Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred H.B. No. 544, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to reduce the buyback time from ten years to three years for the Housing and Community Development Corporation of Hawaii (HCDCH) to exercise its option.

The HCDCH testified in support of the measure.

In order to prevent speculative investment and preserve affordable housing, homeowners of affordable units in government-sponsored housing projects are prohibited from selling their homes on the open market for a period of ten years during which time the HCDCH retains the first option to buy back the property. When the residential market began to stabilize in the early to mid-1990s, resulting in the sale of market-priced homes at prices comparable to those of affordable homes, the legislature reduced the length of the buyback period. Finding that the ten-year restriction was hindering the resale of affordable units by homeowners facing financial hardship and a developer's ability to compete in the residential market, the legislature in Act 272, Session Laws of Hawaii 1998, reduced the buyback period to three years. The Act further provided that on December 31, 2000, the buyback period would revert to ten years.

Your Committee finds that current economic and residential market conditions continue to inhibit speculative investment. Therefore, in order to stimulate the construction and sale of affordable housing units, this measure re-establishes the three-year buyback period for another three and one-half years and reenacts the ten-year buyback provisions on December 31, 2004.

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. 544, H.D. 1, and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.