law,

including a loan program to provide loans to a state property

insurance program providing hurricane insurance coverage to the

general public.

     8.  The term "special purpose revenue bonds" means all bonds

payable from rental or other payments made to an issuer by a

person pursuant to contract and secured as may be provided by

law.

     9.  The term "user tax" means a tax on goods or services or

on the consumption thereof, the receipts of which are

substantially derived from the consumption, use or sale of goods

and services in the utilization of the functions or services

furnished by a public undertaking, improvement or system;

provided that mortgage recording taxes shall constitute user

taxes of a state property insurance program.

     The legislature, by a majority vote of the members to which

each house is entitled, shall authorize the issuance of all








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general obligation bonds, bonds issued under special improvement

statutes and revenue bonds issued by or on behalf of the State

and shall prescribe by general law the manner and procedure for

such issuance.  The legislature by general law shall authorize

political subdivisions to issue general obligation bonds, bonds

issued under special improvement statutes and revenue bonds and

shall prescribe the manner and procedure for such issuance.  All

such bonds issued by or on behalf of a political subdivision

shall be authorized by the governing body of such political

subdivision.

     Special purpose revenue bonds shall only be authorized or

issued to finance facilities of or for, or to loan the proceeds

of such bonds to assist:

     1.  Manufacturing, processing or industrial enterprises;

     2.  Utilities serving the general public;

     3.  Health care facilities provided to the general public by

not-for-profit corporations;

     4.  Early childhood education and care facilities provided

to the general public by not-for-profit corporations; [or]

     5.  Low and moderate income government housing programs[,]

or;

     6.  The Native Hawaiian Trust Corporation, each of which is








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                                        H.B. NO.           
                                               
                                                           


hereinafter referred to in this paragraph as a special purpose

entity.

     The legislature, by a two-thirds vote of the members to

which each house is entitled, may enact enabling legislation for

the issuance of special purpose revenue bonds separately for each

special purpose entity, and, by a two-thirds vote of the members

to which each house is entitled and by separate legislative bill,

may authorize the State to issue special purpose revenue bonds

for each single project or multi-project program of each special

purpose entity; provided that the issuance of such special

purpose revenue bonds is found to be in the public interest by

the legislature.  The legislature may enact enabling legislation

to authorize political subdivisions to issue special purpose

revenue bonds.  If so authorized, a political subdivision by a

two-thirds vote of the members to which its governing body is

entitled and by separate ordinance may authorize the issuance of

special purpose revenue bonds for each single project or multi-

project program of each special purpose entity; provided that the

issuance of such special purpose revenue bonds is found to be in

the public interest by the governing body of the political

subdivision.  No special purpose revenue bonds shall be secured

directly or indirectly by the general credit of the issuer or by








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any revenues or taxes of the issuer other than receipts derived

from payments by a person under contract or from any security for

such contract or special purpose revenue bonds and no moneys

other than such receipts shall be applied to the payment thereof.

The governor shall provide the legislature in November of each

year with a report on the cumulative amount of all special

purpose revenue bonds authorized and issued, and such other

information as may be necessary."

     SECTION 6.  Article XII, sections 5 and 6, of the

Constitution of the State of Hawaii are repealed.

         ["OFFICE OF HAWAIIAN AFFAIRS; ESTABLISHMENT OF

                        BOARD OF TRUSTEES

     Section 5.  There is hereby established an Office of

Hawaiian Affairs.  The Office of Hawaiian Affairs shall hold

title to all the real and personal property now or hereafter set

aside or conveyed to it which shall be held in trust for native

Hawaiians and Hawaiians.  There shall be a board of trustees for

the Office of Hawaiian Affairs elected by qualified voters who

are Hawaiians, as provided by law.  The board members shall be

Hawaiians.  There shall be not less than nine members of the

board of trustees; provided that each of the following Islands

have one representative:  Oahu, Kauai, Maui, Molokai and Hawaii.








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The board shall select a chairperson from its members.

                   POWERS OF BOARD OF TRUSTEES

     Section 6.  The board of trustees of the Office of Hawaiian

Affairs shall exercise power as provided by law:  to 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; to

formulate policy relating to affairs of native Hawaiians and

Hawaiians; and to exercise control over real and personal

property set aside by state, federal or private sources and

transferred to the board for native Hawaiians and Hawaiians.  The

board shall have the power to exercise control over the Office of

Hawaiian Affairs through its executive officer, the administrator

of the Office of Hawaiian Affairs, who shall be appointed by the

board."]

     SECTION 7.  Article XVIII, section 8, of the Constitution of

the State of Hawaii is repealed.

         ["EFFECTIVE DATE FOR OFFICE OF HAWAIIAN AFFAIRS

     Section 8.  The legislature shall provide for the

implementation of the amendments to Article XII in Sections 5 and








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6 on or before the first general election following ratification

of the amendments to Article XII in Sections 5 and 6."]

                             PART II

     SECTION 8.  The Hawaiian Homes Commission Act, 1920, is

amended by adding two new sections, to be appropriately

designated and to read as follows:

     "§   .  Transfer of lands and administration.  After

establishment of the Native Hawaiian Trust Corporation by law,

and upon consent of the United States, the State shall transfer

the responsibility for and the title to all lands categorized as

Hawaiian home lands as of the effective date of this Act to the

corporation.  The Hawaiian Homes Commission Act shall be

administered and implemented by the Native Hawaiian Trust

Corporation.  The State, as signatory to the compact with the

federal government, shall have oversight responsibilities to

assure that the intent of this Act is carried out.

     §   .  Consolidation of lands.  The Native Hawaiian Trust

Corporation, with the approval of the Secretary of the Interior,

in order to consolidate its holdings or to better effectuate the

purposes of this Act, may exchange the title to available lands

for land, privately or publicly owned, of an equal or greater

value.  All lands so acquired by the Native Hawaiian Trust








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Corporation shall assume the status of available lands as though

the land were originally designated as available lands under

section 203 of this Act, and all lands so conveyed by the Native

Hawaiian Trust Corporation shall assume the status of the land

for which it was exchanged."

     SECTION 9.  Section 201, Hawaiian Homes Commission Act,

1920, is amended as follows:

     1.   By deleting the definition of "commission":

    "[(1) The term "commission" means the Hawaiian Homes

          Commission;"]

     2.   By adding the definition of "corporation":

    "(1)  The term "corporation" means the Native Hawaiian Trust

          Corporation;"

     3.   By deleting the definition of "native Hawaiian":

    "[(7) The term "native Hawaiian" means any descendant of not

          less than one-half part of the blood of the races

          inhabiting the Hawaiian Islands previous to 1778;"]

     4.   By adding the definition of "Hawaiian":

    "(7)  The term "Hawaiian" means any descendant of the blood

          of the races inhabiting the Hawaiian Islands prior to

          1778;"

     SECTION 10.  Section 204, Hawaiian Homes Commission Act,








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1920, is amended to read as follows:

     "§204.  Control [by department] of "available [lands,"

return to board of land and natural resources, when; other lands,

use of.] lands".  (a)  [Upon the passage of this Act, all

available lands shall immediately assume the status of Hawaiian

home lands and be under the control of the department to be used

and disposed of in accordance with the provisions of this Act,

except that:

     (1)  In case any available land is under lease by the

          Territory of Hawaii, by virtue of section 73 of the

          Hawaiian Organic Act, at the time of the passage of

          this Act, such land shall not assume the status of

          Hawaiian home lands until the lease expires or the

          board of land and natural resources withdraws the lands

          from the operation of the lease.  If the land is

          covered by a lease containing a withdrawal clause, as

          provided in section 73(d) of the Hawaiian Organic Act,

          the board of land and natural resources shall withdraw

          such lands from the operation of the lease whenever the

          department gives notice to the board that the

          department is of the opinion that the lands are

          required by it for the purposes of this Act; and such








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          withdrawal shall be held to be for a public purpose

          within the meaning of that term as used in section

          73(d) of the Hawaiian Organic Act.

     (2)  Any available land, including lands selected by the

          department out of a larger area, as provided by this

          Act, not leased as authorized by section 207(a) of this

          Act, may be returned to the board of land and natural

          resources as provided under section 212 of this Act, or

          may be retained for management by the department.  Any

          Hawaiian home lands general lease issued by the

          department after June 30, 1985, shall contain a

          withdrawal clause allowing the department to withdraw

          the land leased at any time during the term of the

          lease for the purposes of this Act.

          In the management of any retained available lands not

          required for leasing under section 207(a), the

          department may dispose of those lands to the public,

          including native Hawaiians, on the same terms,

          conditions, restrictions, and uses applicable to the

          disposition of public lands in chapter 171, Hawaii

          Revised Statutes; provided that the department may not

          sell or dispose of such lands in fee simple except as








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          authorized under section 205 of this Act; provided

          further that the department is expressly authorized to

          negotiate, prior to negotiations with the general

          public, the disposition of a lease of Hawaiian home

          lands to a native Hawaiian, or organization or

          association owned or controlled by native Hawaiians,

          for commercial, industrial, or other business purposes,

          in accordance with the procedure set forth in section

          171-59, Hawaii Revised Statutes, subject to the notice

          requirement of section 171-16(c), Hawaii Revised

          Statutes, and the lease rental limitation imposed by

          section 171-17(b), Hawaii Revised Statutes.] The Native

          Hawaiian Trust Corporation may exercise the withdrawal

          clause in any Hawaiian home lands general lease having

          a withdrawal clause.

     [(3) The department,] (b)  The corporation, with the

approval of the Secretary of the Interior, in order to

consolidate its holdings or to better effectuate the purposes of

this Act, may exchange the title to available lands for land,

privately or publicly owned, of an equal value.  All lands so

acquired by the [department] corporation shall assume the status

of available lands as though the land were originally designated








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as available lands under section 203 of this Act, and all lands

so conveyed by the [department] corporation shall assume the

status of the land for which it was exchanged.  The limitations

imposed by section 73(l) of the Hawaiian Organic Act and the land

laws of Hawaii as to the area and value of land that may be

conveyed by way of exchange shall not apply to exchanges made

pursuant hereto.  [No such exchange of land publicly owned by the

State shall be made without the approval of two-thirds of the

members of the board of land and natural resources.]  For the

purposes of this paragraph, lands "publicly owned" means land

owned by a county or the State or the United States.

     [(b)  Unless expressly provided elsewhere in this Act, lands

or an interest therein acquired by the department pursuant to

section [213(e)], 221(c), or 225(b), or any other section of this

Act authorizing the department to acquire lands or an interest

therein, may be managed and disposed of in the same manner and

for the same purposes as Hawaiian home lands.]"

     SECTION 11.  Section 204.5, Hawaiian Homes Commission Act,

1920, is amended to read as follows:

     "[[]§204.5.[]]  Additional powers.  [In addition and

supplemental to the powers granted to the department by law, and

notwithstanding any law to the contrary, the department may:








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     (1)  With the approval of the governor,] The Native Hawaiian

          Trust Corporation may undertake and carry out the

          development of any Hawaiian home lands available for

          lease under and pursuant to section 207 of this Act by

          assembling these lands in residential developments and

          providing for the construction, reconstruction,

          improvement, alteration, or repair of public facilities

          therein, including, without limitation, streets, storm

          drainage systems, pedestrian ways, water facilities and

          systems, sidewalks, street lighting, sanitary sewerage

          facilities and systems, utility and service corridors,

          and utility lines, where applicable, sufficient to

          adequately service developable improvements therein,

          sites for schools, parks, off-street parking

          facilities, and other community facilities[;

     (2)  With the approval of the governor, undertake and carry

          out the development of available lands for homestead,

          commercial, and multipurpose projects as provided in

          section 220.5 of this Act, as a developer under this

          section or in association with a developer agreement

          entered into pursuant to this section by providing for

          the construction, reconstruction, improvement,








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          alteration, or repair of public facilities for

          development, including, without limitation, streets,

          storm drainage systems, pedestrian ways, water

          facilities and systems, sidewalks, street lighting,

          sanitary sewerage facilities and systems, utility and

          service corridors, and utility lines, where applicable,

          sufficient to adequately service developable

          improvements therein, sites for schools, parks, off-

          street parking facilities, and other community

          facilities;

     (3)  With the approval of the governor, designate by

          resolution of the commission all or any portion of a

          development or multiple developments undertaken

          pursuant to this section an "undertaking" under part

          III of chapter 39, Hawaii Revised Statutes; and

     (4)  Exercise the powers granted under section 39-53, Hawaii

          Revised Statutes, including the power to issue revenue

          bonds from time to time as authorized by the

          legislature.

     All provisions of part III of chapter 39, Hawaii Revised

Statutes, shall apply to the department and all revenue bonds

issued by the department shall be issued pursuant to the








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provisions of that part except these revenue bonds shall be

issued in the name of the department, and not in the name of the

State.

     As applied to the department, the term "undertaking" as used

in part III of chapter 39, shall include a residential

development or a development of homestead, commercial, or

multipurpose projects under this Act.  The term "revenue" as used

in part III of chapter 39, shall include all or any portion of

the rentals derived from the leasing of Hawaiian home lands or

available lands, whether or not the property is a part of the

development being financed]."

     SECTION 12.  Section 205, Hawaiian Homes Commission Act,

1920, is amended to read as follows:

     "§205.  [[]Sale or lease, limitations on.[]]  Available

lands shall be sold or leased only [(1)] in the manner and for

the purposes set out in this title[, or (2) as may be necessary

to complete any valid agreement of sale or lease in effect at the

time of the passage of this Act; except that such limitations

shall not apply to the unselected portions of lands from which

the department has made a selection and given notice thereof, or

failed so to select and give notice within the time limit, as

provided in paragraph (3) of section 204 of this title.] until at








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                                        H.B. NO.           
                                               
                                                           


least twenty-five years have passed since the authorization by

the State of the initial transfer of assets by the State to the

corporation.  Thereafter, upon affirmative vote of no less than

seventy-five percent of all board members, the corporation shall

be permitted to sell lands in an amount not to exceed in the

aggregate fifty percent of the total acreage initially

transferred to it, at the rate of no more than ten percent of the

total acreage per calendar year.  The corporation, after the

twenty-five year period has passed, may make additional lease

provisions other than as provided in this Act, including leasing

land to non-Hawaiians, providing that it provide for the housing

needs of Hawaiians."

