SCR232

WHEREAS, 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, the Legislature adopted Senate Concurrent Resolution No. 226 during the 2007 Regular Session; and

WHEREAS, it was clear to the Legislature that further action was required to address 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; and

WHEREAS, the Concurrent Resolution established a Joint Senate-House Investigative Committee to investigate the personnel, operational, and fiscal management of the Bureau of Conveyances to ensure that the Bureau of Conveyances serves the public at its most optimal level and required the Committee to submit its findings and recommendations to the Legislature prior to the convening of the 2008 Regular Session; and

WHEREAS, the scope of the Committee's investigation of the Bureau of Conveyances was to complement rather than duplicate, impede, or jeopardize the ongoing investigations conducted by the Department of the Attorney General and the State Ethics Commission, and it was the goal of the Committee to develop methods, and short- and long-term solutions on how the Legislature can assist the Bureau of Conveyances in becoming a more efficient, effective, and accountable operation rather than pinpoint blame for the existing problems at the Bureau; and

WHEREAS, pursuant to Senate Concurrent Resolution No. 226 (2007), the objectives of the Committee were to investigate, gather information, assess, and make recommendations concerning:

(1) The management of the employees and administrators of the Bureau of Conveyances;

(2) The fiscal management and accountability of the Bureau of Conveyances;

(3) The rules, procedures, and fee schedules relating to information sharing between the Bureau of Conveyances and private title companies and individual users or subscribers; and

(4) The security of recorded documents, access to these documents from private computers, and the potential for tampering with these documents; and

WHEREAS, during the six months of public hearings and intense investigative work, the Committee uncovered several and sometimes troubling findings relating to the voluminous and escalating problems at the Bureau of Conveyances; and

WHEREAS, the Committee heard testimony and received documents regarding the Bureau's computer system and information sharing service, including the acquisition of the computer system and software; the management of the Bureau's fiscal matters, including contracts and agreements; the Bureau's relationship and business interactions with private title companies or other entities in the title industry; and the personnel and operational management of the Bureau; and

WHEREAS, in the course of its discussion and assessment of the information and testimony it received, the Committee drew the following three prevailing and interlocking conclusions amongst the Committee's findings:

(1) Severe mismanagement of the employees and operations of the Bureau of Conveyances hampers effective and efficient property recordings;

(2) A lack of fiscal management and accountability at the Bureau of Conveyances has led to a loss of revenue for the State; and

(3) Employee and operational mismanagement and a lack of fiscal accountability causes the operations of the Bureau of Conveyances to be vulnerable to abuse; and

WHEREAS, from a review of the testimony and materials presented to the Committee, and in light of the long standing nature of the problems uncovered, it appears extremely unlikely that the Bureau possesses the will or capability to address these issues without some form of concentrated intervention; and

WHEREAS, in light of the breadth and depth of the challenges the Bureau faces, and given the relative lack of success that accompanied earlier attempts at improving operations, it was clear to the Committee that more fundamental changes in the Bureau must be explored than have been discussed in the past; and

WHEREAS, among the approaches the Committee considered were combining the two existing systems - Land Court and Regular System - into a single form of recordation that better serves the needs of the community; and

WHEREAS, in addition, the Bureau's continuing failure to operate in a productive and effective manner as a part of the Department of Land and Natural Resources raised an unavoidable question whether the function would be better placed in another department of the executive branch or within the judicial branch; and

WHEREAS, finally, questions arose as to whether the recordation function would be better placed outside of state government, and instead privatized to an existing or newly-created entity capable of handling the needs of landowners in the State; and

WHEREAS, in light of the Committee's findings and recommendations, it has become apparent that the problems at the Bureau require special action and further analysis; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-fourth Legislature of the State of Hawaii, Regular Session of 2008, the House of Representatives concurring, that the Legislative Reference Bureau is requested to investigate and develop feasibility and implementation models regarding:

(1) The legal and technical obstacles to combining the Land Court and Regular System functions of the Bureau of Conveyances into a single unified system of recordation;

(2) The advisability of reassigning the Bureau of Conveyances from its current position within the Department of Land and Natural Resources to another department within the executive or judicial branches of the state government; and

(3) The considerations attendant to privatizing the functions of the Bureau of Conveyances, including the nature and qualifications of a non-governmental entity suitable to accept current Bureau functions; and

BE IT FURTHER RESOLVED that the Legislative Reference Bureau is requested to examine and analyze the feasibility of merging the existing Regular System and Land Court systems of land recordation into a single unified system of recordation, including the legal and practical impediments to creating a unified system. In doing so, the Legislative Reference Bureau is requested to:

(1) Perform 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;

(2) Work with stakeholders of the Bureau of Conveyances to identify current aspects of property recordation in the State that are critical to the continued effectiveness of the Bureau as a single unified system of recordation;

(3) Consider 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

(4) Establish findings and develop recommendations on how the Bureau of Conveyances may be unified into a single system of recordation; and

BE IT FURTHER RESOLVED that the Legislative Reference Bureau identify a new administrative assignment for the Bureau of Conveyances within the state government, including the following:

(1) Perform a review of departments within the state government to identify likely administrative assignments for the Bureau of Conveyances, 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 of the State of Hawaii; and

(2) Review the policies, procedures, and current functions of "short list" agencies to determine the feasibility and advisability of reassigning the Bureau of Conveyances to one of those agencies, including consultation with the executives of the agencies identified as relocation candidates, their staffs, and stakeholders of those agencies as identified by the respective executives, and consultation 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

BE IT FURTHER RESOLVED that the Legislative Reference Bureau perform an in-depth review of the issues and potential challenges presented by privatizing the functions of the Bureau of Conveyances, including a survey that includes:

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

(2) 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;

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

(4) A recommendation of budgetary and personnel provisions to allow the selected private entity to accept the Bureau of Conveyances and its functions;

(5) A timeline and transition plan for the privatization of the Bureau of Conveyances; and

(6) An analysis of other issues and considerations that may militate against the reassignment of the Bureau to a private entity; and

BE IT FURTHER RESOLVED that the Legislative Reference Bureau submit its findings and recommendations to the Legislature no later than twenty days prior to the convening of the 2009 Regular Session; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Director of the Legislative Reference Bureau, the Chair of the Board of Land and Natural Resources, the Chief Justice, the Governor, and the Executive Director of the Hawaii Government Employees Association.

	OFFERED BY:	_____________________________

Report Title:

Bureau of Conveyances; Joint Investigative Committee; Report

THE SENATE	S.C.R. NO.	232
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII