STAND. COM. REP. NO. 2827

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  H.B. No. 2501
                                        H.D. 2
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Water, Land, and Hawaiian Affairs, to
which was referred H.B. No. 2501, H.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO THE HAWAIIAN HOMES COMMISSION
     ACT, 1920, AS AMENDED,"

begs leave to report as follows:

     The purpose of this measure is to provide the Department of
Hawaiian Home Lands (DHHL) with the flexibility to set the
interest rate on loans from the Hawaiian Home Loan Fund and other
loan sources by:

     (1)  Authorizing DHHL to adjust interest rates by
          administrative rule; and

     (2)  Lowering the minimum interest rate on such loans from
          two and one-half percent to zero percent.

     The Ahupua`a O O`ahu testified in support of the measure.
The DHHL supported the intent of the measure but asked that it be
amended to raise the minimum interest rate from zero percent to
two and one-half percent, to reflect the original position of the
administration-sponsored measure.  The Kawaihae Hawaiian Homes
Community Association opposed the measure.

     Your Committee finds that Section 215 of the Hawaiian Homes
Commission Act of 1920, as amended, established in law, a loan
interest rate of two and one-half percent.  This statutorily

 
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                                   STAND. COM. REP. NO. 2827
                                   Page 2


established rate requires the DHHL to provide a qualified loan
applicant with this exceptionally low interest rate, regardless
of the applicant's ability to pay.

     Your Committee believes that the measure would provide the
DHHL with the flexibility to set by rules adopted pursuant to
Chapter 91, Hawaii Revised Statutes, the interest rates on loans
from the Hawaiian Home Loan Fund and other loan sources.  Rates
would be based on interest rates in the marketplace and the needs
and financial qualifications of the loan applicant.

     Based on the testimony of the DHHL, your Committee has
amended this bill by raising the minimum interest rate from zero
percent to two and one-half percent.

     As affirmed by the record of votes of the members of your
Committee on Water, Land, and Hawaiian Affairs that is attached
to this report, your Committee is in accord with the intent and
purpose of H.B. No. 2501, H.D. 2, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as H.B. No. 2501, H.D. 2, S.D. 1, and be referred to the
Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Water, Land, and
                                   Hawaiian Affairs,



                                   ______________________________
                                   COLLEEN HANABUSA, Chair

 
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