     SECTION 13.  Section 207, Hawaiian Homes Commission Act,

1920, is amended to read as follows:

     "§207.  Leases to Hawaiians, licenses.  (a)  [The

department] Subject to section 205, the Native Hawaiian Trust

Corporation is [authorized to lease] charged with the

responsibility of leasing to [native] Hawaiians the right to the

use and occupancy of a tract or tracts of Hawaiian home lands

[within].  Until the date that is ten years after the initial

transfer of assets by the State to the corporation, the following

acreage limits [per] shall apply to each lessee:  (1) not more








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                                        H.B. NO.           
                                               
                                                           


than forty acres of agriculture lands or lands used for

aquaculture purposes; or (2) not more than one hundred acres of

irrigated pastoral lands and not more than one thousand acres of

other pastoral lands; or (3) not more than one acre of any class

of land to be used as a residence lot; provided that in the case

of any existing lease of a farm lot in the Kalanianaole

Settlement on Molokai, a residence lot may exceed one acre but

shall not exceed four acres in area, the location of such area to

be selected by the [department;] corporation; provided further

that a lease granted to any lessee may include two detached farm

lots or aquaculture lots, as the case may be, located on the same

island and within a reasonable distance of each other, one of

which, to be designated by the [department,] corporation, shall

be occupied by the lessee as the lessee's home, the gross acreage

of both lots not to exceed the maximum acreage of an

agricultural, pastoral, or aquaculture lot, as the case may be,

as provided in this section.  The [department is authorized to]

corporation may develop and construct multifamily units for

housing [native] Hawaiians.  [The method of disposition, as well

as the terms, conditions, covenants, and restrictions as to the

use and occupancy of such multifamily units shall be prescribed

by rules adopted by the department pursuant to chapter 91.]








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                                        H.B. NO.           
                                               
                                                           


     (b)  [The] Subject to section 205, the title to lands so

leased shall remain in the [State.] corporation.  Applications

for tracts shall be made to and granted by the [department, under

such regulations, not in conflict with any provisions of this

title, as the department may prescribe.] corporation.  The

[department shall] corporation, whenever tracts are available,

shall enter into such a lease with any applicant who, in the

opinion of the [department,] corporation, is qualified to perform

the conditions of [such] the lease.

     (c)  (1)  The [department is authorized to] corporation may

          grant licenses as easements for railroads, telephone

          lines, electric power and light lines, gas mains, and

          the like.  The [department] corporation is also

          authorized to grant licenses for lots within a district

          in which lands are leased under the provisions of this

          section, for:

          (A)  Churches, hospitals, public schools, post offices,

               and other improvements for public purposes; and

          (B)  Theaters, garages, service stations, markets,

               stores, and other mercantile establishments (all

               of which shall be owned by native Hawaiians or by

               organizations formed and controlled by native








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                                        H.B. NO.           
                                               
                                                           


               Hawaiians).

     (2)  The [department] corporation is also authorized to

          grant licenses to the United States for reservations,

          roads, and other rights-of-way, water storage and

          distribution facilities, and practice target ranges.

     (3)  Any license issued under this subsection shall be

          subject to such terms, conditions, and restrictions as

          the [department] corporation shall determine and shall

          not restrict the areas required by the [department]

          corporation in carrying on its duties, nor interfere in

          any way with the [department's] corporation's operation

          or maintenance activities."

     SECTION 14.  Sections 208, 209, 210, and 211 of the Hawaiian

Homes Commission Act, 1920, are amended by substituting the word

"corporation" wherever the term "department", or like term

appears, as the context requires.

     SECTION 15.  Section 202 of the Hawaiian Homes Commission

Act, 1920, is repealed.

     ["§202.  Department officers, staff, commission, members,

compensation.  (a)  There shall be a department of Hawaiian home

lands which shall be headed by an executive board to be known as

the Hawaiian homes commission.  The members of the commission








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                                        H.B. NO.           
                                               
                                                           


shall be nominated and appointed in accordance with section

26-34, Hawaii Revised Statutes.  The commission shall be composed

of nine members, as follows:  three shall be residents of the

city and county of Honolulu; two shall be residents of the county

of Hawaii one of whom shall be a resident of east Hawaii and the

other a resident of west Hawaii; two shall be residents of the

county of Maui one of whom shall be a resident from the island of

Molokai; one shall be a resident of the county of Kauai; and the

ninth member shall be the chairman of the Hawaiian homes

commission.  All members shall have been residents of the State

at least three years prior to their appointment and at least four

of the members shall be descendants of not less than one-fourth

part of the blood of the races inhabiting the Hawaiian Islands

previous to 1778.  The members of the commission shall serve

without pay, but shall receive actual expenses incurred by them

in the discharge of their duties as such members.  The governor

shall appoint the chairman of the commission from among the

members thereof.

     The commission may delegate to the chairman such duties,

powers, and authority or so much thereof, as may be lawful or

proper for the performance of the functions vested in the

commission.  The chairman of the commission shall serve in a








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                                        H.B. NO.           
                                               
                                                           


full-time capacity.  He shall, in such capacity, perform such

duties, and exercise such powers and authority, or so much

thereof, as may be delegated to him by the commission as herein

provided above.

     (b)  The provisions of section 76-16, Hawaii Revised

Statutes, shall apply to the positions of first deputy and

private secretary to the chairman of the commission.  The

department may hire temporary staff on a contractual basis not

subject to chapters 76, 77, and 78, Hawaii Revised Statutes, when

the services to be performed will assist in carrying out the

purposes of the Act.  These positions may be funded through

appropriations for capital improvement program projects and by

the administration account, operating fund, or native Hawaiian

rehabilitation fund.  No contract shall be for a period longer

than two years, but individuals hired under contract may be

employed for a maximum of six years; provided that the six-year

limitation shall not apply if the department, with the approval

of the governor, determines that such contract individuals are

needed to provide critical services for the efficient functioning

of the department.  All other positions in the department shall

be subject to chapters 76 and 77, Hawaii Revised Statutes.

     All vacancies and new positions which are covered by








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                                        H.B. NO.           
                                               
                                                           


chapters 76 and 77, Hawaii Revised Statutes, shall be filled in

accordance with sections 76-23 and 76-31, Hawaii Revised

Statutes, provided that the provisions of these sections shall be

applicable first to qualified persons of Hawaiian extraction."]

     SECTION 16.  Sections 212 and 213 of the Hawaiian Homes

Commission Act, 1920, are repealed.

     ["§212.  Lands returned to control of board of land and

natural resources.  The department may return any Hawaiian home

lands not leased as authorized by the provisions of section 207

of this Act to the control of the board of land and natural

resources.  Any Hawaiian home lands so returned shall, until the

department gives notice as hereinafter in this section provided,

resume and maintain the status of public lands in accordance with

the provisions of the [Hawaii Revised Statutes]; provided that

such lands may not be sold, leased, set aside, used, transferred

or otherwise disposed of except under a general lease only.  Any

lease by the board of land and natural resources hereafter

entered into shall contain a withdrawal clause, and the lands so

leased shall be withdrawn by the board, for the purpose of this

Act, upon the department giving at its option, not less than one

nor more than five years' notice of such withdrawal; provided,

that the minimum withdrawal-notice period shall be specifically








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                                        H.B. NO.           
                                               
                                                           


stated in such lease.  Each such lease, whether or not stipulated

therein, shall be deemed subject to the right and duty of the

board of land and natural resources to terminate the lease and

return the lands to the department whenever the department gives

notice to the board that the department is of the opinion that

the lands are required.

     Notwithstanding the provisions of section 171-95, Hawaii

Revised Statutes, in the leasing of Hawaiian home lands by the

board to a public utility or other governmental agency, where

such use directly benefits the department of Hawaiian home lands

or the homestead lessees, the rental may be nominal; in all other

instances, the lease rental shall be no less than the value

determined in accordance with section 171-17(b), Hawaii Revised

Statutes.

     Any general lease of Hawaiian home lands hereafter entered

into by the board shall be void unless prior to the disposition

of such lease by public auction, direct negotiation or otherwise,

approval shall be obtained from the department of Hawaiian home

lands.

     §213.  Funds and accounts.  (a)  There are established in

the treasury of the State two revolving funds, to be known

respectively as the Hawaiian home loan fund and the Hawaiian home








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                                        H.B. NO.           
                                               
                                                           


general loan fund.

     (b)  Hawaiian home loan fund.  The moneys in this fund shall

be available for the purposes enumerated in section 214 and for

payments provided in section 209 and shall not be expended for

any other purpose except as provided in subsection (e).

     Any interest or other earnings arising out of investments

from this fund shall be credited to and deposited into the

Hawaiian home operating fund.

     (c)  Hawaiian home general loan fund.  Moneys appropriated

by the legislature for the construction of homes but not

otherwise set aside for a particular fund, for construction of

replacement homes, for home repairs or additions, or for the

development and operation of a farm, ranch, or aquaculture

operation; moneys transferred from other funds; and installments

of principal paid by the lessees upon loans made to them from

this fund, or as payments representing reimbursements on account

of advances, but not including interest on such loans or

advances, shall be deposited into this fund.  The moneys in the

fund shall be used for purposes enumerated in section 214 and for

payments provided in section 209; provided that, in addition to

the conditions enumerated in section 215, farm loans shall be

subject to the following conditions:








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                                        H.B. NO.           
                                               
                                                           


     (1)  To be eligible for a farm loan the applicant shall

          derive, or present an acceptable plan to derive, a

          major portion of the applicant's income from farming;

     (2)  Farm loans made for the purpose of soil and water

          conservation shall not exceed $20,000 and shall be for

          a term not to exceed ten years;

     (3)  Subsidies and grants or cost-sharing funds entitled and

          received by the lessee for soil and water conservation

          purposes shall be assigned to the department for the

          repayment of the outstanding farm indebtedness; and

     (4)  The lessee shall carry out recommended farm management

          practices approved by a qualified agricultural agency.

     The department may create an account within this fund to

support the guarantee of repayment of loans made by government

agencies or private lending institutions to a holder of a lease

under section 207(a) or license issued under section

207(c)(1)(B).

     The department may create an account within this fund for

moneys borrowed from government agencies or private lending

institutions to be used for any of the purposes enumerated in

section 214.  Installments of principal and that part of the

interest equal to the interest charged to the department by the








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                                        H.B. NO.           
                                               
                                                           


lender paid by the lessees on the loans made to them from this

account shall be deposited into the same account.  Any additional

interest or other earnings arising out of investments from this

account shall be credited to and deposited into the Hawaiian home

receipts fund.

     (d)  There are established in the treasury of the State five

special funds, to be known respectively as the Hawaiian home

operating fund, the Hawaiian home administration account, the

Hawaiian home receipts fund, the Hawaiian home trust fund, and

the native Hawaiian rehabilitation fund.

     (e)  Hawaiian home operating fund.  The interest transferred

from the Hawaiian home loan fund, all moneys received by the

department from any other source, and moneys transferred from the

Hawaiian home receipts fund, shall be deposited into the Hawaiian

home operating fund.  The moneys in this fund, without the prior

written approval of the governor, shall be available:

     (1)  For construction and reconstruction of revenue-

          producing improvements intended to serve principally

          occupants of Hawaiian home lands, including acquisition

          or lease therefor of real property and interests

          therein, such as water rights or other interests;

     (2)  For payment into the treasury of the State of such








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                                        H.B. NO.           
                                               
                                                           


          amounts as are necessary to meet the interest and

          principal charges for state bonds issued for such

          revenue-producing improvements;

     (3)  For operation and maintenance of such improvements

          constructed from such funds or other funds;

     (4)  For the purchase of water or other utilities, goods,

          commodities, supplies, or equipment needed for

          services, or to be resold, rented, or furnished on a

          charge basis to occupants of Hawaiian home lands; and

     (5)  For appraisals, studies, consultants (including

          architects and engineers), or any other staff services

          including those in section 202(b) required to plan,

          implement, develop, or operate these projects.

     The moneys in this fund may be supplemented by other funds

available for or appropriated by the legislature for the same

purposes.  In addition to such moneys, this fund, with the

approval of the governor, may be supplemented by transfers, made

on a loan basis from the Hawaiian home loan fund for a period not

exceeding ten years; provided that the aggregate amount of such

transfers outstanding at any one time shall not exceed $500,000.

     In addition, moneys of this fund shall be made available

with the prior written approval of the governor for offsite








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                                        H.B. NO.           
                                               
                                                           


improvements and development necessary to serve present and

future occupants of Hawaiian home lands; for improvements,

additions, and repairs to all assets owned or leased by the

department excluding structures or improvements that the

department is obligated to acquire under section 209; for

engineering, architectural, and planning services to maintain and

develop properties; for such consultant services as may be

contracted for under this Act; for purchase or lease of necessary

equipment; for acquisition or lease of real property and interest

therein; and for improvements constructed for the benefit of

beneficiaries of this Act and not otherwise permitted in the

various loan funds or the administration account.

     (f)  Hawaiian home administration account.  The entire

receipts derived from any leasing or other disposition of the

available lands pursuant to section [204(a)(2)] and transfers

from the Hawaiian home receipts fund shall be deposited into this

account.  Any interest or other earnings arising out of

investments from this fund shall be credited to and deposited

into this fund.  The moneys in this account shall be expended by

the department for salaries and other administration expenses of

the department in conformity with general law applicable to all

departments of the State, and no sums shall be expended for








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                                        H.B. NO.           
                                               
                                                           


structures and other permanent improvements.  This account shall

be subject to the following conditions and requirements:

     (1)  The department, when required by the governor but not

          later than November 15 preceding each regular session

          of the legislature, shall submit to the state director

          of finance its budget estimates of expenditures for the

          next fiscal period in the manner required by general

          law;

     (2)  The department's budget as approved by the governor

          shall be included in the governor's budget report and

          shall be transmitted to the legislature for its

          approval;

     (3)  Upon legislative approval of a budget, the amount

          appropriated shall be made available to the department.

          If no budget is approved by the legislature prior to

          its adjournment, sums accruing to this account shall

          not be expended for any other purpose but shall remain

          available for future use.  Any amount in this account

          which is in excess of the amount approved by the

          legislature or made available for the fiscal period may

          be transferred to the Hawaiian home operating fund.

