STAND. COM. REP. NO. 2276

Honolulu, Hawaii

RE: S.B. No. 2959

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Health, to which was referred S.B. No. 2959 entitled:

"A BILL FOR AN ACT RELATING TO CONDOMINIUMS,"

begs leave to report as follows:

The purpose and intent of this measure is to allow a condominium board to borrow money for the installation of equipment for the health and safety of residents, in the event of a legislative mandate to install such equipment, without the consent of owners where at least twenty percent of owners reside outside of the United States.

Your Committee received testimony in support of this measure from the Hawaii Council of Associations of Apartment Owners; Hawaiian Affairs Caucus, Democratic Party of Hawai‘i; Associa; and one individual. Your Committee received testimony in opposition to this measure from one individual. Your Committee received comments on this measure from one individual.

Your Committee finds that in the aftermath of the devastating Marco Polo condominium fire, the Honolulu City Council established the Residential Fire Safety Advisory Committee to recommend changes to City ordinances relating to the fire code and suggest ways that high-rise residential buildings could be made safer for residents and first responders. One measure under consideration is the mandatory installation of fire sprinklers, which may pose a significant financial challenge to condominium associations.

According to testimony received by your Committee, one of the challenges faced by the Residential Fire Safety Advisory Committee was how to assist condominium associations who wished to borrow funds necessary for fire sprinkler retrofitting. Under existing state law, borrowing such funds requires the consent of fifty percent of the ownership interest, which can be a challenging threshold to meet, particularly when many owners of a condominium association reside outside the United States.

This measure therefore establishes a narrowly-tailored exception to this fifty percent requirement by specifying that, in the event of a legislative mandate and where at least twenty percent of condominium owners reside outside of the country, the board of directors of a condominium association shall not be required to obtain the consent of the owners prior to borrowing money to pay for the legislatively-mandated installation of equipment or improvements to the common areas of the condominium for the health and safety of residents.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Health that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2959 and recommends that it pass Second Reading and be referred to your Committee on Judiciary.

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

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ROSALYN H. BAKER, Chair