Land Reform Program

DEPARTMENT OF BUSINESS, ECONOMIC ECONOMIC DEVELOPMENT TOURISM AND TOURISM

Repeal of Chapter Repeal of 17-2016 and Chapter 17-2016 Chapter 15-305 Adoption of Chapter Hawaii Administrative Rules Hawaii Rules

May 1, 2007 May 2007

1. Chapter 2016 of Chapter 2016 of Title 17, Hawaii Hawaii Rules is Administrative Rules is repealed.

2. Chapter 305 of Chapter 305 of Title 15, Hawaii Hawaii Administrative Rules, entitled "Land Reform Rules, entitled Reform Program" is adopted. is

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HAWAII ADMINISTRATIVE RULES HAWAII

TITLE 17

DEPARTMENT OF HUMAN SERVICES

SUBTITLE 5

CORPORATION OF HOUSING AND COMMUNITY DEVELOPMENT CORPORATion HAWAII HAWAII

2016 CHAPTER 2016

REFORM PROGRAM LAND REFORM LAND PROGRAM

Repealed

§517-2016-1 to §§17-2016-1 to 17-2016-42 Repealed. [R JUN 15 2007

277 56

HAWAII HAWAII ADMINISTRATIVE RULES

TITLE 15

DEPARTMENT OF BUSINESS, ECONOMIC DEVELOPMENT TOURISM AND TOURISM

SUBTITLE 14

HAWAII HOUSING HAWAII HOUSING FINANCE AND DEVELOPMENT CORPORATION CORPORATION

CHAPTER 305

LAND REFORM LAND REFORM PROGRAM PROGRAM

Subchapter 1 Subchapter General Provisions General

§15-305-1 applicability Purpose and applicability §15-305-2 Definitions §15-305-3 Public information Public information

Subchapter 2 Subchapter Application, Negotiation and Designation

§15-305-11 initiated by lessees Designation iriitiated §15-305-12 Analysis and reply §15-305-13 development tract Boundaries of development §15-305-14 initiated by corporation Designation initiated corporation §15-305-15 Notice, hearings and findings §15-305-16 Negotiation §15-305-17 Financial qualification Financial qualification §15-305-18 General qualification General qualification requirements §15-305-19 Additional deposit Additional deposit §15-305-20 Title search §15-305-21 Designation

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Subchapter 3 Subchapter Condemnation, Acquisition and Disposition

§15-305-31 Ineligibility and disqualification Ineligibility disqualification §15-305-32 Withdrawal from Withdrawal from participation §15-305-33 Substitution of applicants §15-305-34 cost expenditures by fee Submission of cost fee owners §15-305-35 Appraisal fee Appraisal fee §15-305-36 fee interest Disposition; purchase of fee by lessee §15-305-37 fee interest Disposition; purchase of fee by corporation §15-305-38 Sales price

Subchapter 4 Subchapter Miscellaneous Provisions

§15-305-41 Zoning changes §15-305-42 Investigations

Chapter 305 of Title 17, Hawaii Historical note: Chapter Historical Hawaii is based substantially Administrative Rules, is substantially upon chapter 385 of Title 6, Hawaii chapter Hawaii Administrative Rules, [Eff 8/25/90; R 10/25/99], and chapter chapter 178 of Title 15, Hawaii Hawaii Administrative Rules. [Eff [Eff 10/25/99; � JU R JUN 15 2007 1

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§15-305-2 §15-305-2

SUBCHAPTER 11 SUBCHAPTER

GENERAL PROVISIONS GENERAL PROVISIONS

§15-305-1 Purpose §15-305-1 Purpose and and applicability. applicability. This This chapter is chapter is adopted adopted pursuant pursuant toto chapter chapter 91, HRS, and 91, HRS, and implements chapter implements chapter 516, 516, HRS, HRS, which which applies applies to to all all leasehold residential leasehold residential lots lots owned owned or or held held privately, privately, or or owned by owned by the the State State or or by by the the counties. counties. Certain Certain Hawaiian home Hawaiian home lands lands and and lands lands owned owned or or held held by by the the federal government federal government are are excluded. excluded. (Eff JIIN 1 ~ [Eff JUN. ?nn7 15200 ]I(Auth: (Auth: HRS s516-7, 516-33) HRS §§516-7, 516-33) (Imp: 'i!l:RS ( Imp "MRS '"§ §~~ §B6-2, 516-6, 516 6 , 516 516-7, 516 516-21)

§15-305-2 Definitions. §15-305-2 Definitions. Unless Unless otherwise otherwise clear clear from the from the context context or or unless unless further defined herein, further defined herein, the the definitions of definitions of terms terms in in chapter chapter 516, 516, HRS, HRS, shall shall bebe applicable to applicable to this this chapter. chapter. As As used used in in this this chapter: chapter: "Additional deposit" "Additional deposit" means means one one or or more more additional additional deposits of deposits of not not less less than than $500, $500, which which shall shall be be used used to to for administrative pay for administrative costs costs and and tract tract costs costs not not covered by covered by the the initial initial deposit. deposit may Such aa deposit deposit. Such be may be collected in collected in advance if the projected costs exceed the advance if the projected costs exceed the initial deposit. initial deposit. "Corporation" means "Corporation" means the the Hawaii Hawaii housing housing finance finance and development and development corporation. corporation. "Executive director" "Executive director" means means the the executive executive director director employed by employed by the the corporation corporation or or the the executive executive director's designated director's designated representative. representative. "Initial deposit" "Initial deposit" means means aa fee fee of of not not less less than than $1,000 assessed $1,000 assessed to to all all lessees lessees applying to purchase applying to purchase leased fee the leased the fee interest interest inin their their respective respective residential houselots. residential houselots. The The initial initial deposit, deposit, which which may may also be also be referred referred to to as as an an application application fee, fee, shall shall be be used to used to cover cover tract tract costs. costs. "Lessor" means "Lessor" means the the fee fee simple simple owner, owner, and and legal legal and equitable owners who lease or sublease land to and equitable owners who lease or sublease land to another and another and their their heirs, heirs, successors, successors, legal legal representatives, and representatives, and assigns. assigns.