     (g)  Hawaiian home receipts fund.  All interest moneys from








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Page 39                                                    
                                        H.B. NO.           
                                               
                                                           


loans or investments received by the department from any fund

except as provided for in each respective fund, shall be

deposited into this fund.  At the end of each quarter, all moneys

in this fund may be transferred to the Hawaiian home operating

fund, the Hawaiian home administration account, the Hawaiian home

trust fund, and any loan fund in accordance with rules adopted by

the department.

     (h)  Hawaiian home trust fund.  Except for gifts, bequests,

and other moneys given for designated purposes, moneys deposited

into this fund shall be available for transfers into any other

fund or account authorized by the Act or for any public purpose

deemed by the commission to further the purposes of the Act.

Public purpose, as used herein, includes the formation of an

account within the Hawaiian home trust fund as a reserve for

loans insured or guaranteed by the Federal Housing

Administration, Department of Veterans Affairs, or any other

federal agency and their respective successors and assigns, which

are authorized to insure or guarantee loans.  Notwithstanding any

other law to the contrary, the department is expressly authorized

to deposit the reserve for loans in any duly organized bank in

the State or elsewhere in the United States with automatic fund

transfer capabilities and at such reserve amounts as shall be








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Page 40                                                    
                                        H.B. NO.           
                                               
                                                           


reasonably required by the federal agencies as a condition for

participation in their respective insurance or guarantee

programs.

     (i)  Native Hawaiian rehabilitation fund.  Pursuant to

Article XII, Section 1, of the State Constitution, thirty per

cent of the state receipts, derived from lands previously

cultivated as sugarcane lands under any other provision of law

and from water licenses, shall be deposited into this fund.  The

department shall use this money solely for the rehabilitation of

native Hawaiians which shall include, but not be limited to, the

educational, economic, political, social, and cultural processes

by which the general welfare and conditions of native Hawaiians

are thereby improved and perpetuated.

     Any payment of principal, interest, or other earnings

arising out of the loan or investment of money from this fund

shall be credited to and deposited into this fund.

     Sections 214, 215, 216, and 217 shall not apply to

administration of this fund.  The department is authorized to

adopt rules under chapter 91 necessary to administer and carry

out the purposes of this fund."]

     SECTION 17.  Section 214, 215, 216, and 217 of the Hawaiian

Homes Commission Act, 1920, is repealed.








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                                        H.B. NO.           
                                               
                                                           


     ["§214.  Purposes of loans; authorized actions.  (a)  The

department may make loans from revolving funds to any lessee or

native Hawaiian to whom, or any cooperative association to which,

a lease has been issued under section 207(a) of this Act or a

license has been issued under section 207(c)(1)(B) of this Act.

Such loans may be made for the following purposes:

     (1)  The repair or maintenance or purchase or erection of

          dwellings on any tract, and the undertaking of other

          permanent improvements thereon;

     (2)  The purchase of livestock, swine, poultry, fowl,

          aquaculture stock, and farm and aquaculture equipment;

     (3)  Otherwise assisting in the development of tracts and of

          farm, ranch, and aquaculture operations, including:

          (A)  The initial and on-going development, improvement,

               operation, and expansion of homestead farms,

               ranches, and aquaculture enterprises;

          (B)  The liquidation of indebtedness incurred for any

               of the foregoing purposes relating to farm loans

               aged less than five years;

          (C)  The payment of normal and reasonable living

               expenses of a full-time farmer;

          (D)  The planning, layout, and installation of soil and








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Page 42                                                    
                                        H.B. NO.           
                                               
                                                           


               water conservation practices; and

          (E)  Providing relief and rehabilitation to homestead

               farmers and ranchers due to damage by rain and

               windstorms, droughts, tidal wave, earthquake,

               volcanic eruption, and other natural

               catastrophies, and for livestock disease,

               epidemics, crop blights, and serious effects of

               prolonged shipping and dock strikes;

     (4)  The cost of breaking up, planting, and cultivating land

          and harvesting crops, the cost of excavating or

          constructing aquaculture ponds and tanks, the purchase

          of seeds, fertilizers, feeds, insecticides, medicines,

          and chemicals for disease and pest control for animals,

          fish, shellfish, and crops, and the related supplies

          required for farm, ranch, and aquaculture operations,

          the erection of fences and other permanent improvements

          for farm, ranch, and aquaculture purposes and the

          expense of marketing; and

     (5)  To assist licensees in the operation or erection of

          theaters, garages, service stations, markets, stores,

          and other mercantile establishments, all of which shall

          be owned by native Hawaiians or by organizations formed








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Page 43                                                    
                                        H.B. NO.           
                                               
                                                           


          and controlled by native Hawaiians.

     (b)  In addition the department may:

     (1)  Use moneys in the Hawaiian home operating fund, with

          the prior approval of the governor, to match federal,

          state, or county funds available for the same purposes

          and to that end, enter into such undertaking, agree to

          such conditions, transfer funds therein available for

          such expenditure, and do and perform such other acts

          and things, as may be necessary or required, as a

          condition to securing matching funds for such projects

          or works;

     (2)  Loan or guarantee the repayment of or otherwise

          underwrite any authorized loan or portion thereof to

          lessees in accordance with section 215;

     (3)  Loan or guarantee the repayment of or otherwise

          underwrite any authorized loan or portion thereof to a

          cooperative association in accordance with section 215;

     (4)  Permit and approve loans made to lessees by government

          agencies or private lending institutions, where the

          department assures the payment of such loans; provided

          that upon receipt of notice of default in the payment

          of such assured loans, the department may, upon failure








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Page 44                                                    
                                        H.B. NO.           
                                               
                                                           


          of the lessee to cure the default within sixty days,

          cancel the lease and pay the outstanding balance in

          full or may permit the new lessee to assume the

          outstanding debt; and provided further that the

          department shall reserve the following rights:  the

          right of succession to the lessee's interest and

          assumption of the contract of loan; the right to

          require that written notice be given to the department

          immediately upon default or delinquency of the lessee;

          and any other rights enumerated at the time of

          assurance necessary to protect the monetary and other

          interests of the department;

     (5)  Secure, pledge, or otherwise guarantee the repayment of

          moneys borrowed by the department from government

          agencies or private lending institutions and pay the

          interim interest or advances required for loans;

          provided that the State's liability, contingent or

          otherwise, either on moneys borrowed by the department

          or on departmental guarantees of loans made to lessees

          under this paragraph and paragraphs (2), (3), and (4)

          of this subsection, shall at no time exceed

          $50,000,000; the department's guarantee of repayment








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Page 45                                                    
                                        H.B. NO.           
                                               
                                                           


          shall be adequate security for a loan under any state

          law prescribing the nature, amount, or form of security

          or requiring security upon which loans may be made;

     (6)  Use available loan fund moneys or other funds

          specifically available for such purposes as cash

          guarantees when required by lending agencies;

     (7)  Exercise the functions and reserved rights of a lender

          of money or mortgagee of residential property in all

          direct loans made by government agencies or by private

          lending institutions to lessees the repayment of which

          is assured by the department.  The functions and

          reserved rights shall include but not be limited to,

          the purchasing, repurchasing, servicing, selling,

          foreclosing, buying upon foreclosure, guaranteeing the

          repayment, or otherwise underwriting, of any loan, the

          protecting of security interest, and after

          foreclosures, the repairing, renovating, or

          modernization and sale of property covered by the loan

          and mortgage;

     (8)  Pledge receivables of loan accounts outstanding as

          collateral to secure loans made by government agencies

          or private lending institutions to the department, the








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Page 46                                                    
                                        H.B. NO.           
                                               
                                                           


          proceeds of which shall be used by the department to

          make new loans to lessees or to finance the development

          of available lands for purposes permitted by this Act;

          provided that any loan agreement entered into under

          this paragraph by the department shall include a

          provision that the money borrowed by the department is

          not secured directly or indirectly by the full faith

          and credit or the general credit of the State or by any

          revenues or taxes of the State other than the

          receivables specifically pledged to repay the loan;

          provided further that in making loans or developing

          available lands out of money borrowed under this

          paragraph, the department may establish, revise,

          charge, and collect fees, premiums, and charges as

          necessary, reasonable, or convenient, to assure

          repayment of the funds borrowed, and the fees,

          premiums, and charges shall be deposited into the

          Hawaiian home trust fund; and provided further that no

          moneys of the Hawaiian home loan fund may be pledged as

          security under this paragraph; and

     (9)  Notwithstanding any other provisions of this Act to the

          contrary, transfer into the Hawaiian home trust fund








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Page 47                                                    
                                        H.B. NO.           
                                               
                                                           


          any available and unpledged moneys from any loan funds,

          the Hawaiian loan guarantee fund, or any fund or

          account succeeding thereto, except the Hawaiian home

          loan fund, for use as cash guarantees or reserves when

          required by a federal agency authorized to insure or

          guarantee loans to lessees.

     §215.  Conditions of loans.  Except as otherwise provided in

[section 213(c)], each contract of loan with the lessee or any

successor or successors to the lessee's interest in the tract or

with any agricultural, mercantile, or aquacultural cooperative

association composed entirely of lessees shall be held subject to

the following conditions whether or not stipulated in the

contract loan:

     (1)  At any one time, the outstanding amount of loans made

          to any lessee, or successor or successors in interest,

          for the repair, maintenance, purchase, and erection of

          a dwelling and related permanent improvements shall not

          exceed fifty per cent of the maximum single residence

          loan amount allowed in Hawaii by the United States

          Department of Housing and Urban Development's Federal

          Housing Administration (FHA), for the development and

          operation of a farm, ranch, or aquaculture operation








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          shall not exceed $50,000, except that when loans are

          made to an agricultural or aquacultural cooperative

          association for the purposes stated in section

          214(a)(4), the loan limit shall be determined by the

          department on the basis of the proposed operations and

          the available security of the association, and for the

          development and operation of a mercantile establishment

          shall not exceed the loan limit determined by the

          department on the basis of the proposed operations and

          the available security of the lessee or of the

          organization formed and controlled by lessees; provided

          that upon the death of a lessee leaving no relative

          qualified to be a lessee of Hawaiian home lands, or the

          cancellation of a lease by the department, or the

          surrender of a lease by the lessee, the department

          shall make the payment provided for by section 209(a),

          the amount of any such payment shall be considered as

          part or all, as the case may be, of any such loan to

          the successor or successors, without limitation as to

          the above maximum amounts; provided further that in

          case of the death of a lessee, or cancellation of a

          lease by the department, or the surrender of a lease by








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                                        H.B. NO.           
                                               
                                                           


          the lessee, the successor or successors to the tract

          shall assume any outstanding loan or loans thereon, if

          any, without limitation as to the above maximum amounts

          but subject to paragraph (3).

     (2)  The loans shall be repaid in periodic installments,

          such installments to be monthly, quarterly, semiannual,

          or annual as may be determined by the department in

          each case.  The term of any loan shall not exceed

          thirty years.  Payments of any sum in addition to the

          required installments, or payment of the entire amount

          of the loan, may be made at any time within the term of

          the loan.  All unpaid balances of principal shall bear

          interest at the rate of two and one-half per cent a

          year for loans made directly from the Hawaiian home

          loan fund, or at the rate of two and one-half per cent

          or higher as established by law for other loans,

          payable periodically or upon demand by the department,

          as the department may determine.  The payment of any

          installment due shall be postponed in whole or in part

          by the department for such reasons as it deems good and

          sufficient and until such later date as it deems

          advisable.  Such postponed payments shall continue to








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          bear interest on the unpaid principal at the rate

          established for the loan.

     (3)  In the case of the death of a lessee the department

          shall, in any case, permit the successor or successors

          to the tract to assume the contract of loan subject to

          paragraph (1).  In case of the cancellation of a lease

          by the department or the surrender of a lease by the

          lessee, the department may, at its option declare all

          installments upon the loan immediately due and payable,

          or permit the successor or successors to the tract to

          assume the contract of loan subject to paragraph (1).

          The department may, in such cases where the successor

          or successors to the tract assume the contract of loan,

          waive the payment, wholly or in part, of interest

          already due and delinquent upon the loan, or postpone

          the payment of any installment thereon, wholly or in

          part, until such later dates as it deems advisable.

          Such postponed payments shall, however, continue to

          bear interest on the unpaid principal at the rate

          established for the loan. Further, the department may,

          if it deems it advisable and for the best interests of

          the lessees, write off and cancel, wholly or in part,








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          the contract of loan of the deceased lessee, or

          previous lessee, as the case may be, where such loans

          are delinquent and deemed uncollectible.  Such write

          off and cancellation shall be made only after an

          appraisal of all improvements and growing crops or

          improvements and aquaculture stock, as the case may be,

          on the tract involved, such appraisal to be made in the

          manner and as provided for by section 209(a).  In every

          case, the amount of such appraisal, or any part

          thereof, shall be considered as part or all, as the

          case may be, of any loan to such successor or

          successors, subject to paragraph (1).

     (4)  No part of the moneys loaned shall be devoted to any

          purpose other than those for which the loan is made.

     (5)  The borrower or the successor to his interest shall

          comply with such other conditions, not in conflict with

          any provision of this Act, as the department may

          stipulate in the contract of loan.

     (6)  The borrower or the successor to his interest shall

          comply with the conditions enumerated in section 208,

          and with section 209 of this Act in respect to the

          lease of any tract.








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     (7)  Whenever the department shall determine that a borrower

          is delinquent in the payment of any indebtedness to the

          department, it may require such borrower to execute an

          assignment to it, not to exceed, however, the amount of

          the total indebtedness of such borrower, including the

          indebtedness to others the payment of which has been

          assured by the department of all moneys due or to

          become due to such borrower by reason of any agreement

          or contract, collective or otherwise, to which the

          borrower is a party.  Failure to execute such an

          assignment when requested by the department shall be

          sufficient ground for cancellation of the borrower's

          lease or interest therein.

     §216.  Insurance by borrowers; acceleration of loans; lien

and enforcement thereof.  (a)  The department may require the

borrower to insure, in such amount as the department may

prescribe, any livestock, aquaculture stock, swine, poultry,

fowl, machinery, equipment, dwellings, and permanent improvements

purchased or constructed out of any moneys loaned or assured by

the department; or, in lieu thereof, the department may directly

take out such insurance and add the cost thereof to the amount of

principal payable under the loan.








