THE SENATE	S.B. NO.	2327
TWENTY-SIXTH LEGISLATURE, 2012
STATE OF HAWAII

A BILL FOR AN ACT

relating to public lands.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The office of Hawaiian affairs receives a portion of the revenue derived from the conveyance of certain land of the public land trust by the department of land and natural resources to the Hawaii housing finance and development corporation for the development of housing projects.  The formula to determine the revenue received by the office only applies to the developments known as the villages of Leali‘i, Maui, and villages of La‘i‘opua, Hawaii.  Moreover, the amount due to the office is determined by the ambiguous standard of "the most profitable, probable, and legal use to which the land can be put."

     The purpose of this Act is to:

     (1)  Require that the office of Hawaiian affairs receive a portion of the revenue derived from the conveyance or transfer of any land of the public land trust by the department of land and natural resources for development purposes; and

     (2)  Amend the definition of "fair market value" to take into consideration the use of the land at the time of the conveyance.

     SECTION 2.  Section 10-13.6, Hawaii Revised Statutes, is amended to read as follows:

     "§10-13.6 Public land trust conveyed for [the] development [of housing projects].  (a)  This section applies to the revenue derived from land of the public land trust [as designated in subsection (e)] that is conveyed or otherwise transferred by the department of land and natural resources [to the Hawaii housing finance and development corporation for the development of housing projects as defined under section 201H-1.] for development purposes.  The amount due to the office shall be determined by multiplying the fair market value of the land by twenty per cent.  For the purpose of this section[:

"Fair], "fair market value" means the amount of money that a purchaser willing but not obliged to buy the land would pay to an owner willing but not obliged to sell it, taking into consideration the [highest and best] use of the land[.] at the time of conveyance.

     ["Highest and best use" means the most profitable, probable, and legal use to which the land can be put.]

     (b)  Fair market value shall be determined on a per acre basis pursuant to appraisals performed in conformance with the uniform standards of professional appraisal practice as adopted by the department of commerce and consumer affairs, not more than ninety days before the conveyance of the land [to the Hawaii housing finance and development corporation].  The appraisals shall be performed by two disinterested appraisers each of whose services shall be contracted by the department of land and natural resources and the office, respectively.  If the land is of the public land trust and sugarcane lands, as defined by article XII, section 1 of the state constitution, the office and the department of Hawaiian home lands shall contract the services of one appraiser.  The parties shall contract the services of the appraisers within thirty business days after the department of land and natural resources gives written notice to the office, together with the department of Hawaiian home lands if the land is of the public land trust and sugarcane lands, of the proposed conveyance of the land [to the Hawaii housing finance and development corporation].

     If any party fails or refuses to contract the services of an appraiser, then the other party may petition the circuit court in the county where the land is located to appoint the other of the two appraisers.  If the two appraisers are unable to agree on a fair market value, then within thirty days thereafter, the department of land and natural resources and the office, together with the department of Hawaiian home lands if the land is of the public land trust and sugarcane lands, shall contract for the services of a mutually agreed upon third appraiser and the decision of the majority of the appraisers shall be final with respect to determination of the fair market value of the land.  If the department of land and natural resources and the office, together with the department of Hawaiian home lands if the land is of the public land trust and sugarcane lands, are unable to agree on the selection of the third appraiser, any party may petition the circuit court in the county where the land is located to appoint the third appraiser.

     (c)  The amount due to the office shall be due and payable by the State on the date of conveyance of the land [to the Hawaii housing finance and development corporation].  Payment to the office may be in the form of public lands [or], moneys[.], or by any other terms mutually agreed upon by the State and the office; provided that, for land developed for residential purposes, the office may forego receiving moneys in the amount of twenty per cent of the fair market value and instead choose to receive twenty per cent of the real property developed as residential dwellings after it is developed.  If payment is to be in the form of public lands, the lands shall be mutually agreed upon by the department of land and natural resources and the office, and shall be of value comparable to the amount due to the office.  Any monetary payment shall be an obligation of the [Hawaii housing finance and development corporation.] State.  Any portion of that amount that is not paid on the date of conveyance shall be subject to simple interest annually, established pursuant to the fifteen year treasury rate at the time of the conveyance and payable annually by the State to the office.

     (d)  Twenty per cent of the revenue received [by the Hawaii housing finance and development corporation] from commercial, industrial, or other nonresidential use of the land shall be paid annually by the State to the office; provided that:

     (1)  The office shall not receive payment under this subsection until the [Hawaii housing finance and development corporation] developer recovers all moneys previously paid to the office for that portion of land used for commercial, industrial, or other nonresidential purposes;

     (2)  If borrowed moneys are used to finance the development of land for commercial, industrial, or other nonresidential purposes, annual payments due to the office under this subsection shall be made pursuant to the following order of priority:

         (A)  The [Hawaii housing finance and development corporation] State satisfies as a first priority the amount computed annually on the pro rata portion (not the total debt service over the life of the debt) of its total debt service on the borrowed moneys;

         (B)  The [Hawaii housing finance and development corporation] State satisfies as a second priority its operating expense obligations directly incurred from the development and operation of land used for commercial, industrial, or other nonresidential purposes in an amount not exceeding one per cent of the revenues for the project; and

         (C)  After the first and second priorities are satisfied, the [Hawaii housing finance and development corporation] State shall make annual payments due to the office under this subsection from any remaining revenues; and

     (3)  In the event of a sale of land used for commercial, industrial, or other nonresidential purposes, the office shall receive twenty per cent of the revenue received by the [Hawaii housing finance and development corporation.] State.

     [(e)  This section shall only apply to the Hawaii housing finance and development corporation's developments known as the villages of Leali‘i, Maui, and villages of La‘i‘opua, Hawaii.]"

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

OHA; DLNR; Public Land Trust; Revenue; Fair Market Value

Description:

Requires that OHA receive a portion of the revenue derived from the conveyance or transfer of any land of the public land trust by DLNR for development purposes.  Amends the definition of fair market value to take into consideration the use of the land at the time of the conveyance.

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