SB2330.DOC

PART I

SECTION 1. Chapter 171C, Hawaii Revised Statutes, is amended by adding two new parts to read as follows:

"PART II. HOUSING FINANCE AND DEVELOPMENT

A. General Provisions

§171C-A Definitions. The following terms, wherever used or referred to in this part, shall have the following respective meanings, unless a different meaning clearly appears from the context:

"Bonds" means any bonds, interim certificates, notes, debentures, participation certificates, pass-through certificates, mortgage-backed obligations, or other evidences of indebtedness of the corporation issued pursuant to this part.

"Community facilities" includes real and personal property; buildings, equipment, lands, and grounds for recreational or social assemblies, or educational, health, or welfare purposes; and necessary or convenient utilities, when designed primarily for the benefit and use of the corporation or the occupants of the dwelling.

"Contract" means any agreement of the corporation with an obligee or a trustee for the obligee, whether contained in a resolution, trust indenture, mortgage, lease, bond, or other instrument.

"Dwelling", "dwelling unit", or "unit" means any structure or room for sale, lease, or rent, that provides shelter.

"Elderly housing project" means a housing project that is intended and operated as housing that satisfies the definition of housing for older persons under 42 United States Code section 3607(b)(2).

"Federal government" includes the United States and any agency or instrumentality, corporate or otherwise, of the United States.

"Government" or "government agency" includes the State and the United States and any political subdivision, agency, or instrumentality, corporate or otherwise, of either of them.

"Household member" means a person who:

(1) Is a co-applicant; or

(2) Will reside in the dwelling unit purchased or leased from the corporation.

"Housing project" or "project":

(1) Includes all real and personal property, buildings and improvements, commercial spaces, lands for farming and gardening, and community facilities acquired or constructed or to be acquired or constructed, and all tangible or intangible assets held or used in connection with the housing project; and

(2) May also be applied to the planning of the buildings and improvements, the acquisition of property by purchase, lease, or otherwise, the demolition of existing structures, the construction, reconstruction, alteration, and repair of the improvements, and all other work in connection therewith.

"Land" or "property" includes vacant land or land with site improvements, whether partially or entirely finished in accordance with governmental subdivision standards, or with complete dwellings.

"Mortgage holder" includes the United States Department of Housing and Urban Development, Federal Housing Administration, the United States Department of Agriculture, or other federal or state agency engaged in housing activity, United States Department of Veterans Affairs, Federal National Mortgage Association, Government National Mortgage Association, Federal Home Loan Mortgage Corporation, private mortgage lender, private mortgage insurer, and their successors, grantees, and assigns.

"Mortgage lender" means any bank, trust company, savings bank, national banking association, savings and loan association, building and loan association, mortgage banker, credit union, insurance company, or any other financial institution, or a holding company for any of the foregoing, that:

(1) Is authorized to do business in the State;

(2) Customarily provides service or otherwise aids in the financing of mortgages on single-family or multifamily residential property; and

(3) Is a financial institution whose accounts are federally insured or is an institution that is an approved mortgagee for the Federal Housing Administration, an approved lender for the United States Department of Veterans Affairs or the United States Department of Agriculture, or an approved mortgage loan servicer for the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation.

"Nonprofit organization" means a corporate entity, association, or other duly chartered entity that is registered with the State and has received a written determination from the Internal Revenue Service that it is exempt under either section 501(c)(3), section 501(c)(4), or so much of section 501(c)(2) as applied to title holding entities that turn over their income to organizations that are exempt under either section 501(c)(3) or 501(c)(4), of the Internal Revenue Code of 1986, as amended.

"Obligee of the corporation" or "obligee" includes any bondholder, trustee or trustees for any bondholders, any lessor demising property to the corporation used in connection with a housing project, or any assignee or assignees of the lessor's interest or any part thereof, and the United States, when it is a party to any contract with the corporation.

"Real property" includes lands, land under water, structures, and any and all easements, franchises, and incorporeal hereditaments and every estate and right therein, legal and equitable, including terms for years and liens by way of judgment, mortgage, or otherwise.

§171C-B Fair housing law to apply. Notwithstanding any other law to the contrary, the provisions of chapter 515 shall apply in administering this part.

§171C-C Housing advocacy and information system. (a) The corporation, with the assistance of other agencies of the State and counties with related responsibilities, shall develop and maintain a housing advocacy and information system to aid the corporation in meeting the needs and demands of housing consumers.

(b) In establishing and maintaining the housing advocacy and information system, the corporation shall conduct market studies, engage in community outreach, and solicit recommendations from, and statistics and research developed by, agencies of the United States, the State, the counties, private research organizations, nonprofit community groups, trade associations, including those of the construction and real estate industries, departments, individuals at the University of Hawaii, and housing consumers.

(c) The corporation shall analyze the information received and make recommendations to the appropriate agencies and developers.

(d) The corporation, through the housing advocacy and information system, shall act as a clearinghouse for information relating to housing conditions, needs, supply, demand, characteristics, developments, trends in federal housing programs, and housing laws, ordinances, rules, and regulations.

(e) The housing advocacy and information system may be used by housing researchers, planners, administrators, and developers and shall be coordinated with other housing research efforts. The corporation shall maintain a current supply of information, including means to gather new information through surveys, contracted research, and investigations.

(f) The corporation, through the housing advocacy and information system, shall develop and maintain an affordable housing inventory registry to identify:

(1) Affordable housing projects developed by the corporation utilizing moneys in the rental housing trust fund established by section 171C-AAAAH or the dwelling unit revolving fund established by section 171C-AAAAE;

(2) State and federal public housing projects identified by the Hawaii public housing authority;

(3) United States Department of Housing and Urban Development Region 9 federally supported and privately managed housing projects; and

(4) State and county lands that may be developed for affordable housing, as defined in section 171C-AS(b).

§171C-D Housing research. (a) The corporation may study the plans of any government regarding the clearing, replanning, or reconstruction of an area where unsafe or unsanitary dwelling or housing conditions exist.

(b) The corporation may purchase materials for the development of land and the construction of dwelling units in the manner it concludes to be most conducive to lower costs, including purchase from other states or from foreign countries for drop shipment in the State or on cost‑plus contracts for materials with persons or firms doing business in the State, or otherwise.

(c) The corporation may conduct, or cause to be conducted, research on housing needs, materials, design, or technology, and apply the findings of the investigation to housing projects, including the following:

(1) Sociocultural investigation of housing and community utilization, preferences, or needs of residents within the housing need classification of the housing functional plan;

(2) Development of technology for the application of innovative building systems or materials, to provide energy or resource conservation or cost savings in the construction or operation of a housing project;

(3) Investigation of the applicability of locally-produced building materials and systems to dwelling unit construction;

(4) Investigation of new forms of project construction, maintenance, operation, financing, or ownership, involving tenants, homeowners, financing agencies, and others; or

(5) Other necessary or appropriate research that may lower the long-term costs of housing, conserve resources, or create communities best suited to the needs of residents.

(d) In the development and construction of a housing project, the corporation may provide for an on‑the-job training program or other projects as it may deem justifiable, including innovative projects to develop a larger qualified work force in the State.

§171C-E Housing counseling. The corporation may provide the following services for the programs it administers:

(1) Listing and referral services to tenants seeking to rent homes;

(2) Counseling to tenants on matters such as financial management and budgeting, basic housekeeping, communicating effectively and getting along with others, and other matters as may be desirable or necessary;

(3) Counseling to prospective homeowners on the rudiments of owning a home;

(4) Assistance to any person or government agency regarding the nature and availability of federal assistance for housing development and community development or redevelopment;

(5) Counseling and guidance services to aid: any person or government agency in securing the financial aid or cooperation of the federal government in undertaking, constructing, maintaining, operating, or financing any housing designated for elders; persons displaced by governmental action; university and college students and faculty; and any other persons; and

(6) Assistance to a county agency upon request from the agency in the development of programs to correct or eliminate blight and deterioration and to effect community development.

§171C-F Acquisition, use, and disposition of property. (a) The corporation may acquire any real or personal property or interest therein by purchase, exchange, gift, grant, lease, or other means from any person or government to provide housing. Exchange of real property shall be in accordance with section 171-50.

(b) The corporation may own or hold real property. All real property owned or held by the corporation shall be exempt from mechanic's or materialman's liens and also from levy and sale by virtue of an execution, and no execution or other judicial process shall issue against the same nor shall any judgment against the corporation be a charge or lien upon its real property; provided that this subsection shall not apply to or limit the right of obligees to foreclose or otherwise enforce any mortgage of the corporation or the right of obligees to pursue any remedies for the enforcement of any pledge or lien given by the corporation on its rents, fees, or revenues. The corporation and its property shall be exempt from all taxes and assessments.

(c) The corporation may lease or rent all or a portion of any housing project and establish and revise the rents or charges therefor. The corporation may sell, exchange, transfer, assign, or pledge any property, real or personal, or any interest therein to any person or government.

(d) The corporation may insure or provide for the insurance of its property or operations against risks as it deems advisable.

§171C-G Cooperative agreements with other governmental agencies. (a) The corporation may:

(1) Obtain the aid and cooperation of governmental agencies in the planning, construction, and operation of housing projects and enter into agreements and arrangements as it deems advisable to obtain aid and cooperation;

(2) Arrange or enter into agreements with any governmental agency for the acquisition of property, options, or property rights or for the furnishing, installing, opening, or closing of streets, roads, alleys, sidewalks, or other places, or for the furnishing of property, services, parks, sewage, water, and other facilities in connection with housing projects, or for the changing of the map of a political subdivision or the planning, replanning, zoning, or rezoning of any part of a political subdivision;

(3) Procure insurance or guarantees from any governmental agency for the payment of any debts or parts thereof incurred by the corporation, including the power to pay premiums on any such insurance; and

(4) Agree to make payments to any state or county agency, if the agency is authorized to accept payments, as the corporation deems consistent with the maintenance of the character of housing projects or the purposes of this part.

(b) For the purpose of aiding and cooperating in the planning, construction, and operation of housing projects located within their respective territorial boundaries, any state or county agency, upon those terms, with or without consideration, as it determines, may:

(1) Dedicate, grant, sell, convey, or lease any of its property or grant easements, licenses, or any other rights or privileges therein to the corporation or to the federal government;

(2) To the extent that it is within the scope of the agency:

(A) Cause the services customarily provided by the agency to be rendered for the benefit of housing projects and the occupants thereof;

(B) Provide and maintain parks, sewage, water, lights, and other facilities adjacent to or in connection with housing projects;

(C) Open, close, pave, install, or change the grade of streets, roads, roadways, alleys, sidewalks, or other related facilities; and

(D) Change the map of a political subdivision or plan, replan, zone, or rezone any part of a political subdivision;

(3) Enter into agreements with the corporation with respect to the exercise of their powers relating to the repair, closing, or demolition of unsafe, unsanitary, or unfit dwellings;

(4) Employ, notwithstanding any other law as to what constitutes legal investments, any available funds belonging to them or within their control, including funds derived from the sale or furnishing of property or facilities to the corporation, in the purchase of bonds or other obligations of the corporation; and exercise all the rights of any holder of the bonds or other obligations;

(5) Do any and all things necessary or convenient to aid and cooperate in the planning, undertaking, and construction of those housing projects; and

(6) Enter into contracts with the corporation or the federal government for any period agreeing to exercise any of the powers conferred hereby or to take any other action in aid of those housing projects.

In connection with the exercise of this power, any political subdivision may incur the entire expense of any public improvements located within its territorial boundaries without assessment against abutting property owners.

For the purpose of aiding and cooperating in the planning, construction, and operation of housing projects, the department of land and natural resources, the Hawaiian homes commission, and any other agency of the State having power to manage or dispose of its public lands, with the approval of the governor and with or without consideration, may grant, sell, convey, or lease, for any period, any parts of those public lands, without limit as to area, to the corporation or to the federal government.

Any law to the contrary notwithstanding, any gift, grant, sale, conveyance, lease, or agreement provided for in this section may be made by the state or county government without appraisal, public notice, advertisement, or public bidding.

If at any time title to, or possession of, any housing project is held by any governmental agency authorized by law to engage in the development or administration of low-income housing or slum clearance projects, any agreement made under this part relating to the project shall inure to the benefit of and may be enforced by that governmental agency.

Insofar as this subsection is inconsistent with the provisions of any other law, this subsection shall be controlling.

(c) Any county in which a housing project is located or is about to be located may make donations or advances to the corporation in sums as the county in its discretion may determine. The advances or donations shall be made for the purpose of aiding or cooperating in the construction and operation of the housing project. The corporation, when it has money available therefor, shall reimburse the county for all advances made by way of a loan to it.

§171C-H Agents, including corporations. The corporation may exercise any or all of the powers conferred upon it, either generally or with respect to any specific housing project through an agent that it may designate, including any corporation that is formed under the laws of this State, and for those purposes the corporation may cause one or more corporations to be formed under the laws of this State or may acquire the capital stock of any corporation. Any corporate agent, all of the stock of which shall be owned by the corporation or its nominee, to the extent permitted by law, may exercise any of the powers conferred upon the corporation in this part.

§171C-I Development of property. (a) The corporation, in its own behalf or on behalf of any federal, state, or county agency, may:

(1) Clear, improve, and rehabilitate property;

(2) Plan, develop, construct, and finance housing projects; and

(3) In cooperation with the department of education and department of accounting and general services, plan educational facilities and related infrastructure as a necessary and integral part of its housing projects, using all of its innovative powers toward achieving that end expeditiously and economically; provided that the educational facilities comply with the department of education's educational specifications, timelines, and siting requirements.

(b) The corporation may develop public land in an agricultural district subject to the prior approval of the land use commission, when developing lands greater than fifteen acres in size, and public land in a conservation district subject to the prior approval of the board of land and natural resources. The corporation shall not develop state monuments, historical sites, or parks. When the corporation proposes to develop public land, it shall file with the department of land and natural resources a petition setting forth the purpose for the development. The petition shall be conclusive proof that the intended use is a public use superior to that which the land has been appropriated.

(c) The corporation may develop or assist in the development of federal lands with the approval of appropriate federal authorities.

(d) The corporation shall not develop any public land where the development may endanger the receipt of any federal grant, impair the eligibility of any government agency for a federal grant, prevent the participation of the federal government in any government program, or impair any covenant between the government and the holder of any bond issued by the government.

(e) The corporation may contract or sponsor with any county, housing authority, or person, subject to the availability of funds, an experimental or demonstration housing project designed to meet the needs of elders; the disabled; displaced or homeless persons; low- and moderate-income persons; teachers or other government employees; or university and college students and faculty.

§171C-J Eminent domain, exchange or use of public property. (a) The corporation may acquire any real property, including fixtures and improvements, or interest therein: through voluntary negotiation; through exchange of land in accordance with section 171-50, provided that the public land to be exchanged need not be of like use to that of the private land; or by the exercise of the power of eminent domain which it deems necessary by the adoption of a resolution declaring that the acquisition of the property described therein is in the public interest and required for public use. The corporation shall exercise the power of eminent domain granted by this section in the same manner and procedure as is provided by chapter 101 and otherwise in accordance with all applicable provisions of the general laws of the State; provided that condemnation of parcels greater than fifteen acres shall be subject to legislative disapproval expressed in a concurrent resolution adopted by majority vote of the senate and the house of representatives in the first regular or special session following the date of condemnation.

(b) The corporation may acquire by the exercise of the power of eminent domain property already devoted to a public use; provided that no property belonging to any government may be acquired without its consent, and that no property belonging to a public utility corporation may be acquired without the approval of the public utilities commission, and subject to legislative disapproval expressed in a concurrent resolution adopted by majority vote of the senate and the house of representatives in the first regular or special session following the date of condemnation.

§171C-K Contracts with the federal government. (a) The corporation may:

(1) Borrow money or accept grants from the federal government for or in aid of any housing project that the corporation is authorized to undertake;

(2) Take over any land acquired by the federal government for the construction or operation of a housing project with the approval of the federal government or at the request of the federal government;

(3) Procure insurance or guarantees from the federal government for the payment of any debts or parts thereof secured by mortgages made or held by the corporation on any property included in any housing project;

(4) Comply with any conditions required by the federal government in any contract for financial assistance; and

(5) Execute contracts with the federal government.

(b) It is the purpose and intent of this part to authorize the corporation to do any and all things necessary to secure the financial aid and the cooperation of the federal government in the undertaking, construction, maintenance, and operation of any housing project that the corporation is empowered to undertake.

§171C-L Administration of low-income housing credit allowed under section 235-110.8. (a) The corporation is designated as a state housing credit agency to carry out section 42(h) (with respect to limitation on aggregate credit allowable with respect to a project located in a state) of the Internal Revenue Code of 1986, as amended. As a state housing credit agency, the corporation shall determine the eligibility basis for a qualified low-income building, make the allocation of housing credit dollar amounts within the State, and determine the portion of the State's housing credit ceiling set aside for projects involving qualified nonprofit organizations. The corporation shall file any certifications and annual reports required by section 42 (with respect to low-income housing credit) of the Internal Revenue Code of 1986, as amended.

(b) The state aggregate housing credit dollar amount shall be allocated annually as required by section 42 of the Internal Revenue Code of 1986, as amended, by the corporation in an amount equal to $1.25 multiplied by the state population in the calendar year or such greater or lesser amount as provided by section 42(h) of the Internal Revenue Code of 1986, as amended.

(c) The corporation shall adopt rules under chapter 91 necessary to comply with federal and state requirements for determining the amount of the tax credit allowed under section 42 of the Internal Revenue Code of 1986, as amended, and section 235-110.8. The corporation may establish and collect reasonable fees for administrative expenses incurred in providing the services required by this section, including fees for processing developer applications for the credit. All fees collected for administering these provisions, including developer application fees, shall be used to cover the administrative expenses of the corporation.

(d) All claims for allocation of the low-income housing credit under section 235-110.8 shall be filed with the corporation. The corporation shall determine the amount of the credit allocation, if necessary, and return the claim to the taxpayer. The taxpayer shall file the credit allocation with the taxpayer's tax return with the department of taxation.

§171C-M Administration of federal programs. (a) The corporation may carry out federal programs designated to be carried out by a housing finance or housing development entity.

(b) The corporation shall adopt necessary rules in accordance with chapter 91, including the establishment and collection of reasonable fees for administering the program, to carry out any federal program in subsection (a).

(c) All fees collected for administering the program may be deposited into an appropriate special fund of the corporation and may be used to cover the administrative expenses of the corporation.

§171C-N Federal funds outside of state treasury. Notwithstanding chapter 38, the corporation may establish and manage federal funds outside of the state treasury to be used for federal housing programs. The corporation shall invest those funds in permitted investments in accordance with chapter 36.

§171C-O Public works contracts. The corporation may make, execute, and carry out contracts for, or in connection with, any housing project in the manner provided under chapter 103D and section 103-53; provided that with regard to the contracts, the term "officers", as used in chapter 103D, shall mean the corporation or officer authorized by the corporation to act as its contracting officer. Unless made and executed in the name of the State, each contract made and executed as authorized in this section shall state therein that it is so made and executed.

§171C-P Remedies of an obligee: mandamus; injunction; possessory action; receiver; accounting; etc. An obligee of the corporation shall have the right, in addition to all other rights that may be conferred on the obligee subject only to any contractual restrictions binding upon the obligee, and subject to the prior and superior rights of others:

(1) By mandamus, suit, action, or proceeding in law or equity to compel the corporation, and the members, officers, agents, or employees thereof to perform each and every item, provision, and covenant contained in any contract of the corporation, and to require the carrying out of any or all covenants and agreements of the corporation and the fulfillment of all duties imposed upon the corporation by this part;

(2) By suit, action, or proceeding in equity to enjoin any acts or things that may be unlawful, or the violation of any of the rights of the obligee of the corporation;

(3) By suit, action, or proceeding in any court of competent jurisdiction to cause possession of any housing project or any part thereof to be surrendered to any obligee having the right to possession pursuant to any contract of the corporation;

(4) By suit, action, or proceeding in any court of competent jurisdiction, upon the happening of an event of default (as defined in a contract of the corporation), to obtain the appointment of a receiver of any housing project of the corporation or any part or parts thereof, and if the receiver is appointed, the receiver may enter and take possession of the housing project or any part or parts thereof and operate and maintain same, and collect and receive all fees, rents, revenues, or other charges thereafter arising therefrom in the same manner as the corporation itself might do and shall keep the moneys in a separate account or accounts and apply the same in accordance with the obligations of the corporation as the court shall direct; and

(5) By suit, action, or proceeding in any court of competent jurisdiction to require the corporation and the members thereof to account as if it and they were the trustees of an express trust.

§171C-Q Subordination of mortgage to agreement with government. The corporation may agree in any mortgage made by it that the mortgage shall be subordinate to a contract for the supervision by a governmental agency of the operation and maintenance of the mortgaged property and the construction of improvements thereon. In that event, any purchaser or purchasers at a sale of the property of the corporation pursuant to a foreclosure of the mortgage or any other remedy in connection therewith shall obtain title subject to the contract.

§171C-R Duty to make reports. Except as otherwise provided by law, the corporation shall:

(1) Report to the state comptroller on moneys deposited in depositories other than the state treasury under section 40-81 and rules adopted thereunder; and

(2) As part of its report required under section 171C-20, submit a report on all corporation program areas and funds organized by program area, and by fund within each program area, which shall provide the following information on the status of its programs and finances:

(A) A description of programs being developed in the current fiscal biennium, including a summary listing of the programs, the status of each program, the methods of project financing or loans, and other information deemed significant;

(B) A description of programs planned for development during the two ensuing fiscal bienniums, including a summary listing of the proposed programs, the methods of project financing or loans, and other information deemed significant;

(C) A status report of actual expenditures made in the prior completed fiscal year from each fund established under this part, estimated expenditures anticipated for the current fiscal year, and projected expenditures for the ensuing fiscal years to be described in relation to specific projects developed to implement the purposes of any program or fund established under this part;

(D) A financial audit and report conducted on an annual basis by a certified public accounting firm; and

(E) Recommendations with reference to any additional legislation or other action that may be necessary to carry out the purposes of this part.

§171C-S Quitclaim deeds. Unless otherwise provided by law, the corporation shall issue quitclaim deeds and leases whenever it conveys, transfers, sells, or assigns any property developed, constructed, or sponsored under this part.

§171C-T For-sale developments. Any law to the contrary notwithstanding, new multifamily for-sale housing condominium developments of seventy-five units or more per acre on privately owned lands and privately financed without federal, state, or county financing assistance or subsidies, including tax credits, shall:

(1) Be exempt from the corporation's shared appreciation equity program;

(2) Be subject to three-year occupancy requirements and transfer restrictions; provided that the three-year occupancy requirement shall begin upon the sale of each unit; and

(3) Not be subject to the ten-year occupancy requirements and transfer restrictions in sections 171C-AL and 171C-AN, respectively;

provided that, in order for paragraphs (1), (2), and (3) to apply, the primary purpose of constructing the new multifamily for-sale housing condominium development of seventy-five units or more per acre shall be to augment the existing affordable housing unit inventory in the State and not for the purpose of satisfying any affordable housing or reserved housing requirement under this chapter, section 171C-4(a)(17), or any other law or ordinance.

As used in this section:

"Affordable housing" means the same as defined under section 171C-AS.

"Reserved housing" means the same as defined under section 171C-AAAAAP.

B. Housing Development Programs

§171C-U Criteria. In administering this part and other laws of the State applicable to the supplying of housing or the assistance in obtaining housing, the corporation shall give preference to those applicants most in need of assistance in obtaining housing, in light of the amount of moneys available for the various programs. In doing so, the corporation shall take into consideration the applicant's household income and number of dependents; the age of the applicant; the physical disabilities of the applicant or those living with the applicant; whether or not the present housing of the applicant is below standard; whether or not the applicant's need for housing has arisen by reason of displacement of the applicant by governmental actions; and other factors as it may deem pertinent.

§171C-V Definitions. The following terms, wherever used or referred to in this subpart, shall have the following respective meanings unless a different meaning clearly appears from the context:

"Develop" or "development" means the planning, financing and acquisition of real and personal property; demolition of existing structures and clearance of real property; construction, reconstruction, alteration, or repairing of approaches, streets, sidewalks, utilities, and services, or other site improvements; construction, reconstruction, repair, remodeling, extension, equipment, or furnishing of buildings or other structures; or any combination of the foregoing, of any housing project. It also includes any and all undertakings necessary therefor, and the acquisition of any housing, in whole or in part.

"Eligible bidder" means a person, partnership, firm, or corporate entity determined by the corporation:

(1) To be qualified by experience and financial responsibility to construct housing of the type proposed to be contracted; and

(2) To have submitted the lowest acceptable bid.

"Eligible developer" means any person, partnership, cooperative including a limited-equity housing cooperative as defined in chapter 421H, firm, nonprofit or for-profit entity, or public agency determined by the corporation:

(1) To be qualified by experience, financial responsibility, and support to construct housing of the type described and of the magnitude encompassed by the given project;

(2) To have submitted plans for a housing project adequately meeting the objectives of this part, the maintenance of aesthetic values in the locale of the project, and the requirements of all applicable environmental statutes and rules; and

(3) To meet all other requirements the corporation deems to be just and reasonable, and all requirements stipulated in this part.

"Purchaser's equity" means the difference between the original cost of the dwelling unit to the purchaser, and the principal amount of any mortgages, liens, or notes outstanding.

"Qualified resident" means a person who:

(1) Is a citizen of the United States or a resident alien;

(2) Is at least eighteen years of age;

(3) Is domiciled in the State and physically resides in the dwelling unit purchased or rented under this part;

(4) In the case of the purchase of real property in fee simple or leasehold, has a gross income sufficient to qualify for the loan to finance the purchase; or in the case of a rental, demonstrates an ability to pay rent as determined by the corporation and meets any additional criteria established by the corporation for the respective rental housing development for which the applicant is applying; and

(5) Meets the following qualifications:

(A) Is a person who either by the person's self, or together with spouse or household member, does not own a majority interest in fee simple or leasehold lands suitable for dwelling purposes or a majority interest in lands under any trust agreement or other fiduciary arrangement in which another person holds the legal title to the land; and

(B) Is a person whose spouse or household member does not own a majority interest in fee simple or leasehold lands suitable for dwelling purposes or more than a majority interest in lands under any trust agreement or other fiduciary arrangement in which another person holds the legal title to the land, except when husband and wife are living apart under a decree of separation from bed and board issued by the family court pursuant to section 580-71;

provided that for purchasers of market-priced units in an economically integrated housing project, the term "qualified resident" means a person who is a citizen of the United States or a resident alien; is domiciled in the State and shall physically reside in the dwelling unit purchased; is at least eighteen years of age; and meets other qualifications as determined by the developer.

"Short-term project notes" means evidences of indebtedness issued by the State for specified housing projects and secured by the projects, the terms of which call for complete repayment by the State of the face amount in not less than two nor more than ten years.

§171C-W Powers and duties, generally. (a) The corporation may develop fee simple or leasehold property, construct dwelling units thereon, including condominiums, planned units, and cluster developments, and sell, lease, or rent or cause to be leased or rented, at the lowest possible price to qualified residents, nonprofit organizations, or government agencies, with an eligible developer or in its own behalf:

(1) Fully completed dwelling units with the appropriate interest in the land on which the dwelling unit is located;

(2) Dwelling units that are substantially complete and habitable with the appropriate interest in the land on which the dwelling unit is located; or

(3) The land with site improvements (other than the dwelling unit) either partially or fully developed.

(b) The corporation shall require all applicants for the purchase of dwelling units to make application therefor under oath, and may require additional testimony or evidence under oath in connection with any application. The determination of any applicant's eligibility under this part by the corporation shall be conclusive as to all persons thereafter dealing with the property; provided that the making of any false statement knowingly by the applicant or other person to the corporation in connection with any application shall constitute perjury and be punishable as such. The corporation shall establish a system to determine preferences by lot in the event that it receives more qualified applications than it has dwelling units available.

(c) The corporation shall adopt, pursuant to chapter 91, rules on health, safety, building, planning, zoning, and land use that relate to the development, subdivision, and construction of dwelling units in housing projects in which the State, through the corporation, shall participate. The rules shall not contravene any safety standards or tariffs approved by the public utilities commission, and shall follow existing law as closely as is consistent with the production of lower cost housing with standards that meet minimum requirements of good design, pleasant amenities, health, safety, and coordinated development.

When adopted, the rules shall have the force and effect of law and shall supersede, for all housing projects in which the State, through the corporation, shall participate, all other inconsistent laws, ordinances, and rules relating to the use, zoning, planning, and development of land, and the construction of dwelling units thereon. The rules, before becoming effective, shall be presented to the legislative body of each county in which they will be effective and the legislative body of any county may within forty-five days approve or disapprove, for that county, any or all of the rules by a majority vote of its members. On the forty-sixth day after submission, any rules not disapproved shall be deemed to have been approved by the county.

(d) The corporation may acquire, by eminent domain, exchange, or negotiation, land or property required within the foreseeable future for the purposes of this part. Whenever land with a completed or substantially complete and habitable dwelling or dwellings thereon is acquired by exchange or negotiation, the exchange value or purchase price for each dwelling, including land, shall not exceed its appraised value. Land or property acquired in anticipation of future use may be leased for the interim period by the corporation for the term and rent as it deems appropriate.

(e) Upon authorization by the legislature, the corporation shall cause the State to issue general obligation bonds to finance:

(1) Land acquisition;

(2) The development and improvement of land;

(3) The construction of dwelling units;

(4) The purchase, lease, or rental of land and dwelling units by qualified residents, nonprofit organizations, or government agencies under this part;

(5) Payment for any services contracted for under this part, including profit or recompense paid to partners, and including community information and advocacy services deemed necessary by the corporation to provide for citizen participation in the development of housing projects, the implementation of this part, and the staffing of any citizen advisory committee the corporation may establish;

(6) The cost of the repurchase of units under section 171C-AL;

(7) Loans for the rehabilitation and renovation of existing housing; and

(8) Any other moneys required to accomplish the purposes of this part.

(f) The corporation shall do all other things necessary and convenient to carry out the purposes of this part.

§171C-X Additional powers; development. Notwithstanding section 103-7, but with the approval of the governor, the corporation may enter into and carry out agreements and undertake projects or participate in projects authorized by this part.

§171C-Y Authority to modify and amend development agreements with eligible developers. The corporation is authorized to amend, delete, restate, and otherwise modify the terms, conditions, plans, specifications, and all other matters relating, directly or indirectly, to any housing project that was previously approved by the corporation, including the terms, covenants, and conditions of any development agreement for a housing project between the corporation and an eligible developer.

§171C-Z Bond financing. The director of finance may issue general obligation bonds and short-term project notes of the State in an aggregate amount not to exceed $105,000,000 for the dwelling unit revolving fund established by section 171C-AAAAE. Pending the receipt of funds from the issuance and sale of the bonds and notes, the amount required for the purposes of this part shall be advanced from the general fund of the State. Upon the receipt of the bond or note funds, the general fund shall be reimbursed. The director of finance may sequester and separate the proceeds from the sale of the bonds and notes into separate funds and the amounts in either fund may be used for any of the purposes set forth in this part.

§171C-AA Exemption from general excise taxes. (a) In accordance with section 237-29, the corporation may approve and certify for exemption from general excise taxes any qualified person or firm involved with a newly constructed, or moderately or substantially rehabilitated project:

(1) Developed under this subpart;

(2) Developed under a government assistance program approved by the corporation, including but not limited to the United States Department of Agriculture 502 program and Federal Housing Administration 235 program;

(3) Developed under the sponsorship of a private nonprofit organization providing home rehabilitation or new homes for qualified families in need of decent, low-cost housing; or

(4) Developed by a qualified person or firm to provide affordable rental housing where at least fifty per cent of the available units are for households with incomes at or below eighty per cent of the area median family income as determined by the United States Department of Housing and Urban Development, of which at least twenty per cent of the available units are for households with incomes at or below sixty per cent of the area median family income as determined by the United States Department of Housing and Urban Development.

(b) All claims for exemption under this section shall be filed with and certified by the corporation and forwarded to the department of taxation. Any claim for exemption that is filed and approved, shall not be considered a subsidy for the purpose of this subpart.

"Moderate rehabilitation" means rehabilitation to upgrade a dwelling unit to a decent, safe, and sanitary condition, or to repair or replace major building systems or components in danger of failure.

"Substantial rehabilitation":

(1) Means the improvement of a property to a decent, safe, and sanitary condition that requires more than routine or minor repairs or improvements. It may include but is not limited to the gutting and extensive reconstruction of a dwelling unit, or cosmetic improvements coupled with the curing of a substantial accumulation of deferred maintenance; and

(2) Includes renovation, alteration, or remodeling to convert or adapt structurally sound property to the design and condition required for a specific use, such as conversion of a hotel to housing for elders.

(d) The corporation may establish, revise, charge, and collect a reasonable service fee, as necessary, in connection with its approvals and certifications under this section. The fees shall be deposited into the dwelling unit revolving fund.

