STAND. COM. REP. NO. 777

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 571
                                        S.D. 2




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B.
No. 571, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO HAWAIIAN HOME LANDS TRUST
     INDIVIDUAL CLAIMS,"

begs leave to report as follows:

     The purpose of this measure is to extend the Hawaiian Home
Lands Trust Individual Claims Review Panel and the process to
resolve individual claims of breaches of the Hawaiian Home Lands
Trust for two more years.

     Your Committee finds that Chapter 674, Hawaii Revised
Statutes, established a process by which to resolve individual
claims of breaches of the Hawaiian Home Lands Trust.  The
process, as originally conceived, was supposed to be concluded by
1997.  Due to complications and the sheer volume of claims filed,
not all claims could have been filed by the original closing
date.  To remedy these problems the Legislature enacted Act 382,
Session Laws of Hawaii 1997, which in part, extended the claims
resolution process until December 31, 1999, and required the
Attorney General, the Director of Finance, the Chairperson of the
Hawaiian Homes Commission, and the Chairperson of the Hawaiian
Home Lands Trust Individual Claims Review Panel to convene and
establish a revised formula by which to compensate claimants.  In
1998, Circuit Court Judge Marie Milks opined that the composition
of the group to determine a revised formula had the appearance of
bias and, therefore, ruled that the group was unconstitutional,
thereby further slowing down the claims resolution process.

 
a                                                     SB571 SD2
                                   STAND. COM. REP. NO. 777
                                   Page 2



     Your Committee believes that justice must prevail for those
beneficiaries who have faithfully and patiently waded through the
complex claims resolution process only to be put off year after
year.  Unfortunately, with the recent Circuit Court ruling which
has clouded the issue of the amount of compensation owed to
claimants, your Committee believes that a further extension is
necessary.

     Your Committee has amended the measure by:

     (1)  Adding language that establishes a special account in
          the Hawaiian Home Lands Trust Fund for the purpose of
          compensating successful claimants who were awarded a
          monetary judgment by the Hawaiian Home Lands Trust
          Individual Claims Review Panel under Chapter 674,
          Hawaii Revised Statutes;

     (2)  Transferring the cash value credit ($14,498,565) the
          State sought to obtain from the Department of Hawaiian
          Home Lands for lands conveyed by Act 95, Session Laws
          of Hawaii 1996, for settlement payments owed under
          Chapter 673, Hawaii Revised Statutes, to the special
          account in the Hawaiian Home Lands Trust Fund;

     (3)  Authorizing the issuance of general obligation bonds in
          the amount of $1,936,111, to cover the additional
          amount necessary to compensate successful claimants who
          were awarded a monetary judgment by the Hawaiian Home
          Lands Trust Individual Claims Review Panel under
          Chapter 674, Hawaii Revised Statutes;

     (4)  Sunsetting the special account on June 30, 2004; and

     (5)  Stating that the awards authorized by the Hawaiian Home
          Lands Trust Individual Claims Review Panel in either
          their 1997 or 1998 report and settled under this
          measure shall not serve as a precedent for any other
          unresolved claims brought under Chapter 674, Hawaii
          Revised Statutes.

     Your Committee finds that since the enactment of
Chapter 674, Hawaii Revised Statutes, the State has fallen on
hard financial times.  Although your Committee believes that the
Legislature remains committed to resolving past breaches of trust
with individual claimants, general revenues to fund such a
compensation package are virtually nonexistent.

     In order to compensate successful claimants who have been
awarded monetary judgments by the Hawaiian Home Lands Trust

 
a                                                     SB571 SD2
                                   STAND. COM. REP. NO. 777
                                   Page 3


Individual Claims Review Panel established pursuant to
section 674-3, Hawaii Revised Statutes, without adversely
impacting on the State's general fund, your Committee has
established an innovative funding mechanism that involves
leveraging of the cash value of lands transferred to the
Department of Hawaiian Home Lands.

     Your Committee also finds that Act 95, Session Laws of
Hawaii 1996, authorized the transfer of certain real property
developments contained in the Villages at Kapolei on Oahu and the
Villages at Laiopua on Hawaii to the Department of Hawaiian Home
Lands so that the State would obtain credit for its settlement
with the Department of Hawaiian Home Lands authorized under
Act 14, Special Session Laws of Hawaii 1995.  As background, a
part of the settlement agreed to under Act 14, Special Session
Laws of Hawaii 1995, required the State to pay the Department of
Hawaiian Home Lands $30 million annually for twenty years.  This
cash payment could be offset by the prepayment of excess amounts
over the annual $30 million payment, or by the transfer of real
property from the State to the Department of Hawaiian Home Lands.
Act 95, Session Laws of Hawaii 1996, specifically transferred the
real property to gain credit under section 6(1) of Act 14,
Special Session Laws of Hawaii 1995.

     Your Committee has learned however, that the cash value of
the lands conveyed to the Department of Hawaiian Home Lands,
which are estimated at $14,498,565, have not yet been credited to
the State's benefit by the Department of Hawaiian Home Lands.  In
essence, the lands conveyed have not served any purpose towards
resolving claims under Chapter 673 or 674, Hawaii Revised
Statutes.

     Based on these findings, your Committee believes that the
lands conveyed by the State to the Department of Hawaiian Home
Lands pursuant to Act 95, Session Laws of Hawaii 1996, should not
"lie fallow" with regard to the credit the State may be able to
receive for the settlement of past claims against it and that the
cash value of the lands should be immediately credited for the
benefit of native Hawaiian beneficiaries.

     To this end, your Committee further finds that there exists
a class of native Hawaiian beneficiaries that have successfully
engaged the process established under Chapter 674, Hawaii Revised
Statutes, to resolve their individual claims of breach of the
Hawaiian Home Lands Trust.  These beneficiaries' awards have been
documented in the Hawaiian Home Lands Trust Individual Claims
Review Panel's 1997 annual report.  The approximate cost of
compensating these beneficiaries is estimated at $16.4 million.


 
a                                                     SB571 SD2
                                   STAND. COM. REP. NO. 777
                                   Page 4


     Your Committee believes that rather than let the cash value
of the lands conveyed pursuant to Act 95, Session Laws of Hawaii
1996, go uncredited under the State's settlement agreement for
breaches of the Hawaiian home lands trust brought under
chapter 673, Hawaii Revised Statutes, the cash value should be
credited in the State's favor toward compensating native Hawaiian
beneficiaries that have successfully asserted claims against the
State under Chapter 674, Hawaii Revised Statutes.  This would be
accomplished by requiring the Department of Hawaiian Home Lands
to expend funds from the Hawaiian Home Lands Trust Fund, the fund
in which the $30 million dollar annual settlement payments are
deposited, to compensate successful claimants.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of S.B.
No. 571, S.D. 1, as amended herein, and recommends that it pass
Third Reading in the form attached hereto as S.B. No. 571,
S.D. 2.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
a                                                     SB571 SD2