STAND. COM. REP. 1430

Honolulu, Hawaii

, 2003

RE: S.B. No. 1492

S.D. 1

H.D. 2

 

 

 

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. 1492, S.D. 1, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO ASSISTED LIVING FACILITIES,"

begs leave to report as follows:

The purpose of this bill is to:

(1) Specify that an existing condominium may become an assisted living facility if a separate entity is formed and each unit owner can determine if the owner's unit will be placed in the condominium project or the assisted living facility entity;

(2) Amend the definition of "assisted living facility" and clarify that condominiums may not be assisted living facilities without the express authorization of the condominium project instruments; and

(3) Require the Department of Health (DOH) to conduct a study on the impact of the bill on condominiums that may be licensed as assisted living facilities.

Testimony in support of this bill was submitted by Assisted Living Options Hawaii. Hawaii Independent Condominium & Cooperative Owners, Hawaii Council of Associations of Apartment Owners and several individuals submitted testimony in support of the bill's Senate Draft. Several concerned individuals supported the intent of the bill. A number of individuals opposed the bill. One Kalaukaua Senior Living Association offered comments.

This bill attempts to address concerns arising from DOH's licensing of One Kalakaua Senior Living Association (One Kalakaua) as an assisted living facility. One Kalakaua is a condominium with a second floor that is operated as a skilled nursing facility, on a pay-as-you-go basis. The personnel operating the nursing facility have become One Kalakaua employees. One Kalakaua is the first condominium to apply for and receive a license as an assisted living facility.

As a provider of assisted living services, One Kalakaua was required to obtain insurance. When DOH licensed the association, this expense was distributed among all the apartment owners, as a common expense. Some of One Kalakaua's apartment owners have expressed grave concerns regarding the expenses and liabilities incurred by the association in providing assisted living services through its nursing facility. A legal suit ensued over a number of issues, including whether One Kalakaua was created or developed under its condominium declaration as an assisted living facility. As of this date, the suit is still pending.

Your Committee recognizes that the forefront concern for some One Kalakaua owners who do not use One Kalakaua's assisted living services, is the increase in common expenses for services that they do not receive or benefit from. Other residents of One Kalakaua are concerned that this bill would terminate the assisted living services they are currently receiving, and that they expected to receive when they purchased their One Kalakaua unit.

Your Committee recognizes the high costs associated with workers compensation and professional liability insurance and notes that common expenses of condominiums are usually limited to expenses of maintaining the common areas and operating the association for the benefit of all owners.

Your Committee has deliberated with various interested parties in this matter and has reached a suitable compromise that will not interfere with issues currently being litigated, and provides a way to limit the liability of a condominium association or cooperative housing corporation that offers assisted living services.

In this compromise, a condominium or cooperative housing corporation may provide assisted living services through a corporation, partnership, or association established separately and apart from the condominium association or cooperative housing corporation. This separate entity will be licensed and regulated by DOH as an assisted living facility, and will allow the association or cooperative housing corporation to avoid exposure to claims that may arise from the operation of the assisted living facility.

Your Committee acknowledges that the process by which a condominium changes its use to another, for example, from condominium under chapter 514A, Hawaii Revised Statutes (HRS), to an assisted living facility, needs further examination. Your Committee finds that this examination may be appropriately conducted in conjunction with the proposed recodification of chapter 514A, HRS, which will be presented to the Legislature next year.

After careful consideration, your Committee has amended this bill to:

(1) Specify that in addition to condominiums under chapter 514A, the bill also applies to cooperative housing corporations under chapter 421I, HRS;

(2) Allow a condominium or a cooperative housing corporation to establish a separate corporation, partnership, or association, which may enter into a contract with a provider to perform assisted living services, and become licensed and regulated as an assisted living facility by DOH;

(3) Removing the DOH study and the amendments to the definition of "assisted living facility;"

(4) Changing the effective date to July 1, 2050, to allow further discussion of the issues; and

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

 

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. 1492, S.D. 1, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1492, S.D. 1, H.D. 2.

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

 

____________________________

KENNETH T. HIRAKI, Chair