 Welcome to Condo Insider, our weekly show about association living, just not just condos but homeowner associations as well. And I'm your host today. You may have seen, we've done about 250 shows. May have seen we now have a half a dozen hosts so we can kind of share the workload. We have Jane Sugimura and Ray Lenteno and Jonathan Billings and myself and we have a couple more possibly going to start soon to try to talk to everybody about living in association. Now I happen to, those who don't know me, I serve on Community Association Institute, Hawaii Legislative Action Committee. I served on that for about 10 years. I serve on the Board of Directors of the Hawaii Council of Community Associations. So I've been very, very active legislative efforts over the years on behalf of the industry. And so I thought I would take this moment because tomorrow is what we call the halfway point, the midpoint and the legislature. But what do I mean by that? You know, we have a legislature that meets over a biennial period. I mean, it's two years. It begins in an odd year 2021 and ends at the next year 2022. And so what that means is that any bullet was introduced this year, whether it got a hearing or not, is technically still alive in 2022. And so it's over a two year period, although if you look at history, if it didn't get heard in 2021, it's rare that it gets heard in 2022. So anyway, when you start looking at the midpoint, what do I mean by that? Well, we have two houses. We have the Senate and the House of Representatives. And so at some point in time, meaning tomorrow, Friday, the bills have to be out of the Senate and the House, all the committees, and then they will cross over to the other chamber, I should say. So the bills that have been approved by the House will cross over to the Senate and vice versa. The bills that have been approved by the Senate will cross over to the House. It's the first crossover. And so for a bill to cross over and still be alive, it has to be through its final committee by tomorrow. So we're at the midway point. We can pretty much see what's happened so far and what's alive and what's dead. That's what we're going to talk about today. It's kind of a little bit of a background for 2021. We had about 30 bills induced regarding associations this year. Now, you have to understand that you may have different legislators induce a different bill on the same issue. So from an issue point of view, one of the bills may survive and become we call the vehicle bill, where they process this idea through a specific bill. And then some will be what we call companion bills. The identical bill was introduced in the House as well as the Senate. So even though we count 30, there's probably legitimately about 20 issues that were introduced at the legislature this year regarding associations. And because, as I said earlier, they have to be out of their final committee today, excuse me, tomorrow, Friday, to cross over, we can pretty much know what is dead and alive. So we had about 30 bills introduced. And from my account, there's about nine remaining as of tomorrow. Now, I want to go through the bills that first of all, they were introduced. And I'm going to kind of do it in the first half of the show, we'll talk about what was introduced and kind of what they were about. But every bill I talked about in the first half of the show is theoretically dead. Even though in theory, I guess they could have a hearing tomorrow, but rules require 48 hour notice. So if they haven't got a notice now, that means they can't meet their requirements of 48 hours, not a whole bunch of hoops going through it. So experience would say that even though we haven't tomorrow, what I'm talking about what's dead is really dead. But it tells you a little bit about where the industry was going. Another thing you have to understand about the legislature is I always had the misconception when someone put a bill in, they thought it made sense and made common sense or it's a real value and a purpose and we should have a vigorous debate on its value. The truth of the matter is legislators would build been based on one person's request and they'll let the process sort out whether it makes sense or not. So you can't really take the bill and think they're all good and that they are all I think support and because it's not how it works. It's too many times you'll see a bill introduced and it'll say by request meaning someone asked them to put it in and it doesn't mean the legislature particularly supports it or doesn't support it. Oftentimes they don't support it. But anyway, we had about 30 bills introduced this year and that's kind of about average although in certain years, typically non-election years, we've had up to 150 bills introduced. And so industry as a whole has been trying to educate lobby legislators to have them understand our industry better. So we didn't get caught in all this misconception about what our industry is all about. Believe me, there is a lot of that out there. There are groups out there who hate condo boards, hate condo associations, and every year put legislation in that makes no sense whatsoever. Frankly, in my opinion, they're shooting themselves in the foot. But I guess we're all entitled to do that as well. And sometimes we wish they would shoot