 another episode of condo insider. My name is Jane Sugimura and I'm your host for today's episode. And today we're going to have a really interesting discussion with Senator Sharon Moriwaki, who is going to be talking to us about what in the 2023 legislative session that just recently ended and about what condo bills passed and didn't pass, and maybe some of the reasons why. So stay tuned. Okay, well thank you. Senator Moriwaki, thank you for being with us today. Thank you for inviting me. Pleasure always Jane. Well, thank you. And, you know, we're going to start the conversation. I mean, we didn't have too many condo bills. I mean, which was probably a good thing. Although we had some of the usual characters, but we'll talk about them at the end. But, you know, let's talk about Senate Bill 729. And this was your bill. I just called for the real estate commission to set up a curriculum for boards and directors and I think the original bill talked about owners as well. And this was your bill. So why don't you tell us what made you decide or what was behind you introducing this bill. Well, my district is very condo dense. I think it's the most condos among all the districts and so we have a number of complaints coming in about typically one owner against another and owner against the board and the owner against the manager. And you know condos are self governing and so we try to try to mediate that but there is law and they do collect money from the real estate commission to do training to do mediation so we've heard about from a number of residents condo residents or owners who want to eliminate proxies to the board have term limits for the board an ombudsman bill so that they can resolve these disputes that really should be sort of more amicably resolved and haven't been so I mean looking at at the problem. It really boils down to who is the decision maker in the condo and it really is the board of directors and you all the condo owners elect these people and if they are volunteers which they all are they may be teachers they may be people who are not trained in running a multimillion dollar corporation. So the idea for this bill was to train owners and board members about what they own in terms of the condo is not a single family dwelling unit where you just you know you you you have control over everything you deal with your neighbors all your neighbors are part owners of your property. So, so the bill started off that way training owners training condo board members so that they know their responsibilities which is a fiduciary one because they get elected to represent all the members of the association my condo 310 units and they represent everybody so they have to look out the best interest of the whole condo and and what's called fiduciary duty you have a very real responsibility, but you should know what the condo law is because it's a very different animal than others, and you should know all the rules of your own condo so you've got bylaws you've got your house rules and ways that you operate so the idea of this bill was to have a training program so that board members and owners would know what they deal with it in this new living arrangement which is a joint jointly own a property that we all own and we all take care of. So, so that was part of it and then the the board you know one of the let me just point out one of the the the triggers I think that started all this. There was an issue with one archer lane that came to you that was being to your attention. In fact, it was in the media was on the newspapers it was on TV, and this was a situation that happens. You have a group of homeowners who claim that the board of directors blindsided them by making approving a special assessment for doing structural repairs to the building. And they said it was a full surprise. And they came to you because they wanted the legislator to do something about their ball or their their awful board, who did these bad things to them. But then, I think what you have to do in a situation like that, you know, because a decision to do a special assessment, especially in the one archer lane situation didn't happen overnight. There were meetings. There were town hall meetings where the where the owners were invited to attend. They were told they were going to talk about structural problem. And some people did not attend. And some people didn't attend board meetings. But when, you know, after all the discussion and the meetings, you had structural engineers telling the board of directors that unless they did these repairs, they're building the structural of a safeness the safety of their building was in jeopardy. And so under the Hawaii law, the board has got to take action. Otherwise you have a situation like in Florida where the building collapses. Right. And Hawaii, the board can make the decision to do a special assessment in Florida that board, the Florida law did not allow the board of directors to make special assessment. That's why that decision in Florida dragged on to the point where, you know, the boards were not empowered to make the repairs and the building collapse. But in Hawaii, we don't have that situation. But what happened at one archer lane is the board after all the months of talking to experts and trying to have town meetings and inform their owners have to make the hard decision. And when they made the hard decision, you had a bunch of homeowners who got really angry. And I think, you know, the whole purpose of your bill was that both sides have