Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred H.B. No. 204, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to establish restrictions on voting proxies in connection with the election of board members for planned community associations, and to provide procedures for board member election.

Your Committee received testimony in favor of this measure from four individuals. Your Committee received testimony opposing this measure from Mililani Town Association and two individuals. Your Committee received comments on this measure from the Real Estate Commission of the Department of Commerce and Consumer Affairs.

Your Committee finds that homeowners associations do not provide for the direct election of their boards of directors. Presently, members send in proxies that are exercised by the board in the election of directors. This process reduces the possibility of election of directors who are not favorably viewed by the existing board. Thus, the board of directors may be self perpetuating and this may not be in the best interest of the members of the association.

Your Committee has amended this measure by establishing procedures and restrictions on distributing proxies in order to provide a fairer process of electing homeowners association board members.

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. 204, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 204, H.D. 1, S.D. 1, and be placed on the calendar for Third Reading.