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     (b)  Whenever the department has reason to believe that the

borrower has violated any condition enumerated in paragraph (2),

(4), (5), or (6) of section 215 of this Act, the department shall

give due notice and afford opportunity for a hearing to the

borrower or the successor or successors to his interest, as the

case demands.  If upon such hearing the department finds that the

borrower has violated the condition, the department may declare

all principal and interest of the loan immediately due and

payable notwithstanding any provision in the contract of loan to

the contrary.

     (c)  The department shall have a first lien upon the

borrower's or lessee's interest in any lease, growing crops,

aquacultural stock, either on his tract or share in any

collective contract or program, livestock, swine, poultry, fowl,

aquaculture stock, machinery, and equipment purchased with moneys

loaned by the department, and in any dwellings or other permanent

improvements on any leasehold tract, to the amount of all

principal and interest due and unpaid and of all taxes and

insurance and improvements paid by the department, and any other

indebtedness of the borrower, the payment of which has been

assured by the department.  Such lien shall have priority over

any other obligation for which the property subject to the lien








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                                        H.B. NO.           
                                               
                                                           


may be security.

     (d)  The department may, subject to this Act and procedures

established by rule, enforce any lien by declaring the borrower's

interest in the property subject to the lien to be forfeited, any

lease held by the borrower canceled, and shall thereupon order

such leasehold premises vacated and the property subject to the

lien surrendered within a reasonable time.  The right to the use

and occupancy of the Hawaiian home lands contained in such lease

shall thereupon revest in the department, and the department may

take possession of the premises covered therein and the

improvements and growing crops or improvements and aquaculture

stock thereon; provided that the department shall pay to the

borrower any difference which may be due him after the appraisal

provided for in section 209 has been made.

     §217.  [Ejectment, when:  loan to new lessee for

improvements.]  In case the lessee or borrower or the successor

to his interest in the tract, as the case may be, fails to comply

with any order issued by the department under the provisions of

section 210 or 216 of this title, the department may (1) bring

action of ejectment or other appropriate proceedings, or (2)

invoke the aid of the circuit court of the State for the judicial

circuit in which the tract designated in the department's order








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is situated.  Such court may thereupon order the lessee or his

successor to comply with the order of the department.  Any

failure to obey the order of the court may be punished by it as

contempt thereof.  Any tract forfeited under the provisions of

section 210 or 216 of this title may be again leased by the

department as authorized by the provisions of section 207 of this

title, except that the value, in the opinion of the department,

of all improvements made in respect to such tract by the original

lessee or any successor to his interest therein shall constitute

a loan by the department to the new lessee.  Such loan shall be

subject to the provisions of this section and sections 215,

except paragraph (1), and 216 to the same extent as loans made by

the department from the Hawaiian loan fund."]

     SECTION 18.  Sections 219, 219.1, 220, 220.5, 221, and 222

of the Hawaiian Homes Commission Act, 1920, are repealed.

     ["§219.  Agricultural and aquacultural experts.  The

department is authorized to employ agricultural and aquacultural

experts at such compensation and in such number as it deems

necessary.  It shall be the duty of such agricultural and

aquacultural experts to instruct and advise the lessee of any

tract or the successor to the lessee's interest therein as to the

best methods of diversified farming and stock raising and








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aquaculture operations and such other matters as will tend

successfully to accomplish the purposes of this title.

     §219.1.  General assistance.  (a)  The department is

authorized to carry on any activities it deems necessary to

assist the lessees in obtaining maximum utilization of the leased

lands, including taking any steps necessary to develop these

lands for their highest and best use commensurate with the

purposes for which the land is being leased as provided for in

section 207, and assisting the lessees in all phases of farming,

ranching, and aquaculture operations and the marketing of their

agricultural [or] aquacultural produce and livestock.

     (b)  Notwithstanding any law to the contrary, the department

either alone or together with any other governmental agency, may:

     (1)  Form an insurance company, association (nonprofit or

          otherwise), pool, or trust;

     (2)  Acquire an existing insurance company;

     (3)  Enter into arrangements with one or more insurance

          companies; or

     (4)  Undertake any combination of the foregoing; upon such

          terms and conditions and for such periods, as the

          commission shall approve, to provide homeowner

          protection, including hurricane coverage, for lessees








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          participating in such undertaking.  Such undertaking

          shall be subject to the provisions of chapter 431P,

          including but not limited to section 431P-10(b), and

          chapter 431.

     (c)  The department, if experiencing any of the power as

authorized under subsection (b) may:

     (1)  Issue revenue bonds under and pursuant to part III of

          chapter 39, Hawaii Revised Statutes, to establish

          necessary reserves to provide for the payment of claims

          in excess of reserves and for other related purposes;

          or to pay any liability incurred that is self-insured

          or uninsured by the commission including without

          limitations, liabilities for damage to property,

          comprehensive liability, environmental, or other

          losses; and

     (2)  Invest funds held in reserve, which are not required

          for immediate disbursement, in property or securities

          in which savings banks may legally invest funds subject

          to their control or as the commission may authorize by

          resolution.

     §220.  Development projects; appropriations by legislature;

bonds issued by legislature; mandatory reservation of water.  (a)








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Subject to subsection (d), the department is authorized directly

to undertake and carry on general water and other development

projects in respect to Hawaiian home lands and to undertake other

activities having to do with the economic and social welfare of

the homesteaders, including the authority to derive revenue from

the sale, to others than homesteaders, of water and other

products of such projects or activities, or from the enjoyment

thereof by others than homesteaders, where such sale of products

or enjoyment of projects or activities by others does not

interfere with the proper performance of the duties of the

department; provided that roads through or over Hawaiian home

lands, other than federal-aid highways and roads, shall be

maintained by the county in which the particular road or roads to

be maintained are located.

     (b)  The legislature is authorized to appropriate out of the

treasury of the State such sums as it deems necessary to augment

the funds of the department and to provide the department with

funds sufficient to execute and carry on such projects and

activities.  The legislature is further authorized to issue bonds

to the extent required to yield the amount of any sums so

appropriated for the payment of which, if issued for revenue-

producing improvements, the department shall provide, as set








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forth in section 213.

     (c)  To enable the construction of irrigation projects which

will service Hawaiian home lands, either exclusively or in

conjunction with other lands served by such projects, the

department is authorized, with the approval of the governor, and

subject to subsection (d), to:

     (1)  Grant to the board of land and natural resources, or to

          any other agency of the government of the State or the

          United States undertaking the construction and

          operation of such irrigation projects, licenses for

          rights-of-way for pipelines, tunnels, ditches, flumes,

          and other water conveying facilities, reservoirs, and

          other storage facilities, and for the development and

          use of water appurtenant to Hawaiian home lands;

     (2)  Exchange available lands for public lands, as provided

          in section 204 of this Act, for sites for reservoirs

          and subsurface water development wells and shafts;

     (3)  Request any such irrigation agency to organize

          irrigation projects for Hawaiian home lands and to

          transfer irrigation facilities constructed by the

          department to any such irrigation agency;

     (4)  Agree to pay the tolls and assessments made against








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                                        H.B. NO.           
                                               
                                                           


          community pastures for irrigation water supplied to

          such pastures; and

     (5)  Agree to pay the costs of construction of projects

          constructed for Hawaiian home lands at the request of

          the department, in the event the assessments paid by

          the homesteaders upon lands are not sufficient to pay

          such costs;

provided that licenses for rights-of-way for the purposes and in

the manner specified in this section may be granted for a term of

years longer than is required for amortization of the costs of

the project or projects requiring use of such rights-of-way only

if authority for such longer grant is approved by an act of the

legislature of the State.  Such payments shall be made from, and

be a charge against the Hawaiian home operating fund.

     (d)  For projects pursuant to this section, sufficient water

shall be reserved for current and foreseeable domestic, stock

water, aquaculture, and irrigation activities on tracts leased to

native Hawaiians pursuant to section 207(a).

     §220.5.  Development by contract; development by project

developer agreement.  (a)  Notwithstanding any law to the

contrary, the department is authorized to enter into and carry

out contracts to develop available lands for homestead,








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commercial, and multipurpose projects; provided that the

department shall not be subject to the requirements of

competitive bidding if no state funds are to be used in the

development of the project.

     (b)  Notwithstanding any law to the contrary, the department

is authorized to enter into project developer agreements with

qualified developers for, or in connection with, any homestead,

commercial, or multipurpose project, or portion of any project;

provided that prior to entering into a project developer

agreement with a developer, the department shall:

     (1)  Set by appraisal the minimum rental of the lands to be

          disposed of on the basis of the fair market value of

          the lands;

     (2)  Give notice of the proposed disposition in accordance

          with applicable procedures and requirements of section

          171-60(a)(3), Hawaii Revised Statutes;

     (3)  Establish reasonable criteria for the selection of the

          private developer; and

     (4)  Determine within forty-five days of the last day for

          filing applications the applicant or applicants who

          meet the criteria for selection, and notify all

          applicants of its determination within seven days of








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          such determination.  If only one applicant meets the

          criteria for selection as the developer, the department

          then may negotiate the details of the project developer

          agreement with the developer; provided that the terms

          of the project developer agreement shall not be less

          than those proposed by the developer in the

          application.  If two or more applicants meet the

          criteria for selection, the department shall consider

          all of the relevant facts of the disposition or

          contract, the proposals submitted by each applicant,

          and the experience and financial capability of each

          applicant and, within forty-five days from the date of

          selection of the applicants that met the criteria,

          shall select the applicant who submitted the best

          proposal.  The department then may negotiate the

          details of the disposition with the developer,

          including providing benefits to promote native Hawaiian

          socio-economic advancement; provided that the terms of

          the project developer agreement shall not be less than

          those proposed by the developer in the application.

     (c)  Any project developer agreement entered into pursuant

to this section shall include the following terms and conditions,








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wherever appropriate:

     (1)  A requirement that the developer file with the

          department a good and sufficient bond conditioned upon

          the full and faithful performance of all the terms,

          covenants, and conditions of the project developer

          agreement;

     (2)  The use or uses to which the land will be put;

     (3)  The dates on which the developer must submit to the

          department for approval preliminary plans and final

          plans and specifications for the total development. No

          construction shall commence until the department has

          approved the final plans and specifications; provided

          that construction on an incremental basis may be

          permitted by the department;

     (4)  The date of completion of the total development,

          including the date of completion of any permitted

          incremental development;

     (5)  The minimum requirements for off-site and on-site

          improvements that the developer must install,

          construct, and complete by the date of completion of

          the total development.  The department may permit

          incremental development and establish the minimum








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          requirements for off-site and on-site improvements that

          must be installed, constructed, and completed prior to

          the date of completion of the total development; and

     (6)  Any other terms and conditions deemed necessary by the

          department to protect the interests of the State and

          the department.

     (d)  Any project developer agreement entered into pursuant

to this section may provide for options for renewal of the term

of the project developer agreement; provided that:

     (1)  The term of any one project developer agreement shall

          not exceed sixty-five years;

     (2)  Any lands disposed of under a project developer

          agreement shall be subject to withdrawal at any time

          during the term of the agreement, with reasonable

          notice; and

     (3)  The rental shall be reduced in proportion to the value

          of the portion withdrawn and the developer shall be

          entitled to receive from the department the

          proportionate value of the developer's permanent

          improvements so taken in the proportion that they bear

          to the unexpired term of the agreement, with the value

          of the permanent improvements determined on the basis








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          of fair market value or depreciated value, whichever is

          less; or the developer, in the alternative, may remove

          and relocate the developer's improvements to the

          remainder of the lands occupied by the developer.

     (e)  The project developer agreement may permit the

developer, after the developer has completed construction of any

required off-site improvement, to assign or sublease with the

department's approval portions of the leased lands in which the

construction of any required off-site improvement has been

completed to a purchaser or sublessee who shall assume the

obligations of the developer relative to the parcel being

assigned or subleased, including the construction of any on-site

improvement.  The department may permit a developer to share in

the lease rent from the assigned lease for a fixed period in

order to recover costs and profit.

     (f)  Whenever the department enters into a project developer

agreement to develop a homestead project, the department shall

provide for the purchase of the completed project or that portion

of a completed project developed for disposition to native

Hawaiians, and shall dispose of the lands in accordance with this

Act; provided that the project developer agreement shall not

encumber any existing homestead lease in the project area.








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     (g)  As used in this section, the following words and terms

shall have the following meanings unless the context indicates

another or different meaning or intent:

     "Commercial project" means a project or that portion of a

multipurpose project, including single-family or multiple-family

residential, agricultural, pastoral, aquacultural, industrial,

business, hotel and resort, or other commercial uses designed and

intended to generate revenues as authorized by this Act;

     "Developer" means any person, partnership, cooperative,

firm, nonprofit or for-profit corporation, or public agency

possessing the competence, expertise, experience, and resources,

including financial, personal, and tangible resources, required

to carry out a project;

     "Homestead project" means a project or that portion of a

multipurpose project, including residential, agricultural,

pastoral, or aquacultural uses designed and intended for

disposition to native Hawaiians under this Act; provided that

this term shall also include community facilities for homestead

areas;

     "Multipurpose project" means a combination of a commercial

project and a homestead project;

     "Project" means a specific undertaking to develop,








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                                        H.B. NO.           
                                               
                                                           


construct, reconstruct, rehabilitate, renovate, or to otherwise

improve or enhance land or real property;

     "Project developer agreement" means any lease, sublease,

conditional leasing agreement, disposition agreement, financing

agreement, or other agreement or combination of agreement,

entered into under this section by the department, for the

purpose of developing one or more projects.

     (h)  The department is authorized to adopt rules in

accordance with chapter 91, Hawaii Revised Statutes, to implement

and carry out the purposes of this section.

     §221.  Water.  (a)  When used in this section:

     (1)  The term "water license" means any license issued by

          the board of land and natural resources granting to any

          person the right to the use of government-owned water;

          and

     (2)  The term "surplus water" means so much of any

          government-owned water covered by a water license or so

          much of any privately owned water as is in excess of

          the quantity required for the use of the licensee or

          owner, respectively.

     (b)  All water licenses issued after the passage of this Act

shall be deemed subject to the condition, whether or not








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stipulated in the license, that the licensee shall, upon the

demand of the department, grant to it the right to use, free of

all charge, any water which the department deems necessary

adequately to supply the livestock, aquaculture operations,

agriculture operations, or domestic needs of individuals upon any

tract.

