SB2805

SECTION 1. In light of the published news reports, studies, and senate hearings regarding the problems at the bureau of conveyances, the ongoing investigations by the department of the attorney general and the state ethics commission, and the lack of any effective solutions being created or implemented at the bureau of conveyances (bureau), the legislature adopted Senate Concurrent Resolution No. 226 during the 2007 regular session. It was clear to the legislature that further action was required to address the concerns regarding the personnel, operational, and fiscal management of the bureau of conveyances as it serves an important public service as the repository of information relating to the title to land upon which homes and businesses are situated within the State. If the information in this repository is compromised, it could result in enormous potential legal and economic problems for the public.

Senate Concurrent Resolution No. 226 established a joint senate-house investigative committee to investigate the personnel, operational, and fiscal management of the bureau to ensure that the bureau serves the public at its most optimal level. The committee was required to submit its findings and recommendations to the legislature prior to the convening of the 2008 regular session.

The purpose of this Act is to effectuate a number of the recommendations of the investigative committee to:

(1) Establish a special master and an advisory council;

(2) Establish a comprehensive plan for the bureau to address specific problem areas, solve its current problems, and create strategies to remain and maintain or exceed an efficient level of operation in the future;

(3) Increase the ceiling of the bureau of conveyances special fund; and

(4) Appropriate funds from the bureau of conveyances special fund to hire a special master.

PART I

SECTION 2. (a) There is established a special master to be temporarily appointed to serve to develop and implement a comprehensive plan to assist the bureau in becoming a more efficient, effective, and accountable operation, and develop strategic initiatives for the bureau.

(b) The special master shall be selected by a selection committee composed of the following members:

(1) The president of the senate;

(2) The senate minority leader;

(3) The speaker of the house of representatives; and

(4) The minority leader of the house of representatives,

or any of their designees; provided that there is no conflict of interest or appearance of conflict of interest in serving on the selection committee. In the event of a tied vote, the final selection between the two leading candidates shall be made by a majority vote of the joint senate-house investigative committee. The special master shall be willing to serve, for reasonable compensation for the special master's service, and have no conflict of interest. The compensation for the special master shall be made from the bureau of conveyances special fund under section 502-8, Hawaii Revised Statutes.

(c) The special master shall be assisted by an advisory council, consisting of various stakeholders of the bureau, to aid in the development and implementation of a comprehensive plan for operational improvements and strategic initiatives for the bureau. The advisory council shall consist of various stakeholders of the bureau, including but not limited to members representing:

(1) The chairperson of the board of land and natural resources;

(2) The bureau of conveyances at the department of land and natural resources;

(3) The judiciary;

(4) The Hawaii Government Employees Association, AFSCME Local 152, AFL-CIO;

(5) The Hawaii Land Title Association;

(6) The Hawaii Association of Realtors;

(7) The financial services industry; and

(8) The legal community.

The advisory council shall be reimbursed for expenses, including travel expenses, necessary for the performance of their duties.

(d) The special master and the advisory council shall consult and work with various entities to aid in the development and implementation of the comprehensive plan, such as the Hawaii government employees association and the department of human resources development. The special master and the advisory council shall work with and accept full participation and consultation from bureau employees, management, and the department of land and natural resources.

(e) The special master and the advisory council shall develop a comprehensive plan for the improvement of operations at the bureau of conveyances, including but not limited to the following areas:

(1) Concentration on improving the various problematic operational issues at the bureau, including but not limited to:

(A) Updating the bureau's administrative rules, including establishing standard fee schedules for various bureau services, and a standard fee waiver policy that includes the amount waived, the recipient of the waiver, and the reason for the waiver to ensure greater accountability of all moneys due to the bureau;

(B) Drafting or updating written contracts and operating agreements between the bureau and outside parties for goods and services, including but not limited to computer system repair and maintenance, software development and installation, information sharing subscriptions, and recording agreements;

(C) Developing and implementing best practices and methods to provide greater security of the bureau's information system;

(D) Updating and implementing the bureau's policies and procedures manuals, or creating and implementing policies and procedures for areas where manuals do not exist so that all procedures are performed uniformly;

(E) Developing and implementing strong human resource management practices, including reviewing and revising employee job descriptions, duties, salary schedules and performance incentives;

(F) Developing and implementing best practices for personnel performance evaluations and employee disciplinary procedures to ensure that all employees are meeting or exceeding minimum performance requirements and expectations;

