Honolulu, Hawaii

, 2002

RE: H.B. No. 1715

H.D. 1

S.D. 1



Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii


Your Committee on Commerce, Consumer Protection and Housing, to which was referred H.B. No. 1715, H.D. 1, entitled:


begs leave to report as follows:

The purpose of this measure is to increase the amount of time allowed for obtaining the votes necessary to approve a change to the bylaws of an association of apartment owners (AOAO).

Your Committee received testimony in support of this measure from the Real Estate Commission, Hawaiiana Management Company, Ltd., Hawaii Independent Condominium and Cooperative Owners, and six individuals.

Presently, the law requires that the requisite number of votes to approve an association's bylaw amendment must be obtained within one hundred twenty days from the mailing of the vote ballot. Your Committee finds that one hundred twenty days is an insufficient period of time in which to obtain the necessary votes. This measure proposes to extend the time period to one hundred eighty days, which several testifiers indicated is an adequate period of time, for both AOAO boards and voluntary apartment owners' committees.

Your Committee proposed and heard testimony on a Senate draft to this measure. The proposed S.D. 1 replaces the language of this measure with the language of a similar measure, S.B. No. 2471, S.D. 1, and adds provisions relating to AOAO investments. More specifically, the proposed S.D. 1:

(1) Extends the period for obtaining the bylaw amendment vote to three hundred sixty-five days, but applies this requirement only to bylaw amendments proposed by voluntary apartment owners' committees; and

(2) Allows AOAOs greater flexibility in the investment of association funds by permitting investment in instruments other than those currently specified in the law if the alternative investments are authorized pursuant to a bylaw amendment and meet other conditions and restrictions.

Your Committee received testimony opposing the alternative investment provisions from the Hawaii Council of Associations of Apartment Owners and Hawaii Independent Condominium and Cooperative Owners, and comments from the Real Estate Commission.

Upon careful consideration, your Committee has amended the measure, as received, by:

(1) Extending the period to obtain the votes to approve a bylaw amendment from one hundred twenty days to three hundred sixty-five days for both AOAO boards and volunteer apartment owners' committees;

(2) Deleting the amendments to section 514A-97, Hawaii Revised Statutes, relating to AOAO investments;

(3) Clarifying that the requirements of these amendments apply to voting ballots mailed after the Act's effective date; and

(4) Making technical, nonsubstantive amendments for clarity and to reflect preferred drafting style.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1715, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1715, H.D. 1, S.D. 1, and be placed on the calendar for Third Reading.

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