SB1303 SD2

PART I

SECTION 1. The legislature finds that Act 155, Session Laws of Hawaii 2013 (Act 155), was approved by the governor on June 21, 2013. The purpose of Act 155 was to optimize the use of public school lands to generate opportunities to improve public school facilities and infrastructure to meet the challenges of the twenty-first century and to improve the overall quality of education in Hawaii. In particular, Act 155 established a pilot program to generate revenue from uses for public purposes, such as workforce housing, to build and retrofit twenty-first century schools, and create more school-centered communities. The pilot program laid important groundwork for a statewide approach and plan to optimize public school lands and modernize public school facilities.

The legislature further finds that in subsequent discussions with government agencies and private developers, the existing fifty-five year lease term allowed in Act 155 would be problematic in financing redevelopment projects. Also, the department of education has been working closely with the Hawaii housing finance and development corporation for assistance in the implementation of redevelopment projects on department of education-controlled lands. The Hawaii housing finance and development corporation is pursuing ninety-nine year leasehold condominiums for some of their housing projects on state-owned lands. Extending the lease terms for redevelopment under Act 155 would allow prospective developers flexibility in securing financing as well as ensuring a better long-term return to the State for the use of its lands.

The purpose of this part is to allow the department of education to lease public school lands for a term of not more than years per lease to provide prospective developers flexibility in securing financing.

SECTION 2. Section 302A-1151.1, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Notwithstanding sections 171-13 and 302A‑1151, or any other law to the contrary, the department may lease public school land on terms it deems appropriate, including a leaseback of all or a portion of the improvements constructed; provided that:

(1) The board may identify and select up to five public school land sites as candidates for participation in the pilot program; provided that:

(A) During the identification and selection process, the board shall be subject to chapter 92, shall hold at least one public meeting in each affected community, and shall foster school and community participation; and

(B) If the site is on land owned by the county, the department shall consult with the county;

(2) The department may lease public school land for no more than three public school land sites identified and selected by the board pursuant to paragraph (1) under leases for a term of not more than [~~fifty-five years per lease, unless extended pursuant to section 171-36,~~] years per lease, to lessees who shall be required to modify, construct, or utilize facilities to benefit public educational purposes, in accordance with specific request for proposal or request for information guidelines;

(3) Each lease shall stipulate that the lessee may retain any revenue generated from the facilities; provided that:

(A) The lessee shall be obligated to maintain and operate the facilities to benefit public educational purposes for the length of the lease;

(B) The lessee shall be obligated to pay to the county all applicable property tax on the value of any improvements;

(C) A leasehold premium may be charged to the lessee for the right to use the public school land based on a competitive process that complies with applicable sections of chapter 103D;

(D) Upon the expiration of the lease, the facilities shall revert to the department; and

(E) All revenues and proceeds derived by the State under this section shall be deposited in the school facilities subaccount pursuant to section 302A-1151.2; and

(4) Notwithstanding any law to the contrary, the department may enter into leaseback agreements that allow the department to lease or sublease the property to a third party. The department may lease back the property from the third-party lessee or sublessee for a contractual period of time, after which the department shall own any improvements."

PART II

SECTION 3. The legislature finds that Act 206, Session Laws of Hawaii 2017 (Act 206), was approved by the governor on July 12, 2017. The purpose of Act 206 was to transfer lands under existing department of education facilities from the city and county of Honolulu to the department of land and natural resources.

The legislature further finds that rather than have the lands transferred from the city and county of Honolulu to the department of land and natural resources and then to the department of education, Act 206 should be amended to allow the city and county of Honolulu to transfer the lands directly to the department of education in a manner similar to that in Act 210, Session Laws of Hawaii 2018.

The purpose of this part is to amend Act 206, Session Laws of Hawaii 2017, to allow the city and county of Honolulu to transfer lands under existing department of education facilities directly to the department of education, rather than to the department of land and natural resources.

SECTION 4. Act 206, Session Laws of Hawaii 2017, section 2, is amended by amending subsections (a), (b), and (c) to read as follows:

"(a) Notwithstanding any other law to the contrary, the fee simple interest to the following parcels of land with the existing improvements thereon (hereinafter "the properties") (but not including submerged land, accreted land, or any land makai of the shoreline), shall be conveyed by the city and county of Honolulu to the department of [~~land and natural resources~~] education as grantee, as is, where is:

(1) TMK 1-4-5-34-14 (Castle High);

(2) TMKs 1-5-6-6-9, 1-5-6-6-10, and 1-5-6-6-25 (Kahuku High and Elementary);

(3) TMK 1-4-4-34-24 (Kalaheo High);

(4) TMK 1-9-1-1-2 (portion) (Campbell High);

(5) TMK 1-8-5-15-1 (Waianae High);

(6) TMK 1-9-4-8-20 (Waipahu High);

(7) TMK 1-9-8-31-17 (Aiea High);

(8) TMK 1-7-4-18-1 (Leilehua High);

(9) TMK 1-9-9-2-23 (Radford High);

(10) TMK 1-6-7-2-10 (Waialua High and Intermediate);

(11) TMKs 1-6-003-048, 1-6-021-005 (Farrington High);

(12) TMK 2-7-024-001 (Kaimuki High);

(13) TMK 3-9-005-027 (Kaiser High); and

(14) TMK 3-5-020-004 (Kalani High).

(b) The city and county of Honolulu shall prepare, execute, and record, in the land court or bureau of conveyances, as appropriate, a quitclaim deed to convey each above-listed parcel with all existing improvements, subject to the property boundaries determined pursuant to subsection (d), to the department of [~~land and natural resources,~~] education, as grantee. As these are conveyances in which the city and county of Honolulu and the State and its agencies are the only parties, the tax imposed by section 247-1, Hawaii Revised Statutes, shall not apply to them. Effective on the date of transfer pursuant to subsection (e), every reference to the present titleholder or the head of the department or agency in each instrument, if the titleholder is a department or an agency, shall be construed as a reference to the department of [~~land and natural resources.~~] education.

(c) The department of [~~land and natural resources~~] education shall accept the properties in their existing condition. All claims and liabilities against the city and county of Honolulu, if any, which the department of [~~land and natural resources~~] education has, may have had, or may have in the future, regarding any injury, loss, cost, damage, or liability, including reasonable attorney's fees, concerning the physical, environmental, soil, economic, and legal conditions of the conveyed properties, are released, waived, and extinguished."

PART III

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on December 31, 2050.

THE SENATE	S.B. NO.	1303
THIRTIETH LEGISLATURE, 2019		S.D. 2
STATE OF HAWAII