     (c)  In order adequately to supply livestock, the

aquaculture operations, the agriculture operations, or the

domestic needs of individuals upon any tract, the department is

authorized (1) to use, free of all charge, government-owned water

not covered by any water license or covered by a water license

issued after the passage of this Act or covered by a water

license issued previous to the passage of this Act but containing

a reservation of such water for the benefit of the public, and

(2) to contract with any person for the right to use or to

acquire, under eminent domain proceedings similar, as near as may

be, to the proceedings provided in respect to land by sections

101-10 to 101-34, Hawaii Revised Statutes, the right to use any

privately owned surplus water or any government-owned surplus

water covered by a water license issued previous to the passage

of this Act, but not containing a reservation of such water for

the benefit of the public.  Any such requirement shall be held to








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be for a public use and purpose.  The department may institute

the eminent domain proceedings in its own name.

     (d)  The department is authorized, for the additional

purpose of adequately irrigating any tract, to use, free of all

charge, government-owned surplus water tributary to the Waimea

river upon the island of Kauai, not covered by a water license or

covered by a water license issued after July 9, 1921.  Any water

license issued after that date and covering any such government-

owned water shall be deemed subject to the condition, whether or

not stipulated therein, that the licensee shall, upon the demand

of the department, grant to it the right to use, free of all

charge, any of the surplus water tributary to the Waimea river

upon the island of Kauai, which is covered by the license and

which the department deems necessary for the additional purpose

of adequately irrigating any tract.

     Any funds which may be appropriated by Congress as a grant-

in-aid for the construction of an irrigation and water

utilization system on the island of Molokai designed to serve

Hawaiian home lands, and which are not required to be reimbursed

to the federal government, shall be deemed to be payment in

advance by the department and lessees of the department of

charges to be made to them for the construction of such system








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and shall be credited against such charges when made.

     (e)  All rights conferred on the department by this section

to use, contract for, or acquire the use of water shall be deemed

to include the right to use, contract for, or acquire the use of

any ditch or pipeline constructed for the distribution and

control of such water and necessary to such use by the

department.

     (f)  Water systems in the exclusive control of the

department shall remain under its exclusive control; provided

that the department may negotiate an agreement to provide for the

maintenance of the water system and the billing and collection of

user fees.  If any provision or the application of that provision

is inconsistent with provisions contained in this section, this

section shall control.

     Water systems include all real and personal property

together with all improvements to such systems acquired or

constructed by the department for the distribution and control of

water for domestic or agricultural use.

     §222.  Administration.  (a)  The department shall adopt

rules and regulations and policies in accordance with chapter 91,

Hawaii Revised Statutes.  The department may make such

expenditures as are necessary for the efficient execution of the








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                                        H.B. NO.           
                                               
                                                           


functions vested in the department by this Act.  All expenditures

of the department and all moneys necessary for loans made by the

department, in accordance with the provisions of this Act, shall

be allowed and paid upon the presentation of itemized vouchers

approved by the chairman of the commission or the chairman's

designated representative.  The department shall make an annual

report to the legislature of the State upon the first day of each

regular session and such special reports as the legislature may

from time to time require.  The chairman and members of the

commission shall give bond as required by law.  The sureties upon

the bond and the conditions thereof shall be approved annually by

the governor.

     (b)  When land originally leased by the department is, in

turn, subleased by the department's lessee or sublessee, the

department shall submit, within ten days of the convening of any

regular session, a written report to the legislature which shall

cover the sublease transactions occurring in the calendar year

prior to the regular session and shall contain the names of the

persons involved in the transaction, the size of the area under

lease, the purpose of the lease, the land classification of the

area under lease, the tax map key number, the lease rental, the

reason for approval of the sublease by the department, and the








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                                        H.B. NO.           
                                               
                                                           


estimated net economic result accruing to the department, lessee

and sublessee."]

     SECTION 19.  Sections 224, 225, 226, and 227 of the Hawaiian

Homes Commission Act, 1920, are repealed.

     ["§224.  Sanitation and reclamation expert.  The Secretary

of the Interior shall designate from his Department someone

experienced in sanitation, rehabilitation, and reclamation work

to reside in the State and cooperate with the department in

carrying out its duties.  The salary of such official so

designated by the Secretary of the Interior shall be paid by the

department while he is carrying on his duties in the State.

     §225.  Investment of funds; disposition.  (a)  The

department shall have the power and authority to invest and

reinvest any of the moneys in any of its funds, not otherwise

immediately needed for the purposes of the funds, in such bonds

and securities as authorized by state law for the investment of

state sinking fund moneys.

     (b)  (1)  The department may receive, manage, and invest

          moneys or other property, real, personal or mixed, or

          any interest therein, which may be given, bequeathed,

          or devised, or in any manner received from sources

          other than the legislature or any federal








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                                        H.B. NO.           
                                               
                                                           


          appropriation, for the purposes of the Act.

     (2)  All moneys received by or on behalf of the department

          shall be deposited into the state treasury to be

          expended according to law and for purposes in

          accordance with the terms and conditions of the gift.

          All moneys shall be appropriated for purposes

          enumerated in such gifts and if no specific purpose is

          enumerated, shall be appropriated to the Hawaiian home

          trust fund.

     (3)  The department is authorized to sell, lease, or in any

          way manage such real, personal, or mixed property or

          any interest therein, in the manner and for the

          purposes enumerated in the gift.  If no conditions are

          enumerated, the gift may be sold, leased, managed, or

          disposed of and the income or proceeds therefrom shall

          be deposited into the Hawaiian home trust fund.

     (4)  The real property or any interest therein received by

          the department through contributions or grants shall

          not attain the status of Hawaiian home lands as defined

          in section 201(a)(5).

     (5)  The department shall cause to be kept suitable books of

          account wherein shall be recorded each gift, the








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                                        H.B. NO.           
                                               
                                                           


          essential facts of the management thereof, and the

          expenditure of income.

     (6)  Any action to be taken with respect to gifts shall be

          made in a public meeting where any pertinent

          information and reasons for any decisions shall be

          fully disclosed.

     §226.  Qualification for federal programs.  The department

shall be qualified to participate in any federal program that

renders assistance in program areas that the department is

mandated by the Act to implement.

     [§227.]  Enterprise zones.  The department is authorized to

participate in any federal or state program that permits the

establishment of one or more enterprise zones on available lands,

provided that participation in the program will result in

economic benefits to native Hawaiians.  The administration of the

program shall be governed by rules adopted by the department in

accordance with chapter 91, Hawaii Revised Statutes."]

                            PART III

               NATIVE HAWAIIAN TRUST CORPORATION:

   AUTHORIZATION, RIGHTS AND RESPONSIBILITIES, AND GOVERNANCE

     SECTION 20.  The Hawaii Revised Statutes is amended by

adding a new chapter to be appropriately designated and to read








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                                        H.B. NO.           
                                               
                                                           


as follows:

                          "CHAPTER    

                NATIVE HAWAIIAN TRUST CORPORATION

     §   -1  Statement of intent.  The people of the State of

Hawaii reacknowledge and reaffirm the public trust set forth and

approved in the Admissions Act, which includes, among other

responsibilities, the betterment of conditions of the indigenous

people of Hawaii.  The State also acknowledges that categorizing

persons of Hawaiian blood by the quantum thereof has been

divisive, and that ultimately the question whether and to what

extent persons of varying quanta of Hawaiian blood should

participate in rights, responsibilities, and benefits relating to

Hawaiians should be determined by Hawaiians.

     The State recognizes the desire of Hawaiians for greater

control over certain assets which have as their source lands

formerly owned by the Kingdom of Hawaii, such as the Hawaiian

home lands and certain other ceded lands and the revenues

therefrom.  The State believes that transferring agreed-upon

assets and Hawaiian-related responsibilities to a non-profit

corporation run by a Hawaiian board, for the betterment of the

Hawaiian people, would provide optimum direction and management

and accomplish the benefits of self-determination.  In this








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                                        H.B. NO.           
                                               
                                                           


manner, the wishes of the Hawaiian people for greater autonomy

will be fulfilled.

     §  -2  Definitions.  As used in this chapter:

     "After authorization by the State" means after the effective

date of a concurrent resolution approved on a vote of two-thirds

of each house of the legislature acknowledging that the

corporation has complied with the requirements established in

section    -3.

     "Corporation" means the Native Hawaiian Trust Corporation.

     Except as otherwise provided under section    -9, "Hawaiian"

means any descendant of the races inhabiting the Hawaiian Islands

prior to 1778.

     §  -3  Native Hawaiian Trust Corporation, authorized.  (a)

Within three months after the effective date of this Act, the

governor, in consultation with the office of Hawaiian affairs and

the Hawaiian Homes Commission, shall establish an interim panel

whose sole purpose shall be to plan and carry out the election of

an initial board of directors of the corporation.  The panel

shall be placed within the office of planning for administrative

purposes.

     (b)  The election of the initial board of directors of the

corporation shall be held within eighteen months after the








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                                        H.B. NO.           
                                               
                                                           


establishment of the interim panel.  Within three months after

the election of the first board of directors, the board shall

apply to the State for status as a nonprofit corporation, to be

called the Native Hawaiian Trust Corporation.  Upon determination

by the attorney general that:

     (1)  The board has been validly elected in accordance with

          this chapter;

     (2)  The corporation has been created in accordance with the

          laws of this State; and

     (3)  The bylaws of the corporation comport with the duties

          and responsibilities of the corporation as enumerated

          in this chapter,

and further after authorization by the State, the assets, rights,

and responsibilities specified in this chapter shall thereafter

be transferred to the Native Hawaiian Trust Corporation as

provided in this chapter.

     (c)  Within thirty days after the election of the board, the

interim panel shall be dissolved.

     §  -4  Rights, responsibilities, and purposes.  (a)  The

purpose of the Native Hawaiian Trust Corporation shall be to

benefit Hawaiians and the Hawaiian culture by:

     (1)  Developing home, agriculture, farm and ranch lots, and








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                                        H.B. NO.           
                                               
                                                           


          leasing them to Hawaiians;

     (2)  Making home, agriculture, aquaculture, farm and ranch

          loans to Hawaiians;

     (3)  Devising rehabilitation projects to include, but not be

          limited to, educational, economic, political, social,

          and cultural processes by which the general welfare and

          conditions of Hawaiians are improved;

     (4)  Implementing and administering a K - 12 educational

          program in the Hawaiian language for Hawaiian children,

          and other children at the board's discretion;

     (5)  Implementing health initiatives directed at Hawaiians;

     (6)  Devising and implementing business development and

          assistance programs for Hawaiians;

     (7)  Managing Kaho'olawe;

     (8)  Managing the trust lands transferred to it under this

          chapter;

     (9)  Acting as trustees for all assets transferred to it by

          the State and any subsequent assets acquired by the

          corporation;

    (10)  Bettering the conditions of Hawaiians;

    (11)  Serving as the principal agency in the State

          responsible for the performance, development, and








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                                        H.B. NO.           
                                               
                                                           


          coordination of programs and activities relating to

          Hawaiians;

    (12)  Conducting advocacy efforts for Hawaiians;

    (13)  Applying for, receiving, and disbursing, grants and

          donations from all sources for Hawaiian programs and

          services;

    (14)  Serving as the receptacle for any federal reparations

          for Hawaiians;

    (15)  Developing, implementing, and continually updating a

          comprehensive master plan for Hawaiians which shall

          include, but not be limited to, the following:

          (A)  Compilation of basic demographic data on

               Hawaiians;

          (B)  Identification of the physical, sociological,

               psychological, and economic needs of Hawaiians;

          (C)  Establishment of immediate and long-range goals

               pursuant to programs and services for Hawaiians;

          (D)  Establishment of priorities for program

               implementation and of alternatives for program

               implementation; and

          (E)  Organization of administrative and program

               structure, including the use of facilities and








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               personnel;

    (16)  Assisting in the development of state, county, federal,

          and private plans for Hawaiian programs and services;

    (17)  Maintaining an inventory of federal, state, county, and

          private programs and services for Hawaiians and acting

          as a clearinghouse and referral agency for such

          programs and services;

    (18)  Advising and informing federal, state, and county

          officials about Hawaiian programs, and coordinating

          federal, state, and county activities relating to

          Hawaiians;

    (19)  Conducting, encouraging, and maintaining research

          relating to Hawaiians;

    (20)  Developing and reviewing models for comprehensive

          Hawaiian programs;

    (21)  Acting as a clearinghouse for applications for federal

          or state assistance to carry out Hawaiian programs or

          projects;

    (22)  Applying for, accepting, and administering any federal

          funds made available or allotted under any federal law

          or program to benefit Hawaiians;

    (23)  Applying, when appropriate, for special purpose revenue








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                                        H.B. NO.           
                                               
                                                           


          bonds under chapter 39A, part     ;

    (24)  Promoting and assisting the establishment of agencies

          to serve Hawaiians; and

    (25)  Otherwise planning, developing, and carrying out such

          other programs for the social, economic, educational,

          cultural, or spiritual development of Hawaiians as the

          corporation shall determine.

     (b)  The rights and responsibilities of the corporation

shall be such rights and responsibilities as are designated under

this chapter and such other rights and responsibilities as are

subsequently undertaken and assumed by the corporation, but shall

include ownership and management of:

     (1)  All assets formerly owned or managed by the office of

          Hawaiian affairs;

     (2)  All assets formerly owned or managed by the department

          of Hawaiian home lands; and

     (3)  The island of Kaho'olawe.

     §  -5  Board of directors.  (a)  The board of directors of

the corporation shall consist of a minimum of thirteen members

and shall be elected by Hawaiians age eighteen or older, without

regard to residence.  There shall be at least one representative

each who is a resident of O'ahu, Maui, the county of Hawai'i,








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                                        H.B. NO.           
                                               
                                                           


Kaua'i, Moloka'i, and a location other than the State of Hawai'i.