themselves in the brain so they wouldn't come back next year. But anyway, as I said, we're going to go into the bills that are dead. I'm not going to spend a lot of time on them because there's about 20 of them in theory. And I just want to give you kind of a flavor for the kind of things that we do with. The first one was there was a bill introduced. I'm only going to go in general terms and not by numbers because as I explained earlier, sometimes there's companion bills saying the same thing and sometimes those bills that say the same thing but a little bit differently. So I'm going to stay more on the issues. And so if I say this is dead, that means all the related bills that tackle this issue are all dead. And so the first one was there was a bill introduced trying to stop for two years all non-judicial foreclosures. That is if you weren't paying your maintenance fees, nobody could evict you or foreclose on you by non-judicial foreclosure for two years. And that bill actually, I say is dead, is still alive. But what happened was, and that particular bill was, it was amended to be one year, not two years, and then it exempted rental homes, investment property, second homes, and other types of abandoned properties so if an owner abandoned it. So it really was dealing with the COVID issue and owner occupants and people who live in their home and maintenance fees. And that's still alive. And we should have saved that for the second part. But I'm looking at my list here and I've got to get myself better organized. One of the bills that comes up every year, and this was in both chambers, is the bill that number one, eliminate on a proxy for an annual meeting the ability to select the board majority. And the second part of that bill was where the current law says that a managing agent and a resident manager, site manager, not solicit proxies for their own use, keywords for their own use. Was a bill was put in to basically say, that's what they want to do, eliminate the board majority, and they want to insert the rates all employees, and they want to, besides the resident manager and site manager, and they want to take away the issue for their own use. What was interesting about that number one is we hear every year this, people can't get elected, so all the boards fault because they use their board majority proxies to vote for somebody else. And, you know, these associations are simply associations. And yeah, people who live in the mainland don't better like the way the board's running the place. They don't know the people who live there. And you're taking away their right to pick who they want to represent them at the meeting by eliminating that. Well, that got, and the drafts went through the legislature, that got eliminated early on. The second part was the all employee part, and it was like, well, I think most people in the industry don't care if they don't want any employees with associations soliciting. But by deleting for their own use out of it, it meant that if a managing agent sends you a notice saying, this is a reminder, we need your proxies to get a quorum, it would have been illegal under this bill. Anyway, interestingly enough, I had a whole story about this today, but the hearing for consumer protection was today at 10 o'clock this morning, and they indefinitely deferred the bill, which means that issue is dead. The proxies will remain as is. And existing law that the managing agent and the senior manager, resident manager, general manager cancel the proxies for their own use remains, but the addition of the employees and taking away that for own use part has been eliminated. So that particular bill died. The next bill that kind of comes up every year or so is that they wanted for both homeowner associations and for condos that we had a mandatory obligation to solicit email addresses and phone numbers. And like we do now provide the snail mail list, the mailing list upon request of an owner, you would have to provide the email and the phone numbers. Every year that comes up almost because people who want to call and get your proxy or lobby for an issue would then have the ability to send you daily emails on why they want you to proxy all you on the phone. And the industry as a whole, and most owners have been against this, they want privacy. They don't think their emails should be devolved, unless they want their email devolved. So that's if they can ask them for it. And they don't want to be deluged with robocalls and phone calls about how to vote at the annual meeting coming up. They want their privacy. So every year that issue comes about emails on phone numbers. And every year gets deferred and is dead and it's not going to happen again this year. The next bill which is dead was actually a pretty good bill I thought. And basically as we know our states broke like all the states that broke because of COVID. The bill basically exempted from a ground lessor, the capital gains tax, if they were to sell the fee to the owners of the unit or to the association. So it was kind of incentivized lessors to sell their ground lease to the association or the owners by making no capital gains tax. And by not having a capital gains tax, it might have positive effect on the final sales price of a particular ground lease. But the state needs