§171C-AB Exemption from tax on income and obligations. Income earned and obligations issued by a nonprofit entity determined to constitute a "public housing agency" pursuant to section 3(6) of the United States Housing Act of 1937, as amended, and which income and obligations are declared by the United States Department of Housing and Urban Development to be exempt from all taxation imposed by the United States pursuant to section 11(b) of the Act, shall be exempt from all taxation now or hereafter imposed by the State.

§171C-AC Housing development; exemption from statutes, ordinances, charter provisions, and rules. (a) The corporation may develop on behalf of the State or with an eligible developer, or may assist under a government assistance program in the development of, housing projects that shall be exempt from all statutes, ordinances, charter provisions, and rules of any government agency relating to planning, zoning, construction standards for subdivisions, development and improvement of land, and the construction of dwelling units thereon; provided that:

(1) The corporation finds the housing project is consistent with the purpose and intent of this part, and meets minimum requirements of health and safety;

(2) The development of the proposed housing project does not contravene any safety standards, tariffs, or rates and fees approved by the public utilities commission for public utilities or of the various boards of water supply authorized under chapter 54;

(3) The legislative body of the county in which the housing project is to be situated shall have approved the project with or without modifications:

(A) The legislative body shall approve, approve with modification, or disapprove the project by resolution within forty-five days after the corporation has submitted the preliminary plans and specifications for the project to the legislative body. If on the forty-sixth day a project is not disapproved, it shall be deemed approved by the legislative body;

(B) No action shall be prosecuted or maintained against any county, its officials, or employees on account of actions taken by them in reviewing, approving, modifying, or disapproving the plans and specifications; and

(C) The final plans and specifications for the project shall be deemed approved by the legislative body if the final plans and specifications do not substantially deviate from the preliminary plans and specifications. The final plans and specifications for the project shall constitute the zoning, building, construction, and subdivision standards for that project. For purposes of sections 501-85 and 502-17, the executive director of the corporation or the responsible county official may certify maps and plans of lands connected with the project as having complied with applicable laws and ordinances relating to consolidation and subdivision of lands, and the maps and plans shall be accepted for registration or recordation by the land court and registrar; and

(4) The land use commission shall approve, approve with modification, or disapprove a boundary change within forty-five days after the corporation has submitted a petition to the commission as provided in section 205-4. If, on the forty-sixth day, the petition is not disapproved, it shall be deemed approved by the commission.

(b) For the purposes of this section, "government assistance program" means a housing program qualified by the corporation and administered or operated by the corporation or the United States or any of their political subdivisions, agencies, or instrumentalities, corporate or otherwise.

§171C-AD Starter homes; design standards; applicant eligibility; authority to incorporate starter homes into housing projects of the corporation. (a) The corporation shall adopt rules in accordance with chapter 91 to establish design and construction standards for starter homes configured to expand incrementally over time. For the purposes of this section, "starter home" means a dwelling unit that is designed to meet the basic living capacity requirements of homebuyers with families of limited size by eliminating unnecessary design and space amenities, but which nonetheless enables future expansion, modification, and improvement by the owner to accommodate increased occupancy over time as may be necessary. The rules shall include building, setback, minimum lot size, infrastructure, and architectural standards for the construction and development of starter homes.

(b) In addition to the requirements of subsection (a), the corporation shall adopt rules in accordance with chapter 91 to establish the basic requirements for families eligible to purchase starter homes under this section. The rules shall include guidelines and restrictions on occupancy standards initially permitted in a starter home, as well as the income ranges of families eligible to qualify for purchases under this section.

(c) The corporation may incorporate starter homes into any affordable housing project developed by the corporation under this part. The corporation shall determine on a project-by-project basis the number of starter home units to be included in each particular project.

(d) The corporation shall include in its annual report to the legislature a report on the number of starter homes constructed and developed by the corporation in accordance with the authorization provided in this section.

§171C-AE Housing projects; construction and sponsorship. (a) The corporation, on behalf of the State or with eligible developers and contractors, shall develop real property and construct dwelling units thereon; provided that not less than ten per cent of the total number of units in single-family projects consisting of fifty units or more sponsored by the corporation shall be first offered to owner‑builders or to nonprofit organizations assisting owner‑builders in the construction of units thereon. Qualifications for developers and contractors shall be provided by rules adopted by the corporation in accordance with chapter 91. Any person, if qualified, may act as both the developer and the contractor.

(b) In selecting the eligible developers or in contracting any services or materials for the purposes of this part, the corporation shall not be subject to the competitive bidding laws.

(c) If working in partnership with an eligible developer, the corporation shall have sole control of the partnership, shall keep all books of the partnership, and shall ascertain all costs of the partnership, including the cost of services performed by any other partners, and the corporation shall audit the same. The other partners shall perform services for the partnership under the direction of the corporation and shall be reimbursed for all costs relating to the project as certified by the corporation, including administrative and overhead costs. Additionally, the other partners, upon transfer of title by the corporation to the purchaser, shall be entitled to a guaranteed gross share if the actual cost of the project does not exceed the original project cost. The gross share shall not exceed fifteen per cent of the original project cost prorated to the dwelling units, less any amount subsidized by the State. Subsidies shall include unrecovered development and land costs and any other subsidized items as defined in rules adopted by the corporation pursuant to chapter 91. The percentage of the share shall be determined by the corporation by contract with the partners based upon the nature of the services rendered by them. For purposes of this subsection, "original project cost" means the original budget of a project as approved by the corporation without modification at a later date.

(d) The corporation may require that performance bonds be posted to the benefit of the State with surety satisfactory to the corporation guaranteeing performance by the other partners, or the State may act as a self-insurer requiring security, if any, from the other partners, as the corporation shall deem necessary.

§171C-AF Independent development of projects. (a) In any county, the corporation may develop or may enter into agreements to develop housing projects with an eligible developer if in the corporation's reasonable judgment a project is primarily designed for lower income housing. The agreement may provide for the housing to be placed under the control of the corporation, or to be sold by the corporation, or to be sold to the corporation as soon as the units are completed and shall contain terms, conditions, and covenants as the corporation, by rules, deems appropriate. Every agreement shall provide for the developer to furnish a performance bond in favor of the corporation, assuring the timely and complete performance of the housing project. Sureties on the bond shall be satisfactory to the corporation.

(b) The plans and specifications for the housing project shall:

(1) Provide for economically integrated housing by stipulation and design;

(2) Provide for the sale of all dwelling units in fee simple or in leasehold either to the corporation or to the purchaser and in all cases subject to all of the provisions of sections 171C-AL, 171C-AN, and 171C-AO excepting units sold at market price; and

(3) Encompass the use of lands adequately suited to the size, design, and types of occupancies designated in subsection (a), properly located for occupancy by the group for which the project was primarily designed, properly districted for the use intended prior to the agreement, and appropriately zoned within an urban land use district or appropriate in its situation and surroundings for more intensive or denser zoning.

(c) The corporation may accept and approve housing projects independently initiated by private developers that fully comply with subsections (a) and (b). The corporation may review the plans, specifications, districting, and zoning of the project for the purpose of exempting the project from all statutes, ordinances, charter provisions, and rules of any government agency relating to zoning and construction standards for subdivisions, development, and improvement of land and the construction, improvement, and sale of dwelling units thereon; provided that the procedures in section 171C-AC(a)(1), (2), and (3) have been satisfied.

§171C-AG Private development of projects. (a) The corporation may enter into contracts with any eligible bidder to provide for the construction of a housing project or projects. Each contract shall provide that the housing project or projects shall be placed under the control of the corporation as soon as the unit is available for occupancy. Each contract also shall provide that the capital stock of the mortgagor (where the mortgagor is a corporate entity) be transferred to the corporation when the housing project or projects have been completed. Each contract shall contain terms and conditions that the corporation may determine to be necessary to protect the interests of the State. Each contract shall provide for the furnishing by the contractor of a performance bond and a payment bond with sureties satisfactory to the corporation, and the furnishings of the bonds shall be deemed a sufficient compliance with the provisions of law and no additional bonds shall be required. Before the corporation shall enter into any contract as authorized by this section for the construction of a housing project or projects, it shall invite the submission of competitive bids after giving public notice in the manner prescribed by law.

(b) Notwithstanding any other law to the contrary, the corporation may:

(1) Acquire the capital stock of mortgagors holding property covered by a mortgage guarantee under this part and established by this section; to exercise the rights as holder of the capital stock during the life of the mortgage and, upon the termination of the mortgage, to dissolve the mortgagor;

(2) Guarantee the payment of notes or other legal instruments of the mortgagors; and

(3) Make payments thereon.

All housing projects placed under the control of the corporation pursuant to this section shall be deemed to be housing projects under the jurisdiction of the State.

(c) On request by the corporation, the attorney general shall furnish to the corporation an opinion as to the sufficiency of title to any property on which a housing project is proposed for construction, or on which housing projects have been constructed, under this section. If the opinion of the attorney general is that the title to the property is good and sufficient, the corporation is authorized to guarantee, or enter into a commitment to guarantee, the mortgagee against any losses that may thereafter arise from adverse claims to the title. None of the proceeds of any mortgage loan hereafter insured shall be used for title search and title insurance costs; provided that, if the corporation determines in the case of any housing project that the financing of the construction of the project is impossible unless title insurance is provided, the corporation may provide for the payment of the reasonable costs necessary for obtaining title search and title insurance. Any determination by the corporation under this subsection shall be set forth in writing, together with the reasons therefor.

(d) The State shall be authorized to guarantee the repayment of one hundred per cent of the principal and interest of loans from commercial lenders for the purposes of this section pursuant to rules adopted by the corporation which shall conform as closely as is possible to the practices of the Federal Housing Administration in insuring loans under sections 203 and 207 of the United States Housing Act of 1937, as amended; provided that at no time shall the State's liability, contingent or otherwise, on the guarantees exceed $10,000,000.

§171C-AH Interim financing of projects. (a) The corporation may provide interim construction loans to eligible developers. In addition to the rate of interest charged on interim loans, the corporation may charge loan commitment fees to be determined by rules adopted by the corporation.

(b) The interim loans shall be secured by a duly recorded primary or secondary mortgage upon the fee simple or leasehold interest in the land upon which the dwelling units are constructed, or the corporation may require other security interests and instruments as it deems necessary to secure the indebtedness and any other conditions consistent with the production and marketing of dwelling units at the lowest possible prices. The corporation may also set the conditions of a loan in a building and loan agreement between the eligible developer and the corporation to secure the loan and the performance of the developer to complete the project.

§171C-AI Commercial, industrial, and other uses. (a) In connection with the development of any dwelling units under this part, the corporation may also develop commercial, industrial, and other properties if it determines that the uses can be an integral part of the development and can help to preserve the lifestyles of the purchasers of dwelling units in the development. The corporation may designate any portions of the development for commercial, industrial, or other use and shall have all the powers granted under this part with respect thereto, including the power to bypass statutes, ordinances, charter provisions, and rules of any government agency pursuant to section 171C-AC. For this purpose, the corporation may use any of the funds authorized under this part.

(b) The corporation shall adopt rules that shall provide the manner in which the uses of properties shall be designated, and shall provide that any commercial, industrial, or other properties so developed shall be sold or leased at cost or at economic rents or sales prices. Sale or lease shall be made at cost to owners of commercial, industrial, or other facilities displaced by the corporation. All other leases or sales shall be at economic rents or sales prices determined by the corporation, after appraisal, to be consistent with rents or sales prices in similar locations or with similar terms. The net proceeds of all such sales or leases, less costs to the corporation, shall be deposited in the dwelling unit revolving fund.

The rules may also provide that during the first twenty years after its purchase, any commercial, industrial, or other property so developed and sold may be resold or assigned only to the corporation at the original purchase price plus the cost of any improvements made by the purchaser together with simple interest on all of the purchaser's equity in the property at the rate of seven per cent a year. Rules may also provide that ownership of the commercial, industrial, or other property cannot be separated from ownership of the residential property in connection with which it was sold or leased.

§171C-AJ Sale; mortgage, agreement of sale, and other instruments. (a) The corporation shall sell completed dwelling units or dwelling units that are substantially completed and habitable, developed and constructed hereunder, to qualified residents in fee simple, or shall cause them to be leased or rented to qualified residents at a price or rental based on costs as determined by the corporation. The gross share to the other partners or contract payments and any amounts subsidized by the State, including but not limited to the land, need not be counted as cost so as to increase the price. These costs may be borne by the State, pursuant to rules adopted by the corporation subject to reimbursement upon sale as provided in section 171C-AL.

(b) If a qualified purchaser is unable to obtain sufficient funds at reasonable rates from private lenders, the corporation, by way of mortgage, agreement of sale, or other instrument to secure the indebtedness, may loan to the purchaser up to one hundred per cent of the purchase price. The purchaser in that event shall execute with the corporation an agreement of sale, mortgage, or other instrument under the terms of which the unpaid principal and the interest thereon shall be paid in monthly installments over a period of not more than forty years.

(c) Every mortgage, agreement of sale, other instrument to secure the indebtedness, or instrument of indebtedness executed by the corporation may contain other provisions as are usually found in such instruments and shall provide that the purchaser may repay the whole or any part of the unpaid balance of the purchase price plus accrued interest at any time without prepayment penalty.

(d) If the purchaser defaults on the payment of any loan, the corporation shall take all necessary action to collect the delinquent principal and interest on the loan and may take all actions allowed to holders of obligations, including the power to repossess, lease, rent, repair, renovate, modernize, and sell the property foreclosed, subject to the restrictions described in this section.

(e) The mortgages, agreements of sale, and other instruments of indebtedness, at the direction of the corporation, may be assigned to and serviced by commercial banks and other lending institutions doing business in the State at a fee of not more than one-half of one per cent of the amount loaned to the purchaser.

(f) Subsections (a) to (e) need not apply to market-priced dwelling units in an economically integrated housing project, except as otherwise determined by the developer of the units; provided that preference shall be given to qualified residents in the initial sale of market-priced units.

§171C-AK Co-mortgagor. For purposes of qualifying for a mortgage loan to finance the purchase of a dwelling unit under this part, a "qualified resident" as defined in section 171C-V may be assisted by a co-mortgagor who is a family member as defined by the corporation, who may own other lands in fee simple or leasehold suitable for dwelling purposes, whose interest in the dwelling unit to be purchased is limited to no more than one per cent, and who certifies that the co-mortgagor does not intend to reside in the dwelling unit. The income and assets of the co-mortgagor shall not be counted in determining the eligibility of the "qualified resident" under this part.

§171C-AL Real property; restrictions on transfer; waiver of restrictions. (a) The following restrictions shall apply to the transfer of real property developed and sold under this part, whether in fee simple or leasehold:

(1) For a period of ten years after the purchase, whether by lease, assignment of lease, deed, or agreement of sale, if the purchaser wishes to transfer title to the real property, the corporation shall have the first option to purchase the real property at a price that shall not exceed the sum of:

(A) The original cost to the purchaser, as defined in rules adopted by the corporation;

(B) The cost of any improvements added by the purchaser, as defined in rules adopted by the corporation; and

(2) The corporation may purchase the real property either:

(A) By conveyance free and clear of all mortgages and liens; or

(B) By conveyance subject to existing mortgages and liens.

If the real property is conveyed in the manner provided in subparagraph (A), it shall be conveyed to the corporation only after all mortgages and liens are released. If the real property is conveyed in the manner provided in subparagraph (B), the corporation shall acquire the property subject to any first mortgage created for the purpose of securing the payment of a loan of funds expended solely for the purchase of the real property by the seller; and any mortgage or lien created for any other purpose provided that the corporation has previously consented to it in writing.

The corporation's interest created by this section shall constitute a statutory lien on the real property and shall be superior to any other mortgage or lien except for:

(i) Any first mortgage created for the purpose of securing the payment of a loan of funds expended solely for the purchase of the real property by the seller;

(ii) Any mortgage insured or held by a federal housing agency; and

(iii) Any mortgage or lien created for any other purpose; provided that the corporation has previously consented to it in writing.

The amount paid by the corporation to the seller shall be the difference, if any, between the purchase price determined by paragraph (1)(A) to (C), and the total of the outstanding principal balances of the mortgages and liens assumed by the corporation;

(3) A purchaser may refinance real property developed and sold under this part; provided that the purchaser shall not refinance the real property within ten years from the date of purchase for an amount in excess of the purchase price as determined by paragraph (1)(A) to (C); provided further that the purchaser shall obtain the corporation's written consent if any restriction on the transfer of the real property remains applicable;

(4) After the end of the tenth year from the date of initial purchase or execution of an agreement of sale, the purchaser may sell the real property and sell or assign the property free from any price restrictions; provided that the purchaser shall be required to pay to the corporation the sum of:

(A) The balance of any mortgage note, agreement of sale, or other amount owing to the corporation;

(B) Any subsidy or deferred sales price made by the corporation in the acquisition, development, construction, and sale of the real property, and any other amount expended by the corporation not counted as costs under section 171C-AJ but charged to the real property by good accounting practice as determined by the corporation whose books shall be prima facie evidence of the correctness of the costs;

(C) Interest on the subsidy or deferred sales price, if applicable, and any other amount expended at the rate of seven per cent a year computed as to the subsidy or deferred sales price, if applicable, from the date of purchase or execution of the agreement of sale, and as to any amount expended, from the date of expenditure; provided that the computed interest shall not extend beyond thirty years from the date of purchase or execution of the agreement of sale of the real property. If any proposed sale or transfer will not generate an amount sufficient to pay the corporation the sum as computed under this paragraph, the corporation shall have the first option to purchase the real property at a price that shall not exceed the sum as computed under paragraphs (1) and (2); and

(D) The corporation's share of appreciation in the real property as determined under rules adopted pursuant to chapter 91, when applicable;

(5) Notwithstanding any provision in this section to the contrary, pursuant to rules adopted by the corporation, the subsidy or deferred sales price described in paragraph (4)(B) and any interest accrued pursuant to paragraph (4)(C) may be paid, in part or in full, at any time; and

(6) Notwithstanding any provision in this section to the contrary, the corporation's share of appreciation in the real property described in paragraph (4)(D):

(A) Shall apply when the sales price of the real property that is developed and sold under this part is less than the then-current, unencumbered, fair market value of the real property as determined by a real property appraisal obtained prior to the closing of the sale;

(B) Shall be a restriction that runs with the land until it is paid in full and released by the corporation, or extinguished pursuant to subsection (e); and

(b) For a period of ten years after the purchase, whether by lease, assignment of lease, deed, or agreement of sale, if the purchaser wishes to transfer title to the real property, and if the corporation does not exercise the option to purchase the real property as provided in subsection (a), then the corporation shall require the purchaser to sell the real property to a "qualified resident" as defined in section 171C-V, and upon the terms that preserve the intent of this section and sections 171C-AN and 171C-AO, and in accordance with rules adopted by the corporation.

(1) The purchaser wishes to transfer title to the real property by devise or through the laws of descent to a family member who would otherwise qualify under rules established by the corporation;

(2) The sale or transfer of the real property would be at a price and upon terms that preserve the intent of this section without the necessity of the State repurchasing the real property; provided that, in this case, the purchaser shall sell the real property and sell or assign the real property to a person who is a "qualified resident" as defined in section 171C-V; and provided further that the purchaser shall pay to the corporation its share of appreciation in the real property as determined in rules adopted pursuant to chapter 91, when applicable; or

(3) The sale or transfer is of real property subject to a sustainable affordable lease as defined in section 516-1.

(d) The corporation may release the restrictions prescribed in subsection (a) or (b) if the real property is financed under a federally subsidized mortgage program and the restrictions would jeopardize the federal government's ability to recapture any interest credit subsidies provided to the homeowner.

(e) The restrictions prescribed in this section and sections 171C-AN to 171C-AP shall be automatically extinguished and shall not attach in subsequent transfers of title when a mortgage holder or other party becomes the owner of the real property pursuant to a mortgage foreclosure, foreclosure under power of sale, or a conveyance in lieu of foreclosure after a foreclosure action is commenced; provided that the mortgage is the initial purchase money mortgage, or that the corporation consented to and agreed to subordinate the restrictions to the mortgage when originated, if the mortgage is not the initial purchase money mortgage; or when a mortgage is assigned to a federal housing agency. Any law to the contrary notwithstanding, a mortgagee under a mortgage covering real property or leasehold interest encumbered by the first option to purchase in favor of the corporation, prior to commencing mortgage foreclosure proceedings, shall notify the corporation in writing of:

(1) Any default of the mortgagor under the mortgage within ninety days after the occurrence of the default; and

(2) Any intention of the mortgagee to foreclose the mortgage under chapter 667 forty-five days prior to commencing mortgage foreclosure proceedings;

provided that the mortgagee's failure to provide written notice to the corporation shall not affect the mortgage holder's rights under the mortgage. The corporation shall be a party to any foreclosure action, and shall be entitled to its share of appreciation in the real property as determined under this part in lien priority when the payment is applicable, and if foreclosure occurs within the ten-year period after the purchase, the corporation shall also be entitled to all proceeds remaining in excess of all customary and actual costs and expenses of transfer pursuant to default, including liens and encumbrances of record; provided that the person in default shall be entitled to an amount that shall not exceed the sum of amounts determined pursuant to subsection (a)(1)(B) and (C).

(f) The provisions of this section shall be incorporated in any deed, lease, agreement of sale, or any other instrument of conveyance issued by the corporation. In any sale by the corporation of real property for which a subsidy or deferred sales price was made by the corporation, the amount of the subsidy or deferred sales price described in subsection (a)(4)(B), a description of the cost items that constitute the subsidy or deferred sales price, and the conditions of the subsidy or deferred sales price shall be clearly stated at the beginning of the contract document issued by the corporation. In any sale in which the corporation's share of appreciation in real property is a restriction, the terms of the shared appreciation equity program shall be clearly stated and included as an exhibit in any deed, lease, agreement of sale, or any other instrument of conveyance.

(g) This section need not apply to market-priced units in an economically integrated housing project, except as otherwise determined by the developer of the units; provided that preference shall be given to qualified residents in the initial sale of market-priced units.

(h) The corporation is authorized to waive any of the restrictions set forth in this section in order to comply with or conform to requirements set forth in federal law or regulations governing mortgage insurance or guarantee programs or requirements set forth by federally chartered secondary mortgage market participants.

§171C-AM Exception of current owners in corporation projects. The corporation may allow a person who is a current owner of a dwelling unit in a multifamily housing project sponsored by the corporation to apply for the purchase of a larger dwelling unit in a project sponsored by the corporation if the applicant's current family size exceeds the permissible family size for the applicant's current dwelling unit, as determined by prevailing county building or housing codes. The applicant shall be required to sell the applicant's current dwelling unit back to the corporation. Notwithstanding any law to the contrary, any applicant, as it pertains to for-sale housing, shall be a "qualified resident" who:

(1) Is a citizen of the United States or a resident alien;

(2) Is at least eighteen years of age;

(3) Is domiciled in the State and shall physically reside in the dwelling unit purchased under this section;

(4) In the case of purchase of real property in fee simple or leasehold, has a gross income sufficient to qualify for the loan to finance the purchase; and

(5) Except for the applicant's current residence, meets the following qualifications:

(A) Is a person who either oneself or together with the person's spouse or a household member, does not own a majority interest in fee simple or leasehold lands suitable for dwelling purposes, or a majority interest in lands under any trust agreement or other fiduciary arrangement in which another person holds the legal title to the land; and

(B) Is a person whose spouse or a household member does not own a majority interest in fee simple or leasehold lands suitable for dwelling purposes, or a majority interest in lands under any trust agreement or other fiduciary arrangement in which another person holds the legal title to the land, except when husband and wife are living apart under a decree of separation from bed and board issued by the family court pursuant to section 580‑71.

§171C-AN Real property; restrictions on use. (a) Real property purchased under this part shall be occupied by the purchaser at all times during the ten-year restriction period set forth in section 171C-AL, except in hardship circumstances where the inability to reside on the property arises out of unforeseeable job or military transfer, a temporary educational sabbatical, serious illness of the person, or in other hardship circumstances as determined by the corporation on a case-by-case basis.

The corporation may waive the owner-occupancy requirement for a total of not more than ten years after the purchase of the dwelling, during which time the dwelling unit may be rented or leased. Waivers may be granted only to qualified residents who have paid resident state income taxes during all years in which they occupied the dwelling, who continue to pay resident state income taxes during the waiver period, and whose inability to reside on the property does not stem from a natural disaster. The ten-year owner-occupancy requirement shall be extended by one month for every month or fraction thereof that the owner-occupancy requirement is waived.

The corporation shall adopt rules under chapter 91 to implement the letter and spirit of this subsection and to prescribe necessary terms and conditions. The rules shall include:

(1) Application and approval procedures for the waivers;

(2) Exceptions authorized by this subsection;

(3) The amounts of rents that may be charged by persons allowed to rent or lease a dwelling unit; and

(4) Schedules of fees needed to cover administrative expenses and attorneys' fees.

No qualified resident who fails to reoccupy a dwelling unit after any waiver period shall receive more than the maximum to which the person would be entitled under section 171C-AL. Any person who disagrees with the corporation's determination under this section shall be entitled to a contested case proceeding under chapter 91.

(b) From time to time the corporation may submit a verification of owner-occupancy form to the purchaser. Failure to respond to the verification in a timely manner or violation of subsection (a) shall be sufficient reason for the corporation, at its option, to purchase the unit as provided in section 171C-AL(a)(1), (2), or (4), as applicable.

(c) Any deed, lease, agreement of sale, or other instrument of conveyance issued by the corporation shall expressly contain the restrictions on use prescribed in this section.

(d) The restrictions prescribed in subsection (a) shall terminate and shall not attach in subsequent transfers of title if the corporation releases the restrictions when the real property is financed under a federally subsidized mortgage program.

(e) Subsections (a) to (c) need not apply to market-priced units in an economically integrated housing project, except as otherwise determined by the developer of the units; provided that preference shall be given to qualified residents in the initial sale of market-priced units.

(f) The corporation shall be authorized to waive any of the restrictions set forth in this section in order to comply with or conform to requirements set forth in federal law or regulations governing mortgage insurance or guarantee programs or requirements set forth by federally chartered secondary mortgage market participants.

§171C-AO Restrictions on use, sale, and transfer of real property; effect of amendment or repeal. (a) Restrictions on the use, sale, and transfer of real property shall be made as uniform as possible in application to purchasers of all real property, and restrictions shall be conformed with agreement of the purchaser to reflect change or repeal made by any subsequent legislative act, ordinance, rule, or regulation. Purchasers shall be permitted at their election to sell or transfer real property subject to restrictions in effect at the time of their sale or transfer; provided that the corporation is paid its share of appreciation in the real property as determined by rules adopted pursuant to chapter 91, as applicable.

(b) The corporation, any department of the State, or any county housing agency maintaining restrictions, through contract, deed, other instrument, or by rule, shall notify purchasers of any substantial change in restrictions made by law, ordinance, rule, or regulation not more than one hundred eighty days after a change in restrictions. The notice shall clearly state the enacted or proposed new provisions, the date or dates upon which they are to be effective, and offer to each purchaser of real property constructed and sold prior to the effective date an opportunity to modify the existing contract or other instrument to incorporate the most recent provisions. Public notice shall also be given at least three times in the State for state agencies and at least three times in a county for county agencies.

(c) For all purchasers of real property prior to June 25, 1990, where the restrictions on use and transfer of property apply for a period of time, the period of time shall not be increased beyond the date calculated from the date of original purchase.

(d) No purchaser shall be entitled to modify the restrictions on use, transfer, or sale of the real property, without the written permission of the holder of a duly-recorded first mortgage on the dwelling unit and the owner of the fee simple or leasehold interest in the land underlying the unit, unless the holder of the first mortgage or the owner is an agency of the State or its political subdivisions.

(e) This section shall apply to all real property developed, constructed, and sold pursuant to this part and similar programs in the State or its political subdivisions and which are sold on the condition that the purchaser accepts restrictions on the use, sale, or transfer of interest in the real property purchased.

(f) The provisions of this section shall be incorporated in any deed, lease, instrument, rule, or regulation relating to restrictions on use, sale, or transfer of dwelling units, entered into after June 20, 1977.

(g) The restrictions of this section shall terminate as to a particular real property and shall not attach in subsequent transfers of title of that real property if the corporation releases the restrictions when the real property is financed under a federally subsidized mortgage program.

§171C-AP Corporation's right to repurchase or rent real property; authority to seek recovery. (a) Notwithstanding any provisions to the contrary, during the period in which the restrictions in section 171C-AL are in effect, the following provisions shall apply when dwelling units developed, constructed, financed, purchased, or sold pursuant to Act 105, Session Laws of Hawaii 1970, as amended, are found to have a substantial construction defect, or when vacant lands developed, financed, purchased, or sold pursuant to Act 105, Session Laws of Hawaii 1970, as amended, are found to have a substantial soil defect:

(1) The corporation shall have the right, but not the obligation, to repurchase a dwelling unit or land that has a defect, regardless of whether or not the owner wishes to sell; provided that those repurchases shall be in accordance with the following provisions:

(A) The corporation may repurchase a dwelling unit or land if:

(i) The dwelling unit or land is deemed unsafe by the county building department;

(ii) The defects are irreparable; or

(iii) In the opinion of the corporation, the defect is of such magnitude that it will take longer than one year to repair;

(B) The corporation's purchase price shall be based on the formula set forth in section 171C-AL(a)(1);

(C) After repairs to the unit or land are completed, the former owner shall have the first right of refusal to repurchase the real property;

(D) The corporation shall give preference in all other projects of the corporation to all owners whose real property is repurchased by the corporation under this subsection, and the corporation may waive certain eligibility requirements for these owners; and

(E) If the corporation exercises its right to repurchase defective real property against an owner's wishes pursuant to this paragraph, the corporation shall provide relocation assistance to that owner as provided in chapter 111;

(2) If the corporation does not opt to repurchase defective real property, the corporation shall also have the right, but not the obligation, to enter into a contract to repair a dwelling unit which has a construction defect or land which has a soil defect. During the period that the real property is being repaired, the corporation shall rent that real property from the owner for an amount not to exceed the owner's present mortgage payments; and

(3) If the corporation does not execute either a contract to repurchase the real property or an agreement to repair and rent the real property within ninety days after written notice is given to the corporation of a construction defect, the owner may pursue any other available legal remedies.

For the purposes of this section:

"Substantial construction defect" includes but is not limited to:

(1) Structural defects such as shifting foundations and bearing walls;

(2) Structural deficiencies due to the use of defective or undersized materials; and

(3) Defects affecting the health and safety of occupants.

"Substantial soil defect" means shifting, sliding, or sinking ground of such degree as to affect the dwelling unit on the land or the health and safety of the occupants of the land.

(b) If moneys are expended by the corporation pursuant to subsection (a)(1) and (2), the corporation shall have the authority to take necessary legal action against the developer, co‑developer, general contractor, and their subcontractors, consultants, and other parties notwithstanding chapter 657.

(c) If real property developed, constructed, financed, purchased, or sold pursuant to Act 105, Session Laws of Hawaii 1970, as amended, is found to have a substantial construction or soil defect, the corporation shall have the right, but not the obligation, to file or cause to be filed a legal action on behalf of or by the owner or lessee of the real property for the recovery of damages or for injunctive relief against the developer, co-developer, general contractor, and their subcontractors, consultants, and other parties notwithstanding chapter 657. Additionally, notwithstanding any provision of rule 23 of the Hawaii rules of civil procedure, the corporation may file or cause to be filed a legal action brought under this subsection as a class action on behalf of or by at least two owners or lessees of real property that have similar substantial construction or soil defects.

(d) Nothing in this chapter shall be construed to diminish the rights or remedies of the corporation otherwise provided under common law, by law, or by contract.

(e) The corporation shall adopt rules pursuant to chapter 91 necessary for the purposes of this section.

(f) This section shall not apply to a particular real property and shall not apply after subsequent transfers of title of that real property if the corporation releases the restrictions when the real property is financed under a federally subsidized mortgage program.

(g) If any subsection, sentence, clause, or phrase of this section, or its application to any person or transaction or other circumstances, is for any reason held to be unconstitutional or invalid, the remaining subsections, sentences, clauses, and phrases of this section, or the application of this section to other persons or transactions or circumstances, shall not be affected. The legislature hereby declares that it would have passed this section and each subsection, clause, or phrase thereof, irrespective of the fact that any one or more subsections, sentences, clauses, or phrases of this section, or its application to any person or transaction or other circumstance, may be declared unconstitutional or invalid.

§171C-AQ Nonprofit organizations and government agencies. (a) The corporation may retain dwelling units in a project to the extent it determines necessary and appropriate, for sale, lease, or rental to nonprofit organizations and government agencies. The dwelling units shall be used by the nonprofit organizations and government agencies to provide housing opportunities and related support services to special needs individuals or families. These purposes include but are not limited to the use of dwelling units for group homes and congregate living facilities and for government employees in special situations. The corporation, in consultation with other appropriate government agencies, shall adopt rules pursuant to chapter 91 necessary to implement this subsection, including but not limited to rules relating to the eligibility and qualifications of nonprofit organizations and government agencies; the eligibility and qualifications of clients of nonprofit organizations and government agencies to whom housing opportunities may be made available; and restrictions on the use, sale, or transfer of, and authorizing repurchase of, dwelling units sold, leased, or rented pursuant to this subsection.

