Title 17 – Chapter 2015 – Real Property Lease Rent Renegotiations

DEPARTMENT OF HUMAN 	SERVICES
Repeal 	of 	Chapter 	15-177 	and
Adoption 	of Chapter 	17-2015
Hawaii 	Administrative Rules
October 	21, 	2004
1. 	Chapter 	15-177 	of Title 	15, 	Hawaii
Administrative 	Rules, 	is 	repealed.
2. 	Chapter 2015 	of Title 	17, 	Hawaii
Administrative Rules, 	entitled 	"Real 	Property Lease
Rent 	Renegotiations" 	is 	adopted.

HAWAII ADMINISTRATIVE 	RULES
TITLE 	15
DEPARTMENT OF BUSINESS, 	ECONOMIC 	DEVELOPMENT
AND TOURISM
SUBTITLE 	14
HOUSING AND COMMUNITY 	DEVELOPMENT 	CORPORATION OF
HAWAII
CHAPTER 	177
REAL 	PROPERTY 	LEASE 	RENT 	RENEGOTIATIONS
Repealed
§§15-177-1 	to 	15-177-15 Repealed. 	[R 	NOV 15 2004 	)

HAWAII 	ADMINISTRATIVE 	RULES
TITLE 	17
DEPARTM8NT OF HUMAN 	SERVICES
SUBTITLE 	5
HODS.ING·. ANb tto~UNITY 	DEVELOPMENT 	CORPORATION OF
HAWAII
CHAPTER 	2015
REAL 	PROPERTY 	LEASE 	RENT 	RENEGOTIATIONS
Subchapter 	1 	General 	Provisions
§17-2015-1
§17-2015-2
Purpose and 	applicability
Definitions
Subchapter 	2 	Lease 	Rent 	Renegotiations
§17-2015-11
§17-2015-12
§17-2015-13
§17-2015-14
§17-2015-15
Qualifying 	requirements 	for 	arbitration
of 	renegotiation 	of 	lease 	rent
Request 	for 	arbitration
Review 	of application and determination
of 	eligibility
Selection and designation 	of 	an
arbitrator 	and 	execution 	of 	contract
Arbitration proceedings
Historical 	note: 	Chapter 	2015 	of 	Title 	17,
Hawaii Administrative 	Rules, 	is 	based 	substantially
upon 	Chapter 	381 	of 	Title 	6, 	Hawaii 	Administrative
Rules, 	[Eff 	9/25/90; 	R 10/25/99), 	and Chapter 	177 	of
Title 	15, 	Hawaii 	Administrative 	Rules 	[Eff 	10/25/99;
R 	NOV 1 5 2004 J
2015-1 ·2,6 ;11

2 6 	t 1
§17-2015-
SUBCHAPTER 1
GENERAL 	PROVISIONS
§17-2015-1 	Purpose 	and 	applicability. 	This
chapter 	implements 	chapter 	519, 	HRS, 	and 	applies 	to
all 	residential 	leasehold lots 	and 	leases 	of 	~eal
property by 	cooperative 	housing 	corRoAatioDs 	as
defined 	in 	chapter 	519, 	HRS. 	[Eff 	NuV 	15 2004 	]
(Auth: 	HRS 	§§91-2; 	201G-4) 	(Imp: 	HRS 	§§519-2, 	519-3)
§17-2015-2 	Definitions. 	Unless 	otherwise 	clear
from 	the 	context 	or 	unless 	further 	defined 	in 	this
chapter, 	the 	definition 	of 	"Lease,,. 	and 	"Lot, 11 in
section 	516-1, 	and 	definitions 	in 	chapter 	519, 	HRS,
shall 	apply 	to 	this 	chapter. 	In 	addition, 	as 	used 	in
this 	chapter:
ttAdvance 	deposit" 	means 	an 	amount 	determined by
the 	corporation, 	which 	shall 	be 	paid in 	advance 	and 	is
to be 	applied 	to 	expenses 	and 	fees 	of 	the 	corporation
or 	its 	designee 	for 	arbitration 	proceedings.
n'A.:A.A" means 	the 	American 	Arbitration Association,
a 	private, 	public 	service, 	not-for 	profit 	organization
offering 	dispute 	settlement 	services 	in 	a 	variety of
industries 	and 	businesses.
"Corporation" means 	the 	housing 	and community
development 	corporation of 	Hawaii 	created 	under
chapter 	201G, 	Hawaii 	Revised Statutes.
"Executive 	Director•' 	means 	the 	executive 	director
of 	the 	corporation 	or 	the 	executive 	director 1 s
designated 	representative.
nGroup 	of 	lessees" 	means 	more 	than 	one 	lessee
having 	leasehold 	interests 	in 	separate 	residential
lots 	within 	the 	same 	development 	tract 	or 	cooperative
housing 	corporation.
"Group 	of 	lessors" 	means more 	than 	one 	lessor
having 	fee 	ownership 	interest 	of 	residential 	lots 	in
the 	same 	development 	tract 	or 	fee 	ownership 	interest
in 	the 	land 	leased 	to 	a 	cooperative 	housing
corporation.
'' Party 11 means 	a 	lessee 	or 	group 	of 	lessees 	or 	a
2015-2

