STAND

STAND. COM. REP. NO. 1173

Honolulu, Hawaii

, 2005

RE: H.B. No. 931

H.D. 2

S.D. 1

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred H.B. No. 931, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO AFFORDABLE HOUSING,"

begs leave to report as follows:

The purpose of this measure is to prohibit the condemnation of residential development tracts that qualify as sustainable affordable developments.

The Housing and Community Development Corporation of Hawaii (HCDCH), Vice Chair of the Maui County Council, Land Use Research Foundation, Hawaii Reserves, Inc., Building Industry Association of Hawaii, UniDev, LLC, Hawaii Business Roundtable, and Plumbers and Fitters Local 675 testified in support of this measure. The Hawaii State-Wide Housing Coalition opposed the measure.

The Hawaii Land Reform Act, codified in chapter 516, Hawaii Revised Statutes, authorizes HCDCH to acquire leased fee interests in residential house lots in a development tract through voluntary proceedings or pursuant to the State's power of eminent domain. The lessee of a residential lot may then acquire the fee interest from the Corporation. This measure allows a housing development that meets certain guidelines for the provision of affordable housing to obtain an exemption from the leasehold conversion provisions of the land reform law by qualifying as a sustainable affordable development.

Your Committee finds that with the high cost of land in Hawaii, one way of making housing more affordable for purchasers is to offer it on a leasehold basis. Your Committee further finds that this measure will help to encourage landowners to make more land available for affordable workforce housing and remove some of the disincentives for the development of residential leasehold projects.

Your Committee has amended this measure:

(1) To require a lessor's exemption certification to declare the percentage of initial residential lot sales transacted in compliance with affordability guidelines, and the percentage of initial sales and resales transacted at prices not greater than eighty per cent of the residential lots' fair market values in fee;

(2) By deleting the definition of "sustainable affordable lessee's share of appreciation";

(3) By amending the definition of "sustainable affordable development":

(a) To provide that the affordability requirements applicable to a minimum of thirty per cent of the residential lots in the development tract apply to initial sales, not resales;

(b) To allow a state or county housing agency to lower the minimum percentage levels applicable to residential lots that must be offered at affordable prices if an affordable housing project includes other types of affordable housing, such as apartments;

(d) To allow a lessor to share in an appreciation of the lease upon resale;

(4) To take effect upon approval; and

(5) By making technical amendments for the purposes of clarity and consistency and to reflect preferred drafting style.

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. 931, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 931, H.D. 2, S.D. 1, and be referred to the Committee on Ways and Means.

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

		____________________________ RON MENOR, Chair