The corporation, to the extent appropriate, shall have the same powers with respect to nonprofit organizations and government agencies purchasing, leasing, or renting dwelling units as the corporation has with respect to qualified residents purchasing, leasing, or renting dwelling units.

(b) In connection with the development of any residential units under this part, the corporation may provide for the development of appropriate community facilities. The corporation may:

(1) Sell, lease, or rent vacant land or land with site improvements to nonprofit organizations or government agencies to develop community facilities; or

(2) Develop, on behalf of the State or with an eligible developer, the community facilities and then sell, lease, rent, or otherwise transfer or make available these facilities to nonprofit organizations or government agencies.

The corporation shall adopt rules pursuant to chapter 91 necessary to implement this subsection.

§171C-AR Rate of wages for laborers and mechanics. The corporation shall require an eligible bidder or eligible developer of a housing project developed under this part to comply with the requirements of section 104-2 for those laborers and mechanics hired to work on that housing project; provided that this section shall not apply to a housing project developed under this subpart if the entire cost of the project is less than $500,000 and the eligible bidder or eligible developer is a private nonprofit organization.

§171C-AS Land leases to nonprofit organizations providing affordable housing. (a) Notwithstanding any provision to the contrary, the corporation, pursuant to section 171C-4(a)(29), may lease land to any qualified nonprofit organization providing affordable housing, under the following terms and conditions:

(1) Leases shall be for ninety-nine years at $1 per year per parcel; and

(2) The instrument of lease shall include provisions, enforceable by the corporation, that the land shall:

(A) Be used only for providing affordable housing through long-term, renewable, and transferable leases or other means that are in accordance with rules adopted by the corporation under chapter 91; and

(B) Revert back to the corporation if:

(i) The land is used for any purpose other than as provided under subparagraph (A); or

(ii) The qualified nonprofit organization ceases operations.

(b) For the purposes of this section:

"Affordable housing" means housing that is affordable to households with incomes at or below one hundred forty per cent of the median family income as determined by the United States Department of Housing and Urban Development.

"Qualified nonprofit organization" means any private entity that is organized and operated:

(1) In accordance with section 501(c)(3) of the Internal Revenue Code of 1986, as amended; and

(2) For the purpose of providing affordable housing through long-term, renewable, and transferable leases.

§171C-AT Leases; self-help housing. (a) The corporation may lease parcels that it deems suitable for affordable housing at $1 per year for up to fifty years to organizations or community trusts to develop the parcel with ownership units through self-help development.

(b) The corporation may extend or modify the fixed rental period of the lease or extend the term of the lease.

(c) Parcels leased under this section may be transferred or assigned by devise, bequest, or intestate succession, and may be sublet with the approval of the corporation.

§171C-AU Affordable rental housing development program. (a) There is established the affordable rental housing development program under the corporation.

(b) The purpose of this program shall be to preserve affordable rental housing units.

(c) For the purposes of this section, activities eligible for assistance from the affordable rental housing development program shall include rehabilitation, acquisition, or preservation of multifamily rental housing units for persons and families with incomes at or below eighty per cent of the median family income, as determined by the United States Department of Housing and Urban Development.

(d) The corporation shall identify properties whose contracts with either the United States Department of Housing and Urban Development or the United States Department of Agriculture are set to expire on or before January 1, 2014, and the corporation shall contact the project owners to initiate negotiations to renew or preserve the existing subsidy contracts; provided that:

(1) Nonprofit organizations shall be given priority to take over expiring subsidy contracts; and

(2) Nonprofit organizations shall be given priority over for-profit organizations, if federal government funds are needed for the acquisition or rehabilitation of a project.

§171C-AV Additional powers. The powers conferred upon the corporation by this subpart shall be in addition and supplemental to the powers conferred by any other law, and nothing in this subpart shall be construed as limiting any powers, rights, privileges, or immunities so conferred.

C. Financing Programs

1. General Provisions

§171C-AW Bonds; authorization. (a) The corporation, with the approval of the governor, may issue from time to time bonds (including refunding bonds to pay, retire, or provide for the retirement of bonds previously issued by the corporation) in amounts not exceeding the total amount of bonds authorized to be issued by the legislature for any of its corporate purposes. Bonds may also be issued in connection with any program whose primary purpose is to provide housing for active or retired United States military personnel, their families, and other persons authorized by any branch of the United States military to reside in the housing; provided that the aggregate principal amount of all outstanding bonds issued by the corporation for military housing projects shall total no more than $2,000,000,000.

(b) All bonds shall be issued pursuant to part III of chapter 39, except as provided in this subpart.

maturity date of the revenue bonds may be any date not exceeding sixty years from the date of issuance.

(d) The corporation may issue such types of bonds as it may determine, including without limitation bonds payable from and secured, in whole or in part, by:

(1) Income and revenues derived from the housing project or projects financed from the proceeds of bonds;

(2) Receipts derived from any grant from the federal government made in aid of a housing project or projects financed from the proceeds of bonds;

(3) Income and revenues derived from a particular designated housing project or projects whether or not financed, in whole or in part, from the proceeds of bonds;

(4) Receipts derived from any payment for "eligible loans", "eligible improvement loans", or "eligible project loans", as the terms are defined in subdivision 2, or any other agreement or agreements entered into for a "housing loan program", as the term is defined in subdivision 2 or 4, or any other loan program administered by the corporation and financed from the proceeds of bonds;

(5) Receipts derived from loans to mortgage lenders or from the payment on account of principal of or interest on loans purchased from mortgage lenders, as provided in subdivision 2 which loans to mortgage lenders or loans purchased are financed from the proceeds of bonds;

(6) Moneys in any funds or accounts established in connection with the issuance of bonds, and any earnings thereon;

(7) Proceeds derived from any insurance;

(8) Income and revenues of the corporation generally; or

(9) Any combination of paragraphs (1) through (8).

The term "income and revenues" includes income and revenues derived from the sale of land or from both land and improvements thereon serviced from infrastructure financed from the proceeds of bonds as permitted by this subpart. The provisions of this subsection are in addition and supplemental to part III of chapter 39.

(e) Any of the bonds may be additionally secured by a pledge of any revenues or a mortgage of any housing project, other property of the corporation, the pledge or assignment of any loans or other agreements, or any note or other undertaking, obligation, or property held by or on behalf of the corporation to secure loans made from the proceeds of bonds for any "housing loan program", as the term is defined in subdivision 2 or 4, or any other loan program administered by the corporation and financed from the proceeds of bonds.

(f) Any pledge made by the corporation shall create a perfected security interest in the revenues, moneys, or property so pledged and thereafter received by the corporation from and after the time that a financing statement with respect to the revenues, moneys, or property so pledged and thereafter received shall be filed with the bureau of conveyances. Upon the filing, the revenues, moneys, or property so pledged and thereafter received by the corporation shall immediately be subject to the lien of the pledge without any physical delivery thereof or further act, and the lien of any such pledge shall be prior to the lien of all parties having claims of any kind in tort, contract, or otherwise against the corporation, irrespective of whether the parties have notice thereof. This section shall apply to any financing statement heretofore or hereafter filed with the bureau of conveyances with respect to any pledge made to secure revenue bonds issued under this subpart.

(g) Any housing project or projects authorized by, and undertaken pursuant to, this part shall constitute an "undertaking" within the meaning of that term as defined and used in part III, chapter 39. Any loan program authorized by, and undertaken pursuant to, this part, including without limitation "housing loan programs" defined in and authorized by subdivisions 2 and 4, shall constitute a "loan program" within the meaning of that term as defined and used in part III, chapter 39. The corporation shall constitute a "department" and the board shall constitute a "governing body" within the meaning of those terms as defined and used in part III, chapter 39.

(h) Neither the members of the board nor any person executing the bonds shall be liable personally on the bonds by reason of the issuance thereof.

§171C-AX Issuance of bonds for the development of infrastructure. Without limiting section 171C-AW, the corporation, pursuant to and in accordance with this subdivision, is hereby authorized to issue bonds for the purpose of financing the development of infrastructure on land owned by the corporation.

§171C-AY Issuance of bonds for the preservation of low‑income housing projects. The corporation, pursuant to and in accordance with this subdivision, may issue bonds to purchase low-income housing projects financed by the United States Department of Housing and Urban Development to preserve these projects. Upon the payment of all interest and principal stemming from the issuance of these bonds, the corporation may transfer title to these projects to qualified nonprofit organizations. Nothing in this section shall be construed to:

(1) Prohibit qualified nonprofit or for-profit organizations from operating these projects on behalf of the corporation, or providing for the repair and maintenance of these projects, before the payment of all interest and principal stemming from the issuance of these bonds; or

(2) Prohibit the corporation from transferring title to these projects to qualified nonprofit or for-profit organizations if these bonds can be secured to the satisfaction of the bondholders.

As used in this section, "qualified nonprofit organization" includes community-based nonprofit organizations and resident councils.

§171C-AZ Bonds; interest rate, price, and sale. (a) The bonds shall bear interest at rates payable at times that the corporation, with the approval of the governor, may determine except for deeply discounted bonds that are subject to redemption or retirement at their accreted value; provided that the discounted value of the bonds shall not exceed ten per cent of any issue; and provided further that no bonds may be issued without the approval of the director of finance and the governor. Notwithstanding any other law to the contrary, the corporation, subject to the approval of the director of finance and the governor, may issue bonds pursuant to section 171C-AX, in which the discounted value of the bonds exceeds ten per cent of the issue.

(b) The corporation may include the costs of undertaking and maintaining any housing project or projects or loan program for which the bonds are issued in determining the principal amount of bonds to be issued. In determining the costs of undertaking and maintaining the housing projects, the corporation may include the cost of studies and surveys; insurance premiums; underwriting fees; financial consultant, legal, accounting, and other services incurred; reserve account, trustee, custodian, and rating agency fees; and interest on the bonds for a period determined by the corporation, or the estimated expenditure of borrowed funds for any loan program for which the bonds are issued.

§171C-AAA Trustee; designation, duties. (a) The corporation may designate a trustee for each issue of bonds secured under the same trust indenture; provided that the trustee shall be approved by the director of finance.

(b) The trustee shall be authorized by the corporation to receive and receipt for, hold, and administer the proceeds of the bonds, and to apply the proceeds to the purposes for which the bonds are issued.

(c) The trustee shall also be authorized by the corporation to hold and administer any housing project bond special funds and housing loan program revenue bond special funds established pursuant to section 171C-AAF. The trustee may receive and receipt for, hold, and administer the revenues derived by the corporation from any housing project or projects or loan program for which the bonds are issued or the projects or loan programs pledged to the payment of the bonds. The trustee shall apply the revenues to the payment of the cost of administering, operating, and maintaining the housing project or projects or loan program; to pay the principal of and the interest on the bonds; to the establishment of reserves; and to other purposes as may be authorized in the proceedings providing for the issuance of the bonds.

(d) Notwithstanding section 39-68, the director of finance may appoint the trustee to serve as fiscal agent for:

(1) The payment of the principal of and interest on the bonds; and

(2) The purchase, registration, transfer, exchange, and redemption of the bonds.

(e) The trustee shall perform additional functions with respect to the payment, purchase, registration, transfer, exchange, and redemption, as the director of finance may deem necessary, advisable, or expeditious, including the holding of the bonds and coupons, if any, that have been paid and the supervision of their destruction in accordance with law.

(f) Nothing in this subpart shall limit or be construed to limit the powers granted to the director of finance in sections 36‑3, 39-13, and 39-68(a), to appoint the trustee or others as fiscal agents, paying agents, and registrars for the bonds or to authorize and empower those fiscal agents, paying agents, and registrars to perform the functions referred to in those sections.

§171C-AAB Trust indenture. (a) A trust indenture may contain covenants and provisions authorized by part III of chapter 39, and as deemed necessary or convenient by the corporation for the purposes of this subpart.

(b) A trust indenture may allow the corporation to pledge and assign to the trustee agreements related to the housing project or projects or loan program and the rights of the corporation thereunder, including the right to receive revenues thereunder and to enforce the provision thereof.

(c) Where a trust indenture provides that any bond issued under that trust indenture is not valid or obligatory for any purpose unless certified or authenticated by the trustee, all signatures of the officers of the State upon the bonds required by section 39-56 may be facsimiles of their signatures.

(d) A trust indenture shall also contain provisions as to:

(1) The investment of the proceeds of the bonds, the investment of any reserve for the bonds, the investment of the revenues of the housing project or system of housing projects or the loan program, and the use and application of the earnings from investments; and

(2) The terms and conditions upon which the holders of the bonds or any portion of them or any trustee thereof may institute proceedings for the enforcement of any agreement or any note or other undertaking, obligation, or property securing the payment of the bonds and the use and application of the moneys derived therefrom.

(e) A trust indenture may also contain provisions deemed necessary or desirable by the corporation to obtain or permit, by grant, interest subsidy, or otherwise, the participation of the federal government in the housing projects or loan programs or in the financing of the costs of administering, operating, or maintaining the housing projects or loan programs.

§171C-AAC Investment of reserves, etc. The corporation may invest any funds held in reserves or sinking funds or any funds not required for immediate disbursement, including the proceeds of bonds, in property or securities in which the director of finance may legally invest, as provided in section 36-21, except that funds held outside the state treasury may be invested for terms not to exceed thirty-five years. No provisions with respect to the acquisition, operation, or disposition of property by other government agencies shall be applicable to the corporation unless the legislature shall specifically so state.

§171C-AAD Security for funds deposited by the corporation. The corporation may by resolution provide that all moneys deposited by it shall be secured by:

(1) Any securities by which funds deposited by the director of finance may be legally secured as provided in section 38-3; or

(2) An undertaking with sureties as are approved by the corporation faithfully to keep and pay over upon the order of the corporation any deposits and agreed interest thereon, and all banks and trust companies are authorized to give any such security for those deposits.

§171C-AAE Arbitrage provisions, interest rate. (a) Any other provision of law to the contrary notwithstanding, neither the corporation nor the director of finance shall make loans or purchase mortgages with the proceeds of general obligation bonds of the State or from a revolving fund established or maintained from the proceeds of bonds, at a rate of interest or upon terms and conditions that would cause any general obligation bond of the State or any bond to be an "arbitrage bond" within the meaning of that term as defined in the Internal Revenue Code of 1986, as amended, and the regulations of the Internal Revenue Service promulgated pursuant thereto.

(b) The rate of interest on loans made under this part from the proceeds of general obligation bonds of the State shall be established by the corporation, with the approval of the director of finance, after each sale of general obligation bonds of the State, the proceeds of which are to be used for the purposes of making loans or purchasing mortgages under this part. If no sale of general obligation bonds of the State intervenes in a twelve-month period after the last rate fixing, the corporation may review the then existing rates on loans or mortgages made under this part from the proceeds of general obligation bonds of the State and retain the existing rate or, with the approval of the director of finance, establish different rates.

(c) The director of finance shall approve those rates so as to produce up to, but not in excess of, the maximum yield to the State or the corporation permitted under the Internal Revenue Code of 1986, as amended, and the regulations of the Internal Revenue Service promulgated pursuant thereto, on the assumption that the general obligation bonds of the State, the proceeds of which have been or are to be used for the purposes of making loans or purchasing mortgages under this part, would otherwise be "arbitrage bonds" under the Internal Revenue Code of 1986, as amended, and the regulations of the Internal Revenue Service promulgated pursuant thereto, were the maximum yield to be exceeded. The establishment of the rates of interest shall be exempt from chapter 91.

§171C-AAF Housing finance revolving fund; bond special funds. (a) There is established a housing finance revolving fund to be administered by the corporation. Notwithstanding sections 36-21 and 171C-AAAAE, the proceeds in the fund shall be used for long-term and other special financings of the corporation and for the necessary expenses in administering this subpart.

(b) All moneys received and collected by the corporation, not otherwise pledged or obligated nor required by law to be placed in any other special fund, shall be deposited in the housing finance revolving fund.

(c) A separate special fund shall be established for each housing project or system of housing projects or loan program financed from the proceeds of bonds secured under the same trust indenture. Each fund shall be designated "housing project bond special fund" or "housing loan program revenue bond special fund", as appropriate, and shall bear any additional designation as the corporation deems appropriate to properly identify the fund.

(d) Notwithstanding any other law to the contrary, all revenues, income, and receipts derived from a housing project or system of projects or loan program financed from the proceeds of bonds or pledged to the payment of the principal of and interest and premium on bonds, shall be paid into the housing project bond special fund or housing loan program revenue bond special fund established for the housing project or system of projects or loan program and applied as provided in the proceedings authorizing the issuance of the bonds.

§171C-AAG Kikala-Keokea housing revolving fund; established. (a) There is established in the state treasury the Kikala-Keokea housing revolving fund to provide low interest loans for home construction for Kikala-Keokea leaseholders who have been denied loans from traditional financial institutions. The revolving fund shall be administered by the corporation.

(b) The rate of interest on loans executed pursuant to this section shall not exceed three per cent per year and interest earnings on loans made pursuant to this section may be used for administrative and other expenses necessary for administering the loan program. Guidelines shall be established by the corporation with respect to loan terms and loan qualification criteria. Moneys appropriated for the purposes of this section shall be deposited into the Kikala-Keokea housing revolving fund; provided that upon fulfillment of the purposes of this section, all unencumbered moneys shall lapse into the general fund.

§171C-AAH Rate of wages for laborers and mechanics. The corporation shall require an eligible bidder or eligible developer of a housing project developed under this subpart to comply with the requirements of section 104-2 for those laborers and mechanics hired to work on that housing project; provided that this section shall not apply to a housing project developed under this part if the entire cost of the project is less than $500,000 and the eligible bidder or eligible developer is a private nonprofit organization.

§171C-AAI Pineapple workers and retirees housing assistance fund; established. (a) There is established in the state treasury the pineapple workers and retirees housing assistance fund to provide mortgage payments or rent subsidies for eligible Del Monte Fresh Produce pineapple workers and retirees and their families who are displaced or affected by the closure of Del Monte Fresh Produce. The pineapple workers and retirees housing assistance fund shall be administered by the corporation.

(b) Moneys appropriated for the purposes of this section shall be deposited into the pineapple workers and retirees housing assistance fund; provided that, upon fulfillment of the purposes of this section, all unencumbered moneys shall lapse into the general fund. The corporation shall establish guidelines with respect to eligible Del Monte Fresh Produce pineapple workers and retirees and mortgage payments or rental assistance payments under this section.

§171C-AAJ Low-income housing tax credit loan. (a) The corporation may provide a no-interest low-income housing tax credit loan to an owner of a qualified low-income building that has been awarded federal tax credits that are subject to the state housing credit ceiling under section 42(h)(3)(C) of the Internal Revenue Code, federal credits that are allocated pursuant to section 42(h)(4) of the Internal Revenue Code, or a subaward under section 1602 of the American Recovery and Reinvestment Act of 2009, Public Law 111-5. The loan shall be in an amount equal to seventy per cent of the cash value of the amount of the low-income housing tax credit that would otherwise have been claimable with respect to the qualified low-income building under section 235-110.8 for each taxable year in the ten-year credit period, discounted to present day value and capitalized at the rate of interest on the taxable general obligation bonds used to fund the loan.

(b) An owner who is provided a low-income housing tax credit loan under this section shall not be eligible for the state income tax credit under section 235-110.8.

(1) A requirement providing for acceleration and repayment on any no-interest loan under this section to assure that the building with respect to which the loan is made remains a qualified low-income building under section 42 of the Internal Revenue Code or section 1602 of the American Recovery and Reinvestment Act of 2009, Public Law 111-5. Any such repayment shall be payable to the housing finance revolving fund and may be enforced by means of liens or other methods as the corporation deems appropriate;

(2) The same limitations on rent, income, and use restrictions as applied under an allocation of a housing credit dollar amount allocated under section 42 of the Internal Revenue Code; and

(3) The payment of reasonable fees for the corporation to perform or cause to be performed asset management functions to ensure compliance with section 42 of the Internal Revenue Code and the long-term viability of buildings funded by any no-interest loan under this section.

(d) The corporation shall perform asset management functions to ensure compliance with section 42 of the Internal Revenue Code or section 1602 of the American Recovery and Reinvestment Act of 2009, Public Law 111-5, to sustain the long-term viability of buildings funded by a no-interest loan under this section.

(e) The corporation may collect reasonable fees from the owner of a qualified low-income building to cover expenses associated with the performance of the corporation's duties under this section and may retain an agent or other private contractor to satisfy the requirements of this section.

(f) If the owner is not in default, the corporation may forgive the amount remaining under the no-interest loan to the owner of the qualified low-income building after thirty years.

(g) For purposes of this section, "qualified low-income building" shall have the same meaning as used in section 42(c)(2) of the Internal Revenue Code.

§171C-AAK Additional powers. The powers conferred upon the corporation by this subdivision shall be in addition and supplemental to the powers conferred by any other law, and nothing in this subdivision shall be construed as limiting any powers, rights, privileges, or immunities so conferred.

2. Housing Loan and Mortgage Program

§171C-AAL Definitions. The following words or terms as used in this subdivision shall have the following meanings unless a different meaning clearly appears from the context:

"Eligible borrower" means a person or family, without regard to race, creed, national origin, or sex, who:

(1) Is a citizen of the United States or a resident alien;

(2) Is a bona fide resident of the State;

(3) Is at least eighteen years of age;

(4) Does not personally, or whose spouse does not if the person is married, own any interest in a principal residence within or without the State and who has not owned a principal residence within the three years immediately prior to the application for an eligible loan under this subdivision, except this requirement shall not apply to any eligible loan for a targeted area residence as defined in the Mortgage Subsidy Bond Tax Act of 1980, Public Law 96-499, which residence is to replace a housing unit that has been declared structurally unsalvageable by a governmental board or agency having the power to make the declaration; and provided further that this requirement shall not apply to up to ten per cent of eligible loans of a bond issue made to single parent household borrowers. No loans, however, shall be made if they adversely affect the tax-exempt status of the bonds issued. For the purpose of this section, "single parent household" means a household headed by a single person who has legal custody of one or more dependent children;

(5) Has never before obtained a loan under this subpart; and

(6) Meets other qualifications as established by rules adopted by the corporation.

"Eligible improvement" means alterations, repairs, or improvements to an existing dwelling unit that substantially protect or improve the basic livability of the unit.

"Eligible improvement loan" means a loan to finance an eligible improvement to the owner of the dwelling unit, which may be a condominium unit, where the eligible improvement is to be made; provided that the owner meets the requirements of an eligible borrower, except that the requirements of paragraph (4) of the definition of "eligible borrower" shall not apply, the unit to be financed is located in the State, the unit will be occupied as the principal place of residence of the borrower, and meets other requirements as established by rules adopted by the corporation.

"Eligible loan" means a loan to an eligible borrower for the permanent financing of a dwelling unit, including a condominium unit; provided that the property financed is located in the State, will be occupied as the principal place of residence by the eligible borrower, and meets other requirements as established by rules adopted by the corporation.

"Eligible project loan" means an interim or permanent loan, which may be federally insured or guaranteed, made to a qualified sponsor for the financing of a rental housing project, and which meets other requirements as established by rules adopted by the corporation.

"Housing loan programs" includes all or any part of the loans to lenders program, the purchase of existing loans program, the advance commitments program, and the loan funding programs authorized under this subdivision.

"Qualified sponsor" means any person or entity determined by the corporation:

(1) To be qualified by experience, financial responsibility, and support to construct a housing project of the type and magnitude described;

(3) To meet other qualifications as established by rules adopted by the corporation pursuant to chapter 91.

§171C-AAM Owner-occupancy requirement. (a) An eligible borrower shall use the dwelling unit purchased under this subdivision as the eligible borrower's permanent and primary residence.

(b) From time to time, the corporation may submit a verification of owner-occupancy form to the eligible borrower. Failure to respond to this verification in a timely manner may result in an immediate escalation of the interest rate or acceleration of the eligible loan.

(c) For eligible borrowers in the process of selling or transferring title to their property, the corporation may grant a waiver of subsection (a) for a period not to exceed three years and for reasons set forth in section 171C-AN on a case-by-case basis.

§171C-AAN Eligible borrowers. (a) The corporation shall establish the qualifications of the eligible borrower, and may consider the following:

(1) The proportion of income spent for shelter;

(2) Size of the family;

(3) Cost and condition of housing available to the total housing market; and

(4) Ability of the person to compete successfully in the normal housing market and to pay the amounts on which private enterprise is providing loans for safe, decent, and sanitary housing in the State.

(b) The family income of an eligible borrower shall not exceed the income requirements of section 143(f) of the Internal Revenue Code of 1986, as amended.

(1) The dwelling unit for which the eligible improvement loan is to be made and the property on which the dwelling unit is situated shall not be included in the calculation of the eligible borrower's assets; and

(2) The mortgage secured by the dwelling unit and property shall not be included in the calculation of the eligible borrower's liabilities.

(d) For the purpose of determining the qualification of an eligible borrower for an eligible loan for a targeted area residence:

(1) The dwelling unit being replaced and the property on which the dwelling unit is situated shall not be included in the calculation of the eligible borrower's assets; and

(2) The mortgage secured by the dwelling unit and the property shall not be included in the calculation of the eligible borrower's liabilities.

§171C-AAO Eligible loans. (a) The corporation shall establish requirements for property financed by an eligible loan, and may consider the location, age, condition, and other characteristics of the property.

(b) The corporation shall establish restrictions on the terms, maturities, interest rates, collateral, and other requirements for eligible loans.

§171C-AAP Eligible project loans. (a) The corporation shall establish requirements for rental housing projects to be financed by an eligible project loan, and may consider the location, age, condition, and other characteristics of the project.

(b) The corporation shall establish restrictions on the terms, maturities, interest rates, and other requirements for eligible project loans.

(c) The corporation shall establish restrictions on the prepayment of eligible project loans and on the transfer of ownership of the projects securing eligible project loans.

(d) The corporation shall require that any sums deferred on land leased at nominal rates by the corporation to the owner of a rental housing project shall be recovered by the corporation at the time an eligible project loan is prepaid, whether as a result of refinancing of the eligible project loan or otherwise, to the extent that funds are available from the refinancing or other method by which the eligible project loan is paid in full prior to its due date.

(e) The corporation shall enter into an agreement with the owner of a rental housing project to be financed with an eligible project loan which shall provide that in the event that the eligible project loan is at any time prepaid for the purpose of converting the rental units of such project to ownership units, all tenants at the time of the proposed conversion shall have the first option to purchase their units.

(f) All eligible project loans shall comply with applicable state and federal laws.

§171C-AAQ Eligible improvement loans. (a) The corporation shall establish requirements for property financed by an eligible improvement loan, and may consider the location, age, condition, value, and other characteristics of the property.

(b) The corporation shall establish restrictions on the terms, maturities, interest rates, collateral, and other requirements for eligible improvement loans.

§171C-AAR Housing loan programs; procedures and requirements. (a) The corporation shall establish procedures for:

(1) The submission of requests or the invitation of proposals for loans to mortgage lenders;

(2) The purchase of existing loans by auction, invitation of tenders, or negotiation;

(3) The making of advance commitments to purchase and the purchasing of eligible loans, eligible improvement loans, or eligible project loans to be made by mortgage lenders by auction, invitation of tenders, or negotiation; and

(4) Loan applications made through mortgage lenders to eligible borrowers or qualified sponsors.

(b) The corporation shall establish standards and requirements for:

(1) The allocation of loans to mortgage lenders;

(2) The allocation of funds to purchase existing loans from mortgage lenders;

(3) The making of advance commitments and allocation of funds to purchase eligible loans, eligible improvement loans, or eligible project loans from mortgage lenders; and

(4) The participation by mortgage lenders as originators and processors of eligible loans, eligible improvement loans, or eligible project loans on behalf of the corporation.

(c) The standards and requirements for the allocation of funds to mortgage lenders shall be adopted by the corporation and shall be designed to include the maximum number of qualified mortgage lenders as participants in the housing loan programs.

§171C-AAS Housing loan programs; general powers. (a) The corporation may make, enter into, and enforce all contracts or agreements that are necessary, convenient, or desirable in the performance of its duties in executing the housing loan programs.

(b) The corporation may require representations and warranties as it determines necessary to secure its loans.

§171C-AAT Housing loan programs; self-supporting. The interest rate, fees, charges, premiums, and other terms of the loans made under the housing loan programs shall be at least sufficient to pay the cost of administering and maintaining the portion of the specific housing loan programs for which the bonds have been issued, and to assure payment of the principal of and interest on the bonds as they become due.

§171C-AAU Housing loan programs; fees. The corporation may establish, revise, charge, and collect fees, premiums, and charges as necessary, reasonable, or convenient, for its housing loan programs. The fees, premiums, and charges shall be deposited into the housing loan program revenue bond special fund established for the particular housing loan program or part thereof from which the fees, premiums, and charges are derived as determined by the corporation.

§171C-AAV Housing loan programs; evidence of eligible loan, eligible improvement loan, or eligible project loan. (a) Each mortgage lender who participates in any housing loan program shall submit evidence, as deemed satisfactory by the corporation, that eligible loans, eligible improvement loans, or eligible project loans have been made from the proceeds of the bonds.

(b) The corporation may inspect the books and records of the mortgage lenders as may be necessary for the purposes of this section.

§171C-AAW Loans to lenders program. (a) The corporation may make loans to mortgage lenders under terms and conditions requiring that the loan proceeds be used within a time period prescribed by the corporation to make eligible loans, eligible improvement loans, and eligible project loans in an aggregate principal amount substantially equal to the amount of the loan.

(b) The loan made to a mortgage lender shall be a general obligation of the respective mortgage lender.

(1) Bear a date or dates;

(2) Mature at a time or times;

(3) Be evidenced by a note, bond, or other certificate of indebtedness;

(4) Be subject to prepayment; and

(5) Contain other provisions consistent with this subpart.

(d) Subject to any agreement with the holders of its bonds, the corporation may consent to any modification to the rate of interest, time and payment of any installment of principal or interest, security, or any other term of any loan to a mortgage lender or any bond, note, contract, or agreement of any kind to which the corporation is a party.

§171C-AAX Loans to lenders program; collateral security. (a) Loans made to mortgage lenders shall be additionally secured by a pledge of a lien upon collateral security in an amount as the corporation deems necessary to assure the payment of the principal of and interest on the loans as they become due.

(b) The corporation shall determine the nature and type of collateral security required.

(c) A statement designating the collateral security pledged, the mortgage lender pledging the collateral, and the corporation's interest in the pledged collateral may be filed with the bureau of conveyances. Where a statement has been filed, no possession, further filing, or other action under any state law shall be required to perfect any security interest which may be deemed to have been created in favor of the corporation. The mortgage lender shall be deemed the trustee of an express trust for the benefit of the corporation in all matters relating to the pledged collateral.

(d) Subject to any agreement with the holders of its bonds, the corporation may collect, enforce the collection of, and foreclose on any collateral securing its loans to mortgage lenders. The corporation may acquire, take possession of, sell at public or private sale with or without bidding, or otherwise deal with the collateral to protect its interests.

§171C-AAY Purchase of existing loans program. (a) The corporation may contract with a mortgage lender to purchase, in whole or in part, existing loans, whether or not eligible loans, eligible improvement loans, or eligible project loans. The contract may contain provisions as determined by the corporation to be necessary or appropriate to provide security for its bonds, including but not limited to provisions requiring the:

(1) Repurchase of the loans, in whole or in part, by mortgage lenders at the option of the corporation;

(2) Payments of premiums, fees, charges, or other amounts by mortgage lenders to provide a reserve or escrow fund for the purposes of protecting against loan defaults; and

(3) Guarantee by, or for recourse against, mortgage lenders, with respect to defaults on these loans of the corporation.

(b) The corporation shall require, as a condition of each purchase of existing loans from a mortgage lender, that the mortgage lender proceed to make and disburse eligible loans, eligible improvement loans, or eligible project loans in an aggregate principal amount substantially equal to the amount of the proceeds from the purchase by the corporation of loans therefrom.

§171C-AAZ Advance commitments program. (a) The corporation may contract with a mortgage lender for the advance commitment to purchase eligible loans, eligible improvement loans, or eligible project loans.

(b) The contract may contain provisions as determined by the corporation to be necessary or appropriate to provide security for its bonds. Notwithstanding any other law to the contrary, project loans may be made available for housing projects on Hawaiian home lands pursuant to the Hawaiian Homes Commission Act, 1920, as amended.

§171C-AAAA Loan funding programs. (a) The corporation may contract with mortgage lenders to fund eligible loans and eligible improvement loans and may directly make or contract with mortgage lenders to fund eligible project loans.

(b) Any contract in subsection (a) with a mortgage lender may contain provisions as determined by the corporation to be necessary or appropriate to provide security for its revenue bonds.

§171C-AAAB Loans; service and custody. The corporation may contract for the service and custody of its loans. The contract may provide for the payment of fees or charges for the services rendered; provided that the fees or charges shall not exceed the usual, customary, and reasonable charges for the services rendered.

§171C-AAAC Loans; sale, pledge, or assignment. (a) Subject to any agreements with the holders of its revenue bonds, the corporation may sell its loans at public or private sale at a price and upon terms and conditions as it determines.

