STAND. COM. REP. NO.  1472

Honolulu, Hawaii

                , 2007

RE:   S.B. No. 600

      H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Sir:

     Your Committee on Consumer Protection & Commerce, to which was referred S.B. No. 600 entitled:

"A BILL FOR AN ACT RELATING TO LEASEHOLD CONVERSION,"

begs leave to report as follows:

The purpose of this bill is to provide an incentive for lessors to sell their fee interests in residential properties to lessees by temporarily excluding from taxable income 100 percent of the gain realized from the sale of the leased fee interest to the association of apartment owners or the residential cooperative corporation of the leasehold units.

     The Hawaii Association of REALTORS, Hawaii Independent Condominium & Cooperative Owners, Hawaii Legislative Action Committee of the Community Associations Institute, Hawaii Council of Associations of Apartment Owners, Kuilima Estates West Association of Apartment Owners, Kuilima Estates East Association of Apartment Owners, Monarch Properties, Inc., Association of Apartment Owners of Diamond Head Beach Hotel and Residences, and several concerned individuals testified in support of this bill.  The Department of Taxation and Tax Foundation of Hawaii submitted comments.

     Your Committee has amended this measure by changing the effective date to July 1, 2112, to encourage further discussion.

     As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 600, as amended herein, and recommends that it be referred to the Committee on Finance in the form attached hereto as S.B. No. 600, H.D. 1.

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

____________________________

ROBERT N. HERKES, Chair