Rent-to-Own Program

DEPARTMENT OF BUSINESS, BUSINESS, ECONOMIC DEVELOPMENT TOURISM AND TOURISM

Repeal of Chapter Repeal Chapter 17-2010 and Chapter 15-302 Adoption of Chapter 15-302 Hawaii Administrative Rules Hawaii

May 1, 2007

1. Chapter 2010 of Title Chapter Title 17, Hawaii Hawaii entitled "Rent-to-Own Program" Administrative Rules, entitled is repealed.

2. Chapter 302 of Title Chapter Title 15, Hawaii Hawaii entitled "Rent-to-Own Program" Administrative Rules, entitled Program" is adopted. is

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HAWAII ADMINISTRATIVE HAWAII RULES ADMINISTRATIVE RULES

TITLE 17

DEPARTMENT OF HUMAN SERVICES

SUBTITLE 5 SUBTITLE

HOUSING AND COMMUNITY COMMUNITY DEVELOPMENT CORPORATION OF HAWAII HAWAII

CHAPTER 2010 CHAPTER

RENT-TO-OWN PROGRAM PROGRAM

Repealed

$517-2010-1 to §§17-2010-1 to 17-2010-21 17-2010-21 Repealed. � � JU [R JUN 152007 2007

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HAWAII HAWAII ADMINISTRATIVE RULES

15 TITLE 15

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

SUBTITLE 14

HAWAII HOUSING FINANCE AND HAWAII AND DEVELOPMENT CORPORATION CORPORATION

CHAPTER 302

RENT-TO-OWN PROGRAM RENT-TO-OWN PROGRAM

Subchapter 1 Subchapter General Provisions General

§15-302-1 Purpose §15-302-2 Definitions §15-302-3 §15-302-3 Del egation Delegation

Subchapter 2 Subchapter Program Rent-to-Own Program

§15-302-11 Purpose §15-302-12 general provisions Rent-to-own program; general §15-302-13 §15-302-13 Process and procedures §15-302-14 §15-302-14 Eligibility for assistance Eligibility assistance §15-302-15 §15-302-15 Occupancy guidelines for rent-to-own units §15-302-16 in homebuyers' Participation in club homebuyers' club required required §15-302-17 Preference §15-302-18 Information and verification verification §15-302-19 other restrictions Repurchase and other restrictions §15-302-20 Rental agreement Rental agreement §15-302-21 Program administration Program

302-1

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§15-302 -1 §15-302-1

Historical Note: Historical Note: Chapter Chapter 302 302 of of Title Title 15, 15, Hawaii Hawaii Administrative Rules, Administrative Rules, is is based based substantially substantially upon Chapter upon Chapter 351 351 of of Title Title 6, 6, Hawaii Hawaii Administrative Administrative Rules, [Eff Rules, [Eff 9/3/94; 9/3/94; R 10/25/99], Chapter 172 R 10/25/99], Chapter 172 of of Title Title 15, Hawaii 15, Hawaii Administrative Rules, [Eff Administrative Rules, 10/25/99; R [Eff 10/25/99; R 10/15/04], and 10/15/04], and Chapter Chapter 2010 2010 of of Title Title 17, 17, Hawaii Hawaii Administrative Rules. Administrative Rules. [Eff [Eff 10/15/04; 10/15/04; � .!lIN R IIN 155 ?D07 2007 ]1

SUBCHAPTER 11 SUBCHAPTER

GENERAL PROVISIONS GENERAL PROVISIONS

§15-302-1 Purpose. §15-302-1 Purpose. These These rules rules are are adopted adopted under chapter under chapter 91, 91, Hawaii Hawaii Revised Revised Statutes Statutes (hereinafter (hereinafter referred to referred to as " HRS"),. as IIHRSII) and implement ,_ and implement section section 201H-181 201H-181 HRS. HRS. [Eff .lUN l~?Onl [Eff ] 1 (Auth: (Auth: HRS HRS §5201H-4, §§201H-4, J\IN 15200] 201H-181) (MU: 201H-181) RE"5201H-181) (~t'rfp': 1M~ §201H-181)

§15-302-2 Definitions. §15-302-2 Definitions. As As used used inin this this chapter chapter and the and the program's program's procedural procedural handbook: handbook: "IICorporation Corporation "ll means the Hawaii means the Hawaii housing housing finance finance and development and development corporation. corporation. "Executive director IIExecutive director"II 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. Family " means: "IIFamilyll means: (1) Two (1) Two or or more more persons persons whowho live live or or intend intend toto live together as a unit and whose income and live together as a unit and whose income and resources are resources are available available to to meet meet the the family's family's need and need and who who may, may, butbut need need not not be, be, related related by blood, by blood, marriage, marriage, or or operation operation ofof law, law, including foster including foster children children and and hanai hanai children children and whose and whose head head of of household household has has reached reached thethe age of age of majority, majority, or or is is otherwise otherwise legally legally emancipated; or emancipated; or (2) A (2) A person who is person who is pregnant pregnant oror in in the the process process of securing of securing legal legal custody of aa minor custody of minor child child

302-2 302-2

07 5 8

§15-302 -11 §15-302-1l

or children, and who has reached the age of majority or is is otherwise emancipated. amount of "Gross family income" means the total amount participant and all adult income of the participant adult family family members from all sources before deductions. from "Participant" means "Participant" means a person oror family family who contract with the corporation to executes a contract to participate in in the rent-to-own rent-to-own program. program. "Procedural handbook"II means a set of instructions, guidelines, terms, and conditions relating to relating to the rent-to-own program. "Qualified resident" "Qualified resident" means means the same as defined· under section under section 201H-32, HRS. HRS. "State" means "State" means the State of Hawaii. (E ff [Eff JUN 152007 UN 2007 ] . (Auth: HRS HRs §§201H-4, ss201H-4, 201H-181) 201H-181) (Imp: HRS §201H-181)

§15-302-3 Delegation. The corporation delegates §15-302-3 to the executive director the authority to to to implement implement carry out and carry out the purposes of this chapter. (E ff JUN 152007 [Eff 2007 1] (Auth: (Auth: HRS HRS §§201H-4, 55201H-4, 201H-181) 201H-181) (Imp: HRS §201H-181)

SUBCHAPTER 2

RENT-TO-OWN RENT-TO-OWN PROGRAM PROGRAM

§15-302-11 Purpose. The purpose of this this program program is to is to enable residents of the State to to become establishment of a rent-to-own homeowners through the establishment Under the program, a qualified program. Under qualified resident resident will will be provided an opportunity to rent to rent a housing unit for unit to five up to five years prior prior to to exercising exercising his oror her her option to purchase the unit, subject to 8ubjectto to the conditions set forth in forth in these these rules. rules. [Eff JUN ]5 [Eff 157nm 7MM7 (Auth: ] (Auth: §S201H-4, 201H-181) HRS §§201H-4, 201H-181) (Imp: HRS §20'1H-181) §201H-181)

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§15-302-12

§15-302-12 Rent-to-own program; general general provisions. (a) The corporation is is authorized to to develop or or participate in in the development development of housing projects in in which dwelling dwelling units are offered for rent rent to qualified residents who may not to not have the financial capability to capability to purchase a dwelling unit unit at at the time of initial occupancy, but but who demonstrate a desire and potential capability potential capability of being able to to purchase the unit within five unit five years as determined by the corporation. (b) The sales price of the dwelling unit unit shall shall be established at at the beginning of the rentalrental term term and shall remain in in effect effect for the first five five years after rental agreement the rental agreement is is executed. (c) participant shall The participant shall have the option of purchasing the unit unit at at any time within the five-year period and shallshall have the right right to to remain in in the unit unit at least five for at five years provided that that all conditions set forth forth in in these rules are met. met. (d) During the period that the participant participant rents following shall apply: the unit, the following (1) The corporation shallshall credit a portion of the participant's rent rent toward the purchase price of the unit, which amount amount shall be project-by-project basis; determined on a project-by-project (2) participant shall learn The participant learn the responsibilities of homeownership and begin to save money toward the purchase of the to home by participating in home in a homeownership counseling program program approved by the corporation; (3) The corporation shall have the right right to to verify annual basis that the verify on an annual participant is participant is making sufficient sufficient progress saving money toward saving for moneyfor'the purchase of the unit, and if it is is determined thatthat the participant is participant is not not making sufficient sufficient progress, the corporation shall shall have the right to right to terminate the contract contract and offer offer unit to the unit to another another potential potential purchaser purchaser with all rental amounts paid to to date being forfeited; forfeited; and