     (b)  The interim panel or board, as appropriate, may require

proof of each voter's Hawaiian ancestry through birth certificate

or any other reliable indicia of ancestry.  The interim panel or

board, as appropriate, shall establish criteria and procedures

for voting; provided that the "one person one vote" concept shall

be adhered to and that the interim panel or board shall make a

good faith effort to ensure that:

     (1)  The nomination or filing process is fair;

     (2)  All eligible voters have notice of the nomination or

          filing process;

     (3)  All eligible voters have notice of the candidates and

          the election process; and

     (4)  All eligible voters have the opportunity to vote.

The interim panel or board, as appropriate, may allow for

cumulative voting.

     (c)  The members of the board shall be trustees of the

assets of the corporation and shall be held to fiduciary

standards.

     (d)  The corporation may provide for compensation of the

board of trustees; provided that in no event shall any trustee

receive compensation in excess of the statutory compensation set








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                                        H.B. NO.           
                                               
                                                           


for the governor of the State.  No board member shall hold

another position with the corporation during the period that the

board member is a member of the board.

     §  -6  Powers of the corporation.  In addition to specific

powers granted by this chapter or otherwise by law, the

corporation shall have all the usual powers associated with

corporations, including the power to enter into contracts and to

sue and be sued.

     §  -7  Applicable law.  Except as otherwise specified in

this chapter or other specific law, general law applicable to

non-profit corporations shall apply; provided that, when

allegations are made of mismanagement of funds and resources by

board members in breach of fiduciary duty, board members shall be

subject to suit as established by law for charitable trusts.

     §  -8  Relationship to the State.  (a)  The corporation

shall not be a sovereign entity of the State.  The corporation

shall have no power to tax or ability to establish a judicial

system.

     (b)  The State shall retain the duty to oversee the

administration of the "available lands," as defined by section

203 of the Hawaiian Homes Commission Act, 1920, that are

transferred to the corporation that were previously transferred








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                                        H.B. NO.           
                                               
                                                           


to the State under the Hawaiian Homes Commission Act, 1920.

     (c)  In order to allow the State to fulfill its oversight

responsibility, the corporation shall prepare and make public an

annual report within six months after the close of each fiscal

year, which shall include a statement of the corporation's

activities, income, and expenditures during the year.

     §  -9  Hawaiian ancestry, defined.  No sooner than ten years

after authorization by the State, the corporation may redefine

the term "Hawaiian" as used in this chapter to provide for a

minimum quantum of Hawaiian blood, but in no case shall it

exclude persons with at least one-eighth Hawaiian blood.

     §  -10  Right to alienate and lease land.  None of the lands

transferred to the corporation pursuant to this chapter shall be

sold by the corporation during the period expiring twenty-five

years after authorization by the State; provided that after such

period, the corporation may sell such lands in an amount not to

exceed fifty percent of the total acreage initially transferred

to it at the rate of no more than ten percent of the total

initial acreage per calendar year; and provided further that from

and after the period expiring ten years after authorization by

the State, land that was former Hawaiian home lands may be leased

to non-Hawaiians.








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                                        H.B. NO.           
                                               
                                                           


     §  -11  Condemnation.  The corporation shall have no right

of condemnation, but may petition the State to condemn and

transfer to the corporation, upon reimbursement by the

corporation if so required by the State, lands:

     (1)  Of historic or prehistoric value to the Hawaiian

          people;

     (2)  That would adjoin or lie in close proximity to lands

          already owned by the corporation;

     (3)  That would expand parcels already owned by the

          corporation within an ahupua'a; or

     (4)  That would otherwise promote the purposes of the

          corporation.

Should the State determine that any proposed condemnation

promotes a legitimate public purpose, then the condemnation shall

be initiated and proceed as set forth in chapter 101.

     Moneys paid in compensation for the condemnation, if

required by the State, shall be paid by the corporation.  The

corporation shall also pay for all of the State's costs and

expenses incurred during the condemnation process.

     §  -12  Schedule for transfer.  The rights and

responsibilities to be transferred by the State to the

corporation shall be transferred as follows:








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     (1)  On the first day of the fiscal year which begins one

          calendar year after authorization by the State:  ceded

          lands otherwise authorized by the State for transfer to

          a native Hawaiian entity, and Kaho'olawe;

     (2)  On the first day of the fiscal year which begins at

          least two calendar years after authorization by the

          State:  Hawaiian immersion education and any other

          Hawaiian service programs; and

     (3)  On the first day of the fiscal year which begins at

          least three calendar years after authorization by the

          State, or, upon approval of changes to the Hawaiian

          Homes Commission Act by the United States Congress,

          whichever occurs earlier:  Hawaiian home lands.

     SECTION 21.  Chapter 39A, Hawaii Revised Statutes, is

amended by adding a new part to be appropriately designated and

to read as follows:

            "PART    .  ASSISTING THE NATIVE HAWAIIAN

     TRUST CORPORATION WITH ITS OBLIGATIONS TOWARD HAWAIIANS

     §39A-A  Definitions.  Whenever used in this part, unless a

different meaning clearly appears from the context:

     "Corporation" means the Native Hawaiian Trust Corporation.

     "Project agreement" means any agreement entered into under








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                                        H.B. NO.           
                                               
                                                           


this part by the department with the corporation providing for

the issuance of special purpose revenue bonds to finance

facilities of the corporation or for the corporation or to loan

the proceeds of such bonds to assist the corporation, including

without limitation any loan agreement.

     "Refinancing of outstanding obligations" or "refinancing"

means the liquidation, retirement, or provision for retirement

with the proceeds of bonds issued by the State, of any

indebtedness of a project party incurred to finance or aid in

financing a lawful purpose of such project party not financed

pursuant to this part which constitutes a health care facility or

consolidation of such indebtedness with indebtedness of the State

incurred for a health care facility related to the purpose for

which the indebtedness of the project party was initially

incurred.

     "Revenue" includes all or any portion of the rentals derived

from the leasing of Hawaiian home lands or available lands,

whether or not the property is a part of the development being

financed.

     "Special purpose revenue bonds" or "bonds" means bonds,

notes, or other evidences of indebtedness of the State issued

pursuant to this part.








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                                        H.B. NO.           
                                               
                                                           


     "Undertaking" includes a residential development or a

development of homestead, commercial, or multipurpose projects.

     §39A-B  Department powers as to this part.  In addition to

powers which it may now have, the department shall have all

powers necessary or convenient to accomplish the purposes of this

part.  The powers of the department include, but are not limited

to, the following:

     (1)  Notwithstanding and without compliance with section

          103-7 and chapter 103D, but with the approval of the

          governor, to enter into and carry out a project

          agreement, or an amendment or supplement to an existing

          project agreement, with the corporation, and to enter

          into and carry out any agreement whereby the obligation

          of the corporation under a project agreement will be

          unconditionally guaranteed by a person other than the

          corporation.

     (2)  To issue special purpose revenue bonds pursuant to and

          in accordance with this part.

     (3)  To lend the proceeds of the special purpose revenue

          bonds issued for an undertaking to the corporation for

          use and application by the corporation for the

          acquisition, purchase, construction, reconstruction,








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                                        H.B. NO.           
                                               
                                                           


          improvement, betterment, extension, or refinancing of

          outstanding obligations related to an undertaking.

     (4)  As security for the payment of the principal of,

          premium, if any, and interest of the special purpose

          revenue bonds issued for this project, to pledge,

          assign, hypothecate, or otherwise encumber all or any

          part of the revenues and receipts derived or to be

          derived by the department under the project agreement

          for the undertaking for which such bonds are issued; to

          pledge and assign the interest and rights of the

          department under the project agreement or other

          agreement with respect to the undertaking or such

          special purpose revenue bonds; and to pledge and assign

          any bond, debenture, note, or other evidence of

          indebtedness received by the department with respect to

          the undertaking; or any combination of the foregoing.

     (5)  To extend or renew any project agreement or any other

          agreement related thereto; provided that any such

          renewal or extension shall be subject to the approval

          of the governor unless made in accordance with

          provisions for such extension or renewal contained in a

          project agreement or related agreement theretofore








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                                        H.B. NO.           
                                               
                                                           


          approved by the governor.

     (6)  To do any and all things necessary or convenient to

          carry out its purposes and exercise the powers given

          and granted in this part.

When the department finances or refinances an undertaking by the

issuance of special purpose revenue bonds as contemplated by this

part, the State shall not exercise the power of eminent domain to

acquire a project or any part thereof for lease or transfer to

the corporation, nor shall the State operate a project on behalf

of the corporation.

     §39A-C  Compliance with state and local law.  The issuance

of special purpose revenue bonds with respect to any undertaking

under this part, shall not relieve the corporation or other user

of the undertaking from the laws, ordinances, and rules and

regulations of the State or any political subdivision thereof, or

any departments or boards thereof with respect to the

construction, operation, and maintenance of projects, compliance

with health care planning laws or regulations, or zoning laws or

regulations, obtaining of building permits, compliance with

building and health codes and other laws, ordinances, or rules

and regulations of similar nature pertaining to the project, and

such laws shall be applicable to the corporation or such other








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                                        H.B. NO.           
                                               
                                                           


user to the same extent it would be if the costs of the project

were directly financed by the corporation.

     §39A-D  Conditions precedent to negotiating and entering

into a project agreement.  The department prior to entering into

negotiations with the corporation shall require that the State

shall be reimbursed for any and all costs and expenses (direct or

indirect) incurred by it in implementing and administering this

part, as determined by the department, even though a project

agreement may not be entered into and may further require the

deposit of moneys with the department for reimbursement.  Any

amount of the deposit in excess of the amount required to

reimburse the State shall be returned by the department to the

party which has made such deposit.  The State shall not be

required to pay to the corporation any interest or earnings on

the deposit.

     The department shall not enter into any project agreement

with respect to any undertaking unless the department shall first

find and determine either that the corporation is a responsible

party, whether by reason of economic assets or experience in the

type of enterprise to be undertaken through such project, or

otherwise.

     §39A-E  Project agreement.  No special purpose revenue bonds








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                                        H.B. NO.           
                                               
                                                           


shall be issued unless at the time of issuance the department has

entered into a project agreement with respect to the undertaking

for the financing or refinancing of which such revenue bonds are

to be issued.  Any project agreement entered into by the

department shall contain provisions unconditionally obligating

the corporation:

     (1)  To pay to the department during the period or term of

          the project agreement, exclusive of any renewal or

          extension thereof and whether or not the project is

          used or occupied by the corporation or any of its

          beneficiaries, such sum or sums, at such time or times

          and in such amounts that will be at least sufficient:

          (A)  To pay the principal and interest on all special

               purpose revenue bonds issued with respect to the

               project as and when the same become due, including

               any premium payable upon any required redemption

               of such bonds;

          (B)  To establish or maintain such reserve, if any, as

               may be required by the instrument authorizing or

               securing the special purpose revenue bonds;

          (C)  To pay all fees and expenses (including the fees

               and expenses of the paying agents and trustees)








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                                        H.B. NO.           
                                               
                                                           


               incurred in connection with such special purpose

               revenue bonds; and

          (D)  To pay the expenses (direct or indirect) incurred

               by the State, as determined by the department, in

               administering such bonds or in carrying out the

               project agreement.

     (2)  To operate, maintain, and repair the undertaking as

          long as the same is used, and to pay all costs of such

          operation, maintenance, and repair.

Moneys received by the department pursuant to paragraph (1)(D) of

this section shall not be, nor be deemed to be, revenues of the

project and shall be paid into the general fund of the State.

     §39A-F  Issuance of special purpose revenue bonds to finance

undertakings.  In addition to the other powers which it may

otherwise have, the department may issue special purpose revenue

bonds to finance or refinance, the costs of facilities of, or

for, or to loan the proceeds of such bonds to assist

undertakings.  All revenue bonds issued under this part, are

special purpose revenue bonds and the provisions of part III of

chapter 39 shall not apply thereto.  All special purpose revenue

bonds shall be issued in the name of the department and not in

the name of the State.








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     The department in determining the cost of any project, may

also include the following:  financing charges, fees, and

expenses of any trustee and paying agents for special purpose

revenue bonds issued to pay the cost of the undertaking; interest

on the bonds and the expenses of the State in connection with the

bonds and the project to be financed or refinanced from the

proceeds of such bonds accruing or incurred prior to and during

the period of construction and for not exceeding twelve months

thereafter; amounts necessary to establish or increase reserves

for the special purpose revenue bonds; the cost of plans,

specifications, studies, surveys, and estimates of costs and of

revenues; other expenses incidental to determining the

feasibility or practicability of the project; administration

expenses; interest cost incurred by the corporation with respect

to the undertaking prior to the issuance of the special purpose

revenue bonds; fees and expenses incurred in connection with the

refinancing of outstanding obligations; and such other costs,

commissions, and expenses incidental to the construction,

acquisition, reconstruction, renovation, rehabilitation,

improvement, betterment, operation, or extension of the

undertaking, the financing or refinancing thereof, placing of

same in operation, and the issuance of the special purpose








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revenue bonds, whether incurred prior to or after the issuance of

such bonds.

     The legislature finds and determines that the exercise of

the powers vested in the department by this part constitutes

assistance to a not-for-profit corporation serving Hawaiians and

that the issuance of special purpose revenue bonds to finance or

to refinance facilities of, or for, or to loan the proceeds of

such bonds to assist, the corporation, is in the public interest.

     §39A-G  Authorization of special purpose revenue bonds.  (a)

Special purpose revenue bonds for each single or multipart

undertaking for the benefit of Hawaiians under this part, shall

be authorized by a separate act of the legislature, by an

affirmative vote of two-thirds of the members to which each house

is entitled; provided that the legislature shall find that the

issuance of such bonds is in the public interest.  Special

purpose revenue bonds issued pursuant to this part may be in one

or more series for each undertaking.  The special purpose revenue

bonds of each issue shall be dated, shall bear interest at such

rate or rates, shall mature at such time or times not exceeding

forty years from their date or dates, shall have such rank or

priority and may be made redeemable before maturity at the option

of the department, at such price or prices and under such terms








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                                        H.B. NO.           
                                               
                                                           


and conditions, all as may be determined by the department.  The

department shall determine the form of the special purpose

revenue bonds, including any interest coupons to be attached

thereto, and the manner of execution of the special purpose

revenue bonds, and shall fix the denomination or denominations of

the special purpose revenue bonds and the place or places of

payment of principal and interest, which may be at any bank or

trust company within or without the State.  The special purpose

revenue bonds may be issued in coupon or in registered form, or

both, as the department may determine, and provisions may be made

for the registration of any coupon bonds as to principal alone

and also as to both principal and interest, and for the

reconversion into coupon bonds of any bonds registered as to both

principal and interest.  The department may sell special purpose

revenue bonds in such manner, either at public or private sale,

and for such price as it may determine.

