STAND. COM. REP. NO. 3399

Honolulu, Hawaii

RE:    H.B. No. 2894

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii

Madam:

     Your Committee on Commerce, Consumer Protection, and Affordable Housing, to which was referred H.B. No. 2894 entitled:

"A BILL FOR AN ACT RELATING TO PLANNED COMMUNITY ASSOCIATIONS,"

begs leave to report as follows:

     The purpose of this measure is to ensure that planned community associations are able to effectively enforce assessments and restrictive covenants and to ensure that all property owners within planned communities and members of planned community associations are entitled to the rights and protections provided under the law relating to planned community associations, by making clarifying amendments to chapter 421J, Hawaii Revised Statutes.

     Specifically, this measure amends chapter 421J, Hawaii Revised Statutes, by:

     (1)  Adding a new section to establish a rule of interpretation that is similar to the rule of interpretation in the condominium law;

     (2)  Adding a new section to allow non-condominium homeowner associations to restate their documents by board resolution and without an owner vote, which is similar to the procedures used by condominium associations to restate their documents;

     (3)  Amending section 421J-2, Hawaii Revised Statutes, to clarify the definitions for "association", "declaration", and "planned community"; and

     (4)  Amending section 421J-12, Hawaii Revised Statutes, to make it easier to amend the governing documents of non-condominium associations by permitting amendments to be made by written consent as well as by vote at a meeting, even if documents do not specifically permit a vote by written consent.

     Testimony in support of this measure was submitted by the Hawaii Chapter of the Community Associations Institute, the Kaanapali Hillside Homeowners' Association, and two private individuals.

     Your Committee finds that some planned communities and planned community associations that were created prior to the enactment of chapter 421J, Hawaii Revised Statutes, relating to planned community associations, may not be deemed as a planned community or a planned community association as currently defined.  Thus, these property owners are not afforded the rights and protections provided under chapter 421J.  Amending the law relating to planned community associations will ensure that planned community associations are able to effectively enforce assessments and restrictive covenants and will make available to these associations and the landowners of these communities the rights and protections provided under chapter 421J, Hawaii Revised Statutes.

     Your Committee recognizes the concerns that amending the definitions for a planned community and the documents of a planned community may cause unintended consequences.  However, your Committee notes that agreeable language has been proposed that meets the concerns of the parties involved.

     Accordingly, your Committee has amended this measure by:

     (1)  Amending the definition of "association documents" under section 421J-2, Hawaii Revised Statutes, to add language that includes the payment of money as a regular assessment as part of the association documents;

     (2)  Amending the definition of "declaration" under section 421J-2, Hawaii Revised Statutes, to add language that clarifies that the declaration of the association means any recorded association document and excludes a mandatory payment of money as a regular annual assessment as this assessment will be included by the amendments to the definition of "association documents";

     (3)  Amending the definition of "planned community" under section 421J, Hawaii Revised Statutes, to add language that includes real property, other than a condominium or a cooperative housing corporation or a time share plan, that is subject to a planned community association as defined under section 607-14, Hawaii Revised Statutes; and

     (4)  Making technical, nonsubstantive amendments for the purposes of clarity and style.

     As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Affordable Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2894, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2894, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Affordable Housing,

____________________________

RUSSELL S. KOKUBUN, Chair