got to be communicating with each other. You cannot have, because, you know, that situation show that it's not one sided. There's two sides to every issue. And yes, the homeowners, you know, felt put upon because now they have to pay this huge expense. But, you know, I guess if they had participated in the process, it wouldn't have been so painful. I mean, it was going to happen no matter what because they didn't have the money in their reserves to pay for the repairs. So long story short, they would have had to do a special assessment, one way or the other. But the problem was that they weren't talking to each other, or at least some of them weren't talking to each other. Yeah, and I think that you bring up a good point is that you live in, you know, it's a community, it's a communal interest, right. So you do have to talk to each other and the board is responsible talking to the members of the members coming to the board meetings and reading the documents as well. So, so I think it's a joint responsibility of everybody and you pick a board, just like you select legislators to represent your best interest. So, so I think it's that kind of training that we look for. And in the Senate bill 729, which passed, which I hope the governor will sign into law because it does, it got watered down. Because I really did feel that, that we should have had the board being certified by the association at least I went through some training I know what the law is I know, you know, what my rules are in my, my, my condo. But without, without that, at least what we have in this bill is that the real estate commission which collects money from each unit owner every other year has money for training that it should develop the curriculum for board training and and other training and I know the Department of Commerce and Consumer Affairs has programs like this already developed us pulling it together for board for all the board members to really review that and the documents that I think we can have a better functioning. Not only board, but the association and and happier people living in condos and some of these are huge. So you really do need communication and better ways of working together and living together in in the condos. And I think I heard you say one time that the reason for this bill to is to train these volunteer board members who probably don't know how to manage a multimillion dollar, you know, building in terms of taking care of the repair and maintenance of the structure. Plus trying to oversee implementation of rules and regulations so that people, you know, in this community, you know, it's like a mini government. Right. It's like a mini government. And, and we thank the legislature for at least acknowledging self governance and allowing the condos to do self governance. What it means is that that means that the owners and the board have to kind of work harder, because otherwise they're all going to come rushing to the legislature to say, oh, you got to fix. You got to fix this, but if you keep fixing it after a while we're being regulated by the government. Yeah, right. Right. Right. Yeah. And I don't think people would want government to be regulating how they live, you know, ultimately. And it's only when you have a few people who have a problem or many people who have a problem come to us, and we say, okay, we're going to make this law and now it applies to everybody and everybody suffers because now we're regulating. Yeah. The owners of the condo. Yeah. Yeah. Well, I think this is a very important first step. At least the real estate commission is going to have to develop a curriculum. And, you know, there's, you know, like my group Hawaii Council and CAI, and the various property managers, we all do board training. So this is going to help us because it's going to at least focus us on what we have to do to train do board training. Because you already have a lot of segments like the ones we're doing, but you actually have fiduciary, what is fiduciary? What do you mean by a reserve? And how do you have to manage the operations of the condo? So I think they're all very important segments that you have already developed. So it's pulling that together for boards and for condo owners. And then, and one of the things we wanted in this bill which got mixed, because they thought there was a liability and board members having to or not wanting to become board members and volunteer when we said you had to read the law. Well, I would rather not have a person volunteering who didn't know the law running my multi-million dollar building. So, you know, it goes two ways that really if you're taking on a board role, then it's your responsibility to know the law and to be able to, on the best interest of everybody living in your building to take good care of it and to know what the law is. So I think it's that thrust that we're really trying to see everybody has a stake in this. But if you're going to be a board member, you know, you should take it seriously. Right. And I agree. And I think that, you know, if everybody did that, it might alleviate some of the issues we have with the owners. And by the same token, you know, the owners have an obligation, you know, as a owner in the building, if they care to attend, not every board meeting, but, you know, some board meeting, and especially like in the one archer lane where there's a notice posted for town meetings. And they tell you, we're talking about struck for repairs to the building. I mean, I don't know about other