Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Judiciary and Hawaiian Affairs, to which was referred S.B. No. 1336, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to amend the right of first refusal provision in lease to fee conversions for condominiums and cooperative housing corporations.

Testimony in support of the measure was submitted by the St. Francis Healthcare System, the Queen Lili`uokalani Trust, the Small Landowners Association of Hawaii, the Small Landowners of Oahu, and four individuals. Testimony in opposition to the measure was submitted by Monarch Properties, Inc.; the Hawaii Council of Associations of Apartment Owners; and the Hawaii Independent Condominium and Cooperative Owners.

This measure provides that a co-lessor or co-owner who is not a party to the offer to sell the leased fee interest will be given the right of first refusal, provided that the co-lessor or co-owner exercises this right within a specified time period. If the co-lessor or co-owner fails to act, the association of apartment owners or cooperative housing corporation will then be given the right of first refusal for lease to fee conversions.

Your Committee notes that this bill contains a defective effective date for purposes of further discussion. Accordingly, your Committee, for those purposes, will move this measure forward for further consideration that may include a more workable limitation of the proposed exception so that only landowners that qualify as a tax exempt charitable organization would be entitled to the exception.

As affirmed by the record of votes of the members of your Committee on Judiciary and Hawaiian Affairs that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1336, S.D. 1, and recommends that it pass Third Reading.