 Aloha and welcome to another edition of Kondo Insider. Our show is every Thursday from 3 to 3.30 and focuses on association living in Hawaii. As I've said many times about a third of our population lives in some form of an association which has its own rules and regulations and our show is to help boards of directors and owners understand the obligations requirements of living in association. Thank God in about five days our national election and local election will be over. I don't know if I can handle it anymore. I'm sure my wine bill has gone way up because it's driving me to drink to be honest with you. That being said what happens once the legislature the elections over is our legislation starts to get ready for its January start for the 2017 season. I found last year to be one of the toughest years for association management and then about 80 bills were introduced to affect the association living. I thought as I had started this I'd invite Chris Porter who's the chairman of Community Association Institute Legislative Action Committee who's the chair of the CAI LAC committee here in Hawaii to talk to him about what we might anticipate in 2017 before the legislature. So welcome to the show again Chris. Thank you very much Richard. So kind of the review why don't you just briefly tell everybody about your background and your firm and what the CAI Legislative Action Committee is. Sure I'm with Porter, McGuire, Keohokone and Chow we're one of about four of the law firms that specialize in representing condos and HOAs. I would say probably three years ago I started to get involved with LAC. You had already been involved with LAC and that's the Legislative Action Committee of Community Association Institute. Community Association Institute is really an organization that supports condominium and homeowner associations throughout the United States and they have different legislative action committees throughout the U.S. and in Hawaii there's actually a LAC that's a local chapter and they have a chair so I was the chair last year I'm gonna I assume I'm the chair this year but we try to switch it around. You're on the Legislative Action Committee but it's really an organization that attempts to track the bills. We have a lobbyist and we try to track the bills up at the Hawaii State Legislature because believe it or not there's about 3,000 bills that pass through the legislature so it's pretty difficult for us to track it. And so how does the person get on the Legislative Action Committee? Is that mostly management companies the lawyers or who's who really are the members of the Legislative Action Committee? That's a good question. The Legislative Action Committee is actually made up of folks or representatives from all facets of the association industry or the community association industry. So you have owners, you have owners slash directors, you have managers, you have attorneys, you have insurance agents, you have vendors from different parts of the industry but you have to apply to become a member and then your name has to get vetted or goes to the National Organization and then the National Organization will approve you and then if there's an opening locally then the local chapter is always looking for volunteers and actually we're always looking for volunteers because it takes a lot of time and effort to just be able to you know spend the time going down and waiting for the bills to come up and that sort of thing. Yeah correct me if I'm wrong I think C.I. Lack in Hawaii anyway is 12 members yes which is equally divided three members from the vendors three from the attorneys three from the management companies and three from the homeowner slash directors so no one has a real monopoly or control of of what's being what's being said. Correct that you've been on Legislative Action Committee longer than I have and your numbers are correct and no particular body or representative group has a hold on the Legislative Action Committee or can outvote anybody and actually with that type of a division you have equal representation of all facets of the community association industry so. Well there's other lobbying groups like the White Counts of Community Associations there's the economy counts of Maui there's a couple of lawyers out there who do their own lobbying and there's some private owner groups you think it's a good thing if they work together before it goes to the legislature I mean when I go in I know when the legislation is in session it's almost impossible to get much time for the legislators it's already kind of they're in a in a game plan and it's rolling along pretty quickly and and you have all this conflicting testimony during the legislature pretty much stalls the bill out because the legislators aren't experts in our area they don't know what's really going on so do you think it's an important thing that all these groups should try to work together and and bet these things before it gets to the bill state? Yes I think one of the issues that we've seen up there when both you and I have been testifying is that we do have as you said a couple of individual attorneys and we have these other groups that are up there and a lot of times we're not talking to each other as organizations and so this year and beginning last year we're starting to make a more concerted effort to try to bring all of these groups together so that we have one voice and a lot of times we're on the same page we also have the national or what are the representatives of the national registered parliamentarians that testifies so we have about five different groups we also have an individual homeowners group that has raised some complaints that they have with their particular boards and so they formed a different group it would be great if all of us could get together talk about the issues and then go to the legislature with a common plan. Yeah my experience has been when you have competing groups with different points of view pretty much they all speak loudly before the legislature which pretty much stalls the bill because there's no consensus of how to make it better and there's just there's always risk and reward and win and lose and good and bad but if the legislature doesn't seem to see consensus they're more likely not to do anything. Yeah I totally agree