STAND. COM. REP. NO. 2742

                                   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 Ways and Means, to which was referred S.B.
No. 2578, S.D. 1, entitled: 

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

begs leave to report as follows:

     The purpose of this bill is to establish a fair market
standard for determining the value of the leased fee interest for
condominium and cooperative housing corporation lease-to-fee
conversion.

     More specifically, the bill provides for the following fair
market value conversion appraisal method to compute the value of
a lease-to-fee conversion:

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

     (2)  A fee owner's total interest in the property will be
          calculated by deducting the lessee's interest, which is

 
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                                   STAND. COM. REP. NO. 2742
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          calculated in conformance with the USPAP, from the fair
          market value of the property.

     Your Committee finds that this bill applies to all leases
entered into on or after the effective date of the bill and
applies to leases entered into prior to the effective date of the
bill only if the lessor and lessee agree to use the fair market
value standard or if the lease did not specify an appraisal
method.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
2578, S.D. 1, and recommends that it pass Third Reading.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
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