Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Conference on the disagreeing vote of the Senate to the amendments proposed by the House of Representatives in S.B. No. 2708, S.D. 1, H.D. 1, entitled:

having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.

The purpose of this measure is to authorize the Housing and Community Development Corporation of Hawaii (HCDCH) to waive the three-year buyback requirement for the sale of affordable housing.

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 specific number of years during which time the HCDCH retains the first option to buy back the property. Originally the buyback period was ten years, but 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 and provided that the period would revert back to ten years on December 31, 2000. Act 99, Session Laws of Hawaii 2001 (Regular Session), reestablished the three-year buyback period for another three and one-half years and provided for the law to revert back to the ten-year restriction period on December 31, 2004.

Current market and economic conditions reduce the risk of speculation in the housing market. Therefore, this measure allows the HCDCH to waive the three-year buyback provision to allow the developers of affordable housing projects to compete on more equal footing with the developers of market-priced homes. Additionally, on December 31, 2004, the buyback period will revert back to ten years and HCDCH's waiver authority is repealed.

Your Committee has amended this measure by replacing its contents with the language of the Senate version of this measure, S.D. 1. As amended, this measure authorizes a temporary waiver of the buyback and use restrictions by amending statutory law, rather than by enacting session law.

As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of S.B. No. 2708, S.D. 1, H.D. 1, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 2708, S.D. 1, H.D. 1, C.D. 1.