THE SENATE	S.C.R. NO.	90
TWENTY-SIXTH LEGISLATURE, 2012		S.D. 1
STATE OF HAWAII

SENATE CONCURRENT

RESOLUTION

REQUESTING THE LEGISLATIVE REFERENCE BUREAU TO UPDATE THEIR 2003 REPORT ANALYZING the major problems faced by commercial lessees by incorporating an economic analysis to determine if there is a nexus between the existence of high lease rents in Hawaii and the stagnation of Hawaii's economy.

     WHEREAS, commercial properties in the State remain in the hands of a few large landowners who maintain a system of leasehold tenure and continue to establish long-term leases; and

     WHEREAS, in 2003 the Legislature requested the Legislative Reference Bureau to study the major problems facing commercial lessees; and

     WHEREAS, the Legislative Reference Bureau's report contained feedback from lessees and lessors, and also reviewed information from real estate analysts, real property tax data, an economic report prepared by SMS, and information from the Department of Business, Economic Development, and Tourism; and

     WHEREAS, one of the concluding observations noted in the report was that the feedback for the report indicated there was a lack of available fee simple commercial property on the market; and

     WHEREAS, the report also observed that the primary problem lessees in the State face tended to stem from supply and demand; and

     WHEREAS, there has been an increase in the outlying areas on Oahu of fee simple, zoned properties since the 2003 report, thus allowing for a comparative analysis of market behaviors through changing economic conditions; and

     WHEREAS, ground rents have been previously identified as a major expense to business and have continued to increase at rates that may inhibit robust economic growth; and

     WHEREAS, the State's need for economic revitalization would be furthered by a healthy leasehold system in which the risks assumed by the respective parties of the lease, the benefits created by the development, and activities established on the leasehold property are equitably reflected in the setting of the ground rents under the terms of the lease; and

     WHEREAS, potential legislation that mandates the alteration of existing lease agreements must meet certain criteria, including whether the legislation was designed to promote a significant and legitimate public purpose; and

     WHEREAS, the Legislature finds that sustained economic growth of the State's economy is a significant and legitimate public purpose; and

     WHEREAS, a thorough economic analysis should be conducted to determine if there is a nexus between the existence of high lease rents in Hawaii and the stagnation of Hawaii's economy; and

     WHEREAS, almost ten years have passed since an economic analysis was undertaken and incorporated into a report on the problems faced by commercial lessees; now, therefore,

     BE IT RESOLVED by the Senate of the Twenty-sixth Legislature of the State of Hawaii, Regular Session of 2012, the House of Representatives concurring, that the Legislative Reference Bureau is requested to update their 2003 report analyzing the major problems faced by commercial lessees by incorporating an economic analysis to determine if there is a nexus between the existence of high lease rents in Hawaii and the stagnation of Hawaii's economy; and

     BE IT FURTHER RESOLVED that the Research and Economic Analysis Division of the Department of Business, Economic Development, and Tourism and the Economic Research Organization at the University of Hawaii at Manoa are requested to conduct the economic analysis; and

     BE IT FURTHER RESOLVED that the Research and Economic Analysis Division of the Department of Business, Economic Development, and Tourism and the Economic Research Organization at the University of Hawaii at Manoa are requested to transmit a draft report of the economic analysis, including any proposed legislation, to the Legislative Reference Bureau no later than November 1, 2012; and

     BE IT FURTHER RESOLVED that the Legislative Reference Bureau is requested to submit a final report of the economic analysis, including any proposed legislation, to the Legislature no later than twenty days prior to the convening of the Regular Session of 2013; and

     BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Director of the Legislative Reference Bureau, Director of Business, Economic Development, and Tourism, and Economic Research Organization at the University of Hawaii at Manoa.

Report Title:

Commercial Lessees; Economic Analysis; DBEDT; LRB