§17-2015-11
lessor 	or 	a 	group 	of 	lessors.
"Per diem 	rate" 	means 	the 	dai)..y 	rate 	which may 	be
paid 	to 	an 	arbitrator 	for 	profess1ona1· 	services 	in
conducting 	arbitration 	proceedings 	for 	renegotiation
of 	lease 	rent 	cases. 	The 	arbitration 	proceedings
include 	services 	such 	as, 	but 	are 	not 	limited 	to,
prehearing 	conferences, 	hearings, 	study of 	the
positions 	and 	presentations 	of 	the 	parties 1 	providing
meeting 	facilities, 	field 	inspections 	of 	real 	property
site(s}, 	typing, 	reproduction, 	and preparation of
award. 	Not 	included as 	part 	of 	the per diem 	rate 	are
costs 	associated with 	neighbor 	island 	travel 	(air 	and
ground 	transportation 	and 	lodging 	where 	appropriate)
plus 	costs 	of 	travel 	locally by automobile 	to 	points
in 	excess 	of 	thirty minutes 	from 	an 	arbitrator's
office. 	Engagement 	in the 	performance of 	any 	tasks 	of
the 	arbitration 	proceedings 	process 	for 	a 	period 	of
more 	than 	six 	hours 	in 	a 	single 	day 	qualifies 	for 	the
full 	per 	diem 	rate 	and performance 	of 	those 	tasks 	in 	a
single 	day totaling 	less 	than 	two 	hours 	qualifies 	for
one-fourth of 	the 	per 	diem 	rate, 	two 	hours 	of more 	but
less 	than 	four 	hours 	qualifies 	for 	one-half 	of 	the 	per
diem rate, 	and 	four 	hours 	or more 	qualifies 	for 	three-
fourths 	of 	the per 	diem rate.
"Renegotiations" 	means 	deliberations 	between a
lessee 	and 	lessor 	for 	determining 	a 	new 	lease 	rent 	at
the 	time 	the~ia~pe 	is 	reopened 	as 	provided 	in 	chapter
519. 	[Eff 	N 	V li> 2004 	J 	(Auth: 	HRS 	§201G-4)
(Imp: 	HRS 	§§519-1, 	519-2, 	519-3)
SUBCHAPTER 2
LEASE 	RENT 	RENEGOTIATIONS
§17-2015-11 	Qualifying 	requirements 	for
arbitration 	of 	renegotiation 	of 	lease 	rent. 	All
leases 	for 	residential 	leasehold 	lots 	and 	all 	leases,
including 	subleases 	executed 	or 	acquired 	by assignment
by 	cooperative 	housing 	corporations 	shall 	be 	eligible
and 	considered 	qualified 	for 	arbitration 	if 	the
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§17-2015-12
criteria 	outlined 	in 	sections 	519-2 	or 	519-3, 	HRS, 	are
met. 	[Eff 	Mny 1 ~
20041 	(Auth: 	HRS 	§201G-4) 	(Imp:
HRS 	§§519-2, 	5~-3t
§17-2015-12 	Request 	for 	arbitration. 	(a) 	When 	a
lessee 	or group 	of 	lessees 	and 	a 	lessor 	or 	group 	of
lessors 	cannot 	agree 	on a 	renegotiated 	lease 	rent 	and
the 	lease meets 	the 	requirements 	for 	arbitration 	under
chapter 	519, 	HRS, 	either 	party may 	request 	the
corporation 	to 	arbitrate 	the 	renegotiations 	of 	lease
rent. 	The 	request 	for 	arbitration 	shall 	include 	the
following:
(1} 	Description 	of 	the 	property 	including 	its
location 	and 	tax 	map 	key number;
(2) 	Name, 	address, 	and 	business 	and home
telephone 	numbers, 	as 	appropriate, 	of 	each
party;
(3) 	Name, 	address, 	and 	business 	and 	home
telephone 	numbers, 	as 	appropriate, 	of 	the
representative 	(if 	any) 	for 	each 	party;
{4) 	Signature 	sheet 	with 	the 	signatures 	of 	the
party 	initiating 	the 	request;
(5) 	Copies 	of 	all 	current 	lease 	documents
applicable 	to 	the 	requested 	action, 	and 	if
applicable, 	copies 	of 	any 	assignment 	of
lease; 	and 	, 	. 'i 	,
(6) 	Negotiation documents 	and a Yiatrative
statement 	on 	the 	current 	status 	of
r~negotiations 	including 	the 	last 	offers 	of
the 	parties, 	if 	available.
(b) 	The party 	initiating 	the 	request 	for
arbitration 	shall 	submit 	its 	portion 	of 	the 	advance
deposit 	with 	the 	filing 	of 	the 	request 	for
arbitration. 	The 	responding 	party 	shall 	pay 	its 	share
of 	the 	advance 	deposit 	upon 	notification 	from 	the
corporation 	that 	the 	lease meets 	the 	criteria 	for
arbitration 	as 	outlined 	~n 	sections 	519-2 	or 	519-3,
HRS. 	The 	advance 	deposit 	shall be 	in 	the 	form 	of 	a
cashier's 	or 	certified check 	or money order 	in 	the
following 	amounts:
2015-4

