STAND. COM. REP. NO. 553
Honolulu, Hawaii
, 2005
RE: H.B. No. 931
H.D. 1
Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twenty-Third State Legislature
Regular Session of 2005
State of Hawaii
Sir:
Your Committees on Water, Land, & Ocean Resources and Housing, to which was referred H.B. No. 931 entitled:
"A BILL FOR AN ACT RELATING TO AFFORDABLE HOUSING,"
beg leave to report as follows:
The purpose of this bill is to encourage the development of affordable housing on leased residential lots by prohibiting lessees from exercising the rights granted to a lessee, under the Residential Leaseholds Law and Real Property Leases Law, if the lessee's residential lot is in a sustainable affordable development.
Brigham Young University of Hawaii and Hawaii Reserves, Inc., supported this bill. The Housing and Community Development Corporation of Hawaii supported the intent of this measure. The Governor, Pacific Housing Assistance Corporation, and Land Use Research Foundation of Hawaii offered comments.
Your Committees recognize the importance of providing affordable housing, especially in light of the escalating real estate property values in Hawaii. However, there were concerns raised in discussion and testimony regarding the details of this measure, including the rights of lessees affected. Your Committees encourage further review and discussion of this measure to ensure that the rights of lessees are not unduly infringed upon.
Your Committees have amended this bill by retaining its purpose and revising its substance. As amended this bill:
(1) Prohibits lessees under a sustainable affordable lease from exercising rights granted to lessees under the Condemnation of Development Tract Part and certain sections under the Rights of Lessees Part of the Residential Leaseholds Law;
(2) Exempts fee owners and lessors of land in a sustainable affordable development from penalties for violations of the Residential Leaseholds Law and from the Judicial Declaration under Part IV of the Residential Leaseholds Law;
(2) Defines and clarifies "sustainable affordable development" to mean a development tract that satisfies all of the following requirements:
(A) The initial sales price and resale price on all subsequent resales of at least 30 percent of the residential lots in the tract, including all buildings and improvements, shall be set at price levels so as to be affordable to households earning incomes qualifying under applicable affordable housing guidelines promulgated by the applicable county authority;
(B) The initial sales price and resale price on all subsequent resales of at least 51 percent of the residential lots in the development tract shall be no higher than 80 percent of the appraised value of the residential lots in fee, together with all buildings and improvements, unencumbered by the restrictions of the lease;
(C) For subparagraph (A), the percentage of median income which the initial lessees cannot exceed to determine the affordable price levels shall remain constant throughout the term of the lease;
(D) All residential lots sold at the initial sales prices are leased under sustainable affordable leases; and
(E) Residential lots in a development tract are not required to be in a single contiguous area as long as all non-contiguous lots are within a ten-mile radius of each other and leased by the same fee owner under a sustainable affordable lease;
(3) Defines and clarifies "sustainable affordable lease" to mean a lease of a residential lot in a sustainable affordable development that satisfies all of the following requirements:
(A) The land is being leased for a consideration to the fee owner below a fair market return on the appraised value of the land. Compensation to the fee owner for land, including lease rent, shall be either:
(i) Totally capitalized into the initial sales price for the residential lot, including all buildings and improvements; or
(ii) Partially capitalized with a share of appreciation paid upon resale of the residential lot;
and
(B) The lease limits the lessee's share of appreciation in the residential lot, including all buildings and improvements, upon resale to the sustainable affordable lessee's share of appreciation;
(4) Defines and clarifies "sustainable affordable lessee's share of appreciation" to mean a predetermined percentage of the lower of:
(A) The fair market value of the residential lot, including all buildings and improvements, as of the date of resale, subject to the restrictions of the sustainable affordable lease; or
(B) The lessee's purchase price for the residential lot, including all buildings and improvements, plus the lessee's share of the fair market value of additional improvements made by the lessee, plus any appreciation in the residential lot, including all buildings and improvements;
(5) Clarifies that an affidavit filed by a lessor of sustainable affordable developments to certify its qualification for the exemptions established in this bill contain:
(A) A declaration that at least 30 percent of the residential lots in the development tract are priced at initial sales prices affordable to households earning incomes qualifying under applicable affordable housing guidelines promulgated by the applicable county authority at time of initial sale;
(B) A declaration that the initial sales prices of at least 51 percent of the residential lots in the development tract shall be no higher than 80 percent of the appraised value of residential lots in fee, together with all buildings and improvements, unencumbered by the lease and explaining the calculation of the difference; and
(C) A statement of the provisions in the sustainable affordable leases that limit the resale price and the lessees' share of appreciation in the residential lot, including all buildings and improvements;
and
(6) Makes technical, nonsubstantive amendments for style,
clarity, and consistency.
As affirmed by the records of votes of the members of your Committees on Water, Land, & Ocean Resources and Housing that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 931, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 931, H.D. 1, and be referred to the Committee on Finance.
Respectfully submitted on behalf of the members of the Committees on Water, Land, & Ocean Resources and Housing,
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____________________________ MICHAEL P. KAHIKINA, Chair |
____________________________ EZRA R. KANOHO, Chair |
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