(b) Subject to any agreements with the holders of its revenue bonds, the corporation may pledge or assign its loans, other agreements, notes, or property to secure the loans or agreements.

§171C-AAAD Loans; insurance and guarantees. The corporation may procure insurance or guarantees against any default of its loans, in amounts and from insurers or guarantors, as it deems necessary or desirable.

§171C-AAAE Loans; default. (a) The corporation may renegotiate, refinance, or foreclose any loan in default.

(b) The corporation may waive any default or consent to the modification of the terms of any loan or security agreement.

(c) The corporation may commence any action to protect or enforce any right conferred upon it by any law, mortgage, insurance policy, contract, or other agreement.

(d) The corporation may bid for and purchase the property secured by the loan at any foreclosure or other sale, or acquire or take possession of the property secured by the loan.

(e) The corporation may operate, manage, lease, dispose of, or otherwise deal with the property secured by the loan.

§171C-AAAF Additional powers. The powers conferred upon the corporation by this subdivision shall be in addition and supplemental to the powers conferred by any other law, and nothing in this subdivision shall be construed as limiting any powers, rights, privileges, or immunities so conferred.

3. Rental Assistance Program

§171C-AAAG Purpose; findings and determinations. The legislature finds and declares that the health and general welfare of the people of this State require that the people of this State have safe and sanitary rental housing accommodations available at affordable rents; that a grave shortage in the number of such accommodations affordable by families and individuals of low- and moderate-income in the State exists; and that it is essential that owners of rental housing accommodations be provided with appropriate additional means to assist in reducing the cost of rental housing accommodations to the people of this State.

The legislature further finds that the high cost of infrastructure development and the obtaining of interim construction financing are two of the greatest impediments to the production of affordable rental housing in this State. It is especially difficult for private nonprofit and for-profit entities to participate in the development of affordable housing due to the difficulty in amassing the capital necessary to plan and carry out a project to completion.

It is the purpose of this subdivision to:

(1) Assist owners in maintaining rentals at levels affordable to low- and moderate-income families and individuals by providing owners with rental assistance payments which, together with rental payments received from low- and moderate-income tenants, will provide owners with limited but acceptable rates of return on their investments in rental housing accommodations. Assisting owners by entering into contracts with them to provide for rental assistance payments is a valid public purpose and in the public interest; and

(2) Provide a funding source for interim construction financing for the development of affordable rental housing by private nonprofit and for-profit entities, as well as the corporation; provided that in allotting this financing, the corporation shall give preference to qualified sponsors who are private nonprofit and for-profit entities.

§171C-AAAH Definitions. The following terms as used in this subdivision shall have the following meanings unless a different meaning clearly appears from the context:

"Eligible project" means a rental housing project that:

(1) Is financed by the corporation pursuant to subdivision 2 or 4, or that the corporation determines will require rental assistance to make it financially feasible;

(2) Is subject to a regulatory agreement with the corporation;

(3) Maintains at least twenty per cent of its units for eligible tenants; and

(4) Meets other qualifications as established by rules adopted by the corporation.

Notwithstanding any provision to the contrary, "eligible project" may also include a rental housing project that is financed by the corporation pursuant to subdivision 1.

"Eligible tenant" means a family or an individual whose income does not exceed eighty per cent of the area median income as determined by the United States Department of Housing and Urban Development.

"Owner" means the owner of an eligible project.

"Regulatory agreement" means an agreement between the corporation and the owner relating to an eligible project that includes provisions relating to rents, charges, profits, return on owner's equity, development costs, and methods of operation.

"Rental assistance contract" means an agreement between an owner and the corporation providing for periodic rental assistance payment for units in an eligible project.

§171C-AAAI Rental assistance revolving fund. (a) There is created a rental assistance revolving fund to be administered by the corporation.

(b) The rental assistance revolving fund may include sums made available from any government program or grant, from private grants or contributions, from the proceeds of any bond issue, or from appropriations to the fund. The aggregate principal in the fund shall be invested by the corporation in a manner that will maximize the rate of return on investment of the fund; provided that any investment made shall be consistent with section 171C-AAC but need not comply with section 36-21.

(c) The corporation may use, as needed, the aggregate principal sum and the accumulated earnings in the rental assistance revolving fund to make payments under rental assistance contracts or to subsidize tenants' rents in eligible projects developed under this subpart; provided that the corporation shall use up to $25,000,000 plus any bond proceeds to provide interim construction financing to:

(1) Qualified sponsors who are private nonprofit or for-profit entities; or

(2) The corporation, for the development of affordable rental housing;

provided further that the corporation, in allotting interim construction financing moneys pursuant to this subdivision, shall give preference to rental housing projects developed by qualified sponsors who are private nonprofit or for-profit entities.

§171C-AAAJ Rental assistance contracts. (a) The corporation may enter into a rental assistance contract and a regulatory agreement with the owner of an eligible project, when the owner of an eligible project is other than the corporation.

(b) Prior to the execution of a rental assistance contract, the corporation may execute an agreement to enter into a rental assistance contract with an owner. The agreement shall provide for the execution of a rental assistance contract upon satisfaction of the terms set forth in the agreement and otherwise established by the corporation. Each rental assistance contract heretofore entered into by the corporation that provided that rental assistance payments shall be made solely from the earnings on the investment of the rental assistance revolving fund shall hereafter, without modification of the contracts, be payable from the aggregate principal sum and the accumulated earnings in the rental assistance revolving fund.

(c) A rental assistance contract and any subsidy of tenants' rents in projects developed under this subdivision shall be for a term not in excess of thirty-five years and shall be approved by the board of directors of the corporation. Upon that approval by the corporation, the director of finance shall be authorized to guarantee the obligation of the corporation for the term of the rental assistance contract or the subsidy of tenants' rents in an amount equal to the aggregate obligation of the corporation to make assistance payments; provided that the aggregate of all of the outstanding guarantees shall not exceed $100,000,000. Pursuant to that guarantee, the corporation shall make annual rental payments to the owner in accordance with the approved rental assistance contract or to the tenants in accordance with the approved subsidy.

(d) Each rental assistance contract shall set forth a maximum annual rental assistance payment amount. The corporation shall establish procedures for determining the maximum annual rental assistance payment amount and may consider the following:

(1) The cost of constructing the eligible project;

(2) The estimated annual operating cost of the eligible project;

(3) The estimated maximum rentals that may be charged for dwelling units in the eligible project;

(4) The amount of funds available for the funding of rental assistance contracts;

(5) The number of eligible projects requiring assistance under this subdivision; and

(6) A restricted rate of return on equity to the owner, which rate shall be established by the corporation by rule.

§171C-AAAK Rental assistance program. (a) Prior to the execution of a rental assistance contract and annually thereafter, the owner shall submit a proposed rental schedule to the corporation for approval. The schedule shall list every rental unit in the project and shall designate which units are to be maintained for eligible tenants.

(b) The corporation shall establish procedures for evaluating the rental schedules submitted pursuant to this section, and may consider the following:

(1) The size of and number of bedrooms in the units comprising the eligible project;

(2) The location of the project and its type (whether high‑rise, mid-rise, or low-rise);

(3) The percentage of units being maintained for eligible tenants; and

(4) The rentals prevalent in the open market for comparable units.

(c) Annually, following the approval of the rental schedule submitted pursuant to subsection (a), the corporation shall determine the amount of rental assistance payments payable to the owner for the forthcoming year; provided that the amount shall not exceed the maximum annual rental assistance payment amount determined in accordance with section 171C-AAAJ. The amount determined pursuant to this subsection shall take into account the estimated amount to be derived by the owner from rentals to be charged for the forthcoming year and the limited rate of return on equity permitted in accordance with section 171C-AAAJ(d)(6).

(d) The corporation shall establish standards and requirements for:

(1) The awarding of rental assistance contracts and the allocation of annual rental assistance payments;

(2) The form of lease to be utilized by the owner in renting units in an eligible project;

(3) The marketing and tenant selection and admission processes to be employed by the owner with respect to an eligible project; and

(4) The maintenance and operation of eligible projects.

(e) The corporation shall establish procedures for:

(1) The annual review of rental schedules for eligible projects;

(2) The periodic review of the income of tenants renting units in eligible projects; and

(3) The periodic inspection of eligible projects to monitor the owners' compliance with the terms and conditions of their rental assistance contracts.

(f) When an eligible project is not owned by the corporation, the corporation shall be entitled to share in the appreciation in value of units maintained for eligible tenants within an eligible project realized at the time of refinancing or prepayment of the eligible project loan. The corporation's share shall be calculated by multiplying the appreciation in value of units maintained for eligible tenants realized upon refinancing or prepayment by the ratio of the owner's equity to the discounted value of the aggregate rental assistance payments. The discount rate shall be established by rules adopted by the corporation.

The corporation shall exempt projects owned by a county from the shared appreciation requirement set forth in this subsection if all of the following requirements are met:

(1) The funds derived by the county as a result of appreciation in value of the units are used for housing projects wherein:

(A) At least sixty per cent of the project is affordable to families earning one hundred per cent or below of the applicable area median income; and

(B) At least half of the foregoing sixty per cent is affordable to families earning eighty per cent or below of the applicable area median income; and

(2) The project from which the appreciation in value is derived remains as affordable as it was prior to the refinancing or prepayment of the eligible project loan.

§171C-AAAL Benefits of program not exclusive. Nothing in this subdivision shall be construed to prohibit, with respect to an eligible project, the operation of the rental assistance program in conjunction with other state or federal programs including the state rent supplements provided for in part VIII of chapter 356D.

§171C-AAAM Additional powers. The powers conferred upon the corporation by this subdivision shall be in addition and supplemental to the powers conferred by any other law, and nothing in this subdivision shall be construed as limiting any powers, rights, privileges, or immunities so conferred.

4. Taxable Mortgage Securities Programs

§171C-AAAN Definitions. Whenever used in this subdivision, unless the context otherwise requires:

"Eligible borrower" means:

(1) Any person or family, without regard to race, creed, national origin, or sex, who:

(A) Is a citizen of the United States or a resident alien;

(B) Is a bona fide resident of the State;

(D) Does not personally, or whose spouse does not if the person is married, own a majority interest in any residential property in the State; and

(E) Meets other qualifications as established by rules adopted by the corporation; or

(2) A qualified sponsor of an affordable housing project who meets the qualification requirements as established by rules adopted by the corporation.

"Eligible loan" or "loan" means:

(1) A loan to an eligible borrower for the purchase of a dwelling unit, including a condominium unit; provided that the property financed is located in the State, will be occupied as the principal place of residence by the eligible borrower, and meets other requirements as established by rules adopted by the corporation; or

(2) An interim or permanent loan, which may be federally insured or guaranteed, made to a qualified sponsor for the financing of an affordable housing project, and which meets other requirements as established by rules adopted by the corporation.

"Housing loan programs" include all or any part of the loan programs authorized in section 171C-AAAO.

§171C-AAAO Housing loan programs; authorization. (a) The corporation may establish under this subdivision one or more eligible loan programs.

(b) The corporation may invest in, make, purchase, take assignments of, or otherwise acquire or make commitments to invest in, make, purchase, take assignments of, or otherwise acquire any eligible loans or any partial interest or participation therein held by or on behalf of the corporation.

(c) The corporation may sell, assign, or otherwise dispose of or enter into commitments to sell, assign, or otherwise dispose of any eligible loans or any partial interest or participation therein held by or on behalf of the corporation.

(d) The corporation may acquire any obligation under conditions which require the seller of the obligation to use the proceeds of the sale for the purpose of financing eligible loans.

§171C-AAAP Housing loan programs; procedures and requirements. (a) The corporation may establish procedures and requirements for:

(1) The purchase of loans from mortgage lenders by auction, invitation of tender, advance commitment, or other negotiation;

(2) The making of loans through mortgage lenders to eligible borrowers or qualified sponsors;

(3) The allocation to mortgage lenders of money made available under this subdivision; and

(4) The participation by mortgage lenders as originators and processors of loans on behalf of the corporation under this subdivision.

(b) The corporation may adopt rules under chapter 91 necessary or convenient for the operation of the housing loan programs established under this subdivision.

§171C-AAAQ Housing loan programs; general powers. (a) The corporation may make, enter into, and enforce all contracts or agreements which are necessary, convenient, or desirable for the purpose of the performance of its powers under this subdivision.

(b) The corporation may establish, revise, charge, and collect fees, premiums, and charges as necessary, reasonable, or convenient in connection with its housing loan programs established under this subdivision. The fees, premiums, and charges shall be deposited into funds as determined by the corporation.

(c) The corporation may contract for the servicing and custody of any loans or other obligations acquired under this subdivision.

(d) The corporation may procure insurance against any default of its loans from insurers in amounts deemed necessary or desirable.

(e) Subject to any agreements with the holders of its bonds, the corporation may:

(1) Renegotiate, refinance, or foreclose any loan in default;

(2) Commence any action to protect or enforce any right conferred upon it by any law, or as provided in any mortgage, insurance policy, contract, or other agreement; and

(3) Bid for and purchase the property secured by the loan at any foreclosure or other sale; or acquire, or take possession of the property secured by the loan and may operate, manage, lease, dispose of, or otherwise deal with the property securing the loan.

§171C-AAAR Additional powers. The powers conferred upon the corporation by this subdivision shall be in addition and supplemental to the powers conferred by any other law, and nothing in this subdivision shall be construed as limiting any powers, rights, privileges, or immunities so conferred.

5. State Mortgage Guarantee Program

§171C-AAAS State mortgage guarantee. (a) The corporation may guarantee:

(1) Up to the top twenty-five per cent of the principal balance of real property mortgage loans for the purchase of qualified single-family or multifamily dwelling units;

(2) Up to one hundred per cent of the principal balance of real property mortgage loans of qualified single-family housing under section 213 of the Hawaiian Homes Commission Act, 1920, as amended; or

(3) Up to one hundred per cent of the principal balance of real property mortgage loans of single-family or multifamily housing developed under self-help or shell housing programs;

plus the interest due thereon, made to qualified borrowers by qualified private lenders; provided that at no time shall the corporation's liability, contingent or otherwise, on these guarantees exceed $10,000,000.

For purposes of this section:

"Self-help housing program" means development or preservation of housing in which prospective homeowners have contributed labor, materials, or real property; provided that at least two-thirds of the participating homeowners are qualified by income for assistance under this subdivision and that the program is carried out under the sponsorship of a nonprofit community development organization.

"Shell housing program" means development of housing which is habitable but unfinished and can be completed or expanded; provided that one hundred per cent of the participating homeowners are qualified by income for assistance under this subdivision and that the program is carried out under the sponsorship of a public, nonprofit, or private organization.

(b) The loans shall be secured by a duly recorded first mortgage upon the fee simple or leasehold interest of the borrower in the single-family or multifamily dwelling owned and occupied by the borrower and the borrower's permitted assigns. Private lenders shall include all banks, savings and loan associations, mortgage companies, and other qualified companies and trust funds whose business includes the making of loans in the State.

(d) To be eligible for loans under this section, a qualified borrower shall be:

(1) A citizen of the United States or a resident alien;

(2) Qualified under the rules adopted by the corporation; and

(3) Willing to comply with the rules as may be adopted by the corporation.

The corporation may secure the services of a private lender to process all applications and determine the qualification of borrowers under this subdivision.

(e) When the application for an insured loan has been approved by the corporation, the corporation shall issue to the lender a guarantee for that percentage of the loan on which it guarantees payment of principal and interest. The private lender shall collect all payments from the borrower and otherwise service the loan.

(f) In return for the corporation's guarantee, the private lender shall remit out of monthly payments collected an insurance fee as established by the corporation. The funds remitted shall be deposited to the credit of the state general fund.

(g) When any installment of principal and interest has been due for sixty days and has not been paid by the borrower, the private lender may file a claim for the guaranteed portion of the overdue payments with the corporation which may then authorize vouchers for these payments, thereby acquiring a division of interest in the collateral pledged by the borrower in proportion to the amount of the payment. The corporation shall be reimbursed for any amounts so paid plus the applicable interest rate when payment is collected from the borrower.

(h) If there is any default in any payment to be made by the borrower, the lender shall notify the corporation within fifteen days. Should the lender deem that foreclosure proceedings are necessary to collect moneys due from the borrower, it shall notify the corporation. Within thirty days of either notification, the corporation may elect to request an assignment of the loan on payment in full to the lender of the principal balance and interest due. Foreclosure proceedings shall be held in abeyance in the interim.

(i) Every qualified borrower who is granted a loan under this section shall comply with the following conditions:

(1) Expend no portion of the qualified borrower's loan for purposes other than those sanctioned by the corporation;

(2) Not sell or otherwise dispose of the mortgaged property except upon the prior written consent of the corporation and except upon any conditions that may be prescribed in writing by the private lender;

(3) Undertake to pay when due all taxes, liens, judgments, or assessments that may be lawfully assessed against the property mortgaged, together with the costs and expenses of any foreclosure of the mortgage;

(4) Keep insured to the satisfaction of the private lender all improvements and other insurable property covered by the mortgage. Insurance shall be made payable to the mortgagee as its interest may appear at the time of the loss. At the option of the private lender, subject to the rules and standards of the corporation, sums so received may be used to pay for reconstruction of the improvements destroyed, or for decreasing the amount of the indebtedness;

(5) Keep the improvements in good repair; and

(6) The private lender may impose any other conditions in its mortgage; provided the form of the mortgage has received the prior approval of the corporation.

All of the conditions in paragraphs (1) through (6) shall be held and construed to be provisions of any mortgage executed by virtue of this section regardless of whether or not the conditions are expressly incorporated in the mortgage document.

(j) Loans guaranteed and made under this subdivision shall be repaid in accordance with a payment schedule specified by the private lender with payments applied first to interest and then to principal. Additional payments in any sums and the payment of the entire principal may be made at any time within the period of the loan. The private lender for satisfactory cause and at its discretion, may extend the time within which the installments of principal may be made for a period not to exceed two years.

(k) All interest and fees collected under this subdivision by the corporation shall be deposited into the general fund. All moneys necessary to guarantee payment of loans made under this subdivision and to carry on the operations of the corporation in administering and granting loans under this subdivision shall be appropriated by the legislature out of the proceeds of the general fund. The corporation shall include in its legislative budgetary request for the upcoming fiscal period, the amounts necessary to effectuate the purposes of this section.

§171C-AAAT Mortgage guarantee agreements. (a) To induce appropriate officials of any agency or instrumentality of the United States to commit to insure and to insure mortgages under the provisions of the United States Housing Act of 1937, as amended, the corporation may enter into guarantee agreements with those officials whenever:

(1) The purchaser-mortgagor in question is ineligible for mortgage insurance purposes under the United States Housing Act of 1937, as amended, because of credit standing, debt obligation, or income characteristics;

(2) The purchaser-mortgagor in question is a "displaced person" as defined in chapter 111 and the guarantee agreement will enable the purchaser-mortgagor to obtain suitable replacement housing in accordance with chapter 111; or

(3) The corporation finds that the purchaser-mortgagor would be a satisfactory credit risk with ability to repay the mortgage loan if the purchaser-mortgagor were to receive budget, debt management, and related counseling.

(b) Guarantee agreements under subsection (a) may obligate the corporation to:

(1) Provide or cause to be provided counseling under subsection (a)(3); and

(2) Indemnify an agency or instrumentality of the United States for a period not to exceed five years for any loss sustained by the agency or instrumentality by reason of insurance of a mortgage.

(c) The total of guarantees made pursuant to this section and guarantees made pursuant to section 171C-AAAS shall not exceed $10,000,000.

§171C-AAAU Additional powers. The powers conferred upon the corporation by this subdivision shall be in addition and supplemental to the powers conferred by any other law, and nothing in this subdivision shall be construed as limiting any powers, rights, privileges, or immunities so conferred.

6. Downpayment Loan Program

§171C-AAAV Downpayment loans. (a) The corporation may make direct downpayment loans to eligible borrowers who qualify for loans under section 171C-AAAW. The downpayment loan to any one borrower shall not exceed thirty per cent of the purchase price of the residential property or $15,000, whichever is less. The interest rate on the loans may range from zero per cent to eight per cent, depending on the buyer's income.

(b) The repayment of every downpayment loan shall be secured by a duly recorded second mortgage executed by the borrower to the State on the residential property purchased with the downpayment loan.

(c) The principal of the downpayment loan, together with accrued interest, shall be due and payable upon the sale, transfer, or refinancing of the property, or shall be repaid by the borrower in installments as determined by the corporation; provided that the corporation may provide a period in which payments may be waived. The period over which the principal and interest shall be paid need not coincide with the period over which the loan from the mortgage lender for the balance of the purchase price must be repaid. The borrower may repay the whole or any part of the unpaid balance of the downpayment loan, plus accrued interest, at any time without penalty.

(d) The corporation may secure the services of the mortgage lender who loans to the borrower the balance of the purchase price of the residential property or the services of any other mortgage lender doing business in the State to collect, on behalf of the State, the principal and interest of the downpayment loan and otherwise to service the downpayment loan, for a servicing fee not in excess of the prevailing loan servicing fees.

(e) The corporation shall adopt rules pursuant to chapter 91 to carry out the purposes of this subdivision.

§171C-AAAW Qualifications for downpayment loans. (a) No person shall be qualified for a downpayment loan unless the person:

(1) Is a citizen of the United States or a resident alien;

(2) Is at least eighteen years of age;

(3) Is a bona fide resident of the State;

(4) Will physically reside in the residential property to be purchased for the term of the loan;

(5) Is accepted by a mortgage lender as a person to whom it is willing to lend money for the purchase of the residential property provided the required downpayment is made; and

(6) Provides a portion of the downpayment which shall be equal to at least three per cent of the sales price.

(b) No person who owns in fee simple or in leasehold any other residential property within the State shall be eligible to become a borrower under this section. A person shall be deemed to own a residential property if the person, the person's spouse, or both (unless separated and living apart under a decree of a court of competent jurisdiction) own a majority interest in a residential property.

§171C-AAAX Restrictions on borrower. Every loan made under this subdivision shall be subject to the following conditions:

(1) The borrower shall expend no portion of the borrower's downpayment loan for purposes other than to make a downpayment for the purchase of a residential property;

(2) The residential property purchased with the downpayment loan and mortgaged to the State to secure the repayment of the loan shall not be sold or assigned without the prior approval in writing of the corporation and the first mortgage lender;

(3) The borrower shall pay when due all taxes, liens, judgments, or assessments that may be lawfully levied against the residential property and all costs and expenses of any foreclosure of the mortgage made to the State;

(4) The borrower shall maintain fire and casualty insurance in amounts equal to the replacement value of all improvements and insurable portions of the residential property with an insurance company authorized to do business in the State. All proceeds of that insurance shall be made payable to the first mortgage lender and the corporation as their respective interests may appear at the time of any loss or damage. Subject to the rules of the corporation, in the event of any loss or damage to the improvements or property covered by the insurance, the proceeds receivable by the State shall be applied toward the reconstruction of the improvements or property destroyed or damaged, unless otherwise determined by the corporation on behalf of the State; and

(5) The borrower shall maintain the improvements in good repair.

All of the conditions in paragraphs (1) through (5) shall be a part of any downpayment mortgage executed under this subdivision, regardless of whether or not they are expressly incorporated in the mortgage document.

§171C-AAAY Default. If the borrower defaults in the payment of any installment of principal or interest of the downpayment loan, the corporation or mortgage lender shall take all necessary action to collect the delinquent amounts and may take all actions generally allowed holders of mortgages, including the power to foreclose. Upon any foreclosure of the second mortgage, the corporation or mortgage lender on behalf of the corporation, may purchase the interest of the borrower in and to the residential property, take possession thereof and assume all of the obligations of the borrower under the first mortgage held by the private lender and any other liens having priority over the second mortgage that may then exist. On the acquisition of the borrower's interest, the corporation, at its option, may pay in full the unpaid balance of the borrower's obligation secured by the first mortgage and other prior liens; repair, renovate, modernize, or improve the residential property; and, with or without clearing the property of all prior mortgages and liens, sell, lease, or rent the property or use or dispose of the same in any manner authorized by law.

§171C-AAAZ Additional powers. The powers conferred upon the corporation by this subdivision shall be in addition and supplemental to the powers conferred by any other law, and nothing in this subdivision shall be construed as limiting any powers, rights, privileges, or immunities so conferred.

7. Homebuyers' Club Program

§171C-AAAAA Homebuyers' club program. (a) The corporation may establish a homebuyers' club program for participants who are desirous of purchasing a home and who have adequate incomes but who lack sufficient funds for the downpayment and closing costs. The primary focus of this program is to facilitate the purchase of homes by providing participants with strategies to save money, to resolve credit problems, and to educate participants on how to shop for and purchase a home.

(b) In establishing such a program, the corporation shall adopt rules pursuant to chapter 91 relating to establishing a savings program for participants based upon individual analyses of income and family expenses. The rules may also provide for integration of the homebuyers' club program with other governmental programs including but not limited to individual housing accounts under section 235-5.5, the state mortgage guarantee program under subdivision 5, the downpayment loan program established under subdivision 6, and the rent-to-own program established under subdivision 8.

(c) The corporation may secure the services of another public or private entity to carry out the purposes of this section.

§171C-AAAAB Additional powers. The powers conferred upon the corporation by this subdivision shall be in addition and supplemental to the powers conferred by any other law, and nothing in this subdivision shall be construed as limiting any powers, rights, privileges, or immunities so conferred.

8. Rent-to-Own Program

§171C-AAAAC Rent-to-own program. (a) The corporation may establish a rent-to-own program under which dwelling units that are for sale may be rented to program participants. Under this program, the corporation shall credit a portion of the rent received toward the purchase of the unit.

(b) The sales price shall be established at the beginning of the rental term and shall remain fixed for the first five years after the rental agreement is executed. During this period, the participant shall have the option of purchasing the unit at the designated sales price. If the participant does not elect to purchase the unit within the five-year period, the renter shall forfeit the right to continue living in the unit and the unit shall be made available to another purchaser or renter.

(c) The corporation shall have the right to reestablish the sales price upon expiration of the option period or upon resale of the unit.

§171C-AAAAD Additional powers. The powers conferred upon the corporation by this subdivision shall be in addition and supplemental to the powers conferred by any other law, and nothing in this subdivision shall be construed as limiting any powers, rights, privileges, or immunities so conferred.

9. Dwelling Unit Revolving Fund

§171C-AAAAE Dwelling unit revolving fund. There is established a dwelling unit revolving fund. The funds appropriated for the purpose of the dwelling unit revolving fund and all moneys received or collected by the corporation for the purpose of the revolving fund shall be deposited in the revolving fund. The proceeds in the revolving fund shall be used to reimburse the general fund to pay the interest on general obligation bonds issued for the purposes of the revolving fund, for the necessary expenses in administering housing development programs, and for carrying out the purposes of housing development programs, including but not limited to the expansion of community facilities constructed in conjunction with housing projects, permanent primary or secondary financing, and supplementing building costs, federal guarantees required for operational losses, and all things required by any federal agency in the construction and receipt of federal funds or low‑income housing tax credits for housing projects.

§171C-AAAAF Additional powers. The powers conferred upon the corporation by this subdivision shall be in addition and supplemental to the powers conferred by any other law, and nothing in this subdivision shall be construed as limiting any powers, rights, privileges, or immunities so conferred.

10. Rental Housing Trust Fund

§171C-AAAAG Definitions. As used in this subdivision, unless a different meaning is clearly required by the context:

"Develop" or "development" means the planning, financing, or acquisition of real and personal property; demolition of existing structures; clearance of real property; construction, reconstruction, alteration, or repairing of approaches, streets, sidewalks, utilities, and services, or other site improvements; construction, reconstruction, repair, remodeling, extension, equipment, or furnishing of buildings or other structures; or any combination of the foregoing, of any housing project. It also includes any undertakings necessary therefor, and the acquisition of any housing, in whole or in part.

"Fund" means the rental housing trust fund established in this subdivision.

§171C-AAAAH Rental housing trust fund. (a) There is established the rental housing trust fund to be administered by the corporation.

(b) An amount from the fund, to be set by the corporation and authorized by the legislature, may be used for administrative expenses incurred by the corporation in administering the fund; provided that fund moneys may not be used to finance day-to-day administrative expenses of projects allotted fund moneys.

(c) The following may be deposited into the fund: appropriations made by the legislature, private contributions, repayment of loans, interest, other returns, and moneys from other sources.

(d) The fund shall be used to provide loans or grants for the development, pre-development, construction, acquisition, preservation, and substantial rehabilitation of rental housing units. Permitted uses of the fund may include but are not limited to planning, design, land acquisition, costs of options, agreements of sale, downpayments, equity financing, capacity building of nonprofit housing developers, or other housing development services or activities as provided in rules adopted by the corporation pursuant to chapter 91. The rules may provide for a means of recapturing loans or grants made from the fund if a rental housing project financed under the fund is refinanced or sold at a later date. The rules may also provide that moneys from the fund shall be leveraged with other financial resources to the extent possible.

(e) Moneys available in the fund shall be used for the purpose of providing, in whole or in part, loans or grants for rental housing projects in the following order of priority:

(1) Projects or units in projects that are allocated low‑income housing credits pursuant to the state housing credit ceiling under section 42(h) of the Internal Revenue Code of 1986, as amended, or projects or units in projects that are funded by programs of the United States Department of Housing and Urban Development and United States Department of Agriculture Rural Development wherein:

(A) At least fifty per cent of the available units are for persons and families with incomes at or below eighty per cent of the median family income of which at least five per cent of the available units are for persons and families with incomes at or below thirty per cent of the median family income; and

(B) The remaining units are for persons and families with incomes at or below one hundred per cent of the median family income;

provided that the corporation may establish rules to ensure full occupancy of fund projects; and

(2) Mixed-income rental projects or units in a mixed‑income rental project wherein all of the available units are for persons and families with incomes at or below one hundred forty per cent of the median family income.

(f) The corporation shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session describing the projects funded and, with respect to rental housing projects targeted for persons and families with incomes at or below thirty per cent of the median family income, its efforts to develop those rental housing projects, a description of proposals submitted for this target group and action taken on the proposals, and any barriers to developing housing units for this target group.

(g) For the purposes of this subdivision, the applicable median family income shall be the median family income for the county or standard metropolitan statistical area in which the project is located as determined by the United States Department of Housing and Urban Development, as adjusted from time to time.

(h) The corporation may provide loans and grants under this section; provided that the corporation shall establish loan-to-value ratios to protect the fund from inordinate risk and that under no circumstances shall the rules permit the loan‑to-value ratio to exceed one hundred per cent; and provided further that the underwriting guidelines include a debt-coverage ratio of not less than 1.0 to 1.

(i) For the period commencing July 1, 2005, through June 30, 2009, the fund may be used to provide grants for rental units set aside for persons and families with incomes at or below thirty per cent of the median family income in any project financed in whole or in part by the fund in proportion of those units to the total number of units in the project. At the conclusion of the period described in this subsection, the corporation shall report to the legislature on the number and use of grants provided and whether the grants were an effective use of the funds for purposes of developing rental housing for families at or below thirty per cent of the median family income.

§171C-AAAAI Eligible applicants for funds. Eligible applicants for funds shall include nonprofit and for-profit organizations, limited liability companies, partnerships, and government agencies, who are qualified in accordance with rules adopted by the corporation pursuant to chapter 91.

§171C-AAAAJ Eligible projects. (a) Activities eligible for assistance from the fund shall include but not be limited to:

(1) New construction, rehabilitation, or preservation of low-income rental housing units that meet the criteria for eligibility described in subsection (c);

(2) The leveraging of moneys with the use of fund assets;

(3) Pre-development activity grants or loans to nonprofit organizations; and

(4) Acquisition of housing units for the purpose of preservation as low-income or very low-income housing.

(b) Preference shall be given to projects producing units in at least one of the following categories:

(1) Multifamily units;

(2) Attached single-family units;

(3) Apartments;

(4) Townhouses;

(5) Housing units above commercial or industrial space;

(6) Single room occupancy units;

(7) Accessory apartment units;

(8) Employee housing;

(9) United States Department of Housing and Urban Development mixed finance development of public housing units; and

(10) Other types of units meeting the criteria for eligibility set forth in subsection (c).

(c) The corporation shall establish an application process for fund allocation that gives preference to projects meeting the following criteria that are listed in descending order of priority:

(1) Serve the original target group;

(2) Provide at least five per cent of the total number of units for persons and families with incomes at or below thirty per cent of the median family income;

(3) Provide the maximum number of units for persons or families with incomes at or below eighty per cent of the median family income;

(4) Are committed to serving the target group over a longer period of time;

(5) Increase the integration of income levels of the immediate community area;

(6) Meet the geographic needs of the target group of the proposed rental housing project, such as proximity to employment centers and services; and

(7) Have favorable past performance in developing, owning, managing, or maintaining affordable rental housing.

The corporation may include other criteria as it deems necessary to carry out the purposes of this subdivision.

If the corporation, after applying the process described in this subsection, finds a nonprofit project equally ranked with a for-profit or government project, the corporation shall give preference to the nonprofit project in allotting fund moneys.

§171C-AAAAK Additional powers. The powers conferred upon the corporation by this subdivision shall be in addition and supplemental to the powers conferred by any other law, and nothing in this subdivision shall be construed as limiting any powers, rights, privileges, or immunities conferred.