§17-20:.s-:2
(1) 	$1,200 	per party 	participating 	in 	the
arbitration 	proceedings 	for 	residential
lots; 	or
(2) 	$1,200 	per 	cooperative 	housing 	corporation
and 	lessor 	participating 	in 	the 	arbitration
proceedings.
(c) 	If 	the 	request 	for 	arbitr~tion~90~$}~ot 	meet
the 	criteria 	for 	arbitration, 	the 	initiating 	party
shall 	be 	entitled 	to 	a 	refund 	of 	the 	advance 	deposit
and 	the 	responding 	party 	will 	not 	be 	required 	to 	pay
its 	portion of 	the 	advance 	deposit.
{d) 	If 	the 	request 	for 	arbitration meets 	the
criteria 	for 	arbitration 	as 	outlined in 	sections 	519-2
or 	519-3, 	HRS, 	and 	if 	the 	parties 	have 	paid the
advance 	deposit 	and 	the 	dispute 	is 	settled 	or
withdrawn 	from 	arbitration 	before 	the 	contract 	for
arbitration 	is 	executed among 	the 	parties 	and 	the
arbitrator, 	or 	the 	contract 	is 	executed, 	but 	before
arbitration 	proceedings 	commence, 	the 	full 	amount 	of
each party 1 s 	advance 	deposit 	shall 	be 	refunded.
(e) 	If 	the 	parties 	settle 	or withdraw 	their
dispute 	from 	arbitration 	after 	the 	contract 	has 	been
executed, 	but 	before 	the 	arbitration proceedings
commence, 	the 	arbitrator 	shall 	be 	compensated 	with
one-fourth 	of 	the per 	diem 	rate, 	the 	cost 	of 	which
shall 	be 	shared equally by 	the 	parti'f:f(f~\ :··!f}1e,,'P;~.,fment
shall 	be 	deducted 	from 	the 	advance 	deposits m~de 	by
the 	parties. 	The 	balance 	of 	the 	deposits 	is 	to 	be
refunded 	to 	the 	parties 	in 	equal 	amounts.
(f) 	If 	the 	parties 	settle 	or withdraw 	their
dispute 	from 	arbitration 	any 	time 	after 	the
arbitration 	proceedings 	commence 	and before 	the 	award
is 	rendered, 	the 	arbitrator 	shall 	refund 	all 	of 	the
unexpended 	portion 	of 	the 	advance 	deposit 	to 	the
parties 	io 	equal 	amounts.
(g) 	Fees 	to 	cover 	the 	arbitration proceedings
shall 	be 	set 	by 	the 	corporation 	at 	a 	per diem rate
which 	shall 	be 	reviewed 	in 	conjunction 	with 	updating
the master 	list 	of 	arbitrators 	to determine 	whether
any 	adjustment 	in 	the 	rate 	amount 	is 	warranted.
(h) 	All 	projected 	expenses 	and 	fees 	of 	the
arbitration 	proceedings 	shall 	be 	borne 	equally by 	each
2015-5
2 6 1 t