(G) Developing and managing an effective, transparent, and fair practice for overtime work at the bureau to ensure an equal distribution of and opportunity for overtime work;

(H) Actively engaging and consulting with the leadership of the Hawaii Government Employees Association to ensure union representation and consultation on all matters concerning its union members;

(I) Establishing and implementing standard cash management practices and procedures to efficiently and accurately account for all moneys flowing in and out of the bureau;

(J) Developing and implementing appropriate job training to ensure that all employees are able to perform efficiently and effectively within their job title capacity; and

(K) Addressing staff needs and staff budgetary constraints;

(2) Concentration on developing strategic initiatives for the bureau, including but not limited to:

(A) Developing an effective, operational, and secure computer information system for document retrieval that will be timely, useful, and relied upon by entities in the title industry;

(B) Considering whether it is still appropriate for the bureau to remain under the department of land and natural resources;

(C) Examining and identifying best practices in dealing with timeshares recorded at the bureau by reviewing other jurisdictions' practices;

(D) Examining, identifying, and adopting best practices to improve the operations and employee management of the bureau, including a system of periodic review and evaluation, and establishing performance indicators, benchmarks, and objectives, to achieve greater accountability and customer satisfaction;

(E) Reviewing the personnel management at the bureau and developing improvements and best practices to increase work productivity and employee satisfaction;

(F) Examining the current recording system at the bureau, reviewing and exploring other jurisdictions’ recording systems, and implementing best practices to improve the bureau's recording system; and

(G) Establishing a timeline and assigning responsibilities to implement operational and strategic initiatives at the bureau;

(3) Examine and study the feasibility of possible methods to re-evaluate and modernize the operational and employee functions of the bureau, including but not limited to:

(A) Examining the policies, procedures, and operations of state agencies charged with similar responsibilities and functions as the bureau;

(B) Examining the roles, duties, and functions of the land court and regular system staffs of the bureau from a union and employee perspective; review other state agencies' activities, policies, and rules relating to employee training, job descriptions, pay scales, disciplinary procedures, and performance evaluations; and identifying and developing recommendations to re-evaluate and modernize the roles, duties, and functions of the land court and regular system staffs of the bureau;

(C) Examining the operational roles, duties and functions of the bureau from a legal and legislative perspective; reviewing other jurisdictions' activities, policies, directives, and laws relating to recording the title to land; and identifying and developing recommendations to revamp and modernize the operational roles, duties, and functions of the bureau; and

(D) Establishing findings and developing recommendations on how the bureau may re-vamp its employee functions and modernize its operational functions to become a more effective, efficient, and reliable operation for the State and the title industry;

(4) Develop and implement a policy plan and procedure to safeguard personal information contained in documents and records that the bureau collects, maintains, and disseminates for public inspection, including the following:

(A) Examining policies, procedures, and operations of state agencies charged with the responsibility of developing policies and procedures to prevent, monitor, and enforce rules and statutes relating to safeguarding personal information, especially in light of the enactment of chapter 487J, Hawaii Revised Statutes, relating to social security number protection applying to all businesses and government agencies in Hawaii;

(B) Developing and implementing procedures that will enable the bureau to identify information deemed personal and confidential in documents and develop a procedure to ensure that personal identifying information remains confidential;

(C) Developing and implementing procedures that will enable the bureau to account for and keep track of the information it disseminates to the public, including via the Internet, in-person or mail requests, or computer information subscription services; and

(D) Reviewing all statutes and administrative rules relating to all documents recorded at the bureau, and proposing any necessary amendments to ensure that personal information is kept confidential in the course of disseminating bureau information to the public;

(5) Examine and study the feasibility of merging the existing regular system and land court systems of land recordation into a single unified system of recordation, including legal and practical impediments to creating such a system, including but not limited to:

(A) Performing a survey of systems of land recordation in other jurisdictions, including dual-systems and unified systems, to identify best practices and existing challenges in those jurisdictions;

(B) Working with stakeholders of the bureau to identify current aspects of property recordation in Hawaii that are critical to the continued effectiveness of the bureau as a single unified system of recordation;

(C) Considering the pros and cons of the regular system that relies on title insurance to settle discrepancies in ownership versus the land court's explicit guaranty by the State of property ownership; and

(D) Establishing findings and developing recommendations on how the bureau may be unified into a single system of recordation;

