STAND. COM. REP. NO. 1065-00

                                 Honolulu, Hawaii
                                                   , 2000

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




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

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred S.B. No. 873, S.D. 1, entitled: 

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

begs leave to report as follows:

     The purpose of this measure is to require the use of the
Uniform Standards of Professional Appraisal Practice (USPAP) to
determine real property fair market value for condemnation and
lease renegotiation purposes.  This measure also allows for the
reopening of lease renegotiations that were concluded within the
last five years for reconsideration under USPAP standards.

     Testimony in support of this measure was submitted by Snyder
Frandzen Family Trust, STI Industries, and two concerned
citizens.

     Testimony in support of this measure, with proposed
amendments, was submitted by the Hawaii Public Interest Advocate,
Ewert & Company, LLC, and two concerned citizens.

     Testimony in opposition to this measure was submitted by the
Land Use Research Foundation of Hawaii, Castle & Cooke
Properties, Inc., Gentry Companies, Estate of James Campbell,
Mark A. Robinson Trusts, Kaneohe Ranch Company, Ltd., Loyalty
Development Company, Ltd., Small Landowners of Oahu, and the
Small Landowners Association.


 
 
                                 STAND. COM. REP. NO. 1065-00
                                 Page 2

 
     Your Committee has made the following amendments to this
measure to:

     (1)  Provide that the lease rent that is based on fair
          market value as determined by a real property appraisal
          and is less than the rental amount currently being
          paid, shall prevail over the existing lease contract
          provision which bars the lowering of lease rents upon
          renegotiations;

     (2)  Provide that any reduction in rent in the lease between
          the fee simple owner of the land and the sublessor,
          shall cause a corresponding reduction in the sublease
          between the sublessor and the sublessee; 

     (3)  Provide for a State income tax and general excise tax
          credit for the fee simple owner to the extent of the
          reduction in the lease rent;

     (4)  Provide a definition of the term "lease", "lease
          agreement", and "document"; 

     (5)  Delete the provision pertaining to the determination of
          the fair market value in conformance with USPAP
          standards; and

     (6)  Revise the effective date to July 1, 2050, to ensure
          further discussion on this bill.

     Your Committee is mindful of the fact that concerns have
been expressed as to the constitutionality of this measure.
Accordingly, a request has been made to the Attorney General to
provide a formal opinion to address the issue of whether this
bill violates either the Hawaii Constitution or United States
Constitution.

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


 
 
 
 
 
                                 STAND. COM. REP. NO. 1065-00
                                 Page 3

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



                                   ______________________________
                                   RON MENOR, Chair