money. They want money. It died a natural death. So the exclusion of apple gains on ground lease being sold, the fee being sold is dead. Now, next one is dead was for homeowner associations. And basically the bill said that if you have an association and in there some owner has made an improvement to their property without approval. And that has not been identified. It's automatically grandfathered unapproved. Well, the industry went ballistic because we don't know all the things that people have done. And we have to maintain the association and its rules and it creates all sorts of problems of you know, unequal treatment, you know, if you give one person the right to do something and not the other. So anyway, this built a grandfather of these unapproved improvements died a natural death. And unless you have your improvements have been, you've applied to your association, got approval, maybe building permits, etc. You're not grandfathered and you've got to deal with it accordingly with your association. The next one basically is all this argument that there's all sorts of corruption in Nando voting or homeowner voting. They put under the bill was to propose that voting irregular alleged voting allegorities would be supervised by the Hawaii rules commission. They didn't like this idea either because there's all sorts of processes Robert's rules that there's a alleged voting irregularity to deal with it. And they're trying to bring in government to deal with issues of governance of the self governing entities is just not appropriate. The real estate commission brought out all the reasons we don't have the statutory authority to do it. And then the industry brought out all the problems that has already processes and existence. There is a voting irregularity, but the truth of the matter, voting irregularity, if when it does occurs, the miscount of the votes typically, it's not all of this issue of stuffing the ballot box or hanging Chad or whatever it may be. So, but then died of death. And that's the second year in a row that this particular bill was up for for being heard. And then what else do we have here that died? Oh, this was a corner three of them involving smoking. The first one allowed the governor by proclamation to make a building non smoking in the middle of a pandemic. So if you have a pandemic, people staying at home more at the governor could say as of now, there's no smoking in the building. Well, that died. Then there was another one that prohibited smoking in general and all the apartments that died. And then there was another bill that said, if an owner wants non smoking, a joint jaining unit or some other unit, you can petition the board to have a special meeting of the homeowners to vote or not smoking. If that wasn't approved, then it had to go to mediation to find some conciliation on how to solve the one owners smoking issue that die. So the smoking issue is kind of, it goes through that, you know, I'm a non-smoker. I can I've never had a cigarette in my life, but I'm not a big smoking fan. But the reality of it is people buy their apartments and under the current law, you can't smoke in the common areas and you can't smoke in certain limited common areas under certain circumstances. All these smoking bills come out by those no smoking advocates and I respect their opinion, but I'm not sure I'm giving the governor a right to all of a sudden say in a pandemic that I am now declaring all the condos as non-smoking because more people are staying home longer, makes much sense. And that kind of summarizes all the wonderful bills that died and natural death. Interesting enough, if they were heard and got deferred, then they're not going to be alive next year. It's the 10 or 15 that never got a hearing that's technically still alive that I said previously. That is unlikely. It just doesn't happen. I've seen it once in 10 years where a bill came back to surface the following year. So on that note, we're going to take a short break and come back with the bills that remaining that you know, you can hardly wait to hear what's remaining the changes we're going to see in our industry. So we'll be right back on condo insider in a minute. Aloha. Welcome back. I hope you don't have a headache now after hearing all these ideas that the legislators came up with that died a natural death. And we're going to talk about the bills that are technically still alive and frankly, most of them are decels. I mentioned already about the non-judicial foreclosures that they're looking at allowing that to be a moratorium because of COVID for one year, not two years under originally proposed and excluding abandoned homes and rental property and investment properties. So it truly helps the people who are owner occupants and frankly, from all the boards I've seen, they were willing to work with owners anyway. I'm not sure why this was necessary, but I guess maybe there are some people out there that that the board hasn't been so kind about it. Next one is what we call power of sale law. You may remember that we used to do non-judicial foreclosures in the Supreme Court to a bunch of decisions kind of made them unconstitutional. And that was the fast down and dirty for association to do a foreclosure of a non-paying owner. Well, this bill kind of puts in