STAND. COM. REP. NO. 1375

Honolulu, Hawaii

RE:    S.C.R. No. 95

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

Madam:

     Your Committee on Commerce and Consumer Protection, to which was referred S.C.R. No. 95 entitled:

"SENATE CONCURRENT RESOLUTION ENCOURAGING THE REAL ESTATE COMMISSION TO MODIFY AND ADOPT RULES TO REFLECT CHANGES IN THE CONDOMINIUM LAW UNDER CHAPTER 514B, HAWAII REVISED STATUTES,"

begs leave to report as follows:

     The purpose of this measure is to encourage the Real Estate Commission to modify and adopt administrative rules to reflect changes to the condominium law under chapter 514B, Hawaii Revised Statutes.

     Your Committee received testimony in support of this measure from the Real Property and Financial Services Section of the Hawaii State Bar Association, Case Lombardi & Pettit, and four private citizens.  Testimony in opposition to this measure was received from the Real Estate Commission.  Written testimony presented to the Committee may be reviewed on the Legislature's website.

     Your Committee finds that the administrative rules relating to condominiums, chapter 107 Hawaii Administrative Rules, have not been substantially updated since 1981.  Your Committee finds that although the Legislature instituted sweeping changes to the condominium property regime law by enacting and implementing chapter 514B, Hawaii Revised Statutes, in its 2004, 2005, and 2006 Regular Sessions, the Real Estate Commission has not begun to address any of these changes in its administrative rules, despite the passage of almost three years since the last major statutory changes.  Your Committee further finds that in the absence of sufficient and proper administrative rules, the Real Estate Commission currently relies on the practice of issuing nonbinding opinions and grants precedential value to those opinions in interpreting questions, processing applications, and determining effective dates for public reports.  Your Committee finds that this practice, especially in the context of the Real Estate Commission's failure to begin the rule-adoption process, is a violation of chapter 91, Hawaii Revised Statutes.

     Your Committee notes the testimony of the Real Estate Commission that the Commission is engaged in some activities such as community outreach that may be viewed as preliminary steps in the rulemaking process.  However, given the Real Estate Commission's record of lengthy delays and the fact that almost three years have passed since the enactment of chapter 514B, Hawaii Revised Statutes, your Committee respectfully disagrees that the Real Estate Commission is likely to adopt rules in a timely manner without outside intervention.  Further, your Committee finds that where the Real Estate Commission is unable or unwilling to timely enact administrative rules necessary to effectuate the purpose of validly enacted statutes, it becomes the role of the Legislature to intervene.

     Your Committee has amended this measure by:

     (1)  Clarifying that the Real Estate Commission shall move expeditiously toward enacting rules to effectuate the condominium property regime laws; and

     (2)  Replacing the target date of December 31, 2009 for the enactment of rules with a target date of the beginning of the Real Estate Commission's next fiscal year for public hearings on proposed rules.

     As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee concurs with the intent and purpose of S.C.R. No. 95, as amended herein, and recommends its adoption in the form attached hereto as S.C.R. No. 95, S.D. 1.

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

____________________________

ROSALYN H. BAKER, Chair