D. Expenditures Of Revolving Funds Under

The Corporation Exempt From Appropriation And Allotment

§171C-AAAAL Expenditures of revolving funds under the corporation exempt from appropriation and allotment. Except as to administrative expenditures, and except as otherwise provided by law, expenditures from the revolving funds administered by the corporation under subdivisions 9 and 10 of subpart C, relating to financing programs, or sections 171C-AAF, 171C-AAG, 171C-AAAI, or 516‑44 may be made by the corporation without appropriation or allotment by the legislature; provided that no expenditure shall be made from and no obligation shall be incurred against any revolving fund in excess of the amount standing to the credit of the fund or for any purpose for which the fund may not lawfully be expended. Nothing in sections 37-31 to 37-41 shall require the proceeds of the revolving funds identified in subdivisions 9 and 10 of subpart C, or sections 171C-AAF, 171C-AAG, 171C-AAAI, or 516-44 to be reappropriated annually.

§171C-AAAAM Additional powers. The powers conferred upon the corporation by this subpart shall be in addition and supplemental to the powers conferred by any other law, and nothing in this subpart shall be construed as limiting any powers, rights, privileges, or immunities so conferred.

PART III. COMMUNITY DEVELOPMENT

A. General Provisions

§171C-AAAAN Definitions. As used in this part, the following words and terms shall have the following meanings unless the context shall indicate another or different meaning or intent:

"County" means any county of the State.

"Local governing body" means the county council.

"Project" means a specific work or improvement, including real and personal properties, or any interest therein, acquired, owned, constructed, reconstructed, rehabilitated, or improved by the corporation, including a residential project, a redevelopment project, or a commercial project, all as defined herein, or any combination thereof, which combination shall hereinafter be called and known as a "multipurpose project".

(1) "Residential project" means a project or that portion of a multipurpose project, including residential dwelling units, designed and intended for the purpose of providing housing and such facilities as may be incidental or appurtenant thereto;

(2) "Redevelopment project" means an undertaking for the acquisition, clearance, replanning, reconstruction, and rehabilitation or a combination of these and other methods, of an area for a residential project, for an incidental commercial project, and for other facilities incidental or appurtenant thereto, pursuant to and in accordance with this part. The terms "acquisition, clearance, replanning, reconstruction, and rehabilitation" shall include renewal, redevelopment, conservation, restoration, or improvement, or any combination thereof;

(3) "Commercial project" means an undertaking involving commercial or light industrial development, which includes a mixed use development where commercial or light industrial facilities may be built into, adjacent to, under or above residential units.

"Public agency" means any office, department, board, commission, bureau, division, public corporation agency, or instrumentality of the federal, state, or county government.

"Public facilities" includes streets, utility and service corridors, and utility lines where applicable, sufficient to adequately service developable improvements in the district, sites for schools, parks, parking garage, sidewalks, pedestrian ways, and other community facilities. "Public facilities" shall also include public highways, as defined by statute, storm drainage systems, water systems, street lighting systems, off-street parking facilities, and sanitary sewerage systems.

"Real property" means lands, structures, and interests in land, including lands under water and riparian rights, space rights, and air rights and any and all other things and rights usually included within the term. Real property also means any and all interests in such property less than full title, such as easements, incorporeal hereditaments and every estate, interest, or right, legal or equitable, including terms for years and liens thereon by way of judgments, mortgages, or otherwise.

§171C-AAAAO Designation of community development districts; community development plans. (a) The legislature, by statute, may designate an area as a community development district if it determines that there is need for replanning, renewal, or redevelopment of that area. The designation shall describe the boundaries of the district.

(b) After designation, the corporation shall develop a community development plan for the designated district. The plan shall include but not be limited to community development guidance policies, district-wide improvement program and community development rules.

(c) The corporation may enter into cooperative agreements with qualified persons or public agencies, where the powers, services, and capabilities of such persons or agencies are deemed necessary and appropriate for the development of the community development plan.

(d) Whenever possible, planning activities of the corporation shall be coordinated with federal, state, and county plans. Consideration shall be given to state goals and policies, adopted state plan or land use guidance policies, county general plans, development plans, and ordinances.

(e) The corporation shall hold a public hearing on a proposed community development plan pursuant to chapter 91 and, after consideration of comments received and appropriate revision, shall submit the community development plan to the governor for the governor's approval.

After approval, the governor shall submit to the legislature requests for appropriations, authorization to issue bonds, or both, to implement the community development plan in an orderly, affordable, and feasible manner. The governor shall submit the requests to the legislature as part of the executive budget or supplemental budget, as appropriate. In addition to the information, data, and materials required under chapter 37, the requests shall be accompanied by:

(1) Plans, maps, narrative descriptions, and other appropriate materials on the:

(A) Locations and design of projects or public facilities proposed to be funded; and

(B) Phase of the community development plans proposed to be implemented with the requested funds; and

(2) Other information deemed by the governor of significance to the legislature regarding the projects or public facilities proposed to be funded, including a discussion of the public benefits intended by, and adverse effects which may result from, implementation of the projects or public facilities.

(f) The corporation may amend the community development plan as may be necessary. Amendments shall be made in accordance with chapter 91.

§171C-AAAAP Community and public notice requirements; posting on the corporation's website; required. (a) The corporation shall adopt community and public notice procedures pursuant to chapter 91 that shall include at a minimum:

(1) A means to effectively engage the community in which the corporation is planning a development project to ensure that community concerns are received and considered by the corporation;

(2) The posting of the corporation's proposed plans for development of community development districts, public hearing notices, and minutes of its proceedings on the corporation's website; and

(3) Any other information that the public may find useful so that it may meaningfully participate in the corporation's decision-making processes.

(b) The corporation shall notify the president of the senate and speaker of the house:

(1) Of any public hearing upon posting of the hearing notice; and

(2) With a report detailing the public's reaction at the public hearing, within one week after the hearing.

§171C-AAAAQ Public hearing for decision making; separate hearing required. (a) When rendering a decision regarding:

(1) An amendment to any of the corporation's community development rules established pursuant to chapter 91 and section 171C-AAAAS; or

(2) The acceptance of a developer's proposal to develop lands under the corporation's control,

the corporation shall render its decision at a public hearing separate from the hearing that the proposal under paragraph (1) or (2) was presented.

(b) The corporation shall issue a public notice in accordance with section 1‑28.5 and post the notice on its website; provided that the decision-making hearing shall not occur earlier than five business days after the notice is posted. Prior to rendering a decision, the corporation shall provide the general public with the opportunity to testify at its decision-making hearing.

(1) Of any public hearing upon posting of the hearing notice; and

(2) With a report detailing the public's reaction at the public hearing, within one week after the hearing.

§171C-AAAAR District-wide improvement program. (a) The corporation shall develop a district-wide improvement program to identify necessary district-wide public facilities within a community development district.

(b) Whenever the corporation shall determine to undertake, or cause to be undertaken, any public facility as part of the district-wide improvement program, the cost of providing the public facilities shall be assessed against the real property in the community development district specially benefiting from such public facilities. The corporation shall determine the areas of the community development district which will benefit from the public facilities to be undertaken and, if less than the entire community development district benefits, the corporation may establish assessment areas within the community development district. The corporation may issue and sell bonds in such amounts as may be authorized by the legislature to provide funds to finance such public facilities. The corporation shall fix the assessments against real property specially benefited. All assessments made pursuant to this section shall be a statutory lien against each lot or parcel of land assessed from the date of the notice declaring the assessment until paid and such lien shall have priority over all other liens except the lien of property taxes. As between liens of assessments, the earlier lien shall be superior to the later lien.

(c) Bonds issued to provide funds to finance public facilities shall be secured solely by the real properties benefited or improved, the assessments thereon, or by the revenues derived from the program for which the bonds are issued, including reserve accounts and earnings thereon, insurance proceeds, and other revenues, or any combination thereof. The bonds may be additionally secured by the pledge or assignment of loans and other agreements or any note or other undertaking, obligation, or property held by the corporation. Bonds issued pursuant to this section and the income therefrom shall be exempt from all state and county taxation, except transfer and estate taxes. The bonds shall be issued according and subject to the provisions of the rules adopted pursuant to this section.

(d) Any other law to the contrary notwithstanding, in assessing real property for public facilities, the corporation shall assess the real property within an assessment area according to the special benefits conferred upon the real property by the public facilities. These methods may include assessment on a frontage basis or according to the area of real property within an assessment area or any other assessment method which assesses the real property according to the special benefit conferred, or any combination thereof. No such assessment levied against real property specially benefited as provided by this part shall constitute a tax on real property within the meanings of any constitutional or statutory provisions.

(e) The corporation shall adopt rules pursuant to chapter 91, and may amend the rules from time to time, providing for the method of undertaking and financing public facilities in an assessment area or an entire community development district. The rules adopted pursuant to this section shall include but are not limited to the following: methods by which the corporation shall establish assessment areas; the method of assessment of real properties specially benefited; the costs to be borne by the corporation, the county in which the public facilities are situated, and the property owners; the procedures before the corporation relating to the creation of the assessment areas by the owners of real property therein, including provisions for petitions, bids, contracts, bonds, and notices; provisions relating to assessments; provisions relating to financing, such as bonds, revolving funds, advances from available funds, special funds for payment of bonds, payment of principal and interest, and sale and use of bonds; provisions relating to funds and refunding of outstanding debts; and provisions relating to limitations on time to sue, and other related provisions.

(f) Any provisions to the contrary notwithstanding, the corporation may, in its discretion, enter into any agreement with the county in which the public facilities are located, to implement all or part of the purposes of this section.

(g) All sums collected under this section shall be deposited in the Hawaii community development revolving fund established by section 171C-AAAAAD; except that notwithstanding section 171C-AAAAAD, all moneys collected on account of assessments and interest thereon for any specific public facilities financed by the issuance of bonds shall be set apart in a separate special fund and applied solely to the payment of the principal and interest on these bonds, the cost of administering, operating, and maintaining the program, the establishment of reserves, and other purposes as may be authorized in the proceedings providing for the issuance of the bonds. If any surplus remains in any special fund after the payment of the bonds chargeable against such fund, it shall be credited to and become a part of the Hawaii community development revolving fund. Moneys in the Hawaii community development revolving fund may be used to make up any deficiencies in the special fund.

(h) If the public facilities to be financed through bonds issued by the corporation may be dedicated to the county in which the public facilities are to be located, the corporation shall ensure that the public facilities are designed and constructed to meet county requirements.

(i) Notwithstanding any law to the contrary, whenever as part of a district-wide improvement program it becomes necessary to remove, relocate, replace, or reconstruct public utility facilities, the corporation shall establish by rule the allocation of cost between the corporation, the affected public utilities, and properties that may specially benefit from such improvement, if any. In determining the allocation of cost, the corporation shall consider the cost allocation policies for improvement districts established by the county in which the removal, relocation, replacement, or reconstruction is to take place.

§171C-AAAAS Community development rules. The corporation shall establish community development rules under chapter 91 on health, safety, building, planning, zoning, and land use which, upon final adoption of a community development plan, shall supersede all other inconsistent ordinances and rules relating to the use, zoning, planning, and development of land and construction thereon. Rules adopted under this section shall follow existing law, rules, ordinances, and regulations as closely as is consistent with standards meeting minimum requirements of good design, pleasant amenities, health, safety, and coordinated development. The corporation may, in the community development plan or by a community development rule, provide that lands within a community development district shall not be developed beyond existing uses or that improvements thereon shall not be demolished or substantially reconstructed, or provide other restrictions on the use of the lands.

§171C-AAAAT Use of public lands; acquisition of state lands. (a) Any provision of chapter 171 to the contrary notwithstanding, the governor may set aside public lands located within community development districts to the corporation for its use.

(b) If state lands under the control and management of other public agencies are required by the corporation for its purposes, the agency having the control and management of those required lands shall, upon request by the corporation and with the approval of the governor, convey, or lease such lands to the corporation upon such terms and conditions as may be agreed to by the parties.

(c) Notwithstanding the foregoing, no public lands shall be set aside, conveyed, or leased to the corporation as above provided if such setting aside, conveyance, or lease would impair any covenant between the State or any county or any department or board thereof and the holders of bonds issued by the State or such county, department, or board.

§171C-AAAAU Developments within special management areas and shoreline setback. (a) Notwithstanding chapter 205A, all requests for developments within a special management area and shoreline setback variances for developments on any lands within a community development district, for which a community development plan has been developed and approved in accordance with section 171C-AAAAO, shall be submitted to and reviewed by the lead agency as defined in chapter 205A. In community development districts for which a community development plan has not been developed and approved in accordance with section 171C-AAAAO, parts II and III of chapter 205A shall continue to be administered by the applicable county authority until a community development plan for the district takes effect.

(b) In the review of such requests, the lead agency shall conform to the following, as deemed appropriate:

(1) Applicable county rules adopted in accordance with section 205A-26 for the review of developments within a special management area, except that paragraph (2)(C) of section 205A-26 shall not apply; and

(2) Part III of chapter 205A and applicable county rules for the review of developments within the shoreline setback.

(c) With the approval of the lead agency, the developments may be allowed without a special management area permit or shoreline setback variance as required by chapter 205A.

§171C-AAAAV Acquisition of real property from a county. Notwithstanding the provision of any law or charter, any county, by resolution of its local governing body, may, without public auction, sealed bids, or public notice, sell, lease for a term not exceeding sixty-five years, grant or convey to the corporation any real property owned by it which the corporation certifies to be necessary for its purposes. The sale, lease, grant, or conveyance shall be made with or without consideration and upon such terms and conditions as may be agreed upon by the county and the corporation. Certification shall be evidenced by a formal request from the corporation. Before the sale, lease, grant, or conveyance may be made to the corporation, a public hearing shall be held by the local governing body to consider the same. Notice of the hearing shall be published at least ten days before the date set for the hearing in such publication and in such manner as may be designated by such local governing body.

§171C-AAAAW Condemnation of real property. The corporation upon making a finding that it is necessary to acquire any real property for its immediate or future use for the purposes of this part, may acquire the property by condemnation pursuant to chapter 101, including property already devoted to a public use. Such property shall not thereafter be taken for any other public use without the consent of the corporation. No award of compensation shall be increased by reason of any increase in the value of real property caused by the designation of a community development district or plan adopted pursuant to a designation, or the actual or proposed acquisition, use or disposition of any other real property by the corporation.

§171C-AAAAX Relocation. (a) Any provision of law to the contrary notwithstanding, the corporation shall adopt rules pursuant to chapter 91 to ensure the appropriate relocation within or outside the district of persons, families, and businesses displaced by governmental action within the district. The rules may include, but are not limited to, the establishment and operation of a central relocation office; relocation payments for actual moving costs; fixed payments for losses suffered; payments for replacement housing or business locations; relocation payments and loans to displaced businesses for certain costs related to the re-establishment of their business operations; and other similar relocation matters.

(b) The corporation shall provide relocation assistance to persons, families, and businesses within the district that are displaced by private action; provided that such assistance shall not include any form of direct monetary payments except that the corporation may make relocation loans to displaced businesses in accordance with rules adopted by the corporation for the purposes of this section. Temporary relocation facilities within or outside the district may be made available to displacees; provided that those displaced by government action shall be afforded priority to the facilities.

§171C-AAAAY Construction contracts. The corporation shall award construction contracts in conformity with the applicable provisions of chapter 103D.

§171C-AAAAZ Dedication for public facilities as condition to development. The corporation shall establish rules requiring dedication for public facilities of land or facilities, or cash payments in lieu thereof, by developers as a condition of developing real property pursuant to the community development plan. Where state and county public facilities dedication laws, ordinances, or rules differ, the provision for greater dedication shall prevail.

§171C-AAAAAA Public projects. Any project or activity of any county or agency of the State in a designated district shall be constructed, renovated, or improved in consultation with the corporation.

§171C-AAAAAB Sale or lease of redevelopment projects. (a) The corporation may, without recourse to public auction, sell, or lease for a term not exceeding sixty-five years, all or any portion of the real or personal property constituting a redevelopment project to any person, upon such terms and conditions as may be approved by the corporation, if the corporation finds that the sale or lease is in conformity with the community development plan.

(b) In the case of residential projects or redevelopment projects, the terms of the sale shall provide for the repurchase of the property by the corporation at its option, in the event that the purchaser, if other than a state agency, desires to sell the property within ten years, provided that this requirement may be waived by the corporation if the corporation determines that a waiver will not be contrary to the community development plan. The corporation shall establish at the time of original sale a formula setting forth a basis for a repurchase price based on market considerations including but not being limited to interest rates, land values, construction costs, and federal tax laws.

If the purchaser in a residential project is a state agency, the corporation may include as a term of the sale a provision for the repurchase of the property in conformance with this section.

§171C-AAAAAC Residential projects; cooperative agreements. (a) If the corporation deems it desirable to develop a residential project, it may enter into an agreement with qualified persons to construct, maintain, operate, or otherwise dispose of the residential project. Sale, lease, or rental of dwelling units in the project shall be as provided by the rules established by the corporation.

§171C-AAAAAD Hawaii community development revolving fund. There is established the Hawaii community development revolving fund into which all receipts and revenues of the corporation shall be deposited. Proceeds from the fund shall be used for the purposes of this part.

§171C-AAAAAE Expenditures of revolving funds under the corporation exempt from appropriation and allotment. Except as to administrative expenditures, and except as otherwise provided by law, expenditures from any revolving fund administered by the corporation may be made by the corporation without appropriation or allotment of the legislature; provided that no expenditure shall be made from and no obligation shall be incurred against any revolving fund in excess of the amount standing to the credit of the fund or for any purpose for which the fund may not lawfully be expended. Nothing in sections 37-31 to 37-41 shall require the proceeds of any revolving fund administered by the corporation to be reappropriated annually.

§171C-AAAAAF Exemption from taxation. The corporation shall not be required to pay assessments levied by any county, nor shall the corporation be required to pay state taxes of any kind.

§171C-AAAAAG Assistance by state and county agencies. Any state or county agency may render services upon request of the corporation.

§171C-AAAAAH Court proceedings; preferences; venue. (a) Any action or proceeding to which the corporation, the State, or the county may be a party, in which any question arises as to the validity of this part, shall be brought in the circuit court of the circuit where the case or controversy arises, and shall be heard and determined in preference to all other civil cases pending therein except election cases, irrespective of position on the calendar.

(b) Upon application of counsel to the corporation, the same preference shall be granted in any action or proceeding questioning the validity of this part in which the corporation may be allowed to intervene.

(c) Any action or proceeding to which the corporation, the State, or the county may be a party, in which any question arises as to the validity of this part or any portion of this part, may be filed in the circuit court of the circuit where the case or controversy arises, which court is hereby vested with original jurisdiction over the action.

(d) Notwithstanding any provision of law to the contrary, declaratory relief may be obtained for the action.

(e) Any party aggrieved by the decision of the circuit court may appeal in accordance with part I of chapter 641 and the appeal shall be given priority.

§171C-AAAAAI Issuance of bonds. The director of finance may, from time to time, issue general obligation bonds pursuant to chapter 39 in such amounts as may be authorized by the legislature, for the purposes of this part.

§171C-AAAAAJ Violations and penalty. (a) The corporation may set, charge, and collect reasonable fines for violation of this part or any rule adopted pursuant to chapter 91. Any person violating any of the provisions of this part or any rule adopted pursuant to chapter 91, for which violation a penalty is not otherwise provided, shall be fined not more than $500 a day and shall be liable for administrative costs incurred by the corporation.

(b) The corporation may maintain an action for an injunction to restrain any violation of the provisions of this part and may take any other lawful action to prevent or remedy any violation.

(c) Any person violating any provision of this part shall, upon conviction, be punished by a fine not exceeding $1,000 or by imprisonment not exceeding thirty days, or both. The continuance of a violation after conviction shall be deemed a new offense for each day of such continuance.

B. Kakaako Community Development District

§171C-AAAAAK Kakaako community development district; purposes. The legislature finds that:

(1) The Kakaako district is centrally located in Honolulu proper, in close proximity to the central business district, the government center, commercial, industrial and market facilities, major existing and contemplated transportation routes and recreational and service areas;

(2) Due to its present function as a service and light industrial area, the district is relatively underdeveloped and has especially in view of its proximity to the urban core where the pressure for all land uses is strong the potential for increased growth and development that can alleviate community needs such as low-income housing, parks and open space, and commercial and industrial facilities;

(3) The district, if not redeveloped or renewed, has the potential to become a blighted and deteriorated area. Due to its present economic importance to the State in terms of industry and subsequent employment, there is a need to preserve and enhance its value and potential;

(4) Kakaako has a potential, if properly developed and improved, to become a planned new community in consonance with surrounding urban areas.

In coordinating community development in the Kakaako district, the corporation shall plan a mixed-use district whereby industrial, commercial, residential, and public uses may coexist compatibly within the same area.

The corporation shall plan for the above uses, but shall also respect and support the present function of Kakaako as a major economic center, providing significant employment in such areas as light industrial, wholesaling, service, and commercial activity.

§171C-AAAAAL Prohibitions. Anything contained in this part to the contrary notwithstanding, the corporation is prohibited from:

(1) Selling or otherwise assigning the fee simple interest in any lands in the Kakaako community development district to which the corporation in its corporate capacity holds title, except with respect to:

(A) Utility easements;

(B) Remnants as defined in section 171-52;

(D) Private entities for purposes of any easement, roadway, or infrastructure improvements; or

(2) Approving any plan or proposal for any residential development in that portion of the Kakaako community development district makai of Ala Moana boulevard and between Kewalo basin and the foreign trade zone.

§171C-AAAAAM District; established, boundaries. The Kakaako community development district is established. The district shall include that area bounded by King Street; Piikoi Street from its intersection with King Street to Ala Moana Boulevard; Ala Moana Boulevard, inclusive, from Piikoi Street to its intersection with the Ewa boundary of Ala Moana Park also identified as the Ewa boundary of tax map key 2-3-37:01; the Ewa boundary of tax map key 2-3-37:01 from its intersection with Ala Moana Boulevard to the shoreline; the shoreline from its intersection with the property line representing the Ewa boundary of property identified by tax map key 2-3-37:01 to the property line between Pier 2 and Pier 4; the property line between Pier 2 and Pier 4 from its intersection with the shoreline to Ala Moana Boulevard; Ala Moana Boulevard from its intersection with the property line between lands identified by Pier 2 and Pier 4 to Punchbowl Street; and Punchbowl Street to its intersection with King Street; provided that the following parcels at Pier 1 and Pier 2 shall be deleted from the Kakaako community development district boundaries and conveyed to the department of land and natural resources to be set aside for the department of transportation and the foreign-trade zone division of the department of business, economic development, and tourism, to ensure continued maritime and foreign commerce use: all of lot 3 and parcels 2, 3-A, A, and B of the Forrest Avenue subdivision, as shown on the map filed with the bureau of conveyances of the State of Hawaii as file plan 2335; and lots A-1 and A-2, as shown on map 2, filed in the office of the assistant registrar of the land court of the State of Hawaii with land court application 1328; and provided further that all existing easements affecting and appurtenant to the parcels to be deleted from the Kakaako community development district boundaries shall not be affected by this change.

The district shall also include that parcel of land identified by tax map key 2-1-14:16, situated mauka of Pier 6 and Pier 7 and makai of Nimitz Highway, being the site for the existing Hawaiian Electric power plant and related facilities.

§171C-AAAAAN Kakaako community development district; development guidance policies. The following shall be the development guidance policies generally governing the corporation's action in the Kakaako community development district:

(1) Development shall result in a community which permits an appropriate land mixture of residential, commercial, industrial, and other uses. In view of the innovative nature of the mixed use approach, urban design policies should be established to provide guidelines for the public and private sectors in the proper development of this district; while the corporation's development responsibilities apply only to the area within the district, the corporation may engage in any studies or coordinative activities permitted in this part which affect areas lying outside the district, where the corporation in its discretion decides that those activities are necessary to implement the intent of this part. The studies or coordinative activities shall be limited to facility systems, resident and industrial relocation, and other activities with the counties and appropriate state agencies. The corporation may engage in construction activities outside of the district; provided that such construction relates to infrastructure development or residential or business relocation activities; provided further, notwithstanding section 171C-AAAAS, that such construction shall comply with the general plan, development plan, ordinances, and rules of the county in which the district is located;

(2) Existing and future industrial uses shall be permitted and encouraged in appropriate locations within the district. No plan or implementation strategy shall prevent continued activity or redevelopment of industrial and commercial uses which meet reasonable performance standards;

(3) Activities shall be located so as to provide primary reliance on public transportation and pedestrian facilities for internal circulation within the district or designated subareas;

(4) Major view planes, view corridors, and other environmental elements such as natural light and prevailing winds, shall be preserved through necessary regulation and design review;

(5) Redevelopment of the district shall be compatible with plans and special districts established for the Hawaii Capital District, and other areas surrounding the Kakaako district;

(6) Historic sites and culturally significant facilities, settings, or locations shall be preserved;

(7) Land use activities within the district, where compatible, shall to the greatest possible extent be mixed horizontally, that is, within blocks or other land areas, and vertically, as integral units of multi-purpose structures;

(8) Residential development may require a mixture of densities, building types, and configurations in accordance with appropriate urban design guidelines; integration both vertically and horizontally of residents of varying incomes, ages, and family groups; and an increased supply of housing for residents of low- or moderate-income may be required as a condition of redevelopment in residential use. Residential development shall provide necessary community facilities, such as open space, parks, community meeting places, child care centers, and other services, within and adjacent to residential development;

(9) Public facilities within the district shall be planned, located, and developed so as to support the redevelopment policies for the district established by this part and plans and rules adopted pursuant to it.

§171C-AAAAAO Cultural public market. (a) There shall be established within the corporation a state cultural public market.

(b) The cultural public market shall be located on state land within the Kakaako Makai area and developed pursuant to sections 171C-AAAAAK, 171C-AAAAAM, and 171C-AAAAAN. A public parking lot shall be included.

(1) Designate and develop the state-owned land for the cultural public market;

(2) Accept, for consideration, input regarding the establishment of the cultural public market from the following departments and agencies:

(A) The department of agriculture;

(B) The department of business, economic development, and tourism;

(D) The department of labor and industrial relations; and

(E) The Hawaii tourism authority;

(3) Consider and determine the propriety of using public-private partnerships in the development and operation of the cultural public market;

(4) Develop, distribute, and accept requests for proposals from private entities for plans to develop and operate the cultural public market; and

(5) Ensure that the Hawaiian culture is the featured culture in the cultural public market.

(d) Requests for proposals for the cultural public market shall contemplate but not be limited to the inclusion of the following types of facilities and services:

(1) Retail outlets for ethnically diverse products;

(2) Venues for businesses with ethnic themes, including restaurants and other service-related businesses;

(3) Theaters, stages, and arenas designed to showcase cultural performing artists as well as community performing arts;

(4) Exhibition space or museums that showcase artwork created by international and local artists; and

(5) Museums or other educational facilities focusing on the history and cultures of the various ethnic groups within Hawaii, including Hawaiian history.

C. Reserved Housing Loan Programs

§171C-AAAAAP Definitions. The following words or terms as used in this subpart shall have the following meanings, unless a different meaning clearly appears from the context:

"Eligible borrower" means any person or family, irrespective of race, creed, national origin, or sex, who:

(1) Has never before obtained a loan under this subpart; and

(2) Meets other qualifications as established by rules adopted by the corporation.

"Eligible loan" means a loan to an eligible borrower for the purchase of a reserved housing unit; provided that the property financed is located in the community development district, is and will be occupied as the principal place of residence by the eligible borrower, and meets other requirements as established by rules adopted by the corporation.

(1) Is authorized to do business in the State;

(2) Customarily provides service or otherwise aids in the financing of mortgages on single family or multi-family residential property; and

(3) Is a financial institution whose accounts are federally insured, or is an institution which is an approved mortgagee for the Federal Housing Administration, or is an approved lender for the Department of Veterans Affairs or the United States Department of Agriculture, or is an approved mortgage loan servicer for the Federal National Mortgage Association or the Federal Home Mortgage Corporation.

"Reserved housing" means housing designated for residents in the low- or moderate-income ranges who meet such eligibility requirements as the corporation may adopt by rule.

"Reserved housing loan programs" includes all or any part of the loan to lenders program, the purchase of existing loans program, the advance commitments program, and the eligible loan and eligible project loan funding program authorized under this subpart.

"Revenue bonds" means bonds, notes, or other evidence of indebtedness of the corporation issued to finance any of the reserved housing loan programs under this subpart.

"Trust indenture" means an agreement by and between the corporation and the trustee, which sets forth the duties of the trustee with respect to the revenue bonds, the security therefor, and other provisions as deemed necessary or convenient by the corporation to secure the revenue bonds.

§171C-AAAAAQ Rules; eligible loans. (a) The corporation shall establish requirements for reserved housing units financed by an eligible loan, and may consider, but not be limited to the location, age, condition, and other characteristics of the reserved housing units.

(b) The corporation shall establish restrictions on the terms, maturities, interest rates, collateral, and other requirements for eligible loans.

§171C-AAAAAR Revenue bonds; authorization. (a) The corporation, with the approval of the governor, may issue from time to time revenue bonds in amounts not exceeding the total amount of bonds authorized by the legislature for the purpose of undertaking and maintaining any of the reserved housing loan programs.

(b) All revenue bonds shall be issued pursuant to part III of chapter 39, except as provided in this subpart.

(c) The revenue bonds shall be issued in the name of the corporation, and not in the name of the State. The final maturity date of the revenue bonds may be any date not exceeding forty years from the date of issuance.

§171C-AAAAAS Revenue bonds; payment and security. (a) The revenue bonds shall be payable from and secured by the revenues derived from the benefits of the reserved housing loan programs for which the revenue bonds are issued, including:

(1) Any payment made for eligible loans or eligible project loans or other agreements entered into for the reserved housing loan programs;

(2) Revenues derived from insurance proceeds;

(3) Reserve accounts and earnings thereon; and

(4) Revenues resulting from loans to mortgage lenders or from the payment on account of principal of and interest on loans purchased from mortgage lenders.

(b) The corporation may pledge any revenue derived from the reserved housing loan programs financed from the proceeds of the revenue bonds to the punctual payment of the principal, interest, and redemption premiums, if any, on the revenue bonds.

(c) The revenue bonds may be additionally secured by the pledge or assignment of the loans and other agreements or any note or other undertaking, obligation, or property held by the corporation to secure the loans.

(d) Any pledge made by the corporation shall create a perfected security interest in the revenues, moneys, or property so pledged and thereafter received by the corporation from and after the time that a financing statement with respect to the revenues, moneys, or property so pledged and thereafter received shall be filed with the bureau of conveyances. Upon such filing, the revenues, moneys, or property so pledged and thereafter received by the corporation shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of any such pledge shall be prior to the lien of all parties having claims of any kind in tort, contract, or otherwise against the corporation, irrespective of whether such parties have notice thereof.

§171C-AAAAAT Revenue bonds; interest rate, price, and sale. (a) The revenue bonds shall bear interest at a rate or rates payable monthly, quarterly, or semi-annually.

(b) The corporation shall include the costs of undertaking and maintaining the reserved housing loan programs for which the revenue bonds are issued in determining the cost of undertaking and maintaining the reserved housing loan programs, the corporation may include the cost of purchasing or funding loans or other agreements entered into for the reserved housing loan programs; the costs of studies and surveys; insurance premiums; underwriting fees; financial consultant, legal, accounting, and marketing services incurred; reserve account, trustee, custodian, and rating agency fees; and interest on the bonds for a period not to exceed one year from the date of issuance.

(c) The revenue bonds may be sold at public or private sale, and for a price as may be determined by the corporation to be in the best interest of the State.

(d) Section 39-65 shall not apply to revenue bonds issued for the purpose of undertaking and maintaining any of the reserved housing loan programs as permitted by this subpart. The legislature consents to the taxation by the United States of interest on revenue bonds issued for the purpose of undertaking and maintaining any of the reserved housing loan programs as permitted by this subpart.

§171C-AAAAAU Revenue bonds; investment of proceeds, and redemption. Subject to any agreement with the holders of its revenue bonds, the corporation may:

(1) Notwithstanding any other law to the contrary, invest its moneys not required for immediate use, including proceeds from the sale of any revenue bonds, in any investment in accordance with procedures prescribed in a trust indenture;

(2) Purchase its revenue bonds out of any fund or money of the corporation available therefor, and hold, cancel, or resell the revenue bonds.

§171C-AAAAAV Trustee; designation, duties. (a) The corporation shall designate a trustee for each issue of revenue bonds secured under the same trust indenture; provided that the trustee shall be approved by the director of finance.

(b) The trustee shall be authorized by the corporation to receive and receipt for, hold, and administer the proceeds of the revenue bonds, and to apply the proceeds to the purposes for which the bonds are issued.

(c) The trustee shall also be authorized by the corporation to receive and receipt for, hold, and administer the revenues derived by the corporation from the benefits of the reserved housing loan program for which the revenue bonds are issued and to apply these revenues to the payment of the cost of administering, operating, and maintaining the reserved housing loan programs, to pay the principal of and interest on these bonds, to the establishment of reserves, and to other purposes as may be authorized in the proceedings providing for the issuance of the revenue bonds.

