The study by the Hawaiʻi Budget & Policy Center of the nonprofit Hawaiʻi Appleseed Center for Law & Economic Justice concluded that the state could produce leasehold condos with two bedrooms and two bathrooms for $400,000, in contrast to $600,000 for a comparable fee-simple condo built by a private developer.

The report also found that buyer demand for such a product would likely be high.

A $400,000 price would be affordable to households earning about $80,000 a year, or 80 percent of the median income in Honolulu, according to the report. In 2022 the median price for all previously owned condos sold on Oʻahu was $510,000.

The analysis, however, also concluded there could be a big problem with the concept at or near the end of the land lease term when a homeowner would lose their home to the state.

Under the leasehold condo model, home buyers pay monthly maintenance fees to maintain the quality of the property, similar to fee-simple condo ownership, and the state would receive ownership of all units at the end of the 99-year land lease.

In Singapore the government buys out leaseholders near the end of a lease. Doing this in Hawaiʻi, the report said, would be inconsistent with the premise of the concept being revenue-neutral to the state. A further concern, the report added, is that owners could try to convince or force the state to sell them the land under their homes.

In addition to concerns raised in the report, the state Office of Hawaiian Affairs has consistently objected to leasehold condo development on ceded lands, where OHA is entitled to a share of any revenue produced on such land once belonging to the kingdom of Hawaiʻi in order to benefit Native Hawaiians.

Still, Hawaiʻi Appleseed testified on a leasehold condo development bill in 2022 to say it would be worthy to pursue a small-scale project on nonceded state land.

SB865, if enacted into law, could produce such a test project.