people, but if I saw that notice in my building, I would be attending because I know you're talking big bucks. You're talking big bucks. And I know that if you're talking about the building, and I'm an owner of the building, I'm going to end up paying for it. Right. So I would make sure that I was at that meeting to at least hear what was going on. You know, and I think most people, if they understand what's going on, and nobody wants to be in a situation like the Florida collapse or that building, you know, just collapsed. I mean, there was your investment and some people died. You know, nobody wants that. And so I think that if, you know, we were able to at least, you know, get some of the board members more interested in learning and, you know, knowing what their responsibilities, then you've succeeded. You really have. You really have. And I congratulate you for, you know, doing the hard work to get this bill passed out of the legislature. Okay, well, thank you for your support on this. And you know, it's still not all the way through because the governor has to sign the bill or at least not veto the bill. So I hope that your listeners and those watching will make sure that the bills that we do, we do talk about today and others that they're interested in seeing become law, that they have a responsibility as well to go one step further and let their voices be heard by the governor. So he, in fact, will make this become law. It's all law but not quite. Okay, so let's go on to the next one. The next one is Senate Bill 855. And this one, you know, it amended the budget and reserve section, mainly because, you know, the sitting County Honolulu passed this fire safety ordinance. And what it did, I mean, one of the unintended consequences was that it made things more expensive for older condominiums, especially those condominiums that didn't have fire sprinklers. Right. And then, at the same time, as the fire, as these buildings are in Honolulu are dealing with the fire safety ordinance, you have an insurance problem. The reinsurer, which and the two are not connected at all, because the insurance problem that's happening because the reinsurance companies that supply the money, you know, they cover claims for the local insurance companies, they had their they suffered all of these losses. I mean, you look at the world, you look at the wildfires in California, the condo collapsed in in Florida, the floods in in Europe, the floods in the mainland. It's all covered by the same reinsurance companies. And over the 2020, they've suffered losses that are in the hundreds of billions of dollars. And so what do they do. They recoup their losses. So they raise their premiums to the local carriers and the local carriers passed it on to us. And so associations are shaking their heads and saying, What did we do? How come this is happening? And the answer is, it's nothing you did. It's because of other conditions around the world has nothing to do with Hawaii. But we still have to pay just like everybody else has to pay. And, and so like my my building, the insurance went up $35,000 in 2021 and 2022 went up 65,000. That's over and above. I think the 12% that we budgeted. Right. And so, and, you know, I heard, you know, some people couldn't even get hurricane insurance without spending hundreds of thousands of dollars. And this was not included in their budget. So, you know, you know, there are, there have been all these challenges. And now, because of the fire safety ordinance, the budget, budget and reserves section of the 514B was revised to include the, you know, having to include the components of the fire safety ordinance, which are not cheap. Right. And I think it's really important that this change be made so that it's before you have the problem so that you're, you're preparing ahead of time because as, as you know, we're discussing even with the one archer getting a special assessment is like Buko Bucks at one point in time versus planning ahead and saying, okay, I've got to spend, even if it's $10 million in 10 years, I can deal with that over time to make sure that at the time that I need the money to make the repair, I have the money without another special assessment. So that your maintenance fees may have to go up, but it going up 3% or 5% and putting it in this reserve is really important because again, planning ahead for major expenses like you're talking about, Jane, I mean, you can't do it in one year. It has to be because you're, you know, the contractor is not going to take money over 10 years. They want the money upfront. So it is problematic if we don't plan and the law now requires you when passed an actual sign will require to have an independent reserve not reserve preparer so that you do have, you know, the facts before you as much as candidates. This is another interesting thing is when the board doesn't have to talk to the owners, because we're not talking about cheap. The fact that, you know, being put into this statute, and you know about the board has to consider it, and setting aside more money, it means increased maintenance fees just like you said. And so what you cannot have is unit owners saying, hell, no, we're not going to pay. That's not, that's just not the right attitude, because this is stuff that's required by the ordinance. And it is for safety purposes. And most of the older buildings, the fire alarm systems are just hanging together on a wing and a prayer. I mean, they're, you know, right. Because I know ours is like a ball