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§15-305-2 §15-305-2

"Lessor's costs" means "Lessor's costs" means actual actual out-of-pocket out-of-pocket expenses of expenses of appraisal, appraisal, survey, survey, and and attorney's attorney's fees fees that the that the owner, owner, thethe lessor lessor andand the the legal legal and and equitable equitable owners of owners of the the land land designated designated for for acquisition acquisition may have may have incurred as incurred as aa result result ofof the the designation. designation. "Qualified lessee" "Qualified means aa person lessee" means person who has who has applied, petitioned, applied, petitioned, and and qualified qualified for for the the designation designation and condemnation and condemnation of of the the person's person's leasehold leasehold lot lot and and who who executed aa contract has executed has contract to to purchase purchase with with the the corporation. corporation. "Substituting lessee" "Substit:uting lessee" means means aa person who person who substitutes the substitutes the person's person's self self for for the the original original applicant subject applicant subject to to outright outright -purchase purchase oror by by an an agreement of agreement of sale sale pursuant pursuant to to the the consent consent of of the the substitution by substitution by the the executive executive director. director. "Tract costs" "Tract costs" means means direct direct costs costs incurred incurred byby aa particular development tract particular development tract in in conjunction conjunction with with the the designation, condemnation, designation, condemnation, acquisition acquisition andand disposition disposition of the of the leased leased feefee interest interest in in the the residential residential lots lots of of the tract. Such costs may include but are not limited the tract. Such costs may include but are not limited to costs to costs ofof administrative administrative salaries salaries forfor direct direct time time on aa particular spent on spent tract by particular tract by the the corporation's corporation's personnel, appraisals, attorney's personnel, appraisals, attorney's fees, fees, public public hearing hearing expenses, escrow expenses, escrow fees, fees, andand title title reports. reports._ IUN 1 t=re .IIIN [Eff 1 5~ 2nn1' 20Q7 i] (Auth: caucn: §§.88526-7, 516-33) (Imp: 516-7, 516-33) (Iup: HRS §~~16-2, HRS §SST6*z, "s'i6-6, '516-6, 516-7, 516-7, 516-33.5) 516-33.5)

§15-305-3 §15-305-3 Public information. Public information. The The executive executive director shall director shall disseminate disseminate information information and and render render assistance to assistance to lessees lessees ofof residential residential lots lots in in order order that chapter that chapter 516, 516, HRS, HRS, may may be be understood and understood and effectively implemented. effectively implemented. TheThe executive executive director director may may use available use available news news media media to to implement implement this this section. section. [Eff [Eff ]] (Auth: HRS (Auth: HRS §516-7) §516-7) (Imp: HRS (Imp: HRS ss 516 JUN i:fi5200l7 §§s16JtJN 9562007

305-4 305-4 2 7 56 -~

§15-305-11 §15-305-11

SUBCHAPTER 2

APPLICATION, NEGOTIATION APPLICATION, NEGOTIATION AND DESIGNATION

initiated by lessees. §15-305-11 Designation initiated residential lots (a) The lessees of residential lots inin any qualified qualified development tract may development may request request designation of that development tract for acquisition, in development in whole or or part, as provided inin this section. (b) desiring ~o The lessees desiring to acquire the leased leased fee fee interests in in their residential residential lots lots shall initially determine whether initially whether chapter 516, HRS, HRS, applies development tract. The lessees to their development to may submit lessees·may submit their findings toto the executive director prior to prior to director may formal application, and the executive director may provide a preliminary determination determination as toto tract qualification. (c) submit to The lessees shall subm.it to the executive request for designation director a request designation of the development development form provided by the executive director. tract on a form request for designation (1) The request designation shall contain contain sufficient information to sufficient to identify identify the development tract and the fee development fee owners thereof. Each request for designation shall attached a tax have attached tax map showing the development tract and the residential development residential lots lots of the lessees requesting of requesting designation; (2) lessee requesting Each lessee requesting designation of the development tract shall sign development sign a signature sheet which shall be attached to sheet to the request request designation and which sufficiently for designation sufficiently identifies the lessee's lot. The signature of each requesting of,each requesting lessee lessee shall constitute constitute a certification that the lessee certification lessee has read, understood and agreed toto or or with all representations, covenants, and statements of consequence contained in of request for in the request designation.

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§15-305-11

(d) Together with the request Together request for designation, lessee requesting each lessee requesting designation designation shall submit submit toto the the application to corporation an application to purchase the leased leased fee fee interest inin his oror her her leasehold leasehold lot on a form form provided by thethe corporation.- corporation. (1) The application to to purchase shall identify identify the particular residential the residential leasehold leasehold lot for lessee desires to which the lessee to purchase the leased fee leased fee interest interest and shall shall have attached thereto a copy of the original thereto original lease lease and any thereto to that amendments thereto that lot; lessee desiring (2) Each lessee designation of a lot desiring a designation submit a separate shall submit application to separate application to purchase the lessee's lot. All All lessees lease to named on a lease to a lot must must complete an application to application to purchase either either individually individually or jointly; (3) The lessees submitting (3) submitting thethe application application toto purchase shall shall agree to to and comply with the requirements and the statements contained in in the application. Each application the application to to purchase shall shall be signed and sworn to to by the the lessees submitting the the application application to to purchase and shall be notarized; (4) The application to to purchase shall be submitted with a cashier's or or certified certified check inin the the amount amount of $1,000 as an initial deposit. Any int_erest interest accrued on the deposit may be withdrawn at initial deposit at the request of the written request the lessee lessee provided there there sufficient funds remaining on deposit are sufficient deposit for the the lessee lessee to to cover cover the the tract tract costs. A reasonable service charge shall be assessed withdrawal transaction; for each interest withdrawal

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§15-305-12 §15-305-12

(5) (5) Thereafter, in Thereafter, addition to in addition initial the initial to the lessee may each lessee deposit, each deposit, may be to required to be required submit an submit deposit, which additional deposit, an additional shall be which shall be used used toto pay tract costs for tract pay for covered by not covered costs not by deposit. The additional deposit initial deposit. the initial the The additional deposit may may be collected in be collected the projected if the advance ·if in advance projected tract C/(fits tract exceed the initial deposit. Sts exceed the initial deposit. IE£f JUN [Eff ,JUN 15 ]5 "nn7 7nn7 1] (Auth: (Auth: HRS §§516-7 55516-7,/ (Imp: HRS 516-33) (Imp: 516-33) §5516-7, 516-22, HRS §§516-7, 516-33, 516-22, 516-33, 516-33.5) 516-33.5)

§15-305-12 §15-305-12 reply. (a) and reply. Analysis and Analysis The (a) The executive executive director director shall review the lessees' request shall review the lessees' request for designation for designation and shall report and shall report to corporation on the corporation to the on feasibility of the feasibility the of such such designation. designation. Within Within ninety ninety days after days after receipt of aa request receipt of designation and for designation request for and documents and accompanying documents required accompanying all required all initial and initial executive director shall inform the the executive deposit, the deposit, director shall inform the representative of lessees' representative lessees' the preliminary of the preliminary determination of determination feasibility of the feasibility of the designation and of designation and shall inform shall inform the public hearing when aa public lessees when the lessees hearing will be will be scheduled pursuant scheduled section 15-305-15. to section pursuant to 15-305-15. (b) The (b) shall review executive director shall The executive director review each each lessee's application lessee's application to purchase and to purchase all accompanying and all accompanying forms. If forms. executive director the executive If the makes aa preliminary director makes preliminary financially or not financially is not lessee is that aa lessee determination that determination or otherwise qualified otherwise qualified to participate in to participate designation, the designation, in the the executive the shall so director shall executive director the lessee notify the so notify lessee within ninety calendar within ninety days, and calendar days, shall return and shall return the the lessee's application lessee's application toto purchase. purchase. [Eff JUN 15 200 [Eff 15 ?OOZ7 1] (Auth: HRS (Auth: HRS §§516-7, (Imp: HRS §§516-6", 516-33) (Imp: §5516-7, 516-33) §5516-6, 516-"516- 516-33) 22, 516-33) 22,

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§15-305-13 §15-305-13

§15-305-13 Boundaries §15-305-13 Boundaries of of development development tract.. TheThe corporation shall corporation shall make make the the final final determination determination ofof the the boundaries of boundaries of aa development development tract tract andand when requested when requested by lessees lessees to designate aa particular to designate area as particular area as such, such, may may and revise change and revise thethe boundaries boundaries in in any manner manner which considers to it considers to be be most most feasible, feasible, andand its its decisions decisions sha be final ll be final.. shall [ Efff JUN 15 200 ?007 ]] (Auth: (Auth: HRS HRS §516-7) (Imp: §516-7) (Imp: HRS HRS §SS5I6-6, 51c-22) §516-6, s°"'16-22)

§15-305-14 Designation §15-305-14 initiated by Designation initiated by corporation. corporation. The corporation, The corporation, on its its own own initiative, initiative, may designate may designate development tract aa development tract for for acquisition acquisition through through the the procedures specified procedures specified in in sections sections 15-305-15 15-305-15 to 15-305- to 15-305- 20 20.. [E ff JUN 152007 [Eff 152007 1] (Auth: (Auth: HRS HRS §516-7) §516-7) (Imp: (Imp: HRS §5516-6, 516-22) HRS §§516-6, 516-22)

§15-305-15 Notice, §15-305-15 hearings and Notice, hearings and findings. findings. The The corporation shall designate corporation shall designate all or aa portion all or of aa portion of development tract development tract by the resolution by the resolution duly adopted by duly adopted by the corporation. the corporation. Prior to adoption Prior to adoption ofof the the resolution: resolution: (1) The (1) The corporation shall give corporation shall notice of give notice of the the proposed designation by proposed designation by publication publication ofof the the resolution and resolution and of of the the time time and and place of of the the public hearing public hearing scheduled scheduled toto be be held held on the on the proposed designation, in proposed designation, in aa newspaper of newspaper of general circulation general circulation in in the the county inin which which the development the development tract tract is is situated, situated, on atat least three least three different different days, days, the the last last publication being not not less less than than five five days days before the before the hearing. Notice Notice shall shall be be given by mail to by mail to those those persons, persons, atat their their last last recorded address, recorded address, who who have made aa prior have made prior written request written request for for such such notice notice by by mail; mail;

