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

SB3127

THE SENATE

S.B. NO.

3127

THIRTY-THIRD LEGISLATURE, 2026

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:

����
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, and 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 an increased number of 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 offerings, nor can
lessees afford contractor costs for vacant lot home builds.
�
In response to rising costs, subsidy and
affordable mortgage programs have been developed and expanded by government
agencies and private institutions to assist homebuyers.
�
These programs require security to ensure
repayment during their recapture periods or loan terms.
�
On Hawaiian home lands, the department
guarantees the loan because the land is held in trust.
�
The projected number of new housing units on
Hawaiian home lands expected over the next several years because of Act 279 necessitates
an increase in the department's loan guarantee limit.

����
The purpose of this Act is to increase the
limits 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.

����
SECTION 2.
�

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

����
"(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 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;

����
(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 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; 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;

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

���������
(C)
�
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 [
$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;

����
(6)
�
Use
available loan fund moneys or other funds specifically available for guarantee
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
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 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."

����
SECTION 3.
�

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.

����
SECTION 4.
�

Statutory material to be repealed is bracketed and stricken.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

����
SECTION 5.
�

This Act shall take effect upon its approval pursuant to section 16 of
article III of the Constitution of the State of Hawaii; provided that section 2
shall take effect pursuant to title 43 Code of Federal Regulations part 48 on
either:

����
(1)
�
The
date of the United States 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; or

����
(2)
�
The
date that the United States Congress
'
s approval becomes law.

INTRODUCED BY:

_____________________________

BY
REQUEST

Report Title:

DHHL; Hawaiian Home Land Lessees; Loans

Description:

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

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