STAND. COM. REP. 1003

Honolulu, Hawaii

, 2003

RE: S.B. No. 1229

S.D. 1

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred S.B. No. 1229, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO NONPROFIT CORPORATIONS,"

begs leave to report as follows:

The purpose of this bill is to require a nonprofit corporation to comply with chapter 92, Hawaii Revised Statutes (HRS), the state sunshine law, and chapter 92F, HRS, the Uniform Information Practices Act (UIPA), also known as the state open records law, if:

(1) The corporation's bylaws provide for appointment of a majority of its board of directors by a government official or agency;

(2) The corporation's assets are payable to the State upon dissolution; or

(3) The majority of the corporation's funds are public funds.

This bill also provides that the Auditor may conduct audits of these nonprofit corporations.

 

Advocates for Consumer Rights, League of Women Voters of Hawaii, League of Women Voters—Kauai County, American Civil Liberties Union of Hawaii, and several individuals submitted testimony in support of this bill. Child and Family Service submitted comments and offered an amendment. The Office of Information Practices (OIP) supported the intent of the bill.

Your Committee finds that this bill was intended to allow increased public oversight of the decision-making and programming of two nonprofit corporations that administer public, educational, and governmental (PEG) access cable television channels -- Olelo: The Corporation for Community Television (Olelo) and Hoike: Kauai Community Television, Inc (Ho'ike).

Your Committee has determined that when the Director of the Department of Commerce and Consumer Affairs (Director) negotiated and awarded cable franchises for the islands of Oahu and Kauai under chapter 440G, HRS, the Hawaii Cable Communications Systems Law, the Director reserved the right to designate entities to operate PEG access cable channels. The PEG access operators, Olelo and Hoike, were established pursuant to the recommendations of committees appointed by the Director. The bylaws of both Hoike and Olelo require the majority of their board members to be appointed by the Director. These nonprofit corporations are funded almost entirely through funds allocated pursuant to the Director’s authority to issue and regulate cable franchises under chapter 440G, HRS. For example, funding for Olelo comes from a franchise fee collected from cable subscribers, as required by the franchise agreement negotiated between the cable company and the Director.

Your Committee finds that on September 6, 2002, the Office of Information Practices issued an opinion letter that examined the relationship between Olelo, Hoike, and the State, and found that Olelo and Hoike are corporations owned, operated, or managed by or on behalf of the State and therefore required to comply with UIPA.

Although the purpose of this bill is to apply the sunshine and open records law to Hawaii's PEG access organizations, your Committee finds that in its current form the bill is so broadly drafted that it will apply to other types of nonprofit corporations, such as Child and Family Service, or the Humane Society. Accordingly, your Committee has amended this measure by:

(1) Specifying that the law applies only to PEG access organizations;

(2) Deleting the provisions that would have applied the law to nonprofits whose assets are payable to the State upon dissolution, or the majority of whose funds are public funds;

(3) Recasting the purpose clause to reflect the narrowed scope of the bill and its intent;

(4) Changing the bill's effective date to July 1, 2050, to facilitate further discussion; and

(5) Making technical, nonsubstantive amendments for purposes of clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1229, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1229, S.D. 1, H.D. 1, and be referred to the Committee on Judiciary.

 

Respectfully submitted on behalf of the members of the Committee on Consumer Protection and Commerce,

 

____________________________

KENNETH T. HIRAKI, Chair