RELATING TO THE HAWAIIAN HOMES COMMISSION ACT, 1920, AS AMENDED.

HB1351

HOUSE OF REPRESENTATIVES

H.B. NO.

1351

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

relating
to the hawaiian homes commission act, 1920, as amended
.

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

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SECTION 1.
�
The legislature finds that Act 279, Session
Laws of Hawaii 2022 (Act 279), appropriated out of the general revenues of the
State of Hawaii the sum of $600,000,000 or so much thereof as may be necessary
for fiscal year 2021-2022 to provide a multi-pronged approach to reducing the
over twenty-eight thousand applicants on the department of Hawaiian home lands
waitlist.
�
Since this historic
investment, mortgage interest rates have increased and continue to rise, while
construction costs are ever-increasing, due in large part to global inflation
and the 2023 Maui wildfires.
�
These
market conditions have created a situation in which Hawaiian home lands lessees
are unable to qualify for a mortgage at the amount needed to afford the home
prices being offered through the department
'
s turnkey offering, nor can
lessees afford contractor costs for vacant lot home builds.
�
In response, subsidy and affordable mortgage
programs have been developed and expanded by government agencies and private
institutions to assist homebuyers in addressing this situation.
�
Nevertheless, these programs require
collateral to ensure repayment during their recapture periods or loan
terms.
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On Hawaiian home lands, the
department guarantees the loan since the land is held in trust.
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The significantly increased projected number
of housing units that are expected over the next several years as a result of
Act 279 will necessitate an increase in the department
'
s
guarantee limit.

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Accordingly, the purpose of this Act is to increase the limit of
the State
'
s liability from $100,000,000 to $500,000,000 for moneys
borrowed by the department of Hawaiian home lands or loans made to lessees that
are guaranteed by the department.

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SECTION

2
.
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Section 214,
Hawaiian Homes Commission Act, 1920, as amended, is amended by amending
subsection (b) to read as follows:

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"(b)
�
In addition the department may:

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(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 an undertaking, agree to conditions, transfer funds therein available for
expenditure, and do and perform other acts and things, as may be necessary or
required, as a condition to securing matching funds for the department's
projects or works;

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(2)
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Loan or guarantee the repayment of or
otherwise underwrite any authorized loan or portion thereof to lessees in
accordance with section 215;

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(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;

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(4)
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Permit and approve loans made to
lessees by government agencies or private lending institutions, where the
department assures the payment of these loans; provided that upon receipt of
notice of default in the payment of the assured loans, the department may, upon
failure 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:

���������
(A)
�
The right of succession to the lessee's
interest and assumption of the contract of loan;

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(B)
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The right to require that written
notice be given to the department immediately upon default or delinquency of
the lessee; and

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(C)
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Any other rights enumerated at the time
of assurance necessary to protect the monetary and other interests of the
department;

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(5)
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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 [
$100,000,000;
]
$500,000,000;

the department's guarantee of repayment 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;

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(6)
�
Use available loan fund moneys or other
funds specifically available for guarantee purposes as cash guarantees when
required by lending agencies;

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(7)
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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;

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(8)
�
Pledge receivables of loan accounts
outstanding as collateral to secure loans made by government agencies or
private lending institutions to the department, the 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

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(9)
�
Notwithstanding any other provisions of
this Act to the contrary, transfer into the Hawaiian home trust fund 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."

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SECTION 3.
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The provisions of the amendments made by this Act to the Hawaiian Homes
Commission Act, 1920, as amended, are declared to be severable, and if any
section, sentence, clause, or phrase, or the application thereof to any person
or circumstances is held ineffective because there is a requirement of having
the consent of the United States to take effect, then that portion only shall
take effect upon the granting of consent by the United States and effectiveness
of the remainder of these amendments or the application thereof shall not be
affected.

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SECTION 4.
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Statutory material to be repealed is bracketed and stricken.
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New statutory material is underscored.

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SECTION 5.
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This Act shall take effect on either the date of the Secretary of the
Interior's notification letter to the Congressional Committee Chairpersons that
this Act meets none of the criteria in title 43 Code of Federal Regulations
section 48.20 necessitating congressional approval, or on the date that the
United States Congress' approval becomes law.

INTRODUCED BY:

_____________________________

Report Title:

DHHL;
Hawaiian Home Lands Lessees; Loans

Description:

Increases the limit of the State's
liability from $100,000,000 to $500,000,000 for moneys borrowed by the
Department of Hawaiian Home Lands or loans made to lessees that are guaranteed
by the Department.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.