perspective that when I make this clear, the board of directors has the authority and the declaration and or bylaws who allow for non-judicial foreclosures for the association. And the belief is this would overcome some of the obstacles with the Supreme Court decision because by contract, the owners agreed to allow the declaration of bylaws to be amended. And they're going to simplify it, may allow the board of directors to adopt a resolution that will deal with future closures with respect to non-judicial foreclosures. So if this passes, in fact, the board of directors at a meeting with enough notice to the owners can adopt a resolution and amend and record the bylaws and declaration that would allow non-judicial foreclosures under certain circumstances. Makes a lot of sense to be candid with you because associations need people to pay so they can pay their bills. Next one is electronic meetings. Electronic meetings, we learned in the pandemic that, you know, boards can now have electronic meetings, but homeowners can't through an annual meeting or a special meeting. This bill would allow associations when there is an emergency declared by the governor to hold its meetings electronically and they could do voting so long as they could ensure the secret ballot voting process. And I have to tell you from experience there are any voting platforms out there today that deal with cumulative voting and deal with the multiple percentages of common interest we have. We don't always vote one by one. Sometimes it's these nine-digit decimal points that back, I can tell you now, our vendors are working on it, so that's coming. But electronic voting is probably going to pass and we're going to have some administrative issues on how to deal with it, but that's a good thing. Another one that's really cool and that's really good is assistance animals, or we often call them emotional support animals. Every year we've gone through bills trying to change some of the administrative rules regarding emotional support animals and every year they get defeated and they don't get hurt. Well, this bill is still alive and it's passing through rather well and essentially what it says was that certainly disabled people rightfully so are entitled to emotional support animal or assistance animal or therapy animal, whatever it may be. But the fact that someone puts a vest on one or they got their certification over the internet does not meet the criteria of providing proof that you are entitled to have an animal such as a, I'm going to generally categorize them as assistance animals. And so you can't just go to the internet and buy one for $69.95 and then show this board that I'm entitled to an assistance animal. It's going to have to be done by license provider, which means it could be a social worker, it could be a doctor, but this is moving a line even though in fact the weakness in the bill is not much enforcement built into it. The other ones I can do rather quickly, simplify the sale of abandoned property by a con before you have to all this publishing and newspaper and do all these crazy things. Now a condo association can much easier and much less expensively deal with the band property on their association. A good example would be if homeless people left property on your property, what do you have to do to get rid of it or sell it or dispose of? This simplifies this process quite a bit to allow associations to deal with abandoned property on its property. Another one, two-unit condos. They don't have to file a final public report. What happens a lot of times in two-unit condos is they sell one and the developer lives in the other never sells it. And so you have this issue of having to close it out with a final public report that goes away with two-unit condos doesn't affect very many. Next thing with sale of owner occupants, the developers. The current law is 50% of the units have to be made available to owner occupants. This bill began with 90% had to be available to owner occupants and it has morphed into 67% and it's moving forward that the new standard if a past would be 67% of all new condo units have to be first offered to owner occupants versus the current 50%. Then finally, we have a whole herd of agricultural that there aren't that many agricultural condos out there, but basically put restrictions on the association on what it can do to limit condo or cultural activity on the horizon. And that's kind of a summary what's still alive, so all in all not too bad. I would tell you that your industry has had a bunch of dedicated people both in the industry organizations as well as independent people, meeting homeowners and lawyers alike who testify and testifying is very, very important to have your voice heard because it does greatly influence the legislators vote on what they hear and they don't hear. So on that note at the midway point we're surviving pretty well considering all this been done. So interesting bills out there, I want to remind you that just because I said they're still alive doesn't mean they're all yet. We still have another period of time to go through into April, May to finalize it, but that's kind of an update where things are. We thank you for watching Kondo Insider and we look forward to having you tune in again next Thursday. Aloha, stay safe.