(d) Notwithstanding section 39-68, the director of finance may appoint the trustee to serve as fiscal agent for:

(1) The payment of the principal of and interest on the revenue bonds; and

(2) The purchase, registration, transfer, exchange, and redemption of the bonds.

(e) The trustee shall perform additional functions with respect to the payment, purchase, registration, transfer, exchange, and redemption, as the director of finance may deem necessary, advisable, or expeditious, including the holding of the revenue bonds and coupons which have been paid and the supervision of the destruction thereof in accordance with law.

(f) Nothing in this subpart shall limit or be construed to limit the powers granted to the director of finance in sections 36-3 and 39-13, and the third sentence of section 39-68, to appoint the trustee or others as fiscal agents, paying agents and registrars for the revenue bonds or to authorize and empower those fiscal agents and registrars to perform the functions referred to in those sections.

§171C-AAAAAW Trust indenture. (a) A trust indenture may contain covenants and provisions authorized by part III of chapter 39, and as deemed necessary or convenient by the corporation for the purposes of this subpart.

(b) A trust indenture may allow the corporation to pledge and assign to the trustee loans and other agreements related to the reserved housing loan programs, and the rights of the corporation thereunder, including the right to receive revenues thereunder and to enforce the provision thereof.

(c) Where a trust indenture provides that any revenue bond issued under that trust indenture is not valid or obligatory for any purpose unless certified or authenticated by the trustee, all signatures of the officers of the State upon the revenue bonds required by section 39-56 may be facsimiles of their signatures.

(d) A trust indenture shall also contain provisions as to:

(1) The investment of the proceeds of the revenue bonds, the investment of any reserve for the bonds, the investment of the revenues of the reserved housing loan programs, and the use and application of the earnings from investments; and

(2) The terms and conditions upon which the holders of the revenue bonds or any portion of them or any trustee thereof may institute proceedings for the foreclosure of any loan or other agreement or any note or other undertaking, obligation or property securing the payment of the bonds and the use and application of the moneys derived from the foreclosure.

(e) A trust indenture may also contain provisions deemed necessary or desirable by the corporation to obtain or permit, by grant, interest subsidy, or otherwise, the participation of the federal government in the reserved housing loan programs or in the financing of the costs of administering, operating, or maintaining such reserved housing loan programs.

§171C-AAAAAX Reserved housing loan programs; procedures and requirements. (a) The corporation shall establish procedures for:

(1) The submission of requests or the invitation of proposals for loans to mortgage lenders;

(2) The purchase of existing loans by auction, invitation of tenders, or negotiation;

(3) The making of advance commitments to purchase and the purchasing of eligible loans or eligible project loans to be made by mortgage lenders by auction, invitation of tenders, or negotiation; and

(4) Loan applications made through mortgage lenders to eligible borrowers or qualified sponsors.

(b) The corporation shall establish standards and requirements for:

(1) The allocation of loans to mortgage lenders;

(2) The allocation of funds to purchase existing loans from mortgage lenders;

(3) The making of advance commitments and allocation of funds to purchase eligible loans or eligible project loans from mortgage lenders; and

(4) The participation by mortgage lenders as originators and processors of eligible loans or eligible project loans on behalf of the corporation.

(c) The standards and requirements for the allocation of funds to mortgage lenders adopted by the corporation shall be designed to include the maximum number of qualified mortgage lenders as participants in the reserved housing loan programs.

(d) The corporation may adopt rules necessary or convenient for the operation of the reserved housing loan programs under this subpart.

§171C-AAAAAY Reserved housing loan programs; general powers. (a) The corporation may make, enter into, and enforce all contracts or agreements which are necessary, convenient, or desirable for the purpose of the performance of its duties in executing the reserved housing loan programs.

(b) The corporation may require representations and warranties as it determines necessary to secure its loans.

§171C-AAAAAZ Reserved housing loan programs; self supporting. The interest rate, fees, charges, premiums, and other terms of the loans made under the reserved housing loan programs shall be at least sufficient to pay the cost of administering and maintaining the portion of the specific reserved housing loan programs for which the revenue bonds have been issued, and to assure payment of the principal of and interest on the revenue bonds as they become due.

§171C-AAAAAAA Reserved housing loan programs; fees. The corporation may establish, revise, charge, and collect fees, premiums, and charges as necessary, reasonable, or convenient, for its reserved housing loan programs.

The fees, premiums, and charges shall be deposited into the reserved housing loan program revenue bond special fund established for the particular reserved housing loan program or part thereof from which the fees, premiums and charges are derived as determined by the corporation.

§171C-AAAAAAB Reserved housing loan programs; evidence of eligible loan or eligible project loan. (a) Each mortgage lender who participates in any reserved housing loan program shall submit evidence, as deemed satisfactory by the corporation, that eligible loans or eligible project loans have been made from the proceeds of the revenue bonds.

(b) The corporation may inspect the books and records of the mortgage lenders as may be necessary for this section.

§171C-AAAAAAC Loans to lenders program. (a) The corporation may make loans to mortgage lenders under terms and conditions requiring that the loan proceeds be used within a time period prescribed by the corporation to make eligible loans in an aggregate principal amount substantially equal to the amount of the loan.

(b) The loan made to a mortgage lender shall be a general obligation of the respective mortgage lender.

(1) Bear a date or dates;

(2) Mature at a time or times;

(3) Be evidenced by a note, bond or other certificate of indebtedness;

(4) Contain other provisions consistent with this subpart.

(d) Subject to any agreement with the holders of its revenue bonds, the corporation may consent to any modification to the rate of interest, time, and payment of any installment of principal or interest, security or any other term of any loan to a mortgage lender or any bond, note, contract, or agreement of any kind to which the corporation is a party.

§171C-AAAAAAD Loan to lenders program; collateral security. (a) Loans made to mortgage lenders shall be additionally secured by a pledge of a lien upon collateral security in an amount as the corporation deems necessary to assure the payment of principal of and interest on the loans as they become due.

(b) The corporation shall determine the nature and type of collateral security required.

(d) Subject to any agreement with the holders of its revenue bonds, the corporation may collect, enforce the collection of, and foreclose on any collateral securing its loans to mortgage lenders. The corporation may acquire, take possession, sell at public or private sale with or without bidding, or otherwise deal with the collateral to protect its interests.

§171C-AAAAAAE Purchase of existing loans program. (a) The corporation may contract with a mortgage lender to purchase, in whole or in part, existing loans, whether or not eligible loans. The contract may contain provisions as determined by the corporation to be necessary or appropriate to provide security for its revenue bonds, including but not limited to provisions requiring the:

(1) Repurchase of the loans, in whole or in part, by mortgage lenders at the option of the corporation;

(2) Payments of premiums, fees, charges, or other amounts by mortgage lenders to provide a reserve or escrow fund for the purposes of protecting against loan defaults; and

(3) Guarantee by, or for recourse against, mortgage lenders, with respect to defaults on these loans of the corporation.

(b) The corporation shall require as a condition of each purchase of existing loans from a mortgage lender that the mortgage lender proceed to make and disburse eligible loans in an aggregate principal amount substantially equal to the amount of the proceeds from the purchase by the corporation of loans therefrom.

§171C-AAAAAAF Advance commitments program. (a) The corporation may contract with a mortgage lender for the advance commitment to purchase eligible loans or eligible project loans.

(b) The contract may contain provisions as determined by the corporation to be necessary or appropriate to provide security for its revenue bonds.

§171C-AAAAAAG Eligible loan and eligible project loan funding program. (a) The corporation may contract with mortgage lenders to fund eligible loans or eligible project loans.

(b) The contract may contain provisions as determined by the corporation to be necessary or appropriate to provide security for its revenue bonds.

§171C-AAAAAAH Loans; service and custody. The corporation may contract for the service and custody of its loans. The contract may provide for the payment of fees or charges for the services rendered; provided that the fees or charges shall not exceed the usual, customary, and reasonable charges for the services rendered.

§171C-AAAAAAI Loans; sale, pledge, or assignment. (a) Subject to any agreement with the holders of its revenue bonds, the corporation may sell its loans at public or private sale at a price and upon terms and conditions as it determines.

(b) Subject to any agreement with the holders of its revenue bonds, the corporation may pledge or assign its loans, other agreements, notes, or property to secure the loans or agreements.

§171C-AAAAAAJ Loans; insurance and guarantees. The corporation may procure insurance or guarantees against any default of its loans, in amounts and from insurers or guarantors, as it deems necessary or desirable.

§171C-AAAAAAK Loans; default. (a) The corporation may renegotiate, refinance, or foreclose any loan in default.

(b) The corporation may waive any default or consent to the modification of the terms of any loan or security agreement.

(c) The corporation may commence any action to protect or enforce any right conferred upon it by any law, mortgage, insurance policy, contract, or other agreement.

(d) The corporation may bid for and purchase the property secured by the loan at any foreclosure or other sale, or acquire or take possession of the property secured by the loan.

(e) The corporation may operate, manage, lease, dispose of, or otherwise deal with the property secured by the loan.

D. Revenue Bonds For Public Facility Projects

§171C-AAAAAAL Findings and declarations. The legislature finds and declares that the health, safety, and general welfare of the people of the State require that every opportunity be taken to assist the redevelopment of community development districts; that the redevelopment and revitalization of these districts will alleviate community needs for employment, housing, parks, open space, and commercial and industrial facilities; that a significant deterrent to redevelopment is the cost of public facilities; that interest rates on moneys necessary to finance such public facilities add significantly to the cost of such facilities and that more favorable interest rates would be available through the issuance of tax-exempt bonds; and that the availability of revenue bonds to finance the cost of public facilities will facilitate redevelopment of community development districts.

The legislature further finds that the powers conferred, the issuance of revenue bonds, and the expenditure of public moneys under this subpart constitute a serving of a valid public purpose, and that this enactment is in the public interest and is so declared as an express legislative determination.

§171C-AAAAAAM Definitions. The following as used in this subpart shall have the following meaning, unless a different meaning clearly appears from the context:

"Revenue bonds" means bonds, notes, or other evidence of indebtedness of the corporation issued to finance any public facility under this subpart.

§171C-AAAAAAN Revenue bonds; authorization. (a) The corporation, with the approval of the governor, may issue from time to time revenue bonds in amounts not exceeding the total amount of bonds authorized to be issued by the legislature for the purpose of constructing, acquiring, remodeling, furnishing, and equipping any public facility, including acquisition of the site thereof.

(b) All revenue bonds shall be issued pursuant to part III of chapter 39, except as provided in this subpart.

(c) The revenue bonds under this subpart are declared to be issued for a public purpose and, together with interest thereon, shall be exempt from all state and county taxation except estate and transfer taxes. The legislature consents to federal income taxation of interest on revenue bonds issued under this subpart, if it is determined by the corporation that such issuance is in the best interest of the State.

(d) The revenue bonds shall be issued in the name of the corporation and not in the name of the State. The final maturity date of the revenue bonds may be any date not exceeding thirty years from the date of issuance.

§171C-AAAAAAO Revenue bonds; payment and security. (a) The revenue bonds shall be payable from and secured by the revenues derived from the public facility for which the revenue bonds are issued, including revenue derived from insurance proceeds and reserve accounts and earnings thereon.

(b) The corporation may pledge revenues derived from the public facility financed from the proceeds of the revenue bonds to the punctual payment of the principal, interest, and redemption premiums, if any, on the revenue bonds.

(d) Any pledge made by the corporation shall create a perfected security interest in the revenues, moneys, or property so pledged and thereafter received by the corporation from and after the time that a financing statement with respect to the revenues, moneys, or property so pledged and thereafter received shall be filed with the bureau of conveyances. Upon such filing, the revenues, moneys, or property so pledged thereafter received by the corporation shall immediately be subject to the lien of any such pledge without any physical delivery thereof or further act, and the lien of such pledge shall be prior to the lien of all parties having claims of any kind in tort, contract, or otherwise against the corporation, irrespective of whether such parties have notice thereof. This section shall apply to any financing statement heretofore or hereafter filed with the bureau of conveyances with respect to any pledge made to secure revenue bonds issued under this subpart.

§171C-AAAAAAP Revenue bonds; interest rate, price, and sale. (a) The revenue bonds shall bear interest at a rate or rates payable monthly, quarterly, or semi-annually.

(b) The corporation shall include the costs of undertaking the public facility for which the revenue bonds are issued in determining the principal amount of revenue bonds to be issued. In determining the cost of undertaking the public facility, the corporation may include the cost of constructing, acquiring, remodeling, furnishing, and equipping the public facility, including acquisition of the site thereof; the cost of purchasing or funding loans or other agreements entered into for the public facility; the costs of studies and surveys; insurance premiums; underwriting fees; financial consultant, legal, accounting, and marketing services incurred; reserve account, trustee, custodian, and rating agency fees; and any capitalized interest.

(c) The revenue bonds may be sold at public or private sale, and for a price as may be determined by the corporation to be in the best interest of the State.

§171C-AAAAAAQ Revenue bonds; investment of proceeds, and redemption. Subject to any agreement with the holders of its revenue bonds, the corporation may:

(1) Invest its moneys not required for immediate use, including proceeds from the sale of revenue bonds, in any investment in accordance with procedures prescribed in a trust indenture; and

(2) Purchase its revenue bonds out of any fund or money of the corporation available therefor, and hold, cancel, or resell the revenue bonds.

§171C-AAAAAAR Revenue bonds; special funds. (a) A separate special fund shall be established for each public facility financed from the proceeds of the revenue bonds secured under the same trust indenture. Each fund shall be designated "public facility revenue bond special fund" and shall bear additional designation as the corporation deems appropriate to properly identify the fund.

(b) Notwithstanding any other law to the contrary, including particularly section 171C-AAAAAD, all revenues, income, and receipts derived from the public facility for which the revenue bonds are issued shall be paid into the public facility revenue bond fund established for that public facility and applied as provided in the proceedings authorizing the issuance of the revenue bonds.

§171C-AAAAAAS Trustee; designation, duties. (a) The corporation shall designate a trustee for each issue of revenue bonds secured under the same trust indenture; provided that the trustee shall be approved by the director of finance.

(c) The trustee shall also be authorized by the corporation to hold and administer the public facility revenue bond special fund established pursuant to section 171C-AAAAAAR, and to receive and receipt for, hold, and administer the revenues derived by the corporation from the public facility for which the revenue bonds are issued and to apply these revenues to the payment of the cost:

(1) Of undertaking the public facility;

(2) Of administering and operating the proceedings providing for the issuance of the revenue bonds;

(3) To pay the principal or interest on these bonds;

(4) To the establishment of reserves; and

(5) To other purposes as may be authorized in the proceedings providing for the issuance of the revenue bonds.

(d) Notwithstanding section 39-68, the director of finance may appoint the trustee to serve as fiscal agent for:

(1) The payment of the principal of and interest on the revenue bonds; and

(2) The purchase, registration, transfer, exchange, and redemption of the bonds.

(e) The trustee shall perform additional functions with respect to the payment, purchase, registration, transfer, exchange, and redemption, as the director of finance may deem necessary, advisable, or expeditious, including the holding of the revenue bonds and coupons which have been paid and the supervision of the destruction thereof in accordance with law.

(f) Nothing in this subpart shall limit or be construed to limit the powers granted to the director of finance in sections 36-3 and 39-13, and the third sentence of section 39-68, to appoint the trustee or others as fiscal agents, paying agents, and registrars for the revenue bonds or to authorize and empower those fiscal agents, paying agents, and registrars to perform the functions referred to in those sections.

§171C-AAAAAAT Trust indenture. (a) A trust indenture may contain covenants and provisions authorized by part III of chapter 39, and as deemed necessary or convenient by the corporation for the purposes of this subpart.

(b) A trust indenture may allow the corporation to pledge and assign to the trustee loans and other agreements related to the public facility, and the rights of the corporation thereunder, including the right to receive revenues thereunder and to enforce the provision thereof.

(d) A trust indenture shall also contain provisions as to:

(1) The investment of the proceeds of the revenue bonds, the investment of any reserve for the bonds, the investment of the revenues of the public facility, and the use and application of the earnings from investments; and

(2) The terms and conditions upon which the holders of the revenue bonds or any portion of them or any trustee thereof may institute proceedings for the foreclosure of any loan or other agreement or any note or other undertaking, obligation, or property securing the payment of the bonds and the use and application of the moneys derived from the foreclosure.

(e) A trust indenture may also contain provisions deemed necessary or desirable by the corporation to obtain or permit, by grant, interest subsidy, or otherwise, the participation of the federal government in the financing of the costs of undertaking the public facility.

E. Special Facility Projects

§171C-AAAAAAU Definitions. For the purpose of this subpart, if not inconsistent with the context:

"Special facility" means one or more buildings or structures and the land thereof for the construction of facilities that provides benefits to the community at large including, without limitation, an ocean science center that incorporates research and education programs and which is the subject of a special facility lease.

"Special facility lease" includes a contract, lease, or other agreement, or any combination thereof, the subject matter of which is the same special facility.

§171C-AAAAAAV Powers. In addition and supplemental to the powers granted to the corporation by law, the corporation may:

(1) With the approval of the governor, enter into a special facility lease or an amendment or supplement thereto whereby the corporation agrees to construct, acquire, or remodel and furnish or equip a special facility solely for the use by another person to a special facility lease;

(2) With the approval of the governor, issue special facility revenue bonds in principal amounts that may be necessary to yield all or a portion of the cost of any construction, acquisition, remodeling, furnishing, and equipping of any special facility;

(3) With the approval of the governor, issue refunding special facility revenue bonds with which to provide for the payment of outstanding special facility revenue bonds (including any special facility revenue bonds theretofore issued for this purpose) or any part thereof; provided any issuance of refunding special facility revenue bonds shall not reduce the principal amount of the bonds which may be issued as provided in paragraph (2);

(4) Perform and carry out the terms and provisions of any special facility lease;

(5) Notwithstanding section 103-7 or any other law to the contrary, acquire, construct, or remodel and furnish or equip any special facility, or accept the assignment of any contract therefor entered into by the other person to the special facility lease;

(6) Construct any special facility on land owned by the State; provided that no funds derived herein will be expended for land acquisition; and

(7) Agree with the other person to the special facility lease whereby any acquisition, construction, remodeling, furnishing, or equipping of the special facility and the expenditure of moneys therefor shall be undertaken or supervised by another person.

§171C-AAAAAAW Findings and determination for special facility leases. The corporation shall not enter into any special facility lease unless the corporation at or prior to the entering into of such special facility lease shall find and determine that the entering into of such special facility lease would not be in violation of or result in a breach of any covenant contained in any resolution or certificate authorizing any bonds of the corporation then outstanding.

§171C-AAAAAAX Special facility lease. (a) In addition to the conditions and terms set forth in this subpart, any special facility lease entered into by the corporation shall at least contain provisions obligating the other person to the special facility lease:

(1) To pay to the corporation during the initial term of the special facility lease, whether the special facility is capable of being used or occupied or is being used or occupied by the other person, a rental or rentals at the time or times and in the amount or amounts that will be sufficient:

(A) To pay the principal and interest on all special facility revenue bonds issued for the special facility;

(B) To establish or maintain any reserves for these payments; and

(C) To pay all fees and expenses of the trustees, paying agents, transfer agents, and other fiscal agents for the special facility revenue bonds issued for the special facility;

(2) To pay to the corporation:

(A) A ground rental, as determined by the corporation, if the land on which the special facility is located was not acquired from the proceeds of the special facility revenue bonds; or

(B) A properly allocable share of the administrative costs of the corporation in carrying out the special facility lease and administering the special facility revenue bonds issued for the special facility, if the land was acquired from the proceeds of the special facility revenue bonds;

(3) To either operate, maintain, and repair the special facility and pay the costs thereof or to pay to the corporation all costs of operation, maintenance, and repair of the special facility;

(4) To:

(A) Insure, or cause to be insured, the special facility under builder's risk insurance (or similar insurance) in the amount of the cost of construction of the special facility to be financed from the proceeds of the special facility revenue bonds;

(B) Procure and maintain, or cause to be procured or maintained, to the extent commercially available, a comprehensive insurance policy providing protection and insuring the corporation and its officers, agents, servants, and employees (and so long as special facility revenue bonds are outstanding, the trustee) against all direct or contingent loss or liability for damages for personal injury or death or damage to property, including loss of use thereof, occurring on or in any way related to the special facility or occasioned by reason of occupancy by and the operations of the other person upon, in, and around the special facility;

(C) Provide all risk casualty insurance, including insurance against loss or damage by fire, lightning, flood, earthquake, typhoon, or hurricane, with standard extended coverage and standard vandalism and other malicious mischief endorsements; and

(D) Provide insurance for workers' compensation and employer's liability for personal injury or death or damage to property (the other party may self-insure for workers' compensation if permitted by law);

provided that all policies with respect to loss or damage of property including fire or other casualty and extended coverage and builder's risk shall provide for payments of the losses to the corporation, the other person, or the trustee as their respective interests may appear; and provided further that the insurance may be procured and maintained as part of or in conjunction with other policies carried by the other person; and provided further that the insurance shall name the corporation, and so long as any special facility revenue bonds are outstanding, the trustee, as additional insured; and

(5) To indemnify, save, and hold the corporation, the trustee and their respective agents, officers, members, and employees harmless from and against all claims and actions and all costs and expenses incidental to the investigation and defense thereof, by or on behalf of any person, firm, or corporation, based upon or arising out of the special facility or the other person's use and occupancy thereof, including, without limitation, from and against all claims and actions based upon and arising from any:

(A) Condition of the special facility;

(B) Breach or default on the part of the other person in the performance of any of the person's obligations under the special facility lease;

(C) Fault or act of negligence of the other person or the person's agents, contractors, servants, employees, or licensees; or

(D) Accident to, or injury or death of, any person or loss of, or damage to any property occurring in or about the special facility, including any claims or actions based upon or arising by reason of the negligence or any act of the other person.

Any moneys received by the corporation pursuant to paragraphs (2) and (3) shall be paid into the Hawaii community development revolving fund and shall not be nor be deemed to be revenues of the special facility.

(b) The term and all renewals and extensions of the term of any special facility lease (including any amendments or supplements thereto) shall not extend beyond the lesser of the reasonable life of the special facility which is the subject of the special facility lease, as estimated by the corporation at the time of the entering into thereof, or thirty years.

(c) Any special facility lease entered into by the corporation shall contain any other terms and conditions that the corporation deems advisable to effectuate the purposes of this subpart.

§171C-AAAAAAY Special facility revenue bonds. All special facility revenue bonds authorized to be issued shall be issued pursuant to part III of chapter 39, except as follows:

(1) No revenue bonds shall be issued unless at the time of issuance the corporation shall have entered into a special facility lease with respect to the special facility for which the revenue bonds are to be issued;

(2) The revenue bonds shall be issued in the name of the corporation, and not in the name of the State;

(3) The revenue bonds shall be payable solely from and secured solely by the revenues derived by the corporation from the special facility for which they are issued;

(4) The final maturity date of the revenue bonds shall not be later than either the estimated life of the special facility for which they are issued or the initial term of the special facility lease;

(5) If deemed necessary or advisable by the corporation, or to permit the obligations of the other person to the special facility lease to be registered under the U.S. Securities Act of 1933, the corporation, with the approval of the director of finance, may appoint a national or state bank within or without the State to serve as trustee for the holders of the revenue bonds and may enter into a trust indenture or trust agreement with the trustee. The trustee may be authorized by the corporation to collect, hold, and administer the revenues derived from the special facility for which the revenue bonds are issued and to apply the revenues to the payment of the principal and interest on the revenue bonds. If any trustee shall be appointed, any trust indenture or agreement entered into by the corporation with the trustee may contain the covenants and provisions authorized by part III of chapter 39 to be inserted in a resolution adopted or certificate issued, as though the words "resolution" or "certificate" as used in that part read "trust indenture or agreement". The covenants and provisions shall not be required to be included in the resolution or certificate authorizing the issuance of the revenue bonds if included in the trust agreement or indenture. Any resolution or certificate, trust indenture, or trust agreement adopted, issued, or entered into by the corporation pursuant to this subpart may also contain any provisions required for the qualification thereof under the U.S. Trust Indenture Act of 1939. The corporation may pledge and assign to the trustee the special facility lease and the rights of the corporation including the revenues thereunder;

(6) If the corporation, with the approval of the director of finance, shall have appointed or shall appoint a trustee for the holders of the revenue bonds, then notwithstanding the provisions of the second sentence of section 39-68, the director of finance may elect not to serve as fiscal agent for the payment of the principal and interest, and for the purchase, registration, transfer, exchange, and redemption, of the revenue bonds, or may elect to limit the functions the director of finance shall perform as the fiscal agent. The corporation, with the approval of the director of finance, may appoint the trustee to serve as the fiscal agent, and may authorize and empower the trustee to perform the functions with respect to payment, purchase, registration, transfer, exchange, and redemption, that the corporation may deem necessary, advisable, or expedient, including, without limitation, the holding of the revenue bonds and coupons which have been paid and the supervision and conduction of the destruction thereof in accordance with sections 40-10 and 40-11. Nothing in this paragraph shall be a limitation upon or construed as a limitation upon the powers granted in the preceding paragraph to the corporation, with the approval of the director of finance, to appoint the trustee, or granted in sections 36-3 and 39-13 and the third sentence of section 39-68 to the director of finance to appoint the trustee or others, as fiscal agents, paying agents, and registrars for the revenue bonds or to authorize and empower the fiscal agents, paying agents, and registrars to perform the functions referred to in that paragraph and sections, it being the intent of this paragraph to confirm that the director of finance as aforesaid may elect not to serve as fiscal agent for the revenue bonds or may elect to limit the functions the director of finance shall perform as the fiscal agent, that the director of finance may deem necessary, advisable, or expedient;

(7) The corporation may sell the revenue bonds either at public or private sale;

(8) If no trustee shall be appointed to collect, hold, and administer the revenues derived from the special facility for which the revenue bonds are issued, the revenues shall be held in a separate account in the treasury of the State, separate and apart from the Hawaii community development revolving fund, to be applied solely to the carrying out of the resolution, certificate, trust indenture, or trust agreement authorizing or securing the revenue bonds;

(9) If the resolution, certificate, trust indenture, or trust agreement shall provide that no revenue bonds issued thereunder shall be valid or obligatory for any purpose unless certified or authenticated by the trustee for the holders of the revenue bonds, signatures of the officers of the State upon the bonds required by section 39-56 may be facsimiles of their signatures;

(10) Proceeds of the revenue bonds may be used and applied by the corporation to reimburse the other person to the special facility lease for all preliminary costs and expenses, including architectural and legal costs; and

(11) If the special facility lease shall require the other person to operate, maintain, and repair the special facility which is the subject of the lease, at the other person's expense, the requirement shall constitute compliance by the corporation with section 39‑61(a)(2), and none of the revenues derived by the corporation from the special facility shall be required to be applied to the purposes of section 39‑62(2). Section 39-62(4), 39-62(5), and 39-62(6) shall not apply to the revenues derived from a special facility lease.

§171C-AAAAAAZ Special facility revenue bonds; special funds. (a) A separate special fund shall be established for each special facility financed from the proceeds of the revenue bonds secured under the same trust indenture. Each fund shall be designated "special facility revenue bond special fund" and shall bear additional designation as the corporation deems appropriate to properly identify the fund.

(b) Notwithstanding any other law to the contrary, including particularly section 171C-AAAAAD, all revenues, income, and receipts derived from the special facility for which the revenue bonds are issued shall be paid into the special facility revenue bond fund established for that special facility and applied as provided in the proceedings authorizing the issuance of the revenue bonds.

F. Kalaeloa Community Development District

§171C-AAAAAAAA Barbers Point Naval Air Station redevelopment; power to redevelop established. (a) The corporation shall be the designated agency of the State to implement this subpart.

(b) The corporation shall act as the local redevelopment authority to facilitate the redevelopment of Barbers Point Naval Air Station in accordance with the Barbers Point Naval Air Station community reuse plan. In addition to any other duties that the corporation may have pursuant to this part, the corporation's duties shall include but not be limited to:

(1) Coordinating with the Navy and other entities during the conveyance of properties and conducting remediation activities for the Barbers Point Naval Air Station community reuse plan;

(2) Assisting landholders designated by the plan to market their properties and process conveyance requests;

(3) Working with the Navy and others to ensure that infrastructure support is provided to the existing developed area, referred to as the "downtown area", and other federally retained areas;

(4) Developing the infrastructure necessary to support the implementation of the Barbers Point Naval Air Station community reuse plan; and

(5) Providing, to the extent feasible, maximum opportunity for the reuse of surplus property by private enterprise or state and county government.

(c) Five additional voting members shall, except as otherwise provided in this subsection, be appointed to the board of directors of the corporation by the governor to represent the Kalaeloa community development district. These members shall be considered in determining quorum and majority only on issues relating to the Kalaeloa community development district, and may vote only on issues relating to the Kalaeloa community development district. These members shall consist of:

(1) The chairperson of the Hawaiian homes commission;

(2) The director of the city and county of Honolulu department of planning and permitting;

(3) Two members representing the surrounding community for a term pursuant to section 26-34, one of which shall be selected by the mayor of the city and county of Honolulu; and

(4) One member who is a Hawaiian cultural specialist.

§171C-AAAAAAAB Designation of the Kalaeloa community development district. (a) The federal Department of Defense declared approximately two thousand one hundred fifty acres of land at the Barbers Point Naval Air Station to be surplus to its needs and under a base realignment is conveying these surplus lands to the various end users identified by the community reuse plan. The governor has approved and forwarded to the Navy the community reuse plan for these surplus lands.

(b) The legislature hereby designates these surplus lands as the "Kalaeloa community development district".

§171C-AAAAAAAC District established; boundaries. The Kalaeloa community development district is established. The district shall include that area within the boundaries described as follows: the eastern boundary begins at Geiger Gate and runs along East Hansen Road to the intersection with Essex Road until its termination at White Plains Beach Park, where it follows the eastern boundary of parcel 9-1-13:74 to the shoreline at the mean high water mark; the northern boundary begins at the eastern corner at the Geiger Road entry gate where it becomes Roosevelt Road and continues westward until its intersection with West Perimeter Road; the western boundary follows the West Perimeter Road until its termination and then follows the western border of parcel 9-1-13:30 to the shoreline at the mean high water mark; two parcels (9-1-13:01 and 9-1-13:09) lying west of West Perimeter Road toward its mauka end, and two parcels (9-1-31:28 and 9-1-31:47) lying west of West Perimeter Road on its makai end, all of which are physically separated from the western boundary by a storm water drainage canal, are also included; the southern boundary follows the shoreline at the mean high water mark from the western boundary of parcel 9-1-13:30 to the eastern boundary of White Plains Beach Park (9-1-13:74). All references to parcel numbers contained herein indicate the areas identified by such tax map key numbers as of March 18, 2002.

§171C-AAAAAAAD Kalaeloa community development district; development guidance policies. The following development guidance policies shall generally govern the corporation's actions in the Kalaeloa community development district:

(1) Development shall be in accordance with the community reuse plan, except as it conflicts with the Hawaii state constitution and the Hawaii Revised Statutes, as they relate to the department of Hawaiian home lands;

(2) With the approval of the governor and concurrence of the Navy, and in accordance with state law governing lands owned by the department of Hawaiian home lands, the corporation, upon the concurrence of a majority of its voting members, may modify and make changes to the reuse plan to respond to changing conditions; provided that prior to amending the reuse plan the corporation shall conduct a public hearing to inform the public of the proposed changes and receive public input;

(3) Development shall seek to promote economic development and employment opportunities by fostering diverse land uses and encouraging private sector investments that utilize the opportunities presented by the receipt of property from the base closure consistent with the needs of the public;

(4) The corporation may engage in planning, design, and construction activities within and outside of the district; provided that activities outside of the district shall relate to infrastructure development, area-wide drainage improvements, roadways realignments and improvements, business and industrial relocation, and other activities the corporation deems necessary to carry out redevelopment of the district and implement this part. Studies or coordinating activities may be undertaken by the corporation in conjunction with the county and appropriate state agencies and may address facility systems, industrial relocation, and other activities;

(5) Planning, replanning, rehabilitation, development, redevelopment, and other preparation for reuse of Barbers Point Naval Air Station under this part are public uses and purposes for which public money may be spent and private property acquired;

(6) Hawaiian archaeological, historic, and cultural sites shall be preserved and protected. Endangered species of flora and fauna and significant military facilities shall be preserved to the extent feasible;

(7) Land use and redevelopment activities within the district shall be coordinated with and to the extent possible complement existing county and state policies, plans, and programs affecting the district; and

(8) Public facilities within the district shall be planned, located, and developed to support the redevelopment policies established by this part for the district, the reuse plan approved by the governor, and rules adopted pursuant to this part.

§171C-AAAAAAAE Kalaeloa community development revolving fund. (a) There is established in the state treasury the Kalaeloa community development revolving fund, into which shall be deposited:

(1) All revenues, income, and receipts of the corporation for the Kalaeloa community development district, notwithstanding any other law to the contrary, including section 171C-AAAAAD;

(2) Moneys directed, allocated, or disbursed to the Kalaeloa community development district from government agencies or private individuals or organizations, including grants, gifts, awards, donations, and assessments of landowners for costs to administer and operate the Kalaeloa community development district; and

(3) Moneys appropriated to the fund by the legislature.

