Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Transportation, to which was referred S.B. No. 562 entitled:

begs leave to report as follows:

The purpose of this bill is to clarify that motor vehicle fleet leasing contracts that contain Terminable Rental Adjustment Clause (TRAC) provisions are true leases which do not establish a sale of the vehicle or create a security interest in the vehicle.

The Hawaii Bankers Association testified in support of this measure.

TRAC vehicle leases involve the leasing of commercial fleets of motor vehicles by one business to another. Uncertainties currently exist when it comes to recognizing the true lease status of TRAC vehicle leases. Your Committee notes that this measure attempts to clarify that TRAC vehicle leases are not sales or security interests, but true leases.

As affirmed by the record of votes of the members of your Committee on Transportation that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 562, and recommends that it pass Second Reading and be referred to the Committee on Consumer Protection and Commerce.