band aids, you know, and so it's in need of serious, you know, attention. And, you know, so, you know, people have to understand with older building. It's not cheap. And it's going to cost a month bucks, but they have to do it. Otherwise, you're jeopardizing your safety and the marketability of the most valuable asset you probably have. You know, because what, what good is it of, you know, how are you going to sell it if you're not taking care of it? And, but, you know, so this, so this is a, you know, this is a big concern, you know, going forward. And this is, it ties into your bill 79 about the board and the owners talking to each other. I mean, and you have to look at this as you're lucky you're, you have 200 other people helping you pay the bill. So you really need to be eyes wide open and, and, and think of it this way, look at, look at Marco Polo, they didn't have that. And, you know, and that fire went through and people were displaced and it was a tragedy. Right. So, so if you look at that as the worst case scenario, it's better to plan forward. To prevent that versus being stuck with it at the end and it's too late and you lose lives, which, you know, it's really a tragedy. But before we get to 1509, I told a Benjamin Sullivan who's with the state of Hawaii that I would make an announcement. And so we're going to see something scrolling other something called benchmarking. So all of you high rises. There's a state law that says you have to benchmark your utilities and your water and your reports are due to the state of Hawaii. The deadline is June 30 2023. So that's right around the corner, right around the corner. So if you haven't gotten your act together, talk to your property manager, your managing agent and tell them, ask them, where's our benchmark report? And are you going to submit it to the state by June 30 2023? I'm told it's a computer program. It doesn't take more than an hour to install onto your computer. And then you get your information from HECO and border water supply. It uploads. And then it can be forwarded to the state of Hawaii. But you don't do it. Jane, do you know what happens if they don't do what's the penalty? Well, there are fines, but since this is the first year, I was told that they don't anticipate doing the fines. But, you know, I was asked to make the announcement because we had a special program on benchmarking. And what is it? But the report is due June 30 2023. It's right around the corner. Talk to your site manager or resident manager. And if they give you this blank stare, then you better tell them that to check the law, the state law benchmarking of utilities and water. The report for your building is due on June 30. Okay. So make sure you don't let it. June 30. But you'll get it on the state of Hawaii as to where's your report. Okay. Now we're going to talk about 1509. And this is not so complicated, but it's the common interest development. And, you know, there's three laws in Hawaii. There's 514 B that deals with condos. And that's quite a substantial law. I mean, many, many pages. And you have 421 J that talks about planned community development and 421 I which is called and 421 I and 421 J are very small. There are only a couple of pages. And so there are people who have contacted me over the years to say, how come we can't get a subsidized mediation? Like the condos do. Why can't we do recall complaints like the condos do? And so the whole purpose of this is this bill is to set up a task force, basically, right? So that the stakeholders can meet with the DCCA and tell the DCCA what farce of 514 B they want, right? So that they can then come to the legislature and say next session, okay, we're going to amend file because I guess the consensus was because one of the things of that bill was to make one law to deal with all the different types of common interest development. But that kind of hit a brick wall. I don't think anybody was. We got enough problems just by 14. We don't have problems. So, so, so I think it morphed into something. Okay, well set up a task force and the stakeholders can look at 514 B and make a list and work with DCCA and say, okay, we want this portion we want that we want this and that. And then DCCA is going to make a report to the legislature so that you can expand 421 J to include those provisions under statute. Right. And with the condos. Yeah, with the condos, I think they're they're they're just setting up a task force to basically review some of their procedures to see if they can make things better. And I think, you know, it's been many years when was what the when was 2000 and what that the condo law was passed by 14 B, but it's been over 20, 30 years, right, Jane. So the new one B, I think that came about in 2016. Oh, only 2016. That's because that's when that's when they, they separated separated amount and for a while we had two of them, 514 A and 514 B. And then it was the two years. They said, at the end of the two year period, 514 A was going to go away. And that was in 20, I think it was 2016. So I'm looking at, you know, I think it's, it really governs us well, but you know, it could be clarified and certain certainly looking at what some of the dispute resolution kinds of. I mean, it's very general in the law it says the real estate commission shall provide for mediation and it shall do training, but it's very general and I don't know we want to get that specific but but looking at the law and says, does it cover everything that some of some of the condo