Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2006

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred S.R. No. 71 entitled:

begs leave to report as follows:

The purpose of this measure is to request a study by the University of Hawaii on creating contributory affordable housing solutions through mandated state special assessments against real property and improvements that accrue to commercial and industrial lessors through the exercise of full-term expiratory reversion clauses in ground lease contracts entered into after December 31, 1963.

Testimony in support of the measure was submitted by two individuals. The Land Use Research Foundation of Hawaii (LURF) testified in strong opposition.

Your Committee finds that although LURF has raised a serious constitutional question relating to impairment of contracts, the study requested by this resolution may help to settle, without litigation, a controversy between certain commercial and industrial lessors and lessees. The issue is whether any profits accruing to lessors from leasehold reversionary clauses would justify a mandatory state special assessment, as proposed in the resolution.

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 concurs with the intent and purpose of S.R. No. 71 and recommends its adoption.