STAND. COM. REP. NO.  1907

Honolulu, Hawaii

                , 2007

RE:   S.B. No. 600

      H.D. 2

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Sir:

     Your Committee on Finance, to which was referred S.B. No. 600, H.D. 1, 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 interest 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 Council of Associations of Apartment Owners, and a concerned individual testified in support of this bill.  The Department of Taxation provided comments.

     Your Committee has amended this bill by:

     (1)  Leaving blank the percentage of gains realized upon which the exclusion is based;

     (2)  Changing the effective date to July 1, 2020, to encourage further discussion;

     (3)  Changing the period for which the exclusion is available to the 2008 and 2009 taxable years; and

     (4)  Making technical, nonsubstantive amendments for clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 600, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 600, H.D. 2.

Respectfully submitted on behalf of the members of the Committee on Finance,

____________________________

MARCUS R. OSHIRO, Chair