(b) Moneys in the Kalaeloa community development revolving fund shall be used for the purposes of this subpart.

§171C-AAAAAAAF Assessment for operating costs. (a) The corporation shall have the power to assess all land users, except the federal government, for their fair share of the costs required to administer and operate the Kalaeloa community development district, which may include costs associated with staffing. Assessments shall be based on each landowner's proportionate share of the total acreage of the Kalaeloa community development district.

(b) The assessment shall be set by the corporation annually, based upon the operating budget for the district, and adjusted for any actual expenditures made in the prior year in excess of the prior approved budget. The assessments shall be paid to the corporation in semiannual payments commencing thirty days after the beginning of the fiscal year.

(c) The corporation may charge interest or other fees on assessment amounts not paid on a timely basis, and may withhold services or approval of governmental permits for land users delinquent in payments.

(d) For the purposes of this section, "land user" includes the owner of land; provided that the landowner may assign the responsibility for payment of assessments to the lessee or licensee of the land.

§171C-AAAAAAAG Complaints. The corporation may establish procedures for receiving and processing district-related complaints, conducting research, monitoring matters that arise within the district, and reporting its findings.

§171C-AAAAAAAH Remedies. (a) The corporation may research any complaint relating to the district that it determines to be an appropriate subject for investigation, including:

(1) Unkempt appearance of property;

(2) Brushfires on property;

(3) Rubbish disposed of inappropriately; or

(4) Conditions on property otherwise incongruous with generally accepted standards of maintenance.

(b) The corporation may investigate, conduct research, or monitor any matter that arises within the district, in accordance with this subpart.

(c) If the corporation decides not to research a complaint filed with the corporation, it shall inform the complainant of its decision and shall state its reasons.

If the corporation decides to research the complaint, it shall notify the complainant of its decision and shall also notify the landowner of its intention to investigate.

(d) Before giving any opinion or recommendation that is critical of a landowner or person who is the subject of the complaint, the corporation shall consult with the landowner or person on the best means to remedy the situation.

(e) After a reasonable time has elapsed, the corporation shall notify the complainant of the actions taken by it and by the landowner.

§171C-AAAAAAAI Reports. (a) After a reasonable time has elapsed, the corporation may present its opinion and recommendations to the governor, the legislature, the public, or any of these. The corporation shall include with this opinion any reply made by the landowner.

(b) The corporation shall submit to the various landowners in the district a quarterly report discussing the corporation's activities under this subpart. The report shall be made available to the public upon request.

G. Heeia Community Development District

§171C-AAAAAAAJ Definitions. As used in this subpart:

"District" means the Heeia community development district.

"Fund" means the Heeia community development revolving fund.

§171C-AAAAAAAK District established; boundaries. (a) The Heeia community development district is hereby established. The district shall include that area within the boundaries described as follows: the southern boundary begins at the southern property line of tax map key number (1) 4-6-16:001 and runs west to Kahekili highway and east to Kamehameha highway. The northern boundary begins at the northern property line of tax map key number (1) 4-6-16:001 and runs west to Kahekili highway and east to Kamehameha highway. The tax map key numbers are (1) 4-6-16:001 and (1) 4-6-16:002 (owned by the corporation), and (1) 4‑6‑16:004, :011, :012, and :017 (owned by various owners of kuleana parcels).

(b) The corporation shall serve as the local redevelopment authority of the district to facilitate culturally appropriate agriculture, education, and natural-resource restoration and management of the Heeia wetlands, in alignment with the Honolulu board of water supply's most current "Koolau Poko Watershed Management Plan" and the city and county of Honolulu's most current "Koolaupoko Sustainable Communities Plan". In addition to any other of its duties under this part, the corporation shall:

(1) Consult with the following persons and entities:

(A) Recorded landowners in the district;

(B) Recorded landowners in section 6 of zone 4 of the first tax map key division;

(D) Kailua neighborhood board;

(E) Kahaluu neighborhood board; and

(F) Kaneohe neighborhood board,

to implement activities related to and supportive of cultural practices, agriculture, education, and natural-resource restoration and management;

(2) Assist land users to manage their properties and implement activities related to and supportive of cultural practices, agriculture, education, and natural-resource restoration and management;

(3) Work with federal, state, county, and other agencies to ensure that infrastructural support is provided for the district;

(4) Develop the infrastructure necessary to support the implementation of the Heeia community development district master plan; and

(5) Provide, to the extent feasible, maximum opportunity for the restoration and implementation of sustainable, culturally appropriate, biologically responsible, or agriculturally beneficial enterprises.

(c) Three additional voting members shall, except as otherwise provided in this subsection, be appointed to the board of directors of the corporation by the governor pursuant to section 26-34 to represent the district. These three members shall be considered in determining quorum and majority only on issues relating to the district and may vote only on issues related to the district. The three members shall be residents of the district or the Koolaupoko district which consists of sections 1 through 9 of zone 4 of the first tax map key division.

§171C-AAAAAAAL Heeia community development district; policies to guide development. The following general policies to guide development shall govern the corporation's actions in the district:

(1) Development shall be in accordance with the Heeia master plan, except as it conflicts with the Hawaii state constitution and the Hawaii Revised Statutes;

(2) With the approval of the governor, and in accordance with law, the corporation, upon the concurrence of a majority of its voting members, may modify and make changes to the Heeia master plan to respond to changing conditions; provided that prior to amending the Heeia master plan, the corporation shall conduct a public meeting pursuant to chapter 92 to inform the public of the proposed changes and receive public input;

(3) The corporation shall provide, to the extent feasible, maximum opportunity for the restoration and implementation of sustainable, culturally appropriate, biologically responsible, or agriculturally beneficial enterprises;

(4) The corporation may engage in planning, design, and construction activities within and outside the district; provided that activities outside the district shall relate to infrastructural development, area-wide drainage improvements and sediment transport mitigation, roadway realignments and improvements, and other activities the corporation deems necessary to carry out redevelopment of the district and implement this part. Studies or coordinating activities may be undertaken by the corporation in conjunction with the county and appropriate federal and state agencies and may address infrastructural systems, natural-resource systems, and other activities;

(5) Planning, replanning, rehabilitation, development, redevelopment, and other preparations for the restoration of cultural practices, education, natural resources, and agriculture related activities shall be pursued;

(6) Hawaiian archaeological, historic, and cultural sites shall be preserved and protected to the extent feasible while allowing for continued use of the property for cultural activities, education, agricultural and economic pursuits, and natural-resource restoration;

(7) Endangered species of flora and fauna shall be preserved and protected to the extent feasible;

(8) Land use and redevelopment activities within the district shall be coordinated with and, to the extent possible, complement existing county and state policies, plans, and programs affecting the district;

(9) Public facilities within the district shall be planned, located, and developed to support the redevelopment policies established by this subpart for the district, the master plan approved by the governor, and rules adopted pursuant to this part; and

(10) Special management area permit administration for the district shall continue to be under the authority of the city and county of Honolulu.

§171C-AAAAAAAM Heeia community development revolving fund. (a) There is established in the state treasury the Heeia community development revolving fund, into which shall be deposited:

(1) All revenues, income, and receipts of the corporation for the district, notwithstanding any other law to the contrary, including section 171C-AAAAAD;

(2) Moneys directed, allocated, or disbursed to the district from government agencies or private individuals or organizations, including grants, gifts, awards, donations, and assessments of landowners for costs to administer and operate the district; and

(3) Moneys appropriated to the fund by the legislature.

(b) Moneys in the fund shall be used only for the purposes of this part.

§171C-AAAAAAAN Rules; adoption. The corporation shall adopt rules in accordance with chapter 91 to carry out the purposes of this subpart."

SECTION 2. Chapter 171C, Hawaii Revised Statutes, is amended by designating sections 171C-1 to 171C-20 as part I, entitled:

"GENERAL PROVISIONS"

SECTION 3. Section 171C-4, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Except as otherwise limited by this chapter, the corporation may:

(1) Sue and be sued;

(2) Have a seal and alter the same at its pleasure;

(3) Make and alter bylaws for its organization and internal management;

(4) Adopt rules under chapter 91 necessary to effectuate this chapter in connection with its projects, operations, and properties;

(5) Make and execute contracts and all other instruments necessary or convenient for the exercise of its powers and functions under this chapter;

(6) Carry out surveys, research, and investigations into technological, business, financial, consumer trends, and other aspects of leisure or recreational land uses in the national and international community;

(7) Prepare or cause to be prepared a community development plan for all designated community development districts;

(8) Acquire, reacquire, or contract to acquire or reacquire by grant or purchase real, personal, or mixed property or any interest therein; to own, hold, clear, improve, and rehabilitate, and to sell, assign, exchange, transfer, convey, lease, or otherwise dispose of or encumber the same;

[~~(7)~~] (9) Acquire or contract to acquire by grant or purchase:

(A) All privately owned real property or any interest therein and the improvements thereon, if any, that are determined by the corporation to be necessary or appropriate for its purposes under this chapter, including real property together with improvements, if any, in excess of that needed for such use in cases where small remnants would otherwise be left or where other justifiable cause necessitates the acquisition to protect and preserve the contemplated improvements, or public policy demands the acquisition in connection with such improvements; and

(B) Encumbrances, in the form of leases, licenses, or otherwise, needed by the corporation or any state department or agency for public purposes, the disposition of subdivided lots, houselots, apartments or other economic units, or economic development;

[~~(8)~~] (10) Own, hold, improve, and rehabilitate any real, personal, or mixed property acquired; and sell, assign, exchange, transfer, convey, lease, or otherwise dispose of, or encumber the same;

[~~(9)~~] (11) By itself, or in partnership with qualified persons or other governmental agencies, acquire, construct, reconstruct, rehabilitate, improve, alter, or repair any infrastructure or accessory facilities in connection with any project; own, hold, sell, assign, transfer, convey, exchange, lease, or otherwise dispose of, or encumber any project; and develop or manage, by itself, or in partnership with qualified persons or other governmental agencies, any project that meets the purposes of this chapter;

(12) Acquire or reacquire by condemnation real, personal, or mixed property or any interest therein for public facilities, including but not limited to streets, sidewalks, parks, schools, and other public improvements;

(13) By itself, or in partnership with qualified persons, acquire, reacquire, construct, reconstruct, rehabilitate, improve, alter, or repair or provide for the construction, reconstruction, improvement, alteration, or repair of any project; own, hold, sell, assign, transfer, convey, exchange, lease, or otherwise dispose of or encumber any project, and in the case of the sale of any project, accept a purchase money mortgage in connection therewith; and repurchase or otherwise acquire any project which the corporation has theretofore sold or otherwise conveyed, transferred, or disposed of;

(14) Arrange or contract for the planning, replanning, opening, grading, or closing of streets, roads, roadways, alleys, or other places, or for the furnishing of facilities or for the acquisition of property or property rights or for the furnishing of property or services in connection with a project;

(15) Grant options to purchase any project or to renew any lease entered into by it in connection with any of its projects, on such terms and conditions as it deems advisable;

(16) Prepare or cause to be prepared plans, specifications, designs, and estimates of costs for the construction, reconstruction, rehabilitation, improvement, alteration, or repair of any project, and from time to time to modify such plans, specifications, designs, or estimates;

(17) Allow satisfaction of any affordable housing requirements imposed by the corporation upon any proposed development project through the construction of reserved housing, as defined in section 171C-AAAAAP, by a person on land located outside the geographic boundaries of the corporation's jurisdiction; provided that the corporation shall not permit any person to make cash payments in lieu of providing reserved housing, except to account for any fractional unit that results after calculating the percentage requirement against residential floor space or total number of units developed. The substituted housing shall be located on the same island as the development project and shall be substantially equal in value to the required reserved housing units that were to be developed on site. The corporation shall establish the following priority in the development of reserved housing:

(A) Within the community development district;

(B) Within areas immediately surrounding the community development district;

(D) In outlying areas within the same island as the development project.

The corporation shall adopt rules relating to the approval of reserved housing that are developed outside of a community development district. The rules shall include but are not limited to the establishment of guidelines to ensure compliance with the above priorities;

[~~(10)~~] (18) In cooperation with any governmental agency, or otherwise through direct investment or coventure with a professional investor or enterprise or any other person, or otherwise, acquire, construct, operate, and maintain public land facilities, including but not limited to leisure, recreational, commercial, residential, time share, hotel, office space, and business facilities, at rates or charges determined by the corporation;

[~~(11)~~] (19) Assist developmental, recreational, and visitor-industry related enterprises, or projects developed or managed by the corporation, by conducting detailed marketing analysis and developing marketing and promotional strategies to strengthen the position of those enterprises and to better exploit local, national, and international markets;

[~~(12)~~] (20) Receive, examine, and determine the acceptability of applications of qualified persons for allowances or grants for the development of new recreation and visitor-industry related products, the expansion of established recreation and visitor-industry or land development enterprises, and the altering of existing recreational, visitor-industry related, or land development enterprises;

[~~(13)~~] (21) Coordinate its activities with any federal or state programs;

[~~(14)~~] (22) Grant options to purchase any project or to renew any lease entered into by the corporation in connection with any of its projects, on the terms and conditions it deems advisable;

[~~(15)~~] (23) Provide advisory, consultative, training, and educational services and technical assistance to any person, partnership, or corporation, either public or private, to carry out the purposes of this chapter, and engage the services of consultants on a contractual basis for rendering professional and technical assistance and advice;

[~~(16)~~] (24) Procure insurance against any loss in connection with its property and other assets and operations in amounts and from insurers as it deems desirable;

[~~(17)~~] (25) Accept gifts or grants in any form from any public agency or any other source;

[~~(18)~~] (26) Issue bonds to finance the cost of a project and to provide for the security thereof, in the manner and pursuant to the procedure prescribed in this chapter;

[~~(19)~~] (27) Subject to approval by the department, assume management responsibilities for small boat harbors in accordance with chapter 200 and any rules adopted pursuant thereto for periods not to exceed one year;

[~~(20)~~] (28) Recommend to the board of land and natural resources the purchase of any privately owned properties that may be appropriate for development; and

[~~(21)~~] (29) Do all things necessary or proper to carry out the purposes of and powers expressly provided in this chapter."

SECTION 4. Section 182-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) All minerals in, on, or under state lands or lands which hereafter become state lands are reserved to the State; provided that the board of land and natural resources with respect to all minerals except geothermal resources, and the public land development corporation with respect to geothermal resources, may release, cancel, or waive the reservation whenever it deems the land use, other than mining, is of greater benefit to the State as provided for in section 182-4. Such minerals are reserved from sale or lease except as provided in this chapter. A purchaser or lessee of any such lands shall acquire no right, title, or interest in or to the minerals. The right of the purchaser or lessee shall be subject to the reservation of all the minerals and to the conditions and limitations prescribed by law providing for the State and persons authorized by it to prospect for, mine, and remove the minerals, and to occupy and use so much of the surface of the land as may be required for all purposes reasonably extending to the mining and removal of the minerals therefrom by any means whatsoever."

SECTION 5. Section 182-3, Hawaii Revised Statutes, is amended to read as follows:

"§182-3 Bond; compensation to occupiers. (a) Every lessee of a mining lease granted under this chapter and every assignee thereof shall file with the board of land and natural resources regarding leases not involving geothermal resources, and with the public land development corporation regarding leases involving geothermal resources, a bond, in a form and in an amount approved by the board[,] or the public land development corporation, made payable to the State and which shall be conditioned upon the faithful performance by the lessee of all the requirements of this chapter and of the mining lease, and also conditioned upon the full payment by the lessee of all damages suffered by the occupiers hereinunder mentioned. If the State sells or leases its mineral rights on land which it or its predecessors in interest have granted or leased, or which it may hereafter sell or lease, and the land thereof including any crops or improvements is damaged by any mining or other incidental operations, including exploratory work, or by the failure of the lessee of the mining lease to properly restore the land after termination of the operations, the occupier shall be reimbursed the full extent of the damages caused by the mining operations of the lessee to be allocated between the lessee and the fee owner in accordance with the lease terms, if any.

(b) Nothing herein shall be construed to prevent the occupier from demanding and receiving rentals from the lessee of the mining lease or to forbid and prevent the occupier and the lessee from agreeing upon the amount of damages to be paid and the terms and conditions of payment. The occupier may in writing before or within thirty days after the public auction notify the board regarding mining leases not involving geothermal resources, and the public land development corporation regarding leases involving geothermal resources, that the occupier elects to have the amount of damages and the amount of rentals to be paid as a result of the mining lease determined by arbitration with the successful bidder. In such event, the occupier shall notify the successful bidder of the occupier's election to arbitrate, and the arbitration shall proceed in accordance with chapter 658A. The arbitrators in fixing the amount of damages to be paid to the occupier shall award the occupier the amount which in their judgment shall fairly compensate the occupier for the damages the occupier may suffer to the occupier's crops or improvements or to the surface or condition of the occupier's land caused by the mining or other incidental operations, including exploratory work, and a reasonable rental for the use of the surface."

SECTION 6. Section 182-4, Hawaii Revised Statutes, is amended to read as follows:

"§182-4 Mining leases on state lands. (a) If any mineral is discovered or known to exist on state lands, any interested person may notify the board of land and natural resources regarding any mineral not including geothermal resources, and the public land development corporation regarding geothermal resources, of the person's desire to apply for a mining lease. The notice shall be accompanied by a fee of $100 together with a description of the land desired to be leased and the minerals involved and any information and maps that the board or the public land development corporation by rule may prescribe. As soon as practicable thereafter, the board or the public land development corporation shall cause a public notice to be given in the county where the lands are located, at least once in each of three successive weeks, setting forth the description of the land, and the minerals desired to be leased. The board or the public land development corporation may hold the public auction of the mining lease within six months from the date of the first notice or any further time that may be reasonably necessary. Whether or not the state land sought to be auctioned is then being utilized or put to some productive use, the board[,] or the public land development corporation, after due notice of public hearing to all parties in interest, within six weeks from the date of the first notice or any further time that may be reasonably necessary, shall determine whether the proposed mining operation or the existing or reasonably foreseeable future use of the land would be of greater benefit to the State. If the board or the public land development corporation determines that the existing or reasonably foreseeable future use would be of greater benefit to the State than the proposed mining use of the land, it shall disapprove the application for a mining lease of the land without putting the land to auction. The board or the public land development corporation shall determine the area to be offered for lease and, after due notice of public hearing to all parties in interest, may modify the boundaries of the land areas. At least thirty days prior to the holding of any public auction, the board or the public land development corporation shall cause a public notice to be given in the State at least once in each of three successive weeks, setting forth the description of the land, the minerals to be leased, and the time and place of the auction. Bidders at the public auction may be required to bid on the amount of annual rental to be paid for the term of the mining lease based on an upset price fixed by the board[,] or the public land development corporation, a royalty based on the gross proceeds or net profits, cash bonus, or any combination or other basis and under any terms and conditions that may be set by the board[.] or the public land development corporation.

(b) Any provisions to the contrary notwithstanding, if the person who discovers the mineral discovers it as a result of exploration permitted under section 182-6, and if that person bids at the public auction on the mining lease for the right to mine the discovered mineral and is unsuccessful in obtaining such lease, that person shall be reimbursed by the person submitting the highest bid at public auction for the direct or indirect costs incurred in the exploration of the land, excluding salaries, attorneys fees and legal expenses. The department or the public land development corporation shall have the authority to review and approve all expenses and costs that may be reimbursed."

SECTION 7. Section 182-5, Hawaii Revised Statutes, is amended to read as follows:

"§182-5 Mining leases on reserved lands. (a) If any mineral is discovered or known to exist on reserved lands, any interested person may notify the board of land and natural resources regarding any mineral not including geothermal resources, or the public land development corporation regarding geothermal resources, of the person's desire to apply for a mining lease. The notice shall be accompanied by a fee of $100 together with a description of the land desired to be leased and the minerals involved and [~~such~~] any information and maps [as] that the board or the public land development corporation may by [~~regulation~~] rule prescribe. The board or the public land development corporation may grant a mining lease on reserved lands in accordance with section 182-4, or the board or the public land development corporation may, by the vote of two-thirds of its members to which the board or the public land development corporation board of directors is entitled, without public auction, grant a mining lease on reserved lands to the occupier thereof. [~~Such a~~] A mining lease may be granted to a person other than the occupier if the occupier has assigned the occupier's rights to apply for a mining lease to another person, in which case only [~~such an~~] the assignee may be granted a mining lease.

(b) [~~Any provisions to the contrary notwithstanding, if the board~~] Notwithstanding any other law to the contrary, if the public land development corporation decides that it is appropriate to grant a geothermal mining lease on the reserved lands, the surface owner or the owner's assignee shall have the first right of refusal for a mining lease; however, the granting of a geothermal mining lease does not create the presumption that a geothermal resource subzone will be designated, nor shall geothermal development activities occur on land within the geothermal mining lease until the area is designated a geothermal resource subzone.

If the occupier or the occupier's assignee of the right to obtain a mining lease should fail to apply for a mining lease within six months from the date of notice from the board or the public land development corporation of a finding by the board or the public land development corporation that it is in the public interest that the minerals on the reserved lands be mined, a mining lease shall be granted under section 182-4; provided that bidders at the public auction shall bid on an amount to be paid to the State for a mining lease granting to the lessee the right to exploit minerals reserved to the State."

SECTION 8. Section 182-6, Hawaii Revised Statutes, is amended to read as follows:

"§182-6 Exploration. Any person wishing to conduct exploration on such state lands shall apply to the board of land and natural resources if geothermal resources are not involved, or to the public land development corporation, if geothermal resources are involved, who shall issue exploration permits upon such terms and conditions as it shall by [~~regulation~~] rule prescribe. During and as a result of the exploration, no minerals of such types and quantity beyond that reasonably required for testing and analysis shall be extracted and removed from such state lands. Upon termination of the exploration permit, the drill logs and the results of the assays resulting from the exploration shall be turned over to the board or the public land development corporation and kept confidential by the board[.] or the public land development corporation. If the person shall not make application for a mining lease of the lands within a period of six months from the date the information is turned over to the board[,] or the public land development corporation, the board or the public land development corporation in its discretion need not keep the information confidential."

SECTION 9. Section 182-7, Hawaii Revised Statutes, is amended by amending subsections (a) through (e) to read as follows:

"(a) Prior to the public auction contemplated in section 182-4 or 182-5, or the granting of mining lease without public auction contemplated in section 182-5, the board of land and natural resources or the public land development corporation shall cause a mining lease for the land in question to be drawn. The lease shall describe the land and shall contain, in addition to such other provisions which the board or the public land development corporation may deem appropriate, specific provisions as provided in this section.

(b) The term of the lease shall be sixty-five years or for a lesser period at the discretion of the board[.] or the public land development corporation.

(c) The payments to the State as fixed by the board or the public land development corporation shall be specified; provided that:

(1) In the case of bauxite, bauxitic clay, gibbsite, diaspore, boehmite, and all ores of aluminum, the amount of royalties for each long dry ton of ore as beneficiated shall not be less than twenty-five cents or the equivalent of the price of one pound of virgin pig aluminum, whichever is higher, nor shall it exceed the equivalent of the price of three pounds of virgin pig aluminum;

(2) The rate of royalty for ore processed into aluminous oxide in the State shall be set at eighty per cent of the rate of royalty for ore not processed to aluminous oxide in the State; and

(3) The royalty shall be fixed at a rate which will tend to encourage the establishment and continuation of the mining industry in the State.

The prices of virgin pig aluminum for the purpose of determining the royalties under this section shall be the basic price on the mainland United States market for virgin pig, not refined, f.o.b. factory. The royalties shall be in lieu of any severance or other similar tax on the extracting, producing, winning, beneficiating, handling, storing, treating, or transporting of the mineral or any product into which it may be processed in the State, and shall not be subject to reopening or renegotiating for and during the first twenty years of the lease term.

In the event the lessee desires to mine other minerals, the lessee, before mining the minerals, shall so notify the board if geothermal resources are not involved, or the public land development corporation regarding geothermal resources, in writing, and the board or the public land development corporation and the lessee shall negotiate and fix the royalties for the minerals.

Any other law to the contrary notwithstanding, thirty per cent of all royalties received by the State from geothermal resources shall be paid to the county in which mining operations covered under a state geothermal resource mining lease are situated.

(d) The lessee shall covenant and agree that the lessee shall commence mining operations upon the leased lands within three years from the date of execution of the lease; provided that so long as the lessee is actively and on a substantial scale engaged in mining operations on at least one such lease on the same minerals, the covenant shall be suspended as to all other leases held by the lessee.

Any interested party may, however, request that a mining lease contain a research period under which the lessees shall be required to expend money in research and development to establish a method to make economical the mining and processing of the mineral deposits contained in the lease. If the board or the public land development corporation determines that the research period would be beneficial, it shall fix the period of research and shall also fix a minimum expenditure for labor performed or money spent by the lessee in research and development and the method by which the lessee shall establish that such expenditure in fact be made. In such leases, the obligation to commence mining operations within three years shall not commence until the expiration of the research period.

(e) For the period of the lease, the lessee shall have the exclusive right of possession of the minerals leased and the exclusive rights to mine and remove the minerals by means which shall be reasonable and satisfactory to the board or the public land development corporation and to occupy and use so much of the surface of the land as may reasonably be required, subject to the provisions of section 182-3. The right to use the surface shall include the right to erect transportation facilities thereon, construct plants for beneficiating, drying, and processing the minerals for electric power generation and transmission and such other uses as may be necessary or convenient to the winning and processing of the minerals; provided that the lessee shall comply with all water and air pollution control laws, and rules of the State or its political subdivisions."

SECTION 10. Section 182-8, Hawaii Revised Statutes, is amended to read as follows:

"§182-8 Number of leases; acreage limitations; area covered by lease. The board [is] and the public land development corporation are authorized to impose a limitation on the number of leases or acres which a mining lessee or the mining lessee's transferee may hold under such terms and conditions as the board or the public land development corporation determines to be in the best interest of the State. No lease shall grant and include an area of land exceeding four square miles of contiguous land, in which the longest dimension of the area demised shall exceed its narrowest dimension by more than six times unless otherwise approved by the board."

SECTION 11. Section 182-9, Hawaii Revised Statutes, is amended to read as follows:

"§182-9 Deposit; first year's rental. All bidders shall prior to the date of public auction post with the board of land and natural resources or the public land development corporation a deposit of $500. The board or the public land development corporation shall refund to unsuccessful bidders such amount within two days after the auction. All bidders, prior to the auction, shall satisfy the board or the public land development corporation of their financial ability to conduct mining operations and of their capability to develop a mine. The successful bidder shall pay to the board or the public land development corporation the amount of the first year's rental within two days after the acceptance of the bid by the board or the public land development corporation and the $500 deposit shall be credited against such sum. If the deposit exceeds the first year's rental, the excess shall be refunded. All rentals thereafter are payable in advance once a year."

SECTION 12. Section 182-9.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§182-9.5[]] Unitization. Upon motion by the board or the public land development corporation or petition filed by any mining lessee, the board[,] or the public land development corporation, in its discretion, may order such lessees or owners of mineral rights on adjoining properties to collectively adopt, and operate under, a cooperative or unit plan of development, if the board or the public land development corporation finds that such a plan will prevent the waste of any mineral, increase the ultimate recovery, avoid the drilling, digging, or excavating of any unnecessary well, or for such other reason that would encourage and promote the development of any mineral resource."

SECTION 13. Section 182-10, Hawaii Revised Statutes, is amended to read as follows:

"§182-10 Revocation of mining leases. A mining lease may be revoked if the lessee fails to pay rentals when due or if any of the terms of the lease or of law are not complied with, or if the lessee wholly ceases all mining operations for other than reasons of force majeure or the uneconomic operation of the mining lease for a period of one year without the written consent of the board of land and natural resources[;] or the public land development corporation; provided that the board or the public land development corporation shall give the lessee notice of any default and the lessee shall have six months or such other time limit as provided by the rules and regulations from the date of the notice to remedy the default."

SECTION 14. Section 182-11, Hawaii Revised Statutes, is amended to read as follows:

"§182-11 Assignment. Any mining lease may be assigned in whole or in part, subject to the approval of the board of land and natural resources[,] or the public land development corporation, to an assignee who shall have the same qualifications as any bidder for a mining lease. The assignee shall be bound by the terms of the lease to the extent as if the assignee were the original lessee. The approval of the assignment by the board or the public land development corporation shall release the assignor from any liabilities or duties under the mining lease as to the portion thereof assigned except for any liability or duty which arose prior to the approval of the assignment by the board or the public land development corporation and which remains unsatisfied or unperformed."

SECTION 15. Section 182-13, Hawaii Revised Statutes, is amended to read as follows:

"§182-13 Surrender of mining leases. Any lessee of a mining lease, who has complied fully with all the terms, covenants, and conditions of the existing lease, may, with the consent of the board of land and natural resources[,] or the public land development corporation, surrender at any time and from time to time all or any part of a mining lease or the land contained therein upon payments as consideration therefor two years' rent prorated upon the portion of the lease or land surrendered. The lessee shall thereupon be relieved of any further liability or duty with respect to the land or lease so surrendered; provided that nothing herein contained shall constitute a waiver of any liability or duty the lessee may have with respect to the land or lease surrendered as a result of any previous activities conducted on the land or under the lease. Upon the termination, cancellation, or surrender of any mining lease or any portion thereof, the lessee shall have the right to remove any and all equipment, buildings, and plants placed on the land surrendered by the holder of the mining lease. A mining lease may also be surrendered if as a result of a final determination by a court of competent jurisdiction, the lessee is found to have acquired no rights in or to the minerals on reserved lands, nor the right to exploit the same, pursuant to the lease, and, in such event, the lessee shall be reimbursed for rentals paid to the State pursuant to the lease."

SECTION 16. Section 182-14, Hawaii Revised Statutes, is amended to read as follows:

"§182-14 Rules [~~and regulations~~]. Subject to chapter 91, the board of land and natural resources or the public land development corporation may make, promulgate, and amend such rules [~~and regulations~~] as it deems necessary to carry out this chapter and to perform its duties thereunder, all commensurate with and for the purpose of protecting the public interest. All such rules [~~and regulations~~] shall have the force and effect of law."

SECTION 17. Section 182-15, Hawaii Revised Statutes, is amended to read as follows:

"§182-15 Other use of surface of state lands. Where mining leases are granted on state lands, the board of land and natural resources or the public land development corporation may reserve to the State the right to lease, sell, or otherwise dispose of the surface of the lands embraced within the lease. The lease, sale, or other disposal of the surface, if made, shall be subject to the rights of the holder of the mining lease."

SECTION 18. Section 182-18, Hawaii Revised Statutes, is amended to read as follows:

"[[]§182-18[]] Geothermal royalties. (a) The [~~board~~] public land development corporation shall fix the payment of royalties to the State for the utilization of geothermal resources at a rate which will encourage the initial and continued production of such resources. With respect to all geothermal mining leases previously issued or to be issued, where the [~~board~~] public land development corporation determines that it is necessary to encourage the initial or continued production of geothermal resources, the [~~board~~] public land development corporation shall have the authority to waive royalty payments to the State for any fixed period of time up to but not exceeding eight years.

(b) The [~~board~~] public land development corporation shall adopt, amend, or repeal rules pursuant to chapter 91 to establish the basis upon which the amount and duration of royalty payments to the State will be fixed or waived. The [~~board's~~] public land development corporation's assessment of each application shall include[,] but not be limited to[,] the examination of such factors as the progress of geothermal development taking place in the State at the time of the application, the technical and financial capabilities of the applicant to undertake the project, and the need for providing a financial incentive in order for the applicant to proceed. The granting of any favorable terms to an applicant for the payment of royalties under this section may be revoked by the [~~board~~] public land development corporation if the applicant fails to satisfy any of the terms and conditions established by the [~~board,~~] public land development corporation, or if the applicant wholly ceases operations and for reasons other than events which are outside the control of the parties and which could not be avoided by the exercise of due care by the parties.

(c) The [~~board~~] public land development corporation shall submit a written report of all geothermal royalty dispositions to the legislature in accordance with section 171-29."

SECTION 19. Section 196D-3, Hawaii Revised Statutes, is amended by amending the definitions of "approval" and "discretionary consent" to read as follows:

""Approval" means a discretionary consent required from an agency or the public land development corporation prior to the actual implementation of the project.

"Discretionary consent" means a consent, sanction, or recommendation from an agency or the public land development corporation for which judgment and free will may be exercised by the issuing agency[,] or the public land development corporation, as distinguished from a ministerial consent."

SECTION 20. Section 196D-4, Hawaii Revised Statutes, is amended to read as follows:

"[[]§196D-4[]] Consolidated permit application and review process. (a) The [~~department~~] public land development corporation is designated as the lead agency for the purposes of this chapter and, in addition to its existing functions, shall establish and administer the consolidated permit application and review process provided for in this chapter, which shall incorporate the permitting functions of those agencies involved in the development of the project which are transferred by section 196D-10 to the [~~department~~] public land development corporation to effectuate the purposes of this chapter.

