STAND. COM. REP. NO. 2749

Honolulu, Hawaii

RE: S.B. No. 2404

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2024

State of Hawaii

Sir:

Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 2404 entitled:

"A BILL FOR AN ACT RELATING TO CONDOMINIUMS,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Prohibit the use of proxies in condominium association voting;

(2) Require associations to allow members to vote by mail and attend and cast votes in association meetings through internet, teleconference, or other electronic transmission technology; and

(3) Require associations to mail out paper ballots before any annual or other periodic election of board members.

Your Committee received testimony in support of this measure from the District 25 Council of the Democratic Party of Hawaiʻi, Ala Moana-Kakaʻako Neighborhood Board No. 11, Chamber of Sustainable Commerce, Kokua Council, and twelve individuals.

Your Committee received testimony in opposition to this measure from Hawaii First Realty LLC; Community Associations Institute; Hawaiʻi State Association of Parliamentarians; Palehua Townhouse Association; Honolulu Tower AOAO; AOAO Lakeview Sands; Law Offices of Mark K. McKellar, LLC; and sixteen individuals.

Your Committee received comments on this measure from one individual.

Your Committee finds that condominium association voting is essential to providing unit owners with a critical opportunity to hold association board members accountable and otherwise having their voices heard. Your Committee also finds that while proxy voting can be useful in allowing a unit owner who is physically unable to participate in an election to cast their vote through another person, it can also create additional challenges for the organizing of elections, which can unfortunately lead to disputes over an election's validity.

Notwithstanding, your Committee has heard the concerns raised in testimony, including the questions regarding the State's role in prohibiting condominium associations from deciding for themselves whether they should use proxies, as proposed by this measure in its current form. Therefore, amendments to this measure are necessary to address these concerns.

Accordingly, your Committee has amended this measure by:

(1) Deleting its contents and inserting language that repeals section 514B-123(e)(1)(C), Hawaii Revised Statutes, which requires a standard proxy form authorized by the association to contain a box wherein an owner may indicate that the proxy is given to the board as a whole and that the vote is to be made on the basis of the preference of the majority of the directors present at the meeting;

(2) Inserting an effective date of July 1, 2040, to encourage further discussion; and

(3) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

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 is in accord with the intent and purpose of S.B. No. 2404, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2404, S.D. 1, and be placed on the calendar for Third Reading.

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

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JARRETT KEOHOKALOLE, Chair