Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Consumer Protection & Commerce, to which was referred S.B. No. 1137, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this bill is to increase investment options for associations that are subject to the provisions of the recodified condominium law, by amending Act 164, Session Laws of Hawaii 2004, to allow a condominium association to retain a Hawaii-based securities broker to invest association funds in certificates of deposit (CDs) from out-of-state lenders.

The Hawaii Association of Realtors, Hawaii Bankers Association, and Pahio Resorts, Inc., submitted testimony in support of this measure. Community Associations Institute Hawaii supported the bill with amendments. The Hawaii Independent Condominium and Cooperative Owners submitted testimony in opposition to this measure.

Your Committee finds that Act 164, which is set to become effective July 1, 2005, eliminates the ability of condominium associations to purchase CDs from out-of-state financial institutions. However, the current condominium law authorizes this, so long as the CDs are purchased through a securities broker with an office or base of operation in Hawaii.

Your Committee finds that by returning the recodified condominium law to the status quo, this bill will give associations subject to that law, a greater diversity of investment options for their funds.

As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1137, S.D. 1, recommends that it pass Second Reading and be referred to the Committee on Finance.