(6) Identify a new administrative assignment for the bureau within the state government, including the following:

(A) Performing a review of departments within the state government to identify likely administrative assignments for the bureau, in order to produce a "short list" of agencies for in-depth review, which shall not be limited to executive branch departments, but shall include the judiciary;

(B) Reviewing the policies, procedures, and current functions of "short list" agencies to determine the feasibility and advisability of reassigning the bureau to one of those agencies;

(C) Consulting with the executives of the agencies identified as relocation candidates, their staffs, and stakeholders of those agencies as identified by the respective executives;

(D) Consulting with the leadership of the Hawaii Government Employees Association as necessary to ensure union representation and consultation on all matters concerning its union members; and

(E) Preparing a report on the reassignment of the bureau; and

(7) Perform an in-depth review of the issues and potential challenges presented by privatizing the functions of the bureau, including:

(A) Preparing a survey of land recordation systems in other jurisdictions that have been privatized, which shall include:

(i) Provisions for ensuring the protection of personal information and other sensitive data;

(ii) Provisions for ensuring the reliability of recorded information;

(iii) Experience with transitions between vendors, including migration of data, assignments of liability, and continuing assurances of data safety and completeness; and

(iv) Existence and nature of agreements for the protection of the State or other government entity from claims of liability for errors and omissions in the recordation or preservation of land claims;

(B) Actively engaging and consulting with other stakeholders of the bureau in analyzing the appropriateness and potential for privatization, including:

(i) The Hawaii Government Employees Association, AFSCME Local 152, AFL-CIO;

(ii) The Hawaii Land Title Association;

(iii) The Hawaii Association of Realtors;

(iv) The financial services industry; and

(v) The legal community;

(i) An outline of criteria to be applied in identifying and selecting a private entity to assume the responsibilities of the bureau;

(ii) Financial projections related to privatizing bureau functions, including potential income earned and expenses borne by the private entity, adequacy of current pricing, and potential net income to the State;

(iii) An analysis of tax collections now handled by the bureau and, if appropriate, a process for the selected private entity to collect and transfer those tax revenues;

(iv) A recommendation of budgetary and personnel provisions to allow the selected private entity to accept the bureau and its functions;

(v) A timeline and transition plan for the privatization of the bureau; and

(vi) An analysis of other issues and considerations that may militate against the reassignment of the bureau to a private entity.

(f) The special master and the advisory committee shall submit to the legislature the following:

(1) A preliminary report to the legislature regarding the areas of policy and operation that might be improved prior to the 2009 regular session, and a final report regarding the operational measures achieved and strategic initiatives to be implemented prior to the 2010 regular session;

(2) A preliminary report to the legislature regarding the operational functions at the bureau that need improvement and modernization prior to the 2009 regular session, and a final report, including any suggested legislation, prior to the 2010 regular session;

(3) A written report regarding a policy plan and procedure to safeguard personal information contained in documents and records that the bureau collects, maintains, and disseminates for public inspection to the legislature including any proposed legislation, prior to the 2009 regular session;

(4) A preliminary report regarding the creation of a single unified system of recordation prior to the 2010 regular session, and a final report, including any suggested legislation, prior to the 2011 regular session;

(5) A preliminary report regarding the reassignment of the bureau prior to the 2010 regular session, and a final report, including any suggested legislation, prior to the 2011 regular session; and

(6) A preliminary report to the legislature regarding the privatization of the bureau prior to the 2010 regular session, and a final report, including any suggested legislation, prior to the 2011 regular session.

(g) The special master and the advisory council shall cease to exist on June 30, 2011.

PART II

SECTION 3. Section 502-8, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) All moneys in excess of [~~$500,000~~] $750,000 remaining on balance in the bureau of conveyances special fund on June 30 of each year shall lapse to the credit of the state general fund. On July 1 of each year, the director of finance is authorized to transfer any excess funds in the bureau of conveyances special fund to the state general fund."

PART III

SECTION 4. Notwithstanding section 502-8(b), Hawaii Revised Statutes, there is appropriated out of the bureau of conveyances special fund the sum of $ or so much thereof as may be necessary for fiscal year 2008-2009 for the hiring of a special master.

The sum appropriated shall be expended by the department of land and natural resources for the purposes of this Act.

PART IV

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval; provided that section 4 shall take effect on July 1, 2008.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2805
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII