STAND. COM. REP. NO. 135

Honolulu, Hawaii

RE:    S.B. No. 1290

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

Sir:

     Your Committee on Hawaiian Affairs, to which was referred S.B. No. 1290 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 increase the limit the Department of Hawaiian Home Lands is currently authorized to borrow or guarantee on loans from $50,000,000 to $100,000,000 in order to cover the Department's guarantee requirements for its housing program.  The intent of this measure is to enhance the Department's ability to deliver homesteads and home ownership opportunities to beneficiaries, which is directly tied to its ability to guarantee mortgage loans.

     Your Committee received testimony in support of this measure from the Department of Hawaiian Home Lands and the Department of Budget and Finance.

     Your Committee finds that since Hawaiian homelands are inalienable, the Department is required to guarantee mortgage loans made for homes located on Hawaiian homelands when lenders do not have a loan assurance program.  Current loan guarantees are approximately $30,000,000, with an additional $16,800,000 in loans to be closed over the next six months, bringing the total very close to the current $50,000,000 ceiling.

     Your Committee understands that as part of its housing strategy, the Department has partnered with local lenders on loan programs with complementing mortgage insurance to minimize the Department's guarantee obligations.  However, there are still loan programs that serve specific income level families, such as the United States Department of Agriculture Rural Development loans, county programs, and Habitat for Humanity, which will be hampered without the increase in the $50,000,000 ceiling.  The increase will also allow more construction of affordable units and benefit Hawaii's construction industry and local economy.

     As affirmed by the record of votes of the members of your Committee on Hawaiian Affairs that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1290 and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Hawaiian Affairs,

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BRICKWOOD GALUTERIA, Chair