Proposes a constitutional amendment to protect trust lands that benefit Hawaiians from condemnation by the State and counties.

A BILL FOR AN ACT

SECTION 1. Historically, charitable trusts were developed to do public good by providing aid to the community as well as governmental assistance. To recognize charitable trusts for providing these important societal benefits, the federal government adopted specific laws to identify these trusts and to exempt qualifying charitable trusts from paying federal and state income taxes. The law reflects the public policy of supporting charities that relieve government from some of the burden of financing community services.

In Hawaii, many of these charitable trusts arose from land held by Hawaiian royalty and whose beneficiaries are native Hawaiians with vital social needs. These charitable trusts are often referred to as the "Alii trusts." In order to realize income to further their charitable purposes, these trusts allowed developers to build residential properties, both single and multi-family, on their lands. Homeowners agreed to pay leasehold rent to the landowner. Charitable trust landowners in Hawaii assumed that they would continue to own the lands under these properties and obtain income from their lands.

Act 307, Session Laws of Hawaii 1967, also known as the Hawaii Land Reform Act, allowed certain homeowners of single family residences to purchase the fee interest in their lands under the State's power of eminent domain. The city and county of Honolulu subsequently passed legislation to allow owners of condominium units to likewise purchase the fee interest in the land under the city's power of eminent domain. In 2002, the council for the city and county of Honolulu introduced legislation (Bill 53) that was intended to relax the requirements for condominium owners to force condemnation proceedings. Testimony at the public hearings on Bill 53 raised the significant concern that charitable trust landowners, like the Queen Liliuokalani Trust, would be imperiled if the legislation passed because they would be stripped of a necessary asset. Even if compensated as provided by law, given the current economic climate, it is doubtful that they would be able to find another type of investment with the same level of return. If the trust lands are taken, many of the trusts would be economically crippled and unable to continue their activities that significantly benefit the public.

The legislature finds that the Alii trusts provide a significant amount of social services in this State. If the charitable trusts fail, many segments of Hawaii's Hawaiian population -- the poor, the elderly, women, children, the disabled, the mentally ill -- would lose their safety net. The State would be hard-pressed to finance these services itself.

This Act ensures that the real property assets of these charitable trusts can be preserved by prohibiting the State or the counties from condemning land held in fee by those charitable trusts.

SECTION 2. The purpose of this Act is to propose an amendment to Article XVI of the Constitution of the State of Hawaii to prohibit the State or the counties from using their powers of eminent domain to condemn land held in fee simple ownership by certain charitable trusts.

SECTION 3. Article XVI of the Constitution of the State of Hawaii is amended by adding a new section to read as follows:

Section    . Neither the State nor any county may institute or participate in a condemnation action of land owned by a charitable trust, all of the beneficiaries of which are Hawaiians. For the purposes of this section, a charitable trust is one that is sited in this State and the income of which is not taxable under the Internal Revenue Code."

SECTION 4. The question to be printed on the ballot shall be as follows:

SECTION 5. New constitutional material is underscored.

SECTION 6. This amendment shall take effect upon compliance with article XVII, section 3, of the Constitution of the State of Hawaii.