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27 58

§15-302-13 §15-302-13

(4) (4) The participant The participant shall shall perform perform minor minor maintenance on maintenance on the the dwelling dwelling unit, unit, with with major major maintenance being maintenance being provided provided by the by the corporation corporation or or the the owner owner of of the the project, project, if if the owner the owner isis other other than than the the corporation. corporation. When aa participant (e) When (e) participant decides decides to to exercise exercise his his or her or her option option to to purchase purchase the the unit, unit, in in order order toto qualify for qualify for aa first first mortgage, mortgage, the the participant participant must must satisfy conventional satisfy conventional lender lender requirements requirements oror requirements under requirements under any any ofof the the corporation's corporation's mortgage mortgage lending programs. lending programs. In rural In rural areas, areas, financing financing may be may be provided through the provided through the United United States States Department Department ofof Agriculture's Rural Agriculture's Rural Development Development Program. Program. (f) If (f) If the the participant participant does does not not qualify qualify toto purchase the unit within the five-year period, the purchase the unit within the five-year period, the renter shall renter shall forfeit forfeit the the right right to to continue continue living living inin the unit the unit and and the the unit unit shall shall be be rented rented to to another another potential purchaser. potential purchaser. Renters Renters displaced displaced inin accordance accordance with this with this section section shall shall bebe given given preference preference toto occupy occupy other rental units other rental units owned owned by the corporation. by the corporation. (g) The (g) The corporation corporation shall shall have have the the right right toto re­ re­ establish the establish the sales sales price price of of the the unit unit upon upon expiration expiration of the of the option option period period oror upon upon resale resale of of the the unit. unit. ( Eff [EffJUN 15?007 J J N 15?007 � 1 (Auth: (Auth: Rs HRS ss201H-4, §§201H-4, 201H-181) 201H-181) (Imp: HRS (Imp: HRS §2 01H-181) §201H-181)

§15-302-13 §15 - 3 Process and 02 -13 Process and procedures. procedures. (a) (a) Applications for Applications for participation participation inin the the rent-to-own rent-to-own program shall be program shall be available available at at the the principal principal office office ofof the corporation the corporation or or through through aa private private realtor realtor or or property manager contracted property manager contracted to to handle handle the the rent-to-own rent-to-own program program onon behalf behalf of of the the corporation. corporation. (b) Units (b) Units shall shall be be rented rented and and sold sold under under the the rent-to-own program rent-to-own program in in accordance accordance with with all all applicable applicable state and state and federal federal fair fair housing housing laws. laws. (c) Prior (c) Prior to to identification identification ofof the the site site or or the the start of start of marketing, marketing, anan affirmative fair housing af~irmative fair housing marketing plan marketing shall be plan shall be filed filed with with the the U;S. U.S. Department Department of Housing of Housing andand Urban Urban Development, Development, and and marketing marketing ofof the the units shall units shall not not commence commence until approval of until-approval of the the plan is plan is received from received from the the department. department. Such Such approval approval shall shall be be

302-5 302-5 27 58

§15-302-13

to ensure receipt necessary to receipt of Federal Federal Housing Administration mortgage insurance. (d) system to shall establish a system The corporation shall to determine preferences by lot inin the event event that that it more qualified receives more qualified residents than it has units available. may be accepted from (e) Applications may from an applicant for more than one project applicant project sponsored by the corporation. [Eff JUN 152007 [Eff JJN 15207 ] (Auth: HRS HRS §S201H-4,,201H-181 §§201H-4 201H-181) (Imp: HRS §201H-181)

