STAND. COM. REP. NO. 1315

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 1282
                                     S.D. 2
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Labor and Public Employment, to which was
referred S.B. No. 1282, S.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO INVESTMENTS OF THE EMPLOYEES'
     RETIREMENT SYSTEM,"

begs leave to report as follows:

     The purpose of this bill is to authorize the Employees'
Retirement System (ERS) to invest in real estate directly or
through limited liability companies (LLC).

     The ERS testified in support of this bill with proposed
revisions.

     Your Committee notes that this bill is similar to H.B. 1036,
H.D. 2, passed out of the House of Representatives earlier this
session after public hearings before this Committee and the
Committee on Finance.

     Your Committee finds that LLCs provide advantages to
investors, such as:

     (1)  Elimination of federal and state tax;

     (2)  Centralized management; and

     (3)  Limited liability for its owners.


 
 
                                 STAND. COM. REP. NO. 1315
                                 Page 2

 
     Allowing the ERS to invest in LLC and other similar
entities, will provide different avenues of investment while
limiting the ERS's liability from personal injury and property
damage lawsuits.

     Your Committee has amended this bill by:

     (1)  Changing its effective date to August 1, 2001; and

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

     As affirmed by the record of votes of the members of your
Committee on Labor and Public Employment that is attached to this
report, your Committee is in accord with the intent and purpose
of S.B. No. 1282, S.D. 2, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as S.B. No.
1282, S.D. 2, H.D. 1, and be referred to the Committee on
Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Labor and Public
                                   Employment,



                                   ______________________________
                                   TERRY NUI YOSHINAGA, Chair