owners are complaining about does it need to be revamped and I think that's the idea that it's their focus is really on these community associations and co-ops that don't have the protections and the governing structure that condos have and they wanted to see what of it can they can they learn from and include in this. But but there's also while we have that those task forces asking the task force to maybe look at 514 B should there be more duties. There should be place on board members or should there be any kind of more information or more more regulation of how you do dispute resolution I think those are kind of the areas where it's been friction in the condo arena that maybe this would be a good time for those who have almost to turn it into the task force so as you're looking at the community associations and the condos here are some things to think about in terms of whether we revise the the law or not and that would be very good for us coming back next session to see what what transpires from the task force. And, you know, we only have like a minute left but you know in that time, I wanted to address this, you know, there's a concern about the ombudsman bill which didn't get much traction is that. And, and, you know, maybe I'm an old timer. I can. And, and, and, you know, and I was talking to some of your colleagues in the legislature when those bills were being considered, and I reminded them about the condo court. And some of them remember that in 2024 through 2027, there was a condo court in the DCCA. And there was a hearings officer. And if a condo owner had a complaint, they filed it with the DCCA they got a hearing before the hearings officer, no rules of evidence you didn't need a lawyer you just went in and basically told your story. The hearings officer would answer questions and make a ruling on the complaint. The problem with that is because of the rules that were in effect it was an administrative hearing. If you didn't like the decision, you could appeal it to circuit court. And then when you appeal it to circuit court, I mean the whole purpose of the process was to come up with a process that was cheap and fast. The minute you go to circuit court it becomes slow and expensive. Right, which is what we wanted to avoid. And, and then the results came were mixed. And, and William Sparrow was the lead legislator on that and I was working with him. It was a one year with a one year bill with the sunset. And I taught them into extending the sunset because I said, you know, Senator, one year isn't enough time. I extended it two years. So the whole bill was in place for three years. And by year number three, everybody wanted it gone. The association faded, the attorneys hated it, mainly because the rulings, you know, the people who are making the decisions didn't have a clue about condo. I mean, they could look at 514 b but if you don't have the experience. It kind of keeps the decision, even the owners run half. And especially when it got appeal to the circuit court. I mean, and then you get mired and litigation and expenses. I mean, it was not what was contemplated by anybody. So it went away. And I reminded people that's what happened. So do we really want to go back and revisit that. That's what the ombudsman bill is all about. I don't want to jump in on just one thing. You know, we feel that the condo world is is the world, but we're a small portion of all the states living arrangements. I must say, so when we try to pass some of these bills, there are very few of our colleagues have interest or you know know about it. And so when James talks about a hearings officer or even maybe a judge unless he's or she is dedicated to condo a condo court. The law is different. The whole 514 is a different regime. So you really do need people who have history who know what it means and and it's not it's not just regular landlord tenant law or housing law. It's it's an animal of its own that was created for the self governing, not to have government and government interfere too much. We can, we can take care of our own in our own condo or living arrangement. So, so it is different. And so when you talk about having an ombudsman or having a hearings officer. You really do need to have a person that really understands condo law and has history, you know, in terms of how we resolve problems in a community living arrangement. Right. Well, anyway, I think that that's the response I have to people who want to know how I understand that. Yeah. You know, Bill never had any traction. And because there were a lot of people who remember the condo court and all the complaints that why would you go there again. I mean, it's done that then they're done that. And so anyway, we run out of time. Thank you so much, Senator again for being with us. We always have always a pleasure. Interesting conversations. Okay, and please. Just remind everybody, these 3 bills. Please write to the governor if you like them because they really do need to have the governor signature or at least not be doing the bills. They're all good. Okay. Listeners, pick up your pencil or get on your computers and write to the governor. But anyway, thank you for being with us today. And please join us next week for another session. Thank you so much for watching think tech Hawaii. If you like what we do, please like us and click the subscribe button on YouTube and the follow button on Vimeo. You can also follow us on Facebook, Instagram and LinkedIn and donate to us at think tech Hawaii.com. Mahalo.