STAND. COM. REP. NO. 3000

Honolulu, Hawaii

RE: S.B. No. 2667

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committees on Judiciary and Ways and Means, to which was referred S.B. No. 2667, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO AFFORDABLE HOUSING,"

beg leave to report as follows:

The purpose and intent of this measure is to extend the deadline for the Hawaii Housing Finance and Development Corporation to renegotiate an existing, or issue a new, ground lease for the Front Street Apartments affordable housing project before the Corporation's requirement to initiate condemnation proceedings.

Your Committees received testimony in support of this measure from the Hawaii Housing Finance and Development Corporation and one member of the Maui County Council.

Your Committees find that the County of Maui, particularly West Maui, is facing a severe shortage of affordable housing. In 2018, the Legislature passed Act 150, Session Laws of Hawaii 2018 (Act 150), to appropriate funds in support of the Front Street Apartments in Lahaina, Maui. Pursuant to Act 150, as amended by Act 98, Session Laws of Hawaii 2019, and Act 34, Session Laws of Hawaii 2020, the Hawaii Housing Finance and Development Corporation must initiate condemnation proceedings unless, by December 31, 2021, the Corporation renegotiates the ground lease for the Front Street Apartment project or issues a new ground lease.

In 2019, the Hawaii Housing Finance and Development Corporation paid nearly $15 million to acquire the leased-fee interest in the Front Street Apartments from 3900, LLC. Ongoing issues to advance the Front Street Apartments project has inhibited the Hawaii Housing Finance and Development Corporation from obtaining a definitive appraisal report on the fair market value of the ground lease for the property. Without the report, the Hawaii Housing Finance and Development Corporation could not proceed with the renegotiation or condemnation of the ground lease by the December 31, 2021 deadline as stipulated by Act 150, as amended.

To allow the Hawaii Housing Finance and Development Corporation to carry out its responsibilities under Act 150, as amended, while also alleviating the severe affordable housing shortage in the County of Maui, this measure extends by five-years, the deadline to complete the renegotiation or condemnation of the ground lease for the Front Street Apartments affordable housing project.

As affirmed by the records of votes of the members of your Committees on Judiciary and Ways and Means that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2667, S.D. 1, and recommend that it pass Third Reading.

Respectfully submitted on behalf of the members of the Committees on Judiciary and Ways and Means,

________________________________ DONOVAN M. DELA CRUZ, Chair

________________________________ KARL RHOADS, Chair