(b) The consolidated permit application and review process shall incorporate:

(1) A list of all permits required for the project;

(2) The role and functions of the [~~department~~] public land development corporation as the lead agency and the interagency group;

(3) All permit review and approval deadlines;

(4) A schedule for meetings and actions of the interagency group;

(5) A mechanism to resolve any conflicts that may arise between or among the [~~department~~] public land development corporation and any other agencies, including any federal agencies, as a result of conflicting permit, approval, or other requirements, procedures, or agency perspectives;

(6) Any other administrative procedures related to the foregoing; and

(7) A consolidated permit application form to be used for the project for all permitting purposes.

(c) The [~~department~~] public land development corporation shall perform all of the permitting functions for which it [is] may be currently responsible and which are transferred to it by section 196D-10 for the purposes of the project, and shall coordinate and consolidate all required permit reviews by other agencies, and to the fullest extent possible by all federal agencies, having jurisdiction over any aspect of the project."

SECTION 21. Section 196D-5, Hawaii Revised Statutes, is amended by amending subsections (a) to (c) to read as follows:

"(a) The [~~department~~] public land development corporation shall serve as the lead agency for the consolidated permit application and review process established pursuant to section 196D-4(b) and as set forth in this section for the project. All agencies whose permitting functions are not transferred by section 196D-10 to the [~~department~~] public land development corporation for the purposes of the project are required to participate in the consolidated permit application and review process.

(b) To the greatest extent possible, the [~~department~~] public land development corporation and each agency whose permitting functions are not transferred by section 196D-10 to the [~~department~~] public land development corporation for the purposes of the project shall complete all of their respective permitting functions for the purposes of the project, in accordance with the timetable for regulatory review set forth in the joint agreement described in subsection (c)(3) and within the time limits contained in the applicable permit statutes, ordinances, regulations, or rules; except that the [~~department~~] public land development corporation or any agency shall have good cause to extend, if and as permitted, the applicable time limit if the permit-issuing agency must rely on another agency, including any federal agency, for all or part of the permit processing and the delay is caused by the other agency.

(1) The applicant shall submit the consolidated permit application using the consolidated permit application form, which shall include whatever data about the proposed project that the [~~department~~] public land development corporation deems necessary to fulfill the purposes of this chapter and to determine which [~~other~~] agencies may have jurisdiction over any aspect of the proposed project[.];

(2) Upon receipt of the consolidated permit application, the [~~department~~] public land development corporation shall notify all agencies whose permitting functions are not transferred by section 196D-10 to the [~~department~~] public land development corporation for the purposes of the project, as well as all federal agencies, that the [~~department~~] public land development corporation determines may have jurisdiction over any aspect of the proposed project as set forth in the application, and shall invite the federal agencies so notified to participate in the consolidated permit application process. The agencies, and those federal agencies that accept the invitation, thereafter shall participate in the consolidated permit application and review process[.];

(3) The representatives of the [~~department~~] public land development corporation and the state, county, and federal agencies and the applicant shall develop and sign a joint agreement among themselves which shall:

(A) Identify the members of the consolidated permit application and review team;

(B) Identify all permits required for the project;

(C) Specify the regulatory and review responsibilities of the [~~department~~] public land development corporation and each state, county, and federal agency and set forth the responsibilities of the applicant;

(D) Establish a timetable for regulatory review, the conduct of necessary hearings, the preparation of an environmental impact statement if necessary, and other actions required to minimize duplication and to coordinate and consolidate the activities of the applicant, the [~~department,~~] public land development corporation, and the state, county, and federal agencies; and

(E) Provide that a hearing required for a permit shall be held on the island where the proposed activity shall occur[.];

(4) A consolidated permit application and review team shall be established and shall consist of the members of the interagency group established pursuant to section 196D-6(a). The applicant shall designate its representative to be available to the review team, as it may require, for purposes of processing the applicant's consolidated permit application[.];

(5) The [~~department~~] public land development corporation and each agency whose permitting functions are not transferred by section 196D-10 to the [~~department~~] public land development corporation for the purposes of the project, and each federal agency shall issue its own permit or approval based upon its own jurisdiction. The consolidated permit application and review process shall not affect or invalidate the jurisdiction or authority of any agency under existing law, except to the extent that the permitting functions of any agency are transferred by section 196D-10 to the [~~department~~] public land development corporation for the purposes of the project[.];

(6) The applicant shall apply directly to each federal agency that does not participate in the consolidated permit application and review process[.];

(7) The [~~department~~] public land development corporation shall review for completeness and thereafter shall process the consolidated permit application submitted by an applicant for the project, and shall monitor the processing of permit application by those agencies whose permitting functions are not transferred by section 196D-10 to the [~~department~~] public land development corporation for the purposes of the project. The [~~department~~] public land development corporation shall coordinate, and seek to consolidate where possible, the permitting functions and shall monitor and assist in the permitting functions conducted by all of these agencies, and to the fullest extent possible the federal agencies, in accordance with the consolidated permit application and review process[.]; and

(8) Once the processing of the consolidated permit application has been completed and the permits requested have been issued to the applicant, the [~~department~~] public land development corporation shall monitor the applicant's work undertaken pursuant to the permits to ensure the applicant's compliance with the terms and conditions of the permits."

SECTION 22. Section 196D-6, Hawaii Revised Statutes, is amended to read as follows:

"[[]§196D-6[]] Interagency group. (a) The [~~department~~] public land development corporation shall establish an interagency group comprised of those agencies whose permitting functions are not transferred by section 196D-10 to the [~~department~~] public land development corporation for the purposes of the project and which have jurisdiction over any aspect of the project. Each of these agencies shall designate an appropriate representative to serve on the interagency group as part of the representative's official responsibilities. The interagency group shall perform liaison and assisting functions as required by this chapter and the [~~department.~~] public land development corporation. The [~~department~~] public land development corporation shall invite and encourage the appropriate federal agencies having jurisdiction over any aspect of the project to participate in the interagency group.

(b) The [~~department~~] public land development corporation and agencies shall cooperate with the federal agencies to the fullest extent possible to minimize duplication between and, where possible, promote consolidation of federal and state requirements. To the fullest extent possible, this cooperation shall include, among other things, joint environmental impact statements with concurrent public review and processing at both levels of government. Where federal law has requirements that are in addition to but not in conflict with state law requirements, the [~~department~~] public land development corporation and the agencies shall cooperate to the fullest extent possible in fulfilling their requirements so that all documents shall comply with all applicable laws.

(c) If the legislature establishes any public corporation or authority for the purposes of the project, then upon its establishment, the public corporation or authority shall be a member of the interagency group."

SECTION 23. Section 196D-7, Hawaii Revised Statutes, is amended to read as follows:

"[[]§196D-7[]] Streamlining activities. In administering the consolidated permit application and review process, the [~~department~~] public land development corporation shall:

(1) Monitor all permit applications submitted under this chapter and the processing thereof on an ongoing basis to determine the source of any inefficiencies, delays, and duplications encountered and the status of all permits in process;

(2) Adopt and implement needed streamlining measures identified by the interagency group, in consultation with those agencies whose permitting functions are not transferred by section 196D-10 to the [~~department~~] public land development corporation for the purposes of the project and with members of the public;

(3) Design, in addition to the consolidated permit application form, other applications, checklists, and forms essential to the implementation of the consolidated permit application and review process;

(4) Recommend to the legislature, as appropriate, suggested changes to existing laws to eliminate any duplicative or redundant permit requirements;

(5) Coordinate with agencies to ensure that all standards used in any agency decisionmaking for any required permits are clear, explicit, and precise; and

(6) Incorporate, where possible, rebuttable presumptions based upon requirements met for permits issued previously under the consolidated permit application and review process."

SECTION 24. Section 196D-8, Hawaii Revised Statutes, is amended to read as follows:

"[[]§196D-8[]] Information services. The [~~department~~] public land development corporation shall:

(1) Operate a permit information and coordination center during normal working hours, which will provide guidance to potential applicants for the project with regard to the permits and procedures that may apply to the project; and

(2) Maintain and update a repository of the laws, rules, procedures, permit requirements, and criteria of agencies whose permitting functions are not transferred by section 196D-10 to the [~~department~~] public land development corporation for the purposes of the project and which have control or regulatory power over any aspect of the project and of federal agencies having jurisdiction over any aspect of the project."

SECTION 25. Section 196D-9, Hawaii Revised Statutes, is amended to read as follows:

"[[]§196D-9[]] Construction of the chapter; rules. This chapter shall be construed liberally to effectuate its purposes, and the [~~department~~] public land development corporation shall have all powers which may be necessary to carry out the purposes of this chapter, including the authority to make, amend, and repeal rules to implement this chapter; provided that all procedures for public information and review under chapter 91 shall be preserved; and provided further that the consolidated permit application and review process shall not affect or invalidate the jurisdiction or authority of any agency under existing law. The adoption, amendment, and repeal of all rules shall be subject to chapter 91."

SECTION 26. Section 196D-10, Hawaii Revised Statutes, is amended to read as follows:

"[[]§196D-10[]] Transfer of functions. (a) Those functions identified in paragraphs (1) and (2) insofar as they relate to the permit application, review, processing, issuance, and monitoring of laws, and rules and to the enforcement of terms, conditions, and stipulations of permits and other authorizations issued by agencies with respect to the development, construction, installation, operation, maintenance, repair, and replacement of the project, or any portion or portions thereof, are transferred to the [~~department.~~] public land development corporation. With respect to each of the statutory authorities cited in paragraphs (1) and (2), the transferred functions include all enforcement functions of the agencies or their officials under the statute cited as may be related to the enforcement of the terms, conditions, and stipulations of permits, including but not limited to the specific sections of the statute cited. "Enforcement", for purposes of this transfer of functions, includes monitoring and any other compliance or oversight activities reasonably related to the enforcement process. These transferred functions include:

(1) Such functions of the land use commission related to: district boundary amendments as set forth in section 205-3.1 et seq.; and changes in zoning as set forth in section 205-5; and

(2) The permit approval and enforcement functions of the director of transportation or other appropriate official or entity in the department of transportation related to permits or approvals issued for the use of or commercial activities in or affecting the ocean waters and shores of the State under chapter 266.

(b) Nothing in this section shall be construed to relieve an applicant from the laws, ordinances, and rules of any agency whose functions are not transferred by this section to the [~~department~~] public land development corporation for the purposes of the project.

[~~(d) Notwithstanding any other provision of this chapter, this section shall take effect on July 1, 1989.~~]"

SECTION 27. Section 196D-11, Hawaii Revised Statutes, is amended to read as follows:

"[[]§196D-11[]] Annual report. The [~~department~~] public land development corporation shall submit an annual report to the governor and the legislature on its work during the preceding year, the development status of the project, any problems encountered, and any legislative actions that may be needed further to improve the consolidated permit application and review process and implement the intent of this chapter."

SECTION 28. Section 196D-13, Hawaii Revised Statutes, is amended to read as follows:

"§196D-13 Exemptions from certain state laws. In order to promote the purposes of this chapter, all persons hired by the [~~department~~] public land development corporation to effectuate this chapter are excepted from chapters 76 and 89."

SECTION 29. Section 205-5.1, Hawaii Revised Statutes, is amended as follows:

1. By amending subsections (b) through (d) to read:

"(b) The [~~board of land and natural resources~~] public land development corporation shall have the responsibility for designating areas as geothermal resource subzones as provided under section 205-5.2; except that the total area within an agricultural district which is the subject of a geothermal mining lease approved by the [~~board of land and natural resources,~~] public land development corporation, any part or all of which area is the subject of a special use permit issued by the county for geothermal development activities, on or before May 25, 1984, is designated as a geothermal resource subzone for the duration of the lease. The designation of geothermal resource subzones shall be governed exclusively by this section and section 205-5.2, except as provided therein. The [~~board~~] public land development corporation shall adopt, amend, or repeal rules related to its authority to designate and regulate the use of geothermal resource subzones in the manner provided under chapter 91.

The authority of the [~~board~~] public land development corporation to designate geothermal resource subzones shall be an exception to those provisions of this chapter and of section 46-4 authorizing the land use commission and the counties to establish and modify land use districts and to regulate uses therein. The provisions of this section shall not abrogate nor supersede the provisions of chapters 182, 183, and 183C.

(c) The use of an area for geothermal development activities within a geothermal resource subzone shall be governed by the [~~board~~] public land development corporation within the conservation district and, except as herein provided, by state and county statutes, ordinances, and rules not inconsistent herewith within agricultural, rural, and urban districts, except that no land use commission approval or special use permit procedures under section 205-6 shall be required for the use of such subzones. In the absence of provisions in the county general plan and zoning ordinances specifically relating to the use and location of geothermal development activities in an agricultural, rural, or urban district, the appropriate county authority may issue a geothermal resource permit to allow geothermal development activities. "Appropriate county authority" means the county planning commission unless some other agency or body is designated by ordinance of the county council. Such uses as are permitted by county general plan and zoning ordinances, by the appropriate county authority, shall be deemed to be reasonable and to promote the effectiveness and objectives of this chapter. Chapters 177, 178, 182, 183, 183C, 205A, 226, 342, and 343 shall apply as appropriate. If provisions in the county general plan and zoning ordinances specifically relate to the use and location of geothermal development activities in an agricultural, rural, or urban district, the provisions shall require the appropriate county authority to conduct a public hearing on any application for a geothermal resource permit to determine whether the use is in conformity with the criteria specified in subsection (e) for granting geothermal resource permits; provided that within the urban, rural, and agricultural land use districts, direct use applications of geothermal resources are permitted without any application for a geothermal resource permit both within and outside of areas designated as geothermal resource subzones pursuant to section 205-5.2 if such direct use applications are in conformance with all other applicable state and county land use regulations and are in conformance with this chapter.

(d) If geothermal development activities are proposed within a conservation district, with an application with all required data, the [~~board of land and natural resources~~] public land development corporation shall conduct a public hearing and, upon appropriate request for mediation from any party who submitted comment at the public hearing, the [~~board~~] public land development corporation shall appoint a mediator within five days. The [~~board~~] public land development corporation shall require the parties to participate in mediation. The mediator shall not be a member of the [~~board~~] public land development corporation or its staff. The mediation period shall not extend beyond thirty days after the date mediation started, except by order of the [~~board.~~] public land development corporation. Mediation shall be confined to the issues raised at the public hearing by the party requesting mediation. The mediator will submit a written recommendation to the [~~board,~~] public land development corporation, based upon any mediation agreement reached between the parties for consideration by the [~~board~~] public land development corporation in its final decision. If there is no mediation agreement, the [~~board~~] public land development corporation may have a second public hearing to receive additional comment related to the mediation issues. Within ten days after the second public hearing, the [~~board~~] public land development corporation may receive additional written comment on the issues raised at the second public hearing from any party.

The [~~board~~] public land development corporation shall consider the comments raised at the second hearing before rendering its final decision. The [~~board~~] public land development corporation shall then determine whether, pursuant to [~~board~~] public land development corporation rules, a conservation district use permit shall be granted to authorize the geothermal development activities described in the application. The [~~board~~] public land development corporation shall grant a conservation district use permit if it finds that the applicant has demonstrated that:

(1) The desired uses would not have unreasonable adverse health, environmental, or socio-economic effects on residents or surrounding property; and

(2) The desired uses would not unreasonably burden public agencies to provide roads and streets, sewers, water, drainage, and police and fire protection; or

(3) There are reasonable measures available to mitigate the unreasonable adverse effects or burdens referred to above.

A decision shall be made by the [~~board~~] public land development corporation within six months of the date a complete application was filed; provided that the time limit may be extended by agreement between the applicant and the [~~board.~~] public land development corporation."

2. By amending subsections (f) through (h) to read:

"(f) Requests for mediation shall be received by the [~~board~~] public land development corporation or county authority within five days after the close of the initial public hearing. Within five days thereafter, the [~~board~~] public land development corporation or county authority shall appoint a mediator. Any person submitting an appropriate request for mediation shall be notified by the [~~board~~] public land development corporation or county authority of the date, time, and place of the mediation conference by depositing such notice in the mail to the return address stated on the request for mediation. The notice shall be mailed no later than ten days before the start of the mediation conference. The conference shall be held on the island where the public hearing is held.

(g) Any decision made by an appropriate county authority or the [~~board~~] public land development corporation pursuant to a public hearing or hearings under this section may be appealed directly on the record to the intermediate appellate court for final decision and shall not be subject to a contested case hearing. Sections 91-14(b) and (g) shall govern the appeal, notwithstanding the lack of a contested case hearing on the matter. The appropriate county authority or the [~~board~~] public land development corporation shall provide a court reporter to produce a transcript of the proceedings at all public hearings under this section for purposes of an appeal.

(h) For the purposes of an appeal from a decision from a public hearing, the record shall include:

(1) The application for the permit and all accompanying supporting documents, including but not limited to: reports, studies, affidavits, statements, and exhibits[.];

(2) Staff recommendations submitted to the members of the agency in consideration of the application[.];

(3) Oral and written public testimony received at the public hearings[.];

(4) Written transcripts of the proceedings at the public hearings[.];

(5) The written recommendation received by the agency from the mediator with any mediation agreement[.];

(6) A statement of relevant matters noticed by the agency members at the public hearings[.];

(7) The written decision of the agency issued in connection with the application and public hearings[.]; and

(8) Other documents required by the [~~board~~] public land development corporation or county authority."

SECTION 30. Section 205-5.2, Hawaii Revised Statutes, is amended to read as follows:

"§205-5.2 Designation of areas as geothermal resource subzones. (a) Beginning in [~~1983, the board of land and natural resources~~] 2013, the public land development corporation shall conduct a county-by-county assessment of areas with geothermal potential for the purpose of designating geothermal resource subzones. This assessment shall be revised or updated at the discretion of the [~~board,~~] public land development corporation, but at least once each five years beginning in [~~1988.~~] 2018. Any property owner or person with an interest in real property wishing to have an area designated as a geothermal resource subzone may submit a petition for a geothermal resource subzone designation in the form and manner established by rules [~~and regulations~~] adopted by the [~~board.~~] public land development corporation. An environmental impact statement as defined under chapter 343 shall not be required for the assessment of areas under this section.

(b) The [~~board's~~] public land development corporation's assessment of each potential geothermal resource subzone area shall examine factors to include[,] but not be limited to:

(1) The area's potential for the production of geothermal energy;

(2) The prospects for the utilization of geothermal energy in the area;

(3) The geologic hazards that potential geothermal projects would encounter;

(4) Social and environmental impacts;

(5) The compatibility of geothermal development and potential related industries with present uses of surrounding land and those uses permitted under the general plan or land use policies of the county in which the area is located;

(6) The potential economic benefits to be derived from geothermal development and potential related industries; and

(7) The compatibility of geothermal development and potential related industries with the uses permitted under chapter 183C and section 205-2, where the area falls within a conservation district.

In addition, the [~~board~~] public land development corporation shall consider, if applicable, objectives, policies, and guidelines set forth in part I of chapter 205A, and chapter 226.

(c) Methods for assessing the factors in subsection (b) shall be left to the discretion of the [~~board~~] public land development corporation and may be based on currently available public information.

(d) After the [~~board~~] public land development corporation has completed a county-by-county assessment of all areas with geothermal potential or after any subsequent update or review, the [~~board~~] public land development corporation shall compare all areas showing geothermal potential within each county, and shall propose areas for potential designation as geothermal resource subzones based upon a preliminary finding that the areas are those sites which best demonstrate an acceptable balance between the factors set forth in subsection (b). Once a proposal is made, the [~~board~~] public land development corporation shall conduct public hearings pursuant to this subsection, notwithstanding any contrary provision related to public hearing procedures. Contested case procedures are not applicable to these hearings.

(1) Hearings shall be held at locations which are in close proximity to those areas proposed for designation. A public notice of hearing, including a description of the proposed areas, an invitation for public comment, and a statement of the date, time, and place where persons may be heard shall be given and mailed no less than twenty days before the hearing. The notice shall be given on three separate days statewide and in the county in which the hearing is to be held. Copies of the notice shall be mailed to the department of business, economic development, and tourism, to the planning commission and planning department of the county in which the proposed areas are located, and to all owners of record of real estate within, and within one thousand feet of, the area being proposed for designation as a geothermal resource subzone. The notification shall be mailed to the owners and addresses as shown on the current real property tax rolls at the county real property tax office. Upon that action, the requirement for notification of owners of land is completed. For the purposes of this subsection, notice to one co-owner shall be sufficient notice to all co-owners;

(2) The hearing shall be held before the [~~board,~~] public land development corporation, and the authority to conduct hearings shall not be delegated to any agent or representative of the [~~board.~~] public land development corporation. All persons and agencies shall be afforded the opportunity to submit data, views, and arguments either orally or in writing. The department of business, economic development, and tourism and the county planning department shall be permitted to appear at every hearing and make recommendations concerning each proposal by the [~~board;~~] public land development corporation; and

(3) At the close of the hearing, the [~~board~~] public land development corporation may designate areas as geothermal resource subzones or announce the date on which it will render its decision. The [~~board~~] public land development corporation may designate areas as geothermal resource subzones only upon finding that the areas are those sites which best demonstrate an acceptable balance between the factors set forth in subsection (b). Upon request, the [~~board~~] public land development corporation shall issue a concise statement of its findings and the principal reasons for its decision to designate a particular area.

(e) The designation of any geothermal resource subzone may be withdrawn by the [~~board of land and natural resources~~] public land development corporation after proceedings conducted pursuant to chapter 91. The [~~board~~] public land development corporation shall withdraw a designation only upon finding by a preponderance of the evidence that the area is no longer suited for designation; provided that the designation shall not be withdrawn for areas in which active exploration, development, production or distribution of electrical energy from geothermal sources or direct use applications of geothermal resources are taking place.

(f) [~~This~~] Act 296, Session Laws of Hawaii 1983, shall not apply to any active exploration, development or production of electrical energy from geothermal sources or direct use applications of geothermal resources taking place on June 14, 1983, provided that any expansion of [~~such~~] these activities shall be carried out in compliance with its provisions."

SECTION 31. Section 227D-1, Hawaii Revised Statutes, is amended by amending the definitions of "project" and "research and technology park" to read as follows:

""Project" means any combination of land and buildings and other improvements thereon for use in, but not limited to research, development, demonstration, processing, or manufacturing activities or enterprises utilizing or in support of the utilization of natural resources [~~and geothermal energy~~] which are located in a research and technology park and acquired, constructed, reconstructed, rehabilitated, improved, altered, or repaired by or on behalf of the authority.

"Research and technology park" means a tract of real property determined by the board as being suitable for use as building sites for projects engaged in research, development, demonstration, processing, or manufacturing activities or retail or commercial enterprises utilizing or in support of the utilization of natural resources [~~or geothermal energy~~]. This includes[,] but is not limited to[,] research, commercialization, training, education, technical analyses, pilot plant, or prototype product development, and may include the installation of improvements to tracts incidental to the use of real property as a research and technology park, such as water, sewer, sewage and waste disposal, and drainage facilities, sufficient to adequately service projects in the research and technology park, and provision of incidental transportation facilities, power distribution facilities, and communication facilities."

SECTION 32. Section 227D-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There is established the natural energy laboratory of Hawaii authority, which shall be a body corporate and politic and an instrumentality and agency of the State. The authority shall be placed within the department of business, economic development, and tourism for administrative purposes, pursuant to section 26-35. The purpose of the natural energy laboratory of Hawaii authority shall be to facilitate research, development, and commercialization of natural energy resources and ocean-related research, technology, and industry in Hawaii and to engage in retail, commercial, or tourism activities that will financially support that research, development, and commercialization at a research and technology park in Hawaii. Its duties shall include:

(1) Establishing, managing, and operating facilities that provide sites for:

(A) Research and development;

(B) Commercial projects and businesses utilizing natural resources, such as ocean water [~~or geothermal energy~~];

(C) Compatible businesses engaged in scientific and technological investigations, or retail, commercial, and tourism activities; and

(D) Businesses or educational facilities that support the primary projects and activities;

(2) Providing support, utilities, and other services to facility tenants and government agencies;

(3) Maintaining the physical structure of the facilities;

(4) Promoting and marketing these facilities;

(5) Promoting and marketing the reasonable utilization of available natural resources;

(6) Supporting ocean research and technology development projects that support national and state interests, use facilities and infrastructure in Hawaii, and foster potential commercial development; and

(7) Engaging in retail, commercial, and tourism activities that are not related to facilitating research, development, and commercialization of natural energy resources in Hawaii; provided that all income derived from these activities shall be deposited in the natural energy laboratory of Hawaii authority special fund."

SECTION 33. Chapter 201H, Hawaii Revised Statutes, is repealed.

SECTION 34. Chapter 206E, Hawaii Revised Statutes, is repealed.

PART II

SECTION 35. Section 26-18, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The following are placed in the department of business, economic development, and tourism for administrative purposes as defined by section 26-35: Aloha Tower development corporation, [~~Hawaii community development authority, Hawaii housing finance and development corporation,~~] high technology development corporation, land use commission, natural energy laboratory of Hawaii authority, and any other boards and commissions as shall be provided by law.

The department of business, economic development, and tourism shall be empowered to establish, modify, or abolish statistical boundaries for cities, towns, or villages in the State and shall publish, as expeditiously as possible, an up-to-date list of cities, towns, and villages after changes to statistical boundaries have been made."

SECTION 36. Section 53-1, Hawaii Revised Statutes, is amended by amending the definition of "Hawaii housing finance and development corporation" to read as follows:

""[~~Hawaii housing finance and development corporation",~~] Public land development corporation", "corporation", "government", "federal government", and "real property" have the respective meanings set forth for these terms in chapter [~~201H.~~] 171C."

SECTION 37. Section 171-2, Hawaii Revised Statutes, is amended to read as follows:

"§171-2 Definition of public lands. "Public lands" means all lands or interest therein in the State classed as government or crown lands previous to August 15, 1895, or acquired or reserved by the government upon or subsequent to that date by purchase, exchange, escheat, or the exercise of the right of eminent domain, or in any other manner; including accreted lands not otherwise awarded, submerged lands, and lands beneath tidal waters which are suitable for reclamation, together with reclaimed lands which have been given the status of public lands under this chapter, except:

(1) Lands designated in section 203 of the Hawaiian Homes Commission Act, 1920, as amended;

(2) Lands set aside pursuant to law for the use of the United States;

(3) Lands being used for roads and streets;

(4) Lands to which the United States relinquished the absolute fee and ownership under section 91 of the Hawaiian Organic Act prior to the admission of Hawaii as a state of the United States unless subsequently placed under the control of the board of land and natural resources and given the status of public lands in accordance with the state constitution, the Hawaiian Homes Commission Act, 1920, as amended, or other laws;

(5) Lands to which the University of Hawaii holds title;

[~~(6) Lands to which the Hawaii housing finance and development corporation in its corporate capacity holds title;~~

~~(7) Lands to which the Hawaii community development authority in its corporate capacity holds title;~~]

(6) Lands to which the public land development corporation in its corporate capacity holds title;

[~~(8)~~] (7) Lands to which the department of agriculture holds title by way of foreclosure, voluntary surrender, or otherwise, to recover moneys loaned or to recover debts otherwise owed the department under chapter 167;

[~~(9)~~] (8) Lands [~~which~~] that are set aside by the governor to the Aloha Tower development corporation; lands leased to the Aloha Tower development corporation by any department or agency of the State; or lands to which the Aloha Tower development corporation holds title in its corporate capacity;

[~~(10)~~] (9) Lands [~~which~~] that are set aside by the governor to the agribusiness development corporation; lands leased to the agribusiness development corporation by any department or agency of the State; or lands to which the agribusiness development corporation in its corporate capacity holds title; and

[~~(11)~~] (10) Lands to which the high technology development corporation in its corporate capacity holds title."

SECTION 38. All references to "Hawaii community development authority", or like terms, as the case may be, in sections 46-102 and 514A-14.5, Hawaii Revised Statutes, shall be amended to "public land development corporation", or like terms, as the case may be, as the context requires.

SECTION 39. All references to "Hawaii housing finance and development corporation", or like terms, as the case may be, in chapter 516 and sections 10-13.6, 36-24, 46-15.1, 53-17, 53-22, 111-8, 111-9, 171-18.5, 171-50.2, 171-64.7, 209-16, 209-17, 237-29, 356D-161, 519-2, and 519-3, Hawaii Revised Statutes, shall be amended to "public land development corporation", or like terms, as the case may be, as the context requires.

SECTION 40. The revisor of statutes shall substitute all references made to "chapter 201H" or any specific section, part, or subpart of chapter 201H, as the case may be, in sections 10-13.6, 29-15.5, 46-15.1, 46-15.2, 53-17, 91-13.5, 104-2, 171-18.5, 171-19.5, 171-64.7, 205-4, 206-1, 235-110.8, 237-29, 247-7, 356D-161, 514A-14.5, 514A-108, 514B-99.5, 516-1, 516-31, and 516-104, Hawaii Revised Statutes, with the corresponding chapter, part, subpart, or section number of the new law created and codified under this Act, as appropriate.

SECTION 41. The revisor of statutes shall substitute all references made to "chapter 206E" or any specific section or part of chapter 206E, as the case may be, in sections 36-27, 36-30, 46-102, and 514A-14.5, Hawaii Revised Statutes, with the corresponding chapter, part, or section number of the new law created and codified under this Act, as appropriate.

PART III

SECTION 42. All rights, powers, functions, and duties of the Hawaii housing finance and development corporation and the Hawaii community development authority are transferred to the public land development corporation.

All officers and employees whose functions are transferred to the public land development corporation by this Act shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

No officer or employee of the State having tenure shall suffer any loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege as a consequence of this Act, and such officer or employee may be transferred or appointed to a civil service position without the necessity of examination; provided that the officer or employee possesses the minimum qualifications for the position to which transferred or appointed; and provided that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.

An officer or employee of the State who does not have tenure and who may be transferred or appointed to a civil service position as a consequence of this Act shall become a civil service employee without the loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefits or privileges and without the necessity of examination; provided that such officer or employee possesses the minimum qualifications for the position to which transferred or appointed.

If an office or position held by an officer or employee having tenure is abolished, the officer or employee shall not thereby be separated from public employment, but shall remain in the employment of the State with the same pay and classification and shall be transferred to some other office or position for which the officer or employee is eligible under the personnel laws of the State as determined by the head of the department or the governor.

SECTION 43. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the Hawaii housing finance and development corporation and the Hawaii community development authority relating to the functions transferred to the public land development corporation shall be transferred with the functions to which they relate.

SECTION 44. All rules, policies, procedures, guidelines, and other material adopted or developed by the Hawaii housing finance and development corporation and the Hawaii community development authority to implement provisions of the Hawaii Revised Statutes which are reenacted or made applicable to the public land development corporation by this Act, shall remain in full force and effect until amended or repealed by the public land development corporation pursuant to chapter 91, Hawaii Revised Statutes. In the interim, every reference to the Hawaii housing finance and development corporation or the Hawaii community development authority or the board of directors of the Hawaii housing finance and development corporation in those rules, policies, procedures, guidelines, and other material is amended to refer to the public land development corporation as appropriate.

SECTION 45. All deeds, leases, contracts, loans, agreements, permits, or other documents executed or entered into by or on behalf of the Hawaii housing finance and development corporation or the Hawaii community development authority pursuant to the provisions of the Hawaii Revised Statutes, which are reenacted or made applicable to the public land development corporation by this Act, shall remain in full force and effect. Upon the effective date of this Act, every reference to the Hawaii housing finance and development corporation or the Hawaii community development authority therein shall be construed as a reference to the public land development corporation as appropriate.

SECTION 46. It is the intent of this Act not to jeopardize the receipt of any federal aid nor to impair the obligation of the State or any agency thereof to the holders of any bond issued by the State or by any such agency, and to the extent, and only to the extent, necessary to effectuate this intent, the governor may modify the strict provisions of this Act, but shall promptly report any such modification with reasons therefor to the legislature at its next session thereafter for review by the legislature.

SECTION 47. If any part of this Act is found to be in conflict with federal requirements that are a prescribed condition for the allocation of federal funds to the State, the conflicting part of this Act is inoperative solely to the extent of the conflict and with respect to the agencies directly affected, and this finding does not affect the operation of the remainder of this Act in its application to the agencies concerned. The rules under this Act shall meet federal requirements that are a necessary condition to the receipt of federal funds by the State.

SECTION 48. This Act shall not be applied so as to impair any contract existing as of the effective date of this Act in a manner violative of either the Hawaii constitution or Article I, section 10, of the United States Constitution.

SECTION 49. Notwithstanding any provision to the contrary, the terms of the members appointed to the board of directors of the Hawaii housing finance and development corporation and the Hawaii community development authority shall terminate no later than June 30, 2013.

SECTION 50. In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 51. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 52. This Act shall take effect on July 1, 2013; provided that the amendments made to section 46-15.1, Hawaii Revised Statutes, in sections 39 and 40 of this Act shall not be repealed when section 46-15.1, Hawaii Revised Statutes, is

reenacted on June 30, 2015 by section 3 of Act 141, Session Laws of Hawaii 2009.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2330
TWENTY-SIXTH LEGISLATURE, 2012
STATE OF HAWAII