HB1748

SECTION 1. Section 514B-149, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) All funds except the amount in excess of the estimated replacement reserves:

(1) [~~All funds collected~~] Collected by an association, or by a managing agent for any association, shall be:

(A) Deposited in a financial institution, including a federal or community credit union, located in the State, pursuant to a resolution adopted by the board, and whose deposits are insured by an agency of the United States government;

(B) Held by a corporation authorized to do business under article 8 of chapter 412;

(D) Purchased in the name of and held for the benefit of the association through a securities broker that is registered with the Securities and Exchange Commission, that has an office in the State, and the accounts of which are held by member firms of the New York Stock Exchange or National Association of Securities Dealers and insured by the Securities Insurance Protection Corporation; or

(E) Placed through a federally insured financial institution located in the State for investment in certificates of deposit issued through the Certificate of Deposit Account Registry Service in federally insured financial institutions located in the United States.

(2) [~~All funds collected~~] Collected by an association, or by a managing agent for any association, shall be invested only in:

(A) Deposits, investment certificates, savings accounts, and certificates of deposit;

(B) Obligations of the United States government, the State of Hawaii, or their respective agencies; provided that those obligations shall have stated maturity dates no more than ten years after the purchase date unless approved otherwise by a majority vote of the unit owners at an annual or special meeting of the association or by written consent of a majority of the unit owners;

(C) Mutual funds comprised solely of investments in the obligations of the United States government, the State of Hawaii, or their respective agencies; government money market funds; or shares or units of another mutual fund satisfying the requirements of this subparagraph; provided that those obligations shall have stated maturity dates no more than ten years after the purchase date unless approved otherwise by a majority vote of the unit owners at an annual or special meeting of the association or by written consent of a majority of the unit owners; or

(D) Certificates of deposit issued through the Certificate of Deposit Account Registry Service in an amount at least equal in their market value, but not to exceed their par value, to the amount of the deposit with the depository;

provided that before any investment longer than one year is made by an association, the board must approve the action; and provided further that the board must clearly disclose to owners all investments longer than one year at each year's association annual meeting.

Records of the deposits and disbursements shall be disclosed to the commission upon request. All funds collected by an association shall only be disbursed by employees of the association under the supervision of the association's board. All funds collected by a managing agent from an association shall be held in a client trust fund account and shall be disbursed only by the managing agent or the managing agent's employees under the supervision of the association's board.

The amount in excess of the estimated replacement reserves, if any, may be invested in obligations that are rated 1, 2, or 3 by the Securities Valuation Office of the National Association of Insurance Commissioners or have an equivalent of a Securities Valuation Office 1, 2, or 3 rating (or, in the absence of a 1, 2, or 3 rating or equivalent rating, the issuer has outstanding obligations with a Securities Valuation Office 1, 2, or 3 equivalent rating) by a nationally-recognized statistical rating organization recognized by the Securities Valuation Office.

For purposes of this subsection "amount in excess of the estimated replacement reserves" means the total replacement reserves of the association under section 514B-148(a)(3), plus the projected collections of the association designated to fund the estimated replacement reserves for the period specified in the reserve study, plus projected collections of the association for the period specified in the reserve study that are unencumbered, minus the estimated replacement reserves amount under section 514B-148(a)(4)."

SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1748
THIRTY-SECOND LEGISLATURE, 2024
STATE OF HAWAII