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§15-305-16 §15-305-16

(2) (2) The public The public hearing hearing shall shall bebe held held in in the the county in county which the in.which the development development tract tract is is situated. All situated. All interested interested persons persons shall shall be be afforded the afforded the opportunity opportunity to to submit submit data data,, views, or views, or arguments arguments for for or or against against thethe proposed designation, orally proposed designation, orally,oror in in writing. writing. Written submissions Written submissions may may be be made to the made to the executive director executive director prior prior toto or or during during thethe public hearing, public hearing, without without the the necessity necessity of of oral presentations. oral presentations. flUN 15 2007 [Ef fJUN [Ef 2007 JJ (Auth: HRS (Auth: HRS §516-7) §516-7) (Imp: (Imp: HRSHRS §§516-6, §5516-6, 516-22) 516-22)

§15-305-16 Negotiation. §15-305-16 Negotiation. (a) After (a) After the the public public hearing, and hearing, and if if there there is is aa finding finding that that the the designation will designation will effectuate effectuate the the public public purpose purpose of of chapter 516, chapter the corporation 516, the corporation shall shall request request the the lessor lessor and lessees, and lessees, oror their their designated designated agents, agents, to negotiate to negotiate the just the just compensation compensation which which the the lessees lessees will will pay the pay the lessor to lessor to acquire acquire all all or or part part ofof the the subject subject development tract development tract under under consideration. consideration. (b) Negotiations (b) Negotiations shall shall end end sixty sixty calendar calendar days days from the from the date date the the corporation corporation requests requests negotiations negotiations to to begin. If begin. If no no agreement agreement is is reached reached within within the the sixty sixty day period, day the executive period, the executive director director may: may: Extend the (1) Extend (1) the negotiation negotiation period period by not more by not more than sixty than sixty additional additional _calendar calendar days days with with the the concurrence of concurrence of the the lessees lessees and and lessor; lessor; Call aa final (2) Call (2) final negotiation negotiation meeting meeting inin which which there shall there shall be be aa simultaneous simultaneous exchange exchange ofof final offers final offers together together with with any any appraisals, appraisals, other documents, other documents, and and any any expert expert opinions opinions on on which their which their negotiating negotiating positions positions were were based. Violation based. Violation oror noncompliance noncompliance with with this this paragraph shall be paragraph shall be cause cause to to institute institute provisions as provisions as prescribed prescribed by by section section 15-305- 15-305- 42; or 42; or both. both.

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§15-305-16 §15-305-16

(c) If (c) If after after the the final negotiation meeting final negotiation meeting described in described in subsection subsection (b)(b) (2) (2) or or at at the the end end of of the the negotiation negotiation period, period, nono agreement agreement isis reached, reached, the the parties parties shall shall submit submit to the executive to the executive director director copies copies of final of offers and final offers and related related documents. documents. TheThe executive executive director may director may use use the the information information in in determining, determining, prior prior to commencing to commencing condemnation condemnation proceedings, proceedings, thethe qualification amounts qualification amounts for for each each ofof the the lots. lots. E ff JIIN [Eff "JIN ~ ,,nn? 15,2007 1 (Auth: HRS 1] (Auth: HRs §516-7) §516-7) (Imp: (Imp: HRS HRS §§ § 516 S516°5' - !:;', ~S16! 516-51, 516 - f'6L4Y, 516 516-68)

§15-305-17 Financial §15-305-17 Financial qualification. qualification. (a) After (a) After the setting the setting of of the the qualification qualification amounts, amounts, thethe corporation shall corporation shall give give each each lessee lessee whowho has has submitted submitted an application an application to notice by purchase aa notice to purchase certified mail by certified mail sent to sent to thethe lessee's lessee's last last known known address, address, informing informing the the lessee of lessee of the the qualification qualification amountamount for for the the lot lot and and requesting that requesting that the the lessee lessee submit submit thethe following following financial information; financial information; (1) An (1) An accurate accurate and and updated updated financial financial statement; statement; and and (2) A (2) true and A true and correct correct copy copy ofof aa letter letter ofof credit, certificate credit, certificate of of deposit, deposit, proof proof ofof funds, or loan commitment letter funds, or loan commitment letter demonstrating that demonstrating that the the lessee lessee is is able able toto pay pay the qualification the qualification amount. amount. Evidence of (3) Evidence (3) of other other assets assets such such asas precious precious metals, coins, jewelry, metals, coins, stocks, bonds, jewelry, stocks, bonds, etc., etc., may be acceptable as proof of funds provided may be acceptable as proof of funds provided that verif that ication is verification is made made and and attested attested to to by, aa qualified by, qualified independent independent financial financial officer, broker, officer, appraiser, etc. broker, appraiser, etc. (b) The (b) The lessee lessee shall shall comply comply with the with the requirements of requirements of subsection subsection (a) (a) within sixty days within sixty days from from the date the date of of notice. notice. (c) Failure (c) Failure of of aa lessee lessee to submit the to submit required the required documentation shall documentation shall make make the the lessee's lessee's application application defective, thereby defective, thereby precluding precluding the the lessee lessee from from proceeding with proceeding designation of with designation of the the lessee's lessee's lotlot as as described in described in paragraph paragraph 15-305-21 15-305-21(1).

