HB1318

SECTION 1. 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 lands accreted after May 20, 2003, and not otherwise awarded, submerged lands, and lands beneath tidal waters that are suitable for reclamation, together with reclaimed lands that 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 before 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) Non-ceded lands set aside by the governor to the Hawaii housing finance and development corporation or 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;

(8) Lands set aside by the governor to the Hawaii public housing authority or lands to which the Hawaii public housing authority in its corporate capacity holds title;

(9) 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;

(10) Lands 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;

(11) Lands 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;

(12) Lands to which the Hawaii technology development corporation in its corporate capacity holds title;

(13) Lands to which the department of education holds title;

(14) Lands to which the stadium authority holds title;

(15) Lands to which the school facilities authority holds title; [~~and~~]

(16) Lands that are set aside by the governor to the department of transportation, lands leased to the department of transportation by any department or agency of the State, or lands to which the department of transportation holds title; and

(17) Lands set aside by the governor to the counties for the purpose of affordable housing;

provided that, except as otherwise limited under federal law and except for state land used as an airport as defined in section 262-1, public lands shall include the air rights over any portion of state land upon which a county mass transit project is developed after July 11, 2005; provided further that if the lands pursuant to paragraph (6) are no longer needed for housing finance and development purposes, the lands shall be returned to the agency from which they were obtained; provided further that if the lands pursuant to paragraph (14) are no longer needed for the stadium development district or related purposes, the lands shall be returned to the public land trust administered by the department."

SECTION 2. Section 171-73, Hawaii Revised Statutes, is amended to read as follows:

"§171-73 Term, rent, and other conditions of residential leases. (a) Residential leases made by the board of land and natural resources may be for an initial term of fifty-five years with the privilege of extension to meet Federal Housing Administration requirements[,]; provided that the aggregate of the initial terms and extension shall [~~in no event~~] not exceed seventy-five years. Residential leases made by the board of land and natural resources for affordable housing may be for an initial term of fifty-five years with the privilege of extension; provided that the aggregate of the initial terms and extension shall not exceed ninety-nine years.

(b) [It] Residential leases made by the board of land and natural resources may contain such terms and conditions as the board may in its discretion determine, except that the following shall in any event be complied with in each residential lease:

(1) Rent and taxes. The annual rent shall be not less than an amount representing a fair return on the value of the premises at the inception of the rental period under the lease, which value shall be determined by appraisers. The lessee shall pay all real property taxes, assessments for the lessee's pro rata share of the costs of the improvements of the tract in which the land is located, and such other charges made against or levied upon the lessee's premises. "Value of premises" as used in this section means the fair market value of the raw land, including in such value the pro rata share of the cost of improvements only if the lessee has not already been assessed or has not already paid the lessee's pro rata share thereof or if the State has not assumed the costs.

(2) Construction of residence. Each residential lease shall contain requirements that the lessee construct a residence upon the premises, pursuant to plans and specifications approved by the board and using a licensed contractor, within such time and having such minimum value or ground floor area as may be determined by the board in its discretion.

(3) Use. Upon the completion of improvements upon the premises, the lessee shall use and occupy the premises as the lessee's residence and shall not rent or use for any business purposes the whole or any part of the premises, except with the written consent of the board.

(4) Alienation. Each residential lease shall contain conditions prohibiting the lessee from subletting or parting with the possession of the whole or any part of the premises and from selling, assigning, transferring, or otherwise disposing of or encumbering, except by way of mortgage as hereinafter permitted, any interest in the lease or any improvements erected on the premises, except with the written consent of the board.

(5) Right of purchase. Each residential lease shall also state that no right or privilege of purchasing the fee title to the land demised shall be created by the lease, except as provided in section 171-79, notwithstanding any other provision of the law to the contrary.

(6) Construction and mortgages. Each residential lease shall provide that the lessee may mortgage the lease and improvements only for the purpose of financing the construction of a residence upon the premises or, after the requirement of construction of a residence upon the premises has been fulfilled, for the purpose of financing the purchase of the lease and improvements. The mortgages shall be made only to recognized lending institutions and may provide for foreclosure and for sale at the foreclosure to any purchaser, without regard to whether the purchaser at the sale is qualified or disqualified to take a residential lease under this part. The mortgagee's interest in any such mortgage shall be freely assignable.

(7) Mortgage qualification. The foregoing provisions to the contrary notwithstanding, the board is authorized from time to time, upon the issuance of any such lease to adopt or modify or eliminate any provision contained in sections 171-70 to 171-83, to the extent necessary to qualify the lease for mortgage lending or guaranty purposes with the Federal Housing Administration, Federal National Mortgage Association, and Department of Veterans Affairs, and their respective successors and assigns."

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

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

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1318
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII