Honolulu, Hawaii

, 2002

RE: H.B. No. 2245

H.D. 1

S.D. 1



Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii


Your Committee on Commerce, Consumer Protection and Housing, to which was referred H.B. No. 2245, H.D. 1, entitled:


begs leave to report as follows:

The purpose of this measure is to reform the leasehold renegotiation process by requiring that:

(1) The fair market value per square foot be determined in conformance with the Uniform Standards of Professional Appraisal Practice;

(2) Leasehold disputes be settled by a procedure selected by the lessee and not by arbitration; and

(3) A one-time adjustment be imposed on all applicable leases renegotiated after January 1, 1990, to reflect the respective fair market values pursuant to this Act.

Testimony supporting this measure was received from the Hawaii Council of Associations of Apartment Owners, Institute of Real Estate Management, Bacon Universal, Gretzinger Corporation, Windward Business Center, LLC, Thomas Square Development, Waiakamilo Shopping Center, Waialae Plaza, Magoo's Pizza, Moilili Plaza, Snyder Family Trust/STI Industries, and thirty-six individuals.

Testimony opposing this measure was received from the Housing and Community Development Corporation of Hawaii, Castle & Cooke Properties, Inc., The Hallstorm Group, Inc., Hawaii Bankers Association, Loyalty Development Company, Ltd., The Estate of James Campbell, Kamehameha Schools, Queen Emma Foundation, Land Use Research Foundation of Hawaii, Howell & Associates, GRAPAC Properties, Maui Land & Pineapple Company, Inc., Appraisal Institute, Hawaii Association of Realtors, A & B Properties, Inc., Small Landowners of Oahu & Small Landowners Association, and eight individuals.

Your Committee finds that Hawaii's leaseholders are currently experiencing challenging economic times with the downturn in the state real estate market and overall economy. A substantial number of residential and commercial lessees, in particular, who entered into longer-term leases within the past couple of decades, are the hardest hit. Many are currently locked into paying high rents that do not reflect the current fair market values. This measure establishes a process that helps current and future lessees in ensuring lease rents are in parity with fair market values.

Your Committee recognizes that this measure is creating law that affects real property rights in a unique way. Therefore, your Committee formally requests that the Attorney General immediately review the provisions of this measure and provide an opinion on its legality and its compliance with the federal and state constitutions.

Your Committee has amended this measure by:

(1) Changing its effective date to July 1, 2020;

(2) Adding a definition of "Uniform Standards of Professional Appraisal Practice" to section 519-1, Hawaii Revised Statutes; and

(3) Making technical, nonsubstantive changes for purposes of clarity and style.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2245, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2245, H.D. 1, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection and Housing,