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NEWS RELEASE
Honolulu, Hawaii
News Release
July 7, 2011
GOVERNOR SUPPORTS CHANGE IN RENT VALUATION METHODS
On May 3, 2011, both Houses of the Legislature overwhelmingly passed SB 975, SD1, HD2, CD1 relating to Appraisers and on July 12, 2011, Governor Abercrombie showed his commitment to the "New Day" reform by allowing this bill to become law as Act 227.
2012 marks a pivotal year in Hawaii with numerous leasehold properties scheduled for rent resets. With the majority of Hawaii’s industrial and commercial land in just a few hands, rent resets have become increasingly adversarial as lessors’ rent demands greatly exceed fair market valuations.
SB 975 will ensure the highest quality of appraisal service and impartiality, provide transparency of process, and promote public trust as it will require appraisers, while acting as arbitrators, to certify compliance with USPAP. In addition, the public will be better served; as appraisers will be required to provide a written report explaining their findings as part of the final arbitration award. No longer will the public be left wondering how the results were determined nor will they receive just a one line award determination as is the current standard.
Citizens for Fair Valuation executive director, Michael Steiner, said “This is an important day for the consumers of Hawaii as ground lease rent arbitrations will finally come out from behind the curtain providing lessees, lessors, banks and brokers with never-before-seen data. With SB 975, appraisers will be required to certify compliance with USPAP and produce a reasoned report – the how and why - with the arbitration award.”
Steiner said, “Providing a reasoned report will allow lessors and lessees a better understanding of the appraisal process, and ultimately lower transaction costs by developing a truer range of market valuations.” “With reporting transparency and professional standards of practice in place, arbitration awards should better reflect market conditions taking into account valuation methodologies that go beyond simple comparables.”
Steiner added, “CFV appreciates the work of the legislature in providing redress in this area and to the Governor and his staff for their willingness to make change. For leasehold arbitrations, it is a ‘New Day’ in Hawaii.”
CFV is a non-profit organization of businesses with long-term ground leases in the Sand Island, Mapunapuna, and Kalihi Kai areas. It was formed in 2007 to respond to CommonWealth REIT’s (formerly known as HRPT Properties) demands for excessively high ground lease rents.
# # # #
Michael A. Steiner, Executive Director
Citizens for Fair Valuation
Email: MSteiner@SteinerAssoc.com
Phone: 808-221-5955
Web: www.FairValuation.org
Honolulu, Hawaii
News Release
July 7, 2011
GOVERNOR SUPPORTS CHANGE IN RENT VALUATION METHODS
On May 3, 2011, both Houses of the Legislature overwhelmingly passed SB 975, SD1, HD2, CD1 relating to Appraisers and on July 12, 2011, Governor Abercrombie showed his commitment to the "New Day" reform by allowing this bill to become law as Act 227.
2012 marks a pivotal year in Hawaii with numerous leasehold properties scheduled for rent resets. With the majority of Hawaii’s industrial and commercial land in just a few hands, rent resets have become increasingly adversarial as lessors’ rent demands greatly exceed fair market valuations.
SB 975 will ensure the highest quality of appraisal service and impartiality, provide transparency of process, and promote public trust as it will require appraisers, while acting as arbitrators, to certify compliance with USPAP. In addition, the public will be better served; as appraisers will be required to provide a written report explaining their findings as part of the final arbitration award. No longer will the public be left wondering how the results were determined nor will they receive just a one line award determination as is the current standard.
Citizens for Fair Valuation executive director, Michael Steiner, said “This is an important day for the consumers of Hawaii as ground lease rent arbitrations will finally come out from behind the curtain providing lessees, lessors, banks and brokers with never-before-seen data. With SB 975, appraisers will be required to certify compliance with USPAP and produce a reasoned report – the how and why - with the arbitration award.”
Steiner said, “Providing a reasoned report will allow lessors and lessees a better understanding of the appraisal process, and ultimately lower transaction costs by developing a truer range of market valuations.” “With reporting transparency and professional standards of practice in place, arbitration awards should better reflect market conditions taking into account valuation methodologies that go beyond simple comparables.”
Steiner added, “CFV appreciates the work of the legislature in providing redress in this area and to the Governor and his staff for their willingness to make change. For leasehold arbitrations, it is a ‘New Day’ in Hawaii.”
CFV is a non-profit organization of businesses with long-term ground leases in the Sand Island, Mapunapuna, and Kalihi Kai areas. It was formed in 2007 to respond to CommonWealth REIT’s (formerly known as HRPT Properties) demands for excessively high ground lease rents.
# # # #
Michael A. Steiner, Executive Director
Citizens for Fair Valuation
Email: MSteiner@SteinerAssoc.com
Phone: 808-221-5955
Web: www.FairValuation.org
Appraisal Bill Becomes Law (SB 975 is now Act 227)
Honolulu, July 12, 2011: UPDATE -
Senate Bill 975 has become law! Governor Abercrombie has allowed SB 975 to become law and we thank him and our legislators for their support of business.
The bill, which is now ACT 227, amends H.R.S. Section 466K to require appraisers, when acting as arbitrators in a rent arbitration, to "certify compliance with the current Uniform Standards of Professional Appraisal Practice (USPAP) in connection with any arbitration proceeding to determine the fair market value, fair market rental value, or fair and reasonable rent of real estate."
Act 227 also states that "the record of an award shall include but not be limited to findings of fact; the state-licensed appraiser's rationale for the award . . . and information regarding the evidence, including the data, methodologies, and analysis that provided the basis for the award."
There is still work to be done in terms of gaining support within the appraisal and legal communities; and, to that end, CFV is happy to work with DCCA Director Keali’i Lopez as well as local appraisers and attorneys to implement Act 227.
If you have a long-term grond lease and are contemplating or have an upcoming arbitration, please read Act 227 and make sure the professionals with whom you are working understand and apply the law.
Citizens for Fair Valuation thanks its members and proponents for your participation and support during this legislative session. Without community support, this bill would not have become law.
Citizens for Fair Valuation is a local, non-profit organization that exists only through our membership. There are some 80 rent resets coming due in Mapunapuna in 2012. Now is the time for you to join CFV and begin to prepare! If you would like additional information regarding CFV, please contact me.
Mahalo nui loa.
Michael Steiner, Executive Director
MSteiner@SteinerAssoc.com
808-221-5955