     (b)  Prior to the preparation of definitive special purpose

revenue bonds, the department may issue interim receipts or

temporary bonds, with or without coupons, exchangeable for

definitive bonds when the bonds have been executed and are

available for delivery.

     (c)  Should any bond issued under this part or any coupon








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                                        H.B. NO.           
                                               
                                                           


appertaining thereto become mutilated or be lost, stolen, or

destroyed, the department may cause a new bond or coupon of like

date, number, and tenor to be executed and delivered in exchange

and substitution for, and upon the cancellation of the mutilated

bond or coupon, or in lieu of and in substitution for the lost,

stolen, or destroyed bond or coupon.  The new bond or coupon

shall not be executed or delivered until the holder of the

mutilated, lost, stolen, or destroyed bond or coupon has (1) paid

the reasonable expense and charges in connection therewith, (2)

in the case of a lost, stolen, or destroyed bond or coupon, has

filed with the department or its fiduciary evidence satisfactory

to the department or its fiduciary that the bond or coupon was

lost, stolen, or destroyed and that the holder was the owner

thereof, and (3) has furnished indemnity satisfactory to the

department.

     (d)  The department in its discretion may provide that CUSIP

identification numbers shall be printed on the bonds.  In the

event the numbers are imprinted on any bonds (1) no number shall

constitute a part of the contract evidenced by the particular

bond upon which it is imprinted, and (2) no liability shall

attach to the department or any officer or agent thereof,

including any fiscal agent, paying agent, or registrar for such








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                                        H.B. NO.           
                                               
                                                           


bonds, by reason of the numbers or any use made thereof,

including any use thereof made by the department, any officer, or

any agent, or by reason of any inaccuracy, error, or omission

with respect thereto or in such use.  The department in its

discretion may require that all costs of obtaining and imprinting

these numbers shall be paid by the purchaser of the bonds.  For

the purposes of this subsection, the term "CUSIP identification

numbers" means the numbering system adopted by the Committee for

Uniform Security Identification Procedures formed by the

Securities Industry Association.

     §39A-H  Special purpose revenue bond anticipation notes.

Whenever the department has authorized the issuance of special

purpose revenue bonds under this part, special purpose revenue

bond anticipation notes of the department may be issued in

anticipation of the issuance of the bonds and of the receipt of

the proceeds of sale thereof, for the purposes for which the

bonds have been authorized.  All special purpose revenue bond

anticipation notes shall be authorized by the department, and the

maximum principal amount of the notes shall not exceed the

authorized principal amount of the bonds.  The notes shall be

payable solely from and secured solely by the proceeds of sale of

the special purpose revenue bonds in anticipation of which the








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                                        H.B. NO.           
                                               
                                                           


notes are issued and the revenues from which would be payable and

by which would be secured such bonds; provided that to the extent

that the principal of the notes shall be paid from moneys other

than the proceeds of sale of the bonds, the maximum amount of

bonds in anticipation of which the notes are issued that has been

authorized shall be reduced by the amount of notes paid in this

manner.  The authorization, issuance, and the details of the

notes shall be governed by the provisions of this part with

respect to special purpose revenue bonds insofar as the same may

be applicable; provided that each note, together with all

renewals and extensions thereof, or refundings thereof by other

notes issued under this section, shall mature within five years

from the date of the original note.

     §39A-I  Powers with respect to and security for special

purpose revenue bonds.  In order to secure the payment of any of

the special purpose revenue bonds issued pursuant to this part,

and interest thereon, or in connection with the bonds, the

department shall have the power as to the bonds:

     (1)  To pledge all or any part of the revenues derived by

          the department from the project agreement to the

          punctual payment of special purpose revenue bonds

          issued with respect to the undertaking financed or








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          refinanced from proceeds thereof, and interest thereon,

          and to covenant against thereafter pledging any of the

          revenues or receipts to any other bonds or any other

          obligations of the department for any other purpose,

          except as otherwise stated in the law providing for the

          issuance of additional special purpose revenue bonds to

          be equally and ratably secured by a lien upon the

          revenues.

     (2)  To pledge and assign the interest of the department

          under the project agreement and other agreements

          related thereto and the rights, duties, and obligations

          of the department thereunder, including the right to

          receive revenues thereunder.

     (3)  To covenant as to the use and disposition of the

          proceeds from the sale of the bonds.

     (4)  To covenant to set aside or pay over reserves and

          sinking funds for the bonds and as to the disposition

          thereof.

     (5)  To covenant and prescribe as to what happenings or

          occurrences shall constitute "events of default" and

          the terms and conditions upon which any or all of the

          bonds shall become or may be declared due before








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          maturity and as to the terms and conditions upon which

          the declaration and its consequences may be waived.

     (6)  To covenant as to the rights, liabilities, powers, and

          duties arising upon the breach by it of any covenant,

          conditions, or obligation.

     (7)  To designate a national or state bank or trust company

          within or without the State, incorporated in the United

          States, to serve as trustee for the holders of the

          special purpose revenue bonds and to enter into a trust

          indenture or trust agreement or indenture of mortgage

          with the trustee.  The trustee may be authorized by the

          department to receive and receipt for, hold, and

          administer the proceeds of the special purpose revenue

          bonds issued for the undertaking and to apply the same

          to the purposes for which the bonds are issued, or to

          receive and receipt for, hold, and administer the

          revenues derived by the department under the project

          agreement and to apply the revenues to the payment of

          the principal and interest on the bonds, or both, and

          any excess revenues to the payment of expenses incurred

          by the State in administering the bonds or in carrying

          out the project agreement.  In the event that a trustee








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                                        H.B. NO.           
                                               
                                                           


          shall be appointed, any trust indenture or trust

          agreement or indenture of mortgage entered into by the

          department with the trustee may contain whatever

          covenants and provisions as may be necessary or

          convenient or desirable in order to secure the bonds.

          The department may pledge and assign to the trustee the

          interest of the department under the project agreement

          and other agreements related thereto and the rights,

          duties, and obligations of the department thereunder,

          including the right to receive revenues thereunder.

          The department may appoint the trustee to serve as

          fiscal agent for the payment of the principal and

          interest, and for the purchase, registration, transfer,

          exchange, and redemption of the special purpose revenue

          bonds, and may authorize and empower the trustee to

          perform such functions with respect to such payment,

          purchase, registration, transfer, exchange, and

          redemption, as the department may deem necessary,

          advisable, or expedient, including without limitation

          the holding of the special purpose revenue bonds and

          coupons which have been paid and the supervision of the

          destruction thereof in accordance with law.








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     (8)  To execute all instruments necessary or convenient in

          the exercise of the powers herein granted or in the

          performance of its covenants and duties.

     (9)  To make covenants and do any and all acts and things as

          may be necessary or convenient or desirable in order to

          secure the bonds, notwithstanding that the covenants,

          acts, or things may not be enumerated herein; it being

          the purpose hereof to give the department power to do

          all things in the issuance of the bonds and for their

          security that may be consistent with the Constitution

          of the State of Hawaii.

     §39A-J  Security for special purpose revenue bonds.  Special

purpose revenue bonds shall be payable solely from the revenues

derived by the department from payments made to the department

under the project agreement or other supplemental agreements

entered into with respect to the undertaking, and shall be

secured solely by the revenues and by the pledges and assignments

authorized by this part.  All special purpose revenue bonds of

the same issue, subject to the prior and superior rights of

outstanding bonds, claims, obligations, or mechanic's and

materialman's liens, shall have a prior and paramount lien on the

revenues derived from the project agreement with respect to the








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                                        H.B. NO.           
                                               
                                                           


project, for which the bonds have been issued, over and ahead of

all special purpose revenue bonds of any issue payable from the

revenues which may be subsequently issued and over and ahead of

any claims or obligations of any nature against the revenues

subsequently arising or subsequently incurred; provided that the

right and privilege may be reserved by the department in the

trust indenture securing an issue of special purpose revenue

bonds to subsequently issue additional special purpose revenue

bonds, subject to legislative authorization of the issue as

provided in section 39A-G, or to permit the corporation to incur

debt, from time-to-time, payable from the revenues derived from

the project agreement on a parity with the first issue of the

special purpose revenue bonds and any subsequent issue of special

purpose revenue bonds and other debt issued or incurred in

accordance with the provisions of the trust indenture shall be

secured equally and ratably with the first issue of the special

purpose revenue bond without priority by reason of the date of

sale, date of execution, or date of delivery, by a lien on the

revenues in accordance with this part.

     Notwithstanding any other provisions herein, all or part of

the property constituting the undertaking and all interest of the

corporation in the project and the revenues of the corporation








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                                        H.B. NO.           
                                               
                                                           


therefrom may be subjected to the present and future lien of any

mortgage of the corporation securing the corporation's bonds, and

the rights of the department and any trustee for the holders of

the special purpose revenue bonds and the holders of the special

purpose revenue bonds in the undertaking and the revenues

therefrom may be made subject to the prior lien of the

corporation's mortgage.

     §39A-K  Special purpose revenue bonds not a general

obligation of State.  No holder or holders of any special purpose

revenue bonds issued under this part, shall ever have the right

to compel any exercise of taxing power of the State to pay the

bonds or the interest thereon and no moneys other than the

revenues pledged to the bonds shall be applied to the payment

thereof.  Each special purpose revenue bond issued under this

part, shall recite in substance that the bond, including interest

thereon, is not a general obligation of the State and is payable

solely from the revenues pledged to the payment thereof, and that

the bond is not secured directly or indirectly by the full faith

and credit or the general credit of the State or by any revenues

or taxes of the State other than the revenues specifically

pledged thereto.

     §39A-L  Validity of special purpose revenue bonds.  The








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                                        H.B. NO.           
                                               
                                                           


special purpose revenue bonds bearing the signature or facsimile

signature of officers in office on the date of the signing

thereof shall be valid and sufficient for all purposes,

notwithstanding that before the delivery thereof and payment

therefor any or all the persons whose signatures appear thereon

shall have ceased to be officers of the department.  The special

purpose revenue bonds shall contain a recital that they are

issued pursuant to this part, which recital shall be conclusive

evidence of their validity and of the regularity of their

issuance.

     §39A-M  Use of revenues derived from project agreement.  The

department shall have the right to appropriate, apply, or expend

the revenues derived with respect to the project agreement for an

undertaking for the following purposes:

     (1)  To pay when due all special purpose revenue bonds,

          premium, if any, and interest thereon, for the payment

          of which the revenues are or have been pledged,

          charged, or otherwise encumbered, including reserves

          therefor; and

     (2)  To the extent not paid by the project party to provide

          for all expenses of administration, operation, and

          maintenance of the project, including reserves








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                                        H.B. NO.           
                                               
                                                           


          therefor.

Unless and until adequate provision has been made for the

foregoing purposes, the department shall not transfer the

revenues derived from the project agreement to the general fund

of the State.

     §39A-N  Special purpose revenue bonds exempt from taxation.

Special purpose revenue bonds and the income therefrom issued

pursuant to this part, shall be exempt from all state, county,

and municipal taxation except inheritance, transfer, and estate

taxes.

     §39A-O  Federal tax exempt status.  Special purpose revenue

bonds issued pursuant to this part, to the extent practicable,

shall be issued to comply with requirements imposed by applicable

federal law providing that the interest on the special purpose

revenue bonds shall be excluded from gross income for federal

income tax purposes (except as certain minimum taxes or

environmental taxes may apply).  The director of finance may

enter into agreements, establish funds or accounts, and take any

action required to comply with applicable federal law.  Nothing

in this part shall be deemed to prohibit the issuance of special

purpose revenue bonds, the interest on which may be included in

gross income for federal income tax purposes.








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                                        H.B. NO.           
                                               
                                                           


     §39A-P  Exemption from taxation of department property.  All

revenues derived by the department from any undertaking or under

the project agreement pertaining thereto shall be exempt from all

state and county taxation.  Any right, title, and interest of the

department in any undertaking shall also be exempt from all state

and county municipal taxation.  Except as otherwise provided by

law, the interest of the corporation or user of the undertaking

in an undertaking or under the project agreement or related

agreement shall not be exempt from taxation to a greater extent

than it would be if the costs of the undertaking were directly

financed by the corporation or other user.

     §39A-Q  Refunding special purpose revenue bonds.  The

legislature, by act enacted by an affirmative vote of two-thirds

of the members to which each house is entitled, may authorize the

issuance of refunding special purpose revenue bonds for the

purpose of refunding any special purpose revenue bonds then

outstanding and issued under the provisions of this part, whether

or not such outstanding special purpose revenue bonds have

matured or are then subject to redemption.  The legislature is

further authorized to provide, by act finally enacted by an

affirmative vote of two-thirds of the members to which each house

is entitled, for the issuance of a single issue of special








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                                        H.B. NO.           
                                               
                                                           


purpose revenue bonds for the combined purposes of (1) financing

or refinancing the cost of an undertaking or improvement or

expansion thereof, and (2) refunding special purpose revenue

bonds which shall theretofore have been issued under the

provisions of this part and shall then be outstanding, whether or

not such outstanding special purpose revenue bonds have matured

or are then subject to redemption.  Nothing in this section shall

require or be deemed to require the legislature to elect to

redeem or prepay special purpose revenue bonds being refunded, or

to redeem or prepay special purpose revenue bonds being refunded

which were issued in the form customarily known as term bonds in

accordance with any sinking fund installment schedule specified

in any law authorizing the issuance thereof, or, in the event the

department elects to redeem or prepay any such bonds, to redeem

or prepay as of any particular date or dates.  The issuance of

such special purpose revenue bonds, the maturities and other

details thereof, and the rights and remedies of the holders

thereof, and the rights, powers, privileges, duties, and

obligations of the department with respect to the same, shall be

governed by the foregoing provisions of this part insofar as the

same may be applicable.

     §39A-R  Status of special purpose revenue bonds under the








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                                        H.B. NO.           
                                               
                                                           


Uniform Commercial Code.  Notwithstanding any of the provisions

of this part or any recitals in any special purpose revenue bonds

issued under this part, all such special purpose revenue bonds

shall be deemed to be investment securities under the Uniform

Commercial Code, chapter 490, subject only to the provisions of

the special purpose revenue bonds pertaining to registration.

