There is a hearing on Thursday, February 6, 2007 at 9:00 a.m. in room 016 on bills of interest to community associations before the Senate Commerce, Consumer Protection and Affordable Housing Committee before Chair Sen. Brian Taniguchi. The hearing notice discusses the following bills of interest to community associations:

SB 1619 would provide protections for long-term lessees of commercial and industrial property, including:

  • under certain circumstances, exempting the proceeds of a sale of commercial or industrial property, where the lessor sells the property to the lessee at the termination or expiration of the leasehold agreement from gross income, adjusted gross income and taxable income.
  • for spaces larger than 50,000 square feet, prohibiting a lessor from unreasonably withholding approval to transferring or encumbering the leasehold interest or repairing or improving the space.
  • for spaces larger than 50,000 square feet, prohibiting requiring lessees to develop or construct new buildings or infrastructure for leases less than 30 years.
  • for spaces larger than 50,000 square feet, requiring the lessor to accept reversion of the improvements in their existing condition that is the result of reasonable use of the improvements during the term of the lease.
  • for spaces larger than 50,000 square feet, periodic increases in lease rent must be based on the financial feasibility of the increase based on the current use of the property.

There is an issue whether this proposed bill would constitute an unconstitutional taking of property without just compensation or an unconstitutional impairment of existing contracts. In addition, it is not clear why special protections are granted to commercial and industrial lessees of spaces more than 50,000 square feet who presumably are more likely to sophisticated business people and similar protections do not exist for residential lessees or smaller commercial or industrial lessees.

Persons wishing to testify should submit 30 copies of their testimony to the committee clerk, Room 219, State Capitol, 24 hours prior to the hearing. Testimony may also be faxed if less than 5 pages in length, to the Senate Sergeant-At-Arms Office at 586-6659 or 1-800-586-6659 (toll free for neighbor islands), at least 24 hours prior to the hearing. When faxing, please indicate to whom the testimony is being submitted, the date and time of the hearing, and the required number of copies needed for submittal.