§17-2015-12
of 	the 	parties 	as 	prescribed 	in 	chapter 	519, 	HRS, 	and
this 	chapter.
(i) 	Failure 	by 	either 	party 	to 	pay 	their
respective 	share 	of 	the 	advance 	deposit 	and 	costs 	of
arbitration 	proceedings, 	as 	may 	be 	required, 	shall
result 	in 	sanctions 	as 	set 	forth 	in 	chapter 	519, 	HRS.
(Eff 	NOV 1:, LU04 ] 	(Auth: 	HRS 	§201G-4) 	{Imp: 	HRS
§§519-2, 	519-3)
§17-2015-13 	Review of 	application 	and
determination 	of 	eligibility. 	(a) 	Not 	later 	than
fifteen 	working 	days 	after 	receiving 	a 	request 	for
arbitration, 	the 	administrator 	shall 	review 	the 	case
to 	determine 	whether 	the 	lease 	for 	residential 	or
cooperative 	housing 	corporation property 	satisfies 	the
criteria 	outlined 	in 	sections 	519-2 	or 	519-3, 	HRS, 	and
this 	chapter, 	and 	the 	corporation 	shall 	notify 	each
party 	of 	the 	corporation 1 s 	determination.
{b) 	If 	the 	corporation 	finds 	that 	the 	lease 	does
not 	meet 	the 	criteria 	for 	arbitration, 	the 	corporation
shall 	take 	no 	further 	action.
(c) 	If 	the 	corporation 	determines 	that 	the 	lease
does 	meet 	the 	criteria 	for 	arbitration, 	the
corporation 	shall 	proceed 	to 	designate 	an 	arbitrator.
[Eff 	NOY 15 2004 	] 	(Auth: 	HRS 	§201G-4) 	{Imp: 	HRS
§§519-t; 	51~-3)
§17-2015-14 	Selection 	and 	designation 	of 	an
arbitrator 	and 	execution 	of 	contract. 	(a) 	The
corporation may 	appoint 	an 	arbitrator 	from 	the
corporation's 	staff 	or may 	appoint 	a 	designee 	from 	the
private 	sector 	to 	arbitrate 	the 	renegotiation 	of 	lease
rent 	terms.
(b} 	The 	corporation 	shall 	establish 	a 	master
list 	of 	all 	persons 	responding 	to 	solicitations 	for
qualification 	statements 	who meet 	the 	requirements 	for
an 	arbitrator, 	as 	set 	forth 	in 	subsection 	(c) 	to
arbitrate 	renegotiation 	of 	lease 	rent 	cases.
Additionally, 	the 	corporation 	shall 	update 	its 	master
2015-6

list 	of 	qualified 	arbitrators 	each 	year 	or 	at 	any
other 	time 	deemed 	necessary by 	the 	corporation.
§17-20:s-:...;
(c) 	The 	requirements 	for 	a 	person 	to 	act 	as 	an
arbitrator 	to 	arbitrate 	renegotiation 	of 	lease 	rent
cases 	shall 	be 	as 	follows:
{1) 	A real 	estate 	appraiser who 	is 	certified by
the 	State 	of 	Hawaii, 	with 	a 	minimum 	of 	three
years 	of 	experience; 	and
(2) 	At 	least 	one 	of 	the 	following:
(A) 	Successful 	completion 	of 	training 	in
arbitration 	rules 	and procedures
(conducted or 	sanctioned by 	the
American Arbitration 	Association;
(B) 	Admission 	to 	the 	panel 	of 	the American
Arbitration Association; 	or
(C} 	Performance 	as 	an 	arbitrator 	in
rendering 	a 	decision 	in 	at 	least 	three
real 	property 	arbitration 	cases; 	or
(3) 	A person mutually 	selected by both 	parties.
(d) 	If- \the; CV>rr,bration 	decides 	to 	designate 	an
arbitrator 	from 	the 	private 	sector, 	the 	corporation
shall 	furnish 	each party with 	an 	identical 	list 	of 	up
to 	seven 	qualified 	arbitrators 	from 	the 	corporation's
master 	list 	of 	qualified 	arbitrators, 	and 	each 	party
shall 	have 	the 	right 	to 	peremptorily cross 	off 	one
name. 	Each party 	shall 	then 	rank the 	remaining 	names
on 	the 	list 	in 	the 	order 	of 	preference 	and 	shall
return 	the 	list 	to 	the 	corporation 	within 	ten days
from 	the 	date 	of 	the 	referral 	for 	further
consideration. 	The 	corporation 	shall 	assume 	that 	each
party 	concurs 	in 	the 	selection 	of 	any 	named arbitrator
remaining 	on 	their 	respective 	lists.
(e) 	The 	corporation 	shall 	review 	both 	lists 	to
determine 	if 	there 	is 	a 	mutual 	choice 	by 	preference 	of
the 	proposed 	arbitrators 	remaining 	on 	the 	lists. 	If
there 	is 	a 	named arbitrator 	of 	mutual 	choice, 	that
arbitrator 	shall 	be 	selected 	and appointed by 	the
administrator. 	· · · •	. . 	. . , 	/ ~- . •l
(f} 	If 	for 	some 	ie~son, 	the preferred, 	mutual
choice 	arbitrator 	is 	unable 	to 	accept 	the 	appointment,
the 	corporation 	shall 	select 	and 	appoint 	the 	next
mutually 	ranked 	arbitrator by preference. 	If 	there
2015-7 	·2-6 	l 1