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§15-305-18

(d) If after first designation, a lesseelessee is is then to submit able to submit the required required documentation within sixty sixty calendar days after the date of first designation, the calendar lessee's lot may lessee's may be designated as described in subparagraph 15-305-21(4) (4) (A) (A).. (e) may be waived in Proof of funds may in instances settlement has been reached for a development where a settlement development financing for the fee purchase is tract and financing tract is to to be provided by the lessor. All All parties involved involved must must agree toto forego forego the proof of funds in in these types of situations. The lessor, however, shallshall be required to to submit a listing submit listing of all lessees to to whom whom financing financing will will be committed. Any lessee who does not not qualify qualify for lessor financing shall be required lessor financing required to to submit submit proof of funds asas cited cited in in subsection subsection (a) (a).. JUN 1I 5 2007 l [Eff l/UN [Eff (Auth: HRS §516-7) (Imp: HRS §§516-6, (Auth: §5516-6, 516-7)

General qualification requirements. §15-305-18 General (a) In addition to In to financial qualification, each ability to lessee shall demonstrate the ability to meet meet the following following requirements at the time of application and application the time of purchase, as required at the required by section section 516- 33, HRS: (1) The applicant The applicant shall legal title shall either have legal title to the property or to or shall shall have an equitable in the residential structure as the interest in under an agreement vendee under agreement of sale; (2) applicant shall The applicant shall be at at least eighteen years of age; (3) shall be a bonafide resident The applicant shall resident Hawaii and reside of the State of Hawaii reside on the except in lot, except in hardship hardship circumstances as determined by the corporation on a case by case basis;

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§15-305-18

(4) (4 ) applicant shall The applicant shall not not own inin fee fee simple land suitable suitable for residential purposes· residential purposes within the county and in in or or reasonably near near employment or the place of employment the or business of the the applicant. A husband and wife together, unless separated and living living apart apart under under a decree of separation issued court of issued by a court competent jurisdiction, shall be considered competent jointly jointly in in owning fee fee simple land. Provided whenever any of the applicants on title that whenever title to the subject to subject lot owns owns other other fee fee simple land(s) suitable land(s) suitable for residential residential purposes in in the county but the but isis on title title to to the the subject subject solely for purposes of mortgage lot solely financing as co-mortgagor financing co-mortgagor and co-owner, such applicant shall not applicant not cause the disqualification of the subject disqualification subject lot for lease to lease to fee fee conversion. Applicants who claim an exemption under claim under this this subpart subpart shall comply with the the following: (A) (A) thethe applicant applicant must must provide a letter from a mortgage lender attesting from attesting to to the necessity of having such co- co­ mortgagor/co-owner on leasehold mortgagor/co-owner leasehold title title for mortgage purposes; and ( B the co-mortgagor/co-owner co-mortgagor/co-owner under under this sub-part shall sign an affidavit sub-part affidavit that he/she appears on titletitle as co-owner co-owner financing purposes as co- only for financing co­ mortgagor and does not mortgagor not reside or or intend intend to reside at to at the leasehold property applied for; applied 5) 5) The applicant applicant shall not not have pending before the corporation an unrefused application to the to lease or lease or purchase a residential lot. A husband and wife together, unless separated separated living apart and living apart under under a decree of issued by a court separation issued court of competent competent jurisdiction, shall be entitled entitled to to purchase only one lot underunder this this chapter; and

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§15-305-21 §15-305-21

6) {(6) submit to shall submit applicant shall The applicant The to the executive director copies director copies of any mortgage or of any other or other encumbrance on encumbrance the house and lot and shall on the shall any other provide any provide other information information requested requested by by the executive the director in executive director with in connection with the application. the application. (Eff [Eff I ti U 15 2007 UN 15 ?007 1] 516-33) (Inmp: HRS §S516-7, 516-33) HRS §§516-7, (Auth: HRS (Auth: [Imp: HRS §516-7, 516-28, §516-7, 516-28, 516-33) 516-33)

§15-305-19 §15-305-19 Additional Along with Additional deposit. Along with financial information financial information set section 15-305-17, forth in section set forth 15-305-17, may be lessee may lessee be required toto submit additional deposit an additional submit an deposit not less of not of less than than $500, $500, as defined in section 15-305-2. in section 15-305-2. Failure to Failure submit aa required to submit deposit shall preclude aa required deposit from proceeding lessee from lessee proceeding with designation. (Erf UN 7N07 [Eff JJUM 15 ?.no? (Auth: HRS 1] (Auth: §516-7) (Imp: HRs §516- (Imp: HRS HRS §516-33'5)* §516-33 .'~) • " •

§15-305-20 §15-305-20 Title search. Title director search. The executive director may request aa title may request title search search to made prior to be made prior to to lots within the specific lots of specific designation of designation the tract for tract for acquisition. acquisition. [Eff JUN 15 2007 [Eff 2007 (Auth: HRS ] (Auth: §516-7) HRS §516-7) HRS §§516-6, (Imp: HRS (Imp: 516-7) SS516-6, 516-7)

§15-305-21 §15-305-21 Designation. The corporation may Designation. may designate all designate or aa portion all or portion of the development of the development tract for for acquisition 516-22, HRS, pursuant to section 516-22, pursuant to section upon HRS, upon following conditions: the following the conditions: (1) A (1) designation shall A designation made by resolution shall be made resolution duly adopted duly adopted by the corporation, by the corporation, which the corporation's state the shall state resolution shall resolution 1

and shall identify the findings and findings residential the residential leasehold lots leasehold lots for for which which the the corporation intends to intends acquire the to acquire fee interest; leased fee the leased interest;

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§15-305-21

(2) The corporation's determination to to designate residential leasehold lots within individual residential development tract shall take into a development into qualification requirements consideration all qualification shall not and shall solely upon the not be based solely request for designation; request . (3) Upon designation, the executive directordirector mail a copy of the resolution shall mail resolution to to the fee owner fee owner and the representative of the development tract, if any, lessees of the development to those persons who have made and to made prior prior request for notice (at written request (at their last recorded address); and a copy of the resolution shall be published once in in a newspaper or newspaper circulation in general circulation or general in the county in in which the development tract is development tract is situated; (4) Amendments to Amendments resolution may, to the designation resolution be adopted by the corporation as follows: (A) In a development In tract being contested development tract by the lessor, a lessee shall have sixty calendar sixty from the adoption calendar days from date of the first designation resolution to to meet meet the qualification requirements and be subsequently designated. Lessees who fail to to meet meet qualification requirements within the qualification calendar day period following sixty calendar the sixty following date of first designation shall not not be permitted to eminent domain to join the eminent proceedings unless and until said until said lessee has complied with the executive director's request; and (B) Where the lessor and lessee agree to to additional additional designations, additional additional resolutions designating additional lots for acquisition may leasehold lots leasehold may be adopted by the corporation provided that the lessees have applied and have been preliminarily qualified. [Eff JUN 15 2007 [Eff ] (Auth: HRS §516-§516- 7) (Imp: HRS §5516-6, § 516-7, 516-22)