     §39A-S  Special purpose revenue bonds as legal investments

and lawful security.  The special purpose revenue bonds issued

pursuant to this part shall be and are declared to be legal and

authorized investments for banks, savings banks, trust companies,

savings and loan associations, insurance companies, credit

unions, fiduciaries, trustees, guardians, and for all public

funds of the State or other political corporations or

subdivisions of the State.  The special purpose revenue bonds

shall be eligible to secure the deposit of any and all public

funds of the State and any and all public funds of counties or

other political corporations or subdivisions of the State, and

the bonds shall be lawful and sufficient security for the

deposits to the extent of their value when accompanied by all

unmatured coupons appertaining to them.

     §39A-T  Access to and public disclosure of financial records

of the corporation.  (a)  The corporation, when submitting an








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                                        H.B. NO.           
                                               
                                                           


undertaking to the department, shall allow the department full

access to its financial records.  Upon the request of the

department for the examination of any financial records, the

corporation shall allow the department to examine the requested

records within a reasonably prompt time from the date of the

request.  If the department requests copies of the records, the

corporation shall provide the copies.

     (b)  To provide the public with full knowledge of the use of

the proceeds and benefits derived from special purpose revenue

bonds issued under this part, the department shall require the

corporation, when it has a project agreement with the department,

to make available to the public all relevant financial records

which pertain to the use of or savings resulting from the use of

special purpose revenue bonds.

     (c)  The department shall adopt rules under chapter 91 for

the purpose of this section.

     §39A-U  Estimate of benefits.  (a)  The corporation, when it

has a project agreement with the department, shall estimate the

benefits derived from the use of the proceeds of special purpose

revenue bonds.  The benefits estimated shall be based on a

comparison between the use of the proceeds of the special purpose

revenue bonds instead of other means of financing and shall be in








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                                        H.B. NO.           
                                               
                                                           


terms of dollars projected to be or actually saved by consumers

of the services of the corporation.  The format of and method for

determining the estimates shall be established by the department.

     (b)  To promote public understanding of the role played by

special purpose revenue bonds in providing less costly services

by the corporation to Hawaiians, the department shall take

appropriate steps to ensure public access to and scrutiny of the

estimates determined under subsection (a).

     (c)  The department shall adopt rules under chapter 91 for

the purposes of this section.

     S39A-V  Construction of this part.  The powers conferred by

this part shall be in addition and supplemental to the powers

conferred by any other law.  Insofar as the provisions of this

part are inconsistent with the provisions of any other law, this

part shall be controlling."

                             PART IV

                           LAND ISSUES

     SECTION 22.  Chapter 6K, Hawaii Revised Statutes, is amended

by adding a new section to be appropriately designated and to

read as follows:

     "§6K-    Duties of the corporation.  Upon transfer to it of

the island reserve, the corporation shall assume all rights and








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                                        H.B. NO.           
                                               
                                                           


responsibilities of the former Kaho'olawe island reserve

commission.  The corporation is authorized to serve and execute

warrants, arrest offenders, and issue citations in all matters

relating to the enforcement of rules and laws applicable to the

island reserve.  Any person employed to enforce the rules and

laws shall be licensed by the State under chapter 463."

     SECTION 23.  Section 6K-2, Hawaii Revised Statutes, is

amended as follows:

     1.   By adding the definition of "corporation" to read as

          follows:

     ""Corporation" means the Native Hawaiian Trust Corporation."

     2.   By deleting the definitions of "commission" and

          "department".

     [""Commission" means the Kaho'olawe island reserve

commission.

     "Department" means the department of land and natural

resources."]

     SECTION 24.  Section 6K-6, Hawaii Revised Statutes, is

amended to read as follows:

     "§6K-6  Responsibilities and duties of the [commission.]

corporation.  The [commission] corporation shall:

     (1)  Establish criteria, policies, and controls for








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                                        H.B. NO.           
                                               
                                                           


          permissible uses within the island reserve;

     (2)  Approve all contracts for services and rules pertaining

          to the island reserve;

     (3)  Provide advice to the governor, the department, and

          other departments and agencies on any matter relating

          to the island reserve;

     (4)  Provide advice to the office of planning and the

          department of the attorney general on any matter

          relating to the federal conveyance of Kaho'olawe;

     (5)  Enter into curator or stewardship agreements with

          appropriate Hawaiian cultural and spiritual community

          organizations for the perpetuation of native Hawaiian

          cultural, religious, and subsistence customs, beliefs,

          and practices for the purposes stated in section 6K-3;

     (6)  Carry out those powers and duties otherwise conferred

          upon the board of land and natural resources and the

          land use commission with regard to dispositions and

          approvals pertaining to the island reserve.  All powers

          and duties of the board of land and natural resources

          and the land use commission concerning dispositions and

          approvals pertaining to the island reserve are

          transferred to the [commission;] corporation;








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                                        H.B. NO.           
                                               
                                                           


     (7)  Carry out those powers and duties concerning the island

          reserve otherwise conferred upon the county of Maui by

          chapter 205A.  The powers and duties of the county of

          Maui and its agencies concerning coastal zone

          disposition and approvals pertaining to the island

          reserve are transferred to the [commission;]

          corporation;

     (8)  Shall carry out those powers and duties concerning the

          island reserve otherwise conferred upon the island

          burial councils and the department with regard to

          proper treatment of burial sites and human skeletal

          remains found in the island reserve;

     (9)  Shall adopt rules in accordance with chapter 91 that

          are necessary for the purposes of this chapter and

          shall maintain a record of its proceedings and actions;

          and

    (10)  May delegate to the executive director or employees of

          the [commission,] corporation, by formal [commission]

          corporation action, such power and authority vested in

          the [commission] corporation by this chapter as the

          [commission] corporation deems reasonable and proper

          for the effective administration of this chapter.








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                                        H.B. NO.           
                                               
                                                           


     SECTION 25.  Section 6K-9, Hawaii Revised Statutes, is

amended to read as follows:

     "[[]§6K-9[]]  Transfer.  Upon its return to the State, the

resources and waters of Kaho'olawe shall be held in trust as part

of the public land trust; provided that the State shall transfer

management and control of the island and its waters to the

[sovereign native Hawaiian entity upon its recognition by the

United States and the State of Hawaii.  All] corporation upon the

corporation's express and binding agreement to accept and

implement all terms, conditions, agreements, and laws affecting

the island, including any ongoing obligations relating to the

clean-up of the island and its waters[,].  These shall remain in

effect unless expressly terminated [.] by the State."

     SECTION 26.  Section 6K-1, Hawaii Revised Statutes, is

repealed.

     ["[§6K-1]  Administration of chapter.  The Kaho'olawe island

reserve commission and the department of land and natural

resources shall administer this chapter."]

     SECTION 27.  Sections 6K-4 and 6K-5, Hawaii Revised

Statutes, are repealed.

     ["§6K-4  Powers and duties.  The department and other

departments and agencies of the State shall be subject to the








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                                        H.B. NO.           
                                               
                                                           


oversight of the commission with regard to the control and

management of the island reserve.  Subject to section 6K-6, the

department shall:

     (1)  Implement controls and permitted uses for the island

          reserve;

     (2)  Enforce this chapter;

     (3)  Provide administrative support to the commission; and

     (4)  Authorize those of its employees as it deems reasonable

          and necessary to serve and execute warrants and arrest

          offenders or issue citations in all matters relating to

          enforcement of the laws and rules applicable to the

          island reserve.

     §6K-5  Commission.  (a)  There is established the Kaho'olawe

island reserve commission to be placed within the department of

land and natural resources for administrative purposes as

provided in section 26-35.  The commission shall consist of seven

members to be appointed in the manner and to serve for the terms

provided in section 26-34; provided that:

     (1)  One member shall be a member of the Protect Kaho'olawe

          Ohana;

     (2)  Two members shall be appointed by the governor from a

          list provided by the Protect Kaho'olawe Ohana;








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                                        H.B. NO.           
                                               
                                                           


     (3)  One member shall be a trustee or representative of the

          office of Hawaiian affairs;

     (4)  One member shall be a county official appointed by the

          governor from a list provided by the mayor of the

          county of Maui;

     (5)  One member shall be the chairperson of the board of

          land and natural resources; and

     (6)  One member shall be appointed by the governor from a

          list provided by native Hawaiian organizations.

     (b)  The governor shall appoint the chairperson from among

the members of the commission.

     (c)  The members of the commission shall serve without pay

but shall be reimbursed for their actual and necessary expenses,

including travel expenses, incurred in carrying out their duties.

     (d)  Any action taken by the commission shall be approved by

a simple majority of its members.  Four members shall constitute

a quorum to do business.

     (e)  The commission, without regard to the requirements of

chapters 76 and 77, may hire employees necessary to perform its

duties."]

     SECTION 28.  Transfer of office of Hawaiian affairs lands

and assets, and Kaho`olawe.  On the first day of the fiscal year








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which begins at least one calendar year after authorization by

the State, as defined in section 20 of this Act, the State shall

transfer to the Native Hawaiian Trust Corporation:

     (1)  Title to lands then owned by the office of Hawaiian

          affairs, if any;

     (2)  All assets and debts of the office; and

     (3)  The island of Kaho`olawe.

     SECTION 29.  Transfer of Hawaiian home lands.  On the first

day of the fiscal year which begins at least three calendar years

after authorization by the State, as defined in section 20, the

State shall transfer management to the Native Hawaiian Trust

Corporation of the Hawaiian home lands, to be used for the

purposes of this Act.  The State shall transfer possession to the

corporation upon approval of the United States.

                             PART V

               NATIVE HAWAIIAN TRUST CORPORATION:

                  PROGRAMS, SERVICES AND RIGHTS

     SECTION 30.  Transfer of Hawaiian immersion schools.  On the

first day of the fiscal year which begins two calendar years

after authorization by the State, as defined in section 20 of

this Act, the State shall transfer all rights and

responsibilities for the Hawaiian language immersion program to








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the Native Hawaiian Trust Corporation.  The department of

education shall annually transmit to the immersion schools a sum

on a per student basis that is equal to the statewide per pupil

expenditure for average daily attendance, as well as the per

pupil expenditure for maintenance and physical plant; provided

that the allocation for self-contained special education students

and for other special education students shall be adjusted

appropriately to reflect the additional expenses incurred for the

students in these programs.

     The schools shall become private and shall be administered

by the corporation.  Any school site wholly or primarily devoted

to the immersion program shall be transferred.  For immersion

schools that share facilities with regular department of

education schools, the department of education and the

corporation shall negotiate an arrangement concerning the

continued use of facilities until the corporation is able to make

alternate arrangements for facilities.  No such arrangement shall

exceed five years.

     SECTION 31.  Review.  For each year of the five fiscal years

after transfer of the Hawaiian language immersion program to the

corporation, the department of education, with the good faith

cooperation of the corporation, shall conduct a review of the








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corporation's operation of the program and provide

recommendations.  The corporation shall implement each such

recommendation.

     SECTION 32.  Transfer of public historical Hawaiian sites

and prehistoric and historic burial sites.  Within     years

after authorization by the State, as defined in section 20 of

this Act, the State shall transfer title and control to the

Native Hawaiian Trust Corporation over public historical Hawaiian

sites and prehistoric and historic burial sites, which shall

include Iolani Palace and grounds, but exclude Washington Place.

The sites so transferred shall be transferred in trust and the

Native Hawaiian Trust Corporation shall have no greater right to

dispose of the sites than the State would have had under prior

law.

                             PART VI

                          MISCELLANEOUS

     SECTION 33.  Transfer of miscellaneous rights.  Within     

years after initial transfer of assets by the State to the

corporation, the State shall transfer:

     (1)  Title and control of publicly owned Hawaiian fishponds

          and subsistence fishing areas;

     (2)  Control over intestate succession of kuleana land; and








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     (3)  Control over all konohiki-type sea rights.

     SECTION 34.  Chapter 10, Hawaii Revised Statutes, is

repealed.

     SECTION 35.  Upon repeal of Chapter 10, Hawaii Revised

Statutes, all funds, accounts, debts owed and owing, and

financial responsibilities of the office of Hawaiian affairs

shall be transferred to the Native Hawaiian Trust Corporation.

Upon transfer of the Hawaiian home lands to the Native Hawaiian

Trust Corporation, all funds, accounts, debts owed and owing, and

financial responsibilities shall be transferred to the

corporation.

     SECTION 36.  Chapters 673 and 674, Hawaii Revised Statues,

are repealed.

     SECTION 37.  Severability.  The provisions of this Act are

not severable and if any provision of the Act, or the application

thereof, is held to conflict with any federal or state law, rule,

or regulation, this Act, in its entirety, shall be invalid, and

all sections of the Constitution, Hawaiian Homes Commission Act,

and the Hawaii Revised Statutes, shall be reenacted in the form

in which they read on the day before the approval of this Act.

     SECTION 38.  Constitutional and statutory material to be

repealed is bracketed.  New constitutional and statutory material








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is underscored.

     SECTION 39.  In codifying the new sections added by section

21 of this Act, the revisor of statutes shall substitute

appropriate section numbers for the letters used in the new

sections designated in this Act.

     SECTION 40.  The provisions of this Act shall take effect as

follows:

     (1)  Sections 37-40, on approval;

     (2)  Sections 1, 2, 3, 4, 5, 6, and 7; upon compliance with

          article XVII, section 3, of the Constitution of the

          State of Hawaii; provided that section 6, even after

          ratification by the voters, shall not take effect until

          the transfer of the rights and responsibilities of the

          office of Hawaiian affairs as provided in section 25;

     (3)  Sections 20, 21, 28, 29, 30, 31, 35, and 36, upon

          ratification of the constitutional amendments

          enumerated in paragraph (2);

     (4)  Sections 22, 23, 24, 25, 26, 27, and 34, upon the

          effective date of the transfer of Kaho`olawe and the

          assets of the office of Hawaiian affairs as specified

          in section 28; and

     (5)  Sections 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19,








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          29, 32, and 33, upon the effective date for the

          transfer of Hawaiian home lands as specified in section

          29.



                             INTRODUCED BY:______________________