STAND. COM. REP. NO. 1422-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 873
                                     S.D. 1
                                     H.D. 2




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Finance, to which was referred S.B. No.
873, S.D. 1, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO REAL PROPERTY APPRAISALS,"

begs leave to report as follows:

     The purpose of this bill is to:

     (1)  Provide that during lease renegotiations for private
          lands, fair market value, if less than the current rent
          amount as determined through appraisal, shall prevail
          over any contract provision that bars the lowering of
          rent;

     (2)  Provide that any reduction in rent in the lease between
          a fee simple landowner and a sublessor shall result in
          a corresponding reduction in rent between the sublessor
          and the sublessee; and

     (3)  Establish State income tax and general excise tax
          credits for fee simple landowners in the amount of the
          reduction in rent.

     Hawaii Council of Associations of Apartment Owners and
several individuals supported this bill.

     The Tax Foundation of Hawaii, Wholesale Motors, Inc., and an
individual commented on this bill.  Public Interest Policy and

 
 
                                 STAND. COM. REP. NO. 1422-00
                                 Page 2

 
Economic Research Institute, Inc. submitted a proposed amended
draft of this bill.

     The Department of Taxation, Land Use Research Foundation of
Hawaii, Estate of James Campbell, Castle and Cooke Properties,
Inc., Hawaii Association of Realtors, Queen Emma Foundation,
Gentry-Pacific, Ltd., A&B Properties, Inc., and two individuals
opposed this bill.

     Upon further consideration, your Committee has amended this
bill by:

     (1)  Deleting the requirement that any reduction in a
          sublessor's rent shall result in a corresponding
          reduction in rent between the sublessor and the
          sublessee;

     (2)  Deleting the income and excise tax credits for fee-
          simple landowners;

     (3)  Requiring that disputes as to fair market value between
          a fee simple landowner and a lessee that occur during
          lease renegotiations be determined by appraisal and not
          by arbitration;

     (4)  Making the bill take effect upon approval; and

     (5)  Making other technical, nonsubstantive amendments for
          purposes of style and clarity.

     As affirmed by the record of votes of the members of your
Committee on Finance that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
873, S.D. 1, H.D. 1, as amended herein, and recommends that it
pass Third Reading in the form attached hereto as S.B. No. 873,
S.D. 1, H.D. 2.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Finance,



                                   ______________________________
                                   DWIGHT Y. TAKAMINE, Chair