Eligibility for assistance. §15-302-14 Eligibility (a) An applicant shall be eligible applicant eligible toto participate participate in. in the rent-to-own program program ifif the applicant applicant meets all of the following requirements: following (1) qualified resident Is a qualified resident who is is domiciled inin the State; Has not (2) Has not previously received assistance under under a homeownership program program designed and under chapter implemented under chapter 201H, HRS, by the corporation or any of the counties in in the State. However, the corporation may, may, on an individual basis, allow individual who allow a person who previously purchased a dwelling sponsored by the corporation or or any of the counties to to reapply provided thatthat the corporation or or the county repurchased the dwelling unit unit and there has been a significant significant change in in one of the following: (A) Family size; (B) Place of employment; or (C) Income; provided that an applicant applicant may become eligible again if eligible if the sale sale of such person's first dwelling waswas caused by extreme family death, divorce, loss hardship such as family of employment, or a handicap, and the dwelling was dwelling was repurchased by the corporation or the county; Has an acceptable credit report; (3) Has

302-6

2758 58

§15-302-15 §15-302-15

(4 (4 At least At least one one head head ofof household household family family member member must be gainfully employed or have an must be gainfully employed or have an established source established source ofof continuing continuing income; income; (5) Has (5) Has aa sufficient sufficient income income such such that that the the monthly rental payment monthly rental payment will will not not exceed exceed forty forty per cent per cent ofof gross gross monthly income unless monthly income unless offset by offset other favorable by other favorable factors, factors, such such as as sufficient savings, sufficient savings, asas determined determined by the by the corporation; corporation; Does not (6) Does (6) not have have aa record record or or history history ofof conduct conduct or behavior, or behavior, including including past past rent rent payment payment delinquencies, which delinquencies, which may may prove detrimental prove detrimental to other to other tenants tenants or or the the corporation; corporation; and and (7) Is at least eighteen years of age. (7) Is at least eighteen years of age. (b) (b) The corporation The corporation may also establish may also establish other other requirements for participation requir~ments for participation inin the the program, such as program, such as limits. [ EffJUN asset limits. asset ffJUN 1520 152007J/ .]] (Auth: (Auth: HRSHRS §§S201H-4, 201H-181) (Imp: §201H-4, 201H-181) (Imp: HRS HRS §201H-181) §201H-181)

§15-302-15 Occupancy §15-302-15 Occupancy guidelines guidelines for for rent-to-own rent-to-own units. The units. The following following occupancy occupancy guidelines guidelines may be used may be used for rent-to-own for rent-to-own units units when when the the number number of of applicants applicants exceeds the exceeds the number number and and types types of of units units available: available:

Dwelling Dwelling Preferred Preferred Unit Size Unit Size Family Size Family Size

Bedroom 0o Bedroom 11 person person 11 Bedroom Bedroom 22 persons persons Bedroom 22 Bedroom 33 persons persons 33Bedroom Bedroom 44 persons persons 44 Bedroom Bedroom 55 persons persons

i r JUN 152007 [Eff .] (Auth: (Auth: HRs ss2o1H-4, 201H-181) HRS §§201H-4, 201H-181) (Imp: HRS (Imp: §201H-181) HRS §201H-181)

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S15-302-16 §15-302-16

§15-302-16 Participation in in a homeownership counseling program program required. All participants in (a) All in the rent-to-own program program shall be required toto participate in in a homeownership counseling and training training program program approved by the corporation. (b) The homeownership counseling program program shall training to minimally provide training to participants with adequate incomes and who are desirous of of purchasing a but lack home but lack sufficient funds for the downpayment downpayment and closing costs. The primary focus of the program closing is to program is to facilitate the home facilitate home purchase by providing strategies to save money and resolve credit to credit problems; and toto educate participants on how how to to shop for and purchase a home. [Eff JUN 152007 [Eff 2007 ] (Aut.h (Auth:: HRS §§201H-4, §S201H-4, §S201H-171, 201H-181) 201H-171, 201H-181) (Imp: HRS §§201H-171,