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§15-305-31 §15-305-31

SUBCHAPTER 3 SUBCHAPTER

CONDEMNATION, ACQUISITION CONDEMNATION, DISPOSITION ACQUISITION AND DISPOSITION

§15-305-31 §15-305-31 Ineligibility and disqualification. Ineligibility Prior to (a) Prior (a) designation, if the executive director to designation,· director makes aa preliminary makes determination that preliminary determination applicant that an applicant does not does qualify to not qualify to purchase or chapter under chapter lease under or lease 516, HRS, 516, HRS, the executive director shall shall send aa written written notification of notification that determination of that determination to to the applicant at applicant at applicant's last known the applicant's the known address. The The written notification notification shall state state the requirements that that the applicant applicant has has failed failed to to meet meet and any other other reason the applicant does applicant qualify as determined by the not qualify does not director. executive director. executive (b) If (b) applicant so notified the applicant If the notified desires to to contest the contest the executive director's determination, the the applicant, within sixteen applicant, sixteen calendar calendar days after the date the notification the notification is mailed, shall shall file file with the corporation aa written corporation request for written request for reconsideration with aa written statement of written statement of the reasons the applicant applicant believes that believes the executive that the director's determination determination is incorrect. Final is Final determination of for request for of the request reconsideration may reconsideration may be mademade by the corporation prior prior to or to or at its meeting on the at its the resolution for designation. Any designation. request for Any request for reconsideration reconsideration shall be heard pursuant heard pursuant to the corporation's rules of practice to the and procedure, and procedure, and and chapter 91, 91, HRS. HRS. The applicant (c) The (c) applicant who is ineligible and is ruled ineligible who is who is disqualified disqualified fromfrom purchasing shall shall pay to to the corporation aa pro corporation share of all costs incurred up rata share pro rata to of the applicant's disqualification. date of the date to-the [Eff JUN 15 [Eff JUN 15 ?nn7 20M7 1] (Auth: (Auth: HRS 516-33) ss516-7, 516-33) HRS §§516-7' (Imp: HRS (Imp: 516-7, 516-33) 5S516-6, 516-7, HRS §s.5'1.6-6, 516-33)

305-15 305-1-S 277 56

§15-305-32

Withdrawal from §15-305-32 Withdrawal from participation. participation. (a} (a) application for purchase but If, after application but prior prior toto designation for acquisition, a~y any lessee lessee withdraws the lessee's application, the corporation shall shall be entitled to entitled to deduct deduct the actual actual pro rata share of tract from the initial deposit costs from deposit and additional additional deposit deposit made pursuant made pursuant to to section section 516-33.5, HRS, and section section 15-305-11. The executive director director shall shall bill bill the lessee for any amounts not lessee not paid after the deposits have been applied or or may whatever action may take whatever action the executive director deems necessary to to collect collect the from the lessee. costs from (b} If, after the designation for acquisition (b) but prior but prior to to acquisition acquisition of the leased leased fee fee interest by the corporation, any lessee who has applied to to leased fee purchase the leased fee interest in in the lessee's residential residential lot withdraws the application, or or fails fails oror refuses to to pay such reasonable fees assessed by the director for the services of appraisers, executive director title searches, and other title other tract costs, or or otherwise breaches or or violates the provision provision and covenants of request for designation or the request of the application to or.of to purchase, the corporation, at at its its option, may may cease all efforts to to acquire the leased leased feefee interest interest inin that that lessee's residential lessee's residential lot and the lessee lessee shall pay to to the corporation the lessee's pro rata rata share shareofof all incurred in tract costs incurred in the the designation and subsequent subsequent efforts to to acquire the leased leased feefee interest in in the residential lot. residential (c} Failure by the lessee (c) lessee toto close escrow escrow within thirty calendar thirty calendar days after the expiration of the sixty sixty calendar day period set forth calendar forth inin section section 516-30, HRS,HRS, failure to shall constitute a failure to purdhase purchase and the lessee lessee shall be responsible for all costs and fees as set set forth in forth in subsection (b).(b}. (d} The executive director may (d) may take whatever whatever action the executive director deems action deems necessary to to collect the costs and fees set collect set forth forth inin this section section from the lessee, including from including the automatic deductions of the costs and fees from from the initial deposit deposit and additional deposit additional deposit made made by the lessee lessee inin accordance with section section 15-305-11.

