Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred S.B. No. 1137 entitled:

begs leave to report as follows:

The purpose of this measure is to enable a condominium association to invest association funds in certificates of deposit through a Hawaii-based securities broker.

The Hawaii Chapter of the Community Associations Institute, Hawaii Association of Realtors, and Starwood Vacation Ownership, Inc., testified in support of this measure. The Hawaii Independent Condominium and Cooperative Owners opposed the measure. The Hawaii Bankers Association presented comments.

Your Committee finds that the intent of the condominium law recodification pursuant to Act 164, Session Laws of Hawaii 2004, (Act 164), was to retain the rights and protections afforded condominium associations and their members with respect to the investment of association funds. However, while current law allows a condominium association to purchase and invest association funds in financial products purchased through a securities broker located in the State, Act 164, which takes effect on July 1, 2005, will preclude these investments by prohibiting the purchase of deposits and certificates of deposit through a Hawaii-based securities broker. This measure repeals that prohibition.

To further effect the recodification's intent to maintain the rights and duties established under current law, your Committee has amended this measure to repeal amendments made to section    -149 of Act 164, in order to reflect the substance and organization of section 514A-97(c), Hawaii Revised Statutes.

Additionally, your Committee made a technical amendment to this measure for clarification.

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 S.B. No. 1137, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1137, S.D. 1, and be placed on the calendar for Third Reading.