STAND. COM. REP. NO. 520-20

Honolulu, Hawaii

, 2020

RE: H.B. No. 2563

H.D. 1

Honorable Scott K. Saiki

Speaker, House of Representatives

Thirtieth State Legislature

Regular Session of 2020

State of Hawaii

Sir:

Your Committee on Consumer Protection & Commerce, to which was referred H.B. No. 2563 entitled:

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

begs leave to report as follows:

The purpose of this measure is to exempt planned community associations from requirements under the Hawaii Nonprofit Corporations Act regarding cumulative voting for directors and the removal of directors elected by members or directors.

Your Committee received testimony in support of this measure from the Hawaii State Association of Parliamentarians, Associa, Hawaii Chapter of the Community Associations Institute Legislative Action Committee, and Hawaii Council for Associations of Apartment Owners. Your Committee received testimony in opposition to this measure from the Law Offices of Mark K. McKellar, LLLC, and seven individuals.

Your Committee finds that the cumulative voting provisions under the Hawaii Nonprofit Corporations Act may be manipulated by planned community association boards of directors to prevent minority groups from attaining representation by simply omitting cumulative voting from the notice. Under the 11th edition of Robert's Rules of Order Newly Revised, provisions concerning cumulative voting must be in the bylaws. This measure will clarify that the cumulative voting provisions under the Hawaii Nonprofit Corporations Act do not apply to planned community associations governed under the State's planned community association laws.

Your Committee has amended this measure by changing its effective date to July 1, 2050, to encourage further discussion.

Your Committee notes that stakeholders are collaborating on a draft to be presented to your Committee on Judiciary. Should your Committee on Judiciary choose to hear this measure, your Committee respectfully requests that it consider the draft by the stakeholders.

As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2563, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2563, H.D. 1, and be referred to your Committee on Judiciary.

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

____________________________

ROY M. TAKUMI, Chair