2 6 ~\ \
§17-2015-14·
is 	no 	other mutually 	ranked 	choice by preference, 	the
corporation 	shall 	make 	a 	selection and 	appointment
from 	the 	remaining names 	on 	the 	list 	provided 	to 	the
parties, 	and 	if 	for 	any 	reason 	an 	appointment 	cannot
be made 	from 	those 	arbitrators 	remaining 	on 	the 	list
provided 	to 	the 	parties, 	the 	corporation may 	appoint
an 	arbitrator 	without 	the 	referral 	of 	an 	additional
list 	of 	arbitrators 	to 	either 	party.
(g) 	Within 	ten 	calendar 	days 	after 	the 	selection
and 	appointment 	of 	an 	arbitrator 	by 	the 	administrator,
the 	corporation 	shall:
(1) 	Notify 	each party 	and arbitrator; 	and
(2) 	Request 	a written 	disclosure 	statement 	from
the 	selected arbitrator.
(h) 	If, 	after 	review 	of 	the 	arbitrator's
disclosure 	statement, 	the parties 	have no 	objections
to 	the 	selection based 	on 	the 	disclosure 	statement,
the 	corporation 	shall 	prepare 	and 	forward 	the
arbitration 	services 	contract 	to 	each farti 	and 	the
arbitrator 	for 	execution. 	[Eff 	NOV 	5 2u04 	J
(Auth: 	HRS 	§201G-4) 	(Imp: 	HRS 	§§519-2, 	519-3)
§17-2015-15 	Arbitration proceedings. 	(a) 	The
arbitrator 	shall 	pursue 	the 	arbitration of 	the
renegotiations 	in 	accordance 	with 	the 	arbitration
services 	contract 	and 	chapter 	658A, 	HRS.
(b) 	The 	arbitrator 	shall 	render 	an 	award, 	a 	copy
of 	which 	the 	arbitrator 	shall 	send 	to 	each 	party 	and
the 	corporation. 	The 	award 	shall 	be 	completed 	not
later 	than 	thirty days 	from 	the 	date 	of 	the 	last
hearing.
(c) 	The 	corporation 	shall 	not 	participate 	in 	the
arbitration proceedings 	where 	it 	has 	designated an
arbitrator 	from 	the 	private 	sector 	to 	arbitrate 	the
case, 	provided 	the 	corporation 	shall 	monitor 	the
proceedings 	and may 	act 	as 	a 	resource 	in 	the
arbitration. 	[Eff 	NOV 1 5 ,nn4 ] 	(Auth: 	HRS
§201G-4) 	(Imp: 	HRS 	§§519-~, 	~f§'-3; 	chapter 	648)
2015-8

DEPARrI1MEWl' OF HUMAN 	SERVICES
The 	repeal 	of 	chapter 	15-177 	and 	the 	adoption 	of
chapter 	17-2015, 	Hawaii Administrative 	Rules, 	on the
Summary 	Page 	dated October 	21, 	2004, 	was 	adopted on
October 	21, 	2004, 	following 	public 	hearings 	held on
September 	14, 	2004, 	after 	public 	notice 	was 	given 	in
the 	Honolulu 	Star-Bulletin, 	The 	Garden 	Isle, 	The Maui
Times, 	West 	Hawaii 	Today, 	and Hawaii 	Herald-Tribune
newspapers 	on August 	12, 	2004.
The 	repeal 	and 	adoption 	shall 	take 	effect 	ten
days 	after 	filing 	with 	the 	Office 	of 	the 	Lieutenant
Governor.
APPROVED AS 	TO 	FORM:
8£: Olti 	v- AON 	170..
IZJc9r£CHARLES 	A. 	STED, 	Chairperson
Housing 	and Community
D~pment 	Corporation 	of
,.,,---Hawaii
/ 	(
(_J~·
THEODORE 	E:. 	LIO
Director 	of 	Business,
Economic 	Development 	and
Tourism
LIN~~
Governor
State 	of 	Hawaii
Date: 	ROY• 3 20M
Filed