�� �� 305-16 305-16

§15-305-33

(e) If, after designation or or the filing filing of the condemnation complaint, a lesseelessee withdraws the lessee's lot from lessee's from the condemnation action oror fails fails to to leased fee interest to purchase the leased to the lot, the the lessee is lessee is liable liable for thethe lessee's pro rata rata share of costs as set forthforth in in sections 516-23 and 516-30, HRS. HRS. [Eff JUN (Erf 1 ~ ?M7 JUN '51&.Y'516-23, 15 007 1 (Auth: Rs s516-7) (Imp: ] (Auth: HRS §516-7) (Imp: HRS HRS §5516- §§516-6, 51.~ -~~ 516-30)

applicants.· (a) A §15-305-33 Substitution of applicants.· substituting lessee may substituting lessee may take the place of a of lessee provided that withdrawing lessee that the substituting substituting lessee meets all of the qualification requirements lessee stated in stated in section section 15-305-18, and submits the financial financial called for in information called in section 15-305-16. (b) substituting lessee The substituting lessee shall submit submit to to the executive director exe.cuti director a request request for subs titution. The executive director shall executive.director shall make make a preliminary determination of the applicant's qualification to to be substituted as a lessee. substituted (c) lessee who is The lessee is being substituted substituted shall shall title, rights and interest under assign all title, ~ssign under the application toto the substituting substituting lessee. The substituting lessee shall substituting shall assume all liabilities liabilities of the withdrawing lessee. (d) substituting lessee The substituting lessee shall shall assume all responsibility for responsibility for obtaining obtaining approval approval of of the the court court for for substitution into substitution into the condemnation action. JUN 15 [Eff JUN [Eff 2007 1 2007 1] (Auth: (Auth: HRS HRS §516-7) §516-7) (Imp: (Imp: HRS HRS §S516-7 516-63) §§516-7, 516-63)

305-17 3.05-17 27 56

§15-305-34 §15-305-34

§15-305-34 Submission §15-305-34 Submission of of cost cost expenditures expenditures by by fee owners. fee owners. (a) (a) Subsequent Subsequent to to the the designation, designation, the the fee owner, fee owner, lessor lessor andand the the legal legal and and equitable equitable owners owners of the of the lotslots condemned condemned by the corporation, by the corporation, shallshall maintain maintain and and submit submit to to the the corporation corporation aa quarterly quarterly report on report on the the costs costs incurred incurred or or expended. expended. This This quarterly report quarterly report shall shall bebe submitted submitted within within thirty thirty calendar days calendar days following following the the end end of of each each quarter quarter involved, and involved, and shall shall bebe used used for for the the purpose purpose ofof determining pro determining pro rata rata costs costs ofof each each lotlot in in the the event event itit is withdrawn is withdrawn from from the the condemnation condemnation action. action. (b) (b) The initial The initial quarterly quarterly report report shall shall consist consist of costs of costs incurred incurred or or expended expended during during the the month month ofof designation, as designation, as well well as as during during the the three three calendar calendar months following. months following. Thereafter, Thereafter, three three calendar calendar months months shall constitute shall a quarter. constitute a quarter. (c) Such (c) Such reports reports shall shall also also be be updated updated from from time time to time to time uponupon thethe dismissal dismissal of lot and of aa lot and lessees lessees from from the condemnation the condemnation action. action. The The update update to to the the date date ofof dismissal shall dismissal shall be be submitted submitted to to the the corporation corporation within within thirty calendar thirty calendar days days after after notification notification of of the the dismissal. dismissal. (d) Failure (d) Failure to to submit submit the the expenditure expenditure report report asas prescribed prescribed will will bebe grounds grounds for for disallowing disallowing the the same same unless the unless the delay delay is is consented consented to to by the corporation by the corporation for good for good cause cause shown. shown. (e) (e) Costs expenditure Costs expenditure submitted submitted shall shall bebe subject subject to review to review and and approval approval of of the the corporation corporation or or the the courts in courts in case case ofof disagreement. disagreement. [Eff [Eff ]] (Auth: HRS (Auth: HRS §516-7) §516-7) (Imp: (Imp: HRSHRS §§516-6✓ Uij1151Z.Oo-i16-30) sssi6-s]UN115400616-30)

§15-305-35 Appraisal §15-305-35 Appraisal fee. fee. (a) (a) The The executiv~ executive director may director assess and may assess and collect collect from from the the lessees lessees who who indicated aa desire have indicated have desire to to acquire acquire the the leased leased fee fee interest in interest in their their residential residential lots lots an an amount amount reasonably necessary reasonably necessary for for the the services services of of an an appraiser appraiser or appraisers or appraisers contracted contracted by the executive by the executive director director to to determine the determine the owner's owner's basis basis of of the the leased leased fee fee interest interest to be to be acquired. acquired. The The appraisal appraisal fee fee shall shall be be included included in the in the initial initial deposit deposit and and additional additional deposit deposit required required by section by section 516~33.5, 516-33.5, HRS, HRS, and and section section 15-305-11. 15-305-11.

305-18 305-18 87. 5 6

§15-305-38

(b) lessee failing Each lessee failing to to pay any fee fee assessed in subsection in subsection (a) within thirty thirty calendar calendar days after written notice toto pay pay such fee may from may.be prohibited from acquiring the leased fee interest of the lessee's lot pursuant to pursuant to chapter 516, HRS. JUN 1 5 [Eff JUN 15 2007 HRS. . [Ef 2007 1] (Auth: HRS §516-7) (Imp: HRS §516-7)

§15-305-36 Disposition; purchase of fee §15-305-36 fee interest lessee shall purchase the by lessee. The lessee fee interest of the lessee's leasehold lot within fee sixty calendar sixty calendar days of the acquisition of the interest corporation pursuant by the corporation pursuant to to the contract contract to to lessee, however, shall not purchase. The lessee, not be in in default in default in the performance of the lease obligation. (Eff JUN [Eff JUN 15 152007 ]� ·(Auth: HRs §516-7) (Imp: HRS (Auth: HRS §516-30) 2007