§15-302-17 Preference. (a) Unless otherwise provided in in these rules, the corporation maymay give to rent-to-own applicants on the basis of preference to overall need and to overall to applicants who: (1) Meet Meet the occupancy guidelines setset forth forth in in section 15-302-15; section (2) For single For single family family developments only, have, minor excluding an applicant's spouse, minor dependents, as defined in in the applicable applicable regulations of the Internal Revenue Service, and as shown on the applicant's or or co­ applicant's state state income tax tax return, divorce or other decree, or other document document which is is to to be request of submitted upon the request of the corporation. If preference preference.was was given due to to birth of a child child or or pregnancy after the taxtax return year, verification of newborn return children will children will be made made at the time of lot selection and purchase; selection from their homes (3) Have been displaced from homes because of governmental governmental action; and

@7 58 302-8

§15-302-18 §lS-302-18

(4) (4) income preference For income For preferences only, income only, income preference will preference will be be based based on family size on family size and and family income annual family annual income as established from as established from time to time time for to time the State for the State by the United by the United States Department States Department of of Housing Housing andand Urban Urban Development. Developmen t. All income for All income for family members family members are eighteen who are who years of eighteen years age and of age and older older whowho are currently are currently residing with the family and residing with the family and will physically will physically reside reside in in the the dwelling unit dwelling unit be purchased to be to purchased willwill be added to be added to the the gross gross family income family income to to determine determine the the income income preference. The preference The corporation corporation shallshall determine determine income preference the income the preference for each project. for each project. more than Not more (b) Not (b) cent of per cent twenty per than twenty all of all dwelling units in affordable dwelling affordable units in a a specific specific project, project, as as determined by determined corporation,, shall the corporation by the shall be be for for applicants applicants with a with a preference preference as as provided provided in in subsection subsection (a); (a); however, the however, corporation may the corporatio establish may establish a a limit limit the on the ~n number of number units for of units for which preference is which preference is provided provided on on aa project basis. project-by--project project-by basis. preference ss may Other preference (c) Other (c) determined by be determined may 'be by the co~poratio the corpgration for n for a a specific specific project. project. (Eff JuN [Eff JUN 152007 2007 (Auth: HRS �] (Auth: 5$201H-4, 201H-171, HRS §§201H-4, 201H-171, 201H-181) (Imp: 201H-181) (Imp: HRSHRS §§201H-171 §S201H-171, 201H-181) 201H-181)

§15-302-18 Information §lS-302-18 Information and and verificatio n. verificatio n. corporation The corporatio (a) The (a) shall require n shall applicants to require applicants to relating to information relating provide informatio provide to family family income, family income, family financial condition, size, financial size, status changes prior to and status condition, and changes prior to contract. rent-to-own contract. executing aa rent-to-own executing (b) The (b) corporation may The corporation require applicants may require and applicants and program participants to program participan to provide documentatiion to provide documentat to verify information verify informatio submitted to n sUbmitted to the the corporatio corporation n, including but including but not to: limited to: not limited (1) (1) Hawaii Hawaii state state income income tax return; tax return; tax return; income tax Federal income (2) Federal (2) return; on of Certification (3) Certificat (3) of pregnancy; and pregnancy; and documents as required by the Other documents (4) Other (4) as required by the corporation corporatio n.

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§15-302-18 §15-302-18

(c) An (c) applicant found An applicant found to to have have wilfully wilfully false information, submitted false submitted information, made made misstatements, misstatements, or or withheld important information withheld important information shall shall be be deemed deemed to to be be ineligible, provided ineligible, that the provided that the corporation corporation shall shall not not waive its waive its right right toto pursue pursue any any other other recourse recourse provided provided by law. by law. The corporation (d) The (d) corporation may establish an may establish an expiration expiration date for date for applications applications received received to purchase aa dwelling to purchase dwelling unit on unit on aa project-by-project project-by-project basis. basis. ff /.1I1N.15?M1 �[Eff UN15 2007, i ] cautn: (Auth: uss §§201H-4, HRS ss2o1µ-4, 201H-181) 201H-181) ( Imp !l'NH5 jg#1 H-181) ImpJtjf\fH).~~1H-181)

