STAND. COM. REP. NO. 2375

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2578
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Government Operations and Housing, to
which was referred S.B. No. 2578 entitled: 

     "A BILL FOR AN ACT RELATING TO RESIDENTIAL LEASE-TO-FEE
     CONVERSION,"

begs leave to report as follows:

    The purpose of this measure is to establish a fair market
standard for determining the value of the leased fee interest for
residential lease-to-fee conversion.

    This measure applies to leases entered into on or after the
effective date of this measure which do not specify an appraisal
standard and applies the fair market value standard for leases prior
to this measure provided the lessor and lessee agree.

    Testimony in opposition of this measure was received from the
Hawaii Chapter of the Appraisal Institute, and the Small Landowners
of Oahu and the Small Landowners Association.  

    Your Committee has amended this measure to:

    (1)  Require that the appraisal for the valuation of a leased fee
         interest in a condominium and cooperative housing
         corporation lease-to-fee conversion be done by a licensed
         real estate appraiser using methods in conformance with the
         Uniform Standards of Professional Appraisal Practice
         (USPAP);


 
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                                   STAND. COM. REP. NO. 2375
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    (2)  Clarify that a fee owner's total interest in the property
         shall be calculated by deducting the lessee's interest,
         which is calculated in conformance with the USPAP, from the
         fair market value of the property; and

    (3)  Delete the definition of "fair market value".

    As affirmed by the record of votes of the members of your
Committee on Government Operations and Housing that is attached to
this report, your Committee is in accord with the intent and purpose
of S.B. No. 2578, as amended herein, and recommends that it pass
Second Reading in the form attached hereto as S.B. No. 2578, S.D. 1,
and be referred to the Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Government
                                   Operations and Housing,



                                   ______________________________
                                   ROD TAM, Chair

 
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