§15-305-37 Disposition; purchase of fee fee interest by the corporation. (a) Upon acquisition of the fee fee interest in in leasehold leasehold lots lots of a development development tract, the corporation shall sell the fee fee interest to to the lessees leasehold lots as prescribed in of the leasehold in section section 15-305- 36. (b) lessee fails If the lessee fails to to purchase the fee the fee interest, the corporation may interest, may lease lease the acquired residential lot for periods of twenty years or residential or less to to lessee at a lease the lessee lease rental rate rate sufficient sufficient to to pay principal and interest on bonds issued, or for the principal or for other financing, for the purpose of this chapter, as other well as expenses incurred well incurred in in administering administering chapter chapter 516, HRS. (Eff JUN 152007 [Eff 1] (Auth: HRS §516-7) HRs s516-7) (Imp: §S516-6, 516-29, 516-30, 516-31, 516-32) HRS §§516-6,

§15-305-38 Sales price. §15-305-38 price. (a) The sales price of fee interest in the leased fee residential lot to in a residential to the lessee of the lot shall be that lessee that amount amount of money that that will will enable the corporation to recover to recover the total cost cost of acquiring the lot.

305-19 ��� ��

§15-305-38

(b) The total cost cost of acquisition acquisition shall include: (1) actual cost The actual cost of acquisition determined by negotiation or or by eminent eminent domain proceedings; (2) (2) Any and all courtcourt costs; (3) (3) cost of appraisal The cost appraisal not not previously paid pursuant to for pursuant to section 15-305-35; section 15-305-35; (4) other tract costs incurred by the Any other corporation; (5) An amount amount sufficient sufficient to to pay the the principal principal and issued or interest on bonds issued or to to be issued, oror other financing, for the purpose of carrying carrying 516, HRS; out chapter 516, out HRS; and amount sufficient to (6) An amount to create and maintain a reserve toto enable the corporation to to make the amount of principal largest amount principal and interest payments which may may be due on such bonds in in any one year. (c) Any unused balance of the the initial deposit deposit additional deposit and additional deposit paid to to the corporation by a lessee shall be credited to lessee to the sales price of the residential lot of the lessee. residential (d) The executive director may whatever may take whatever action the executive director deems necessary to to collect the collect the costs and fees fees set forthforth in in this this section from from the lessee, including including the automatic deductions of the costs and fees from from the initial deposit deposit and additional additional deposit deposit made made by the lesseelessee in in accordance 15-305-11. [Eff section 15-305-11. with section " J J N, [Eff .ILJM ]] (Auth: HRs §516-7) HRS s516-7) (Imp: HRS HRs §§516-t', ss5i6-f'LJ55400416-24, 516-26, •~1J..-tQ07516-24, 516-26, 516-30, 516-32) 516-30, 516-32)

305-20 305-20 ����

§15-305-42 §15--305-42

SUBCHAPTER 44 SUBCHAPTER

MISCELLANEOUS PROVISIONS MISCELLANEOUS PROVISIONS

§15-305-41 Zoning §15~305-41 Zoning changes. changes. AllAll lessors lessors shall shall notify their notify their lessees lessees whenwhen applying change in for aa change applying for in zoning if zoning if the the lessees lessees reside reside within within three-fourths three-fourths mile mile of the of the land land proposed proposed to to be be rezoned. Notice to rezoned. Notice to the the lessees shall lessees shall bebe in in writing writing oror published published inin aa newspaper of newspaper of general general circulation circulation atat least least thirty thirty calendar days calendar days before before filing filing the the rezoning rezoning application application with the with the appropriate appropriate publicpublic zoning authority. A zoning authority. copy A copy of the of the notice notice shall shall bebe submitted submitted toto the the corporation corporation atat the time the time of of mailing mailing to to the the lessees lessees or or publication. publication. (Eff JUN 15 2nn1 [Eff 2007 1 ] (Auth: (Auth: HRs HRS s516-7) §516-7) (Imp: HRS (Imp: HRS §5516-6, § § 516 516-6/) - , 5 16 ~-·'i)

§15-305-42 Investigations. §15-305-42 Investigations. TheThe executive executive director may conduct director conduct an an investigation investigation oror investigate investigate aa written complaint when it appears chapter 516, written complaint when it appears chapter 516, HRS, or HRS, or these rules these rules are are being being violated. violated. [Eff JUtJ [Eff l JUN l5 ~ l (Auth: HRS (Auth: HRS §516-7) $516-7) (Imp: (Imp: HRS HRS § §516- ss5i6-c"/2 6, "sts'-?gQ]2907

305-21 305-21 ���� � �

BUSINESS, ECONOMIC DEVELOPMENT DEPARTMENT OF BUSINESS, DEVELOPMENT TOURISM AND TOURISM

The repeal of chapter 17-2016 17-2016 and the the adoption adoption of of chapter 15-305, Hawaii the Hawaii Administrative Rules, on the 2007 was adopted Summary Page dated May 1, 2007 adopted on May 1, following public hearings held on April 2007 following April 30, 2007 after public notice notice was given in in the the Honolulu Star- Star­ Bulletin, The. Garden Isle, The Maui Maui Times, West West Hawaii Hawaii Today, and the the Hawaii Hawaii Herald-Tribune on March 30, 2007. 2007.

repeal and adoption The repeal adoption shall take take effect effect ten ten filing with the Office of the days after filing the Lieutenant Lieutenant Governor.

/

- ::=2::7 -----;_::,- ~ CHARLESING, ������� � ING, Chairperson -- Hawaii Housing Finance Hawaii Finance and Development Corporation Development Corporation

LILLIAN B. LILLIAN B. KOLLER, ESQ. Director of Human Services

3Z2E� ~ROVED AS TO FORM:

(JU;: , J}1,-L~ Deputy

� Governor Governor State of Hawaii State Hawaii Date: Date: 'Uhl -5 NIN 5 2007

Filed Filed

07 56