§15-302-19 Repurchase §15-302-19 Repurchase and and other other restrictions. restrictions. For units For units which which are are purchased under this purchased under this program, the program, the corporation shall corporation shall have have the the right right to to impose impose repurchase, repurchase, owner-occupancy, shared owner-occupancy, shared appreciation, appreciation, andand other other restrictions as restrictions as set set forth forth in in chapter 15-174, Hawaii cha~ter 15-174, Hawaii Administrative Rules. Administrative Rules. [Eff JUN 152007 [Eff 20)7 ] (Auth: (Auth: HRS §§201H-4, HRS §S201H-4, 201H-181) 201H-181) (Imp: (Imp: HRS HRS §201H-181) §201H-181)

§15-302-20 Rental §15-302-20 Rental agreement. agreement. (a) A (a) five-year A five-year revocable permit revocable permit as as provided provided by the corporation by the corporation shall shall constitute the constitute the rental rental agreement agreement for for units units under under this this rental program rental and shall program and shall set set forth forth the the names names of of the the authorized occupants, authorized occupants, security security deposit deposit requirements, requirements, monthly rent amount, monthly rent amount, conditions conditions of of occupancy occupancy (llhouse ("house rules"), and rules"), and obligations obligations ofof the the parties, including parties, including performance of performance of minor minor maintenance maintenance and and major major maintenance. The maintenance. The revocable revocable permit permit shall shall also also state state that any that any ongoing ongoing or or repeated repeated violations violations ofof the the house house rules established rules established oror chronic chronic delinquencies delinquencies may may result result in eviction in eviction from from the the unit, unit, with with forfeiture forfeiture ofof rental rental amounts paid amounts to date. paid to date. (b) The (b) The revocable revocable permit permit shall shall be be executed executed by by the responsible the responsible members members of of the the tenant tenant family family and and the the administrator. administrator. (c) Amendments (c) Amendments toto the the revocable revocable permit permit shall shall be be writing and in writing in and executed executed by the parties by the parties involved involved and and attached to attached to the the revocable revocable permit. permit.

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§15-302-21 §15-302-21

(d} In (d) In the the event event of the death death of the participants contract to who have executed a contract to participate in in the the rent-to-own program, the surviving immediate family rent-to-own family members shall members shall have the the option to· to- enter enter into into a new new contract provided that they contract they meet meet the the eligibility eligibility requirements of thethe program. Any Any credits accrued to to original participant the original the participant shall shall be credited to to thethe surviving qualified surviving qualified participant. participant. [Eff � � [Eff .Hm � � l1 a~ ?nn1 ,2 007, l] (Auth: HRS § §2 S201H-4, 201H-181) (Imp: HRS $204421181) HRS §"1'bllqJp

Program administration. Except §15-302-21 Program Except as law or otherwise provided by law or rule, the rental program rental program under this under this chapter chapter shall shall be administered inin accordance chapter 521, HRS, with chapter HRS, the residential residential landlord-tenant landlord-tenant [Eff JUN 152007 code. [Eff code. Il (Auth: (Auth: HRS §201H-4) $201H-4) (Imp: (Imp: HRS HRS §201H-181)

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

17-2010 and the The repeal of chapter 17-2010 the adoption adoption of Hawaii Administrative chapter 15-302, Hawaii Administrative Rules, on the Summary Page dated May 1, 2007, was Summary was adopted'on on May l, May 1, 2007 following 2007 following public hearings held held on April April 30, 2007 2007 was ,given in after public notice was in the Honolulu Star­ Star­ Bulletin, The Garden Island, The Maui Maui News, News, West West Hawaii Today, and Hawaii Hawaii Hawaii Herald-Tribune on March 30, 2007.

adoption shall take effect The repeal and adoption effect ten ten

� filing with the Office Lieutenant days after filing the Lieutenant Governor.

KING, Chairperson CHARLES KING, Hawaii Housing Finance and Hawaii Development Development Corporation

LILLIAN B. KOLLER LILLIAN

� _. of Human Services Director of

?1ZAS.T~~

--2-e ������ ������ General �������

LINDA~4 Governor Governor Hawaii State of Hawaii

Date: JUN -- 55 2007 2007 Filed Filed

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