and I think the all they're seeing is different facets of the industry arguing over a particular issue and like I mean they have to deal with 3,000 bills so imagine if they had that with every single bill there's no way the bills would function and as one of the legislature's ones told me if a bill's like a shark if it doesn't keep moving it's going to die so it's got to keep moving through the different facets of the legislature otherwise it's not going to pass and the more I think fighting and the more conflicting information that they get there's just no way that they're going to be able to make a decision and so it's going to die it's not going to keep advancing and there are things out there that are good for the industry and if we would all simply work together I think it would be great. I would comment just for everybody who may have missed the show we were with the last couple of shows we had Alicia Malofithi on the show who's our lobbyist and she talked about the process and the committees and the bills and how that works and so if you miss that show and you want to know how the legislature works you should go back to the Think Tech Hawaii website and pull up the interview with Alicia Malofithi who really went into detail about the whole legislative and governmental process and how that all works to get a bill. But in my Tom Tom's in my of what we're hearing about from last year and this year let me just talk about and ask you a question about a couple of potential bills I'm not saying they will be bills but we're getting some Tom Tom's already about things that may come up this year and kind of get your sense on them. Sure the first thing was we've talked about one of the always the issues every year is you have a group of homeowners who are upset with their board of directors and so they want to implement change and they want to change the rules by by legislature and law. One of the things that we advocated as an industry for was called Act 187 which provides a form of evaluative mediation. Have you had experience with that has been successful for you evaluative mediation has this been working and and and where do you see we need to maybe amend that law here there'd be some potential amendments about that. How do you see that all shaking up? The the equine seven was probably covered on several shows ago too in terms of the difference between evaluative mediation which is the Act 187 versus the traditional mediation which is more I call it the Henry Kissinger approach where I come to you and ask you what your position is and then I run into the other room and ask the other person whether position is and I go back and forth but I never give you my opinion whereas with evaluative mediation the mediator which which we've been able to get retired judges people that are familiar with the industry the association industry they come in and actually will give you their judgment as to where they think it's going to go so it helps parties focus and tries to get parties to understand that hey if you go fight this in court you're probably not going to win or this is the way it's going to come out so the valid evaluative mediation process has been a great process it's paid for again through the real estate fund and each party pays half of the first hour of the mediators time so it's only about a hundred and seventy five bucks each so it's a great process it's worked one of the problems that we have heard at the legislature and I'm not saying that it's not a problem is that in few circumstances the owners have said I want you to go to mediation Richard Emory and you're on the board of directors of condo X and the board says well we have this a value to mediation process out there but we're not going to go and then the owner is stuck and that owner is coming to the legislature now and telling the legislative body or at least the different committees we don't we can't force them to go what do we do and that's where they're that's the problem that they're raising before the legislature and there is a way to get around it but the legislature's reaction and rightfully so is that they're looking to these owners and saying hey you're lay people they don't have attorneys they don't know how to push the boards or the owners into court or into the mediation and so what I've heard about it I'm gonna ask you the question sure is what is the proposed remedy to help facilitate that and make people show up for mediation there's been some discussion what I know nothing's been agreed to by the committees and but there's been a lot of conversation over the last year about this so what is one of the proposed thoughts on what we might amend to make this better the at least from the association standpoint because they have the ability to have counsel typically somebody like us or another law firm they can file what's called a special proceeding with the court to force you as the owner into the mediation process if you're not going to go so there is a way to do it what the legislature is being told is that that's too much of a headache and that owners really don't know how to go through that process and so they want a different way of dealing with it one of the ways that hasn't yet been discussed throughout the industry but I've heard about it too like you have is that somebody has suggested or at least a group has suggested possibly amending the current law so that if a party asks for mediation through the evaluative mediation process you get notice of it and then you decide not to participate or not to show up that you're giving an opportunity to understand that if you don't show up the evaluative mediator will issue a written decision and that that decision may become binding to some extent and then they have some type of a due process requirement built in so there is some discussion about coming up with some penalty and I don't think it's been fully fleshed out it hasn't been discussed at CAI's legislative action committee yet to get all of the industry input but I think there's got to be some alternative given to the legislature so from your experience of the lawyer you've done act 187 and evaluative mediations yes have you found them successful for the most part oh yeah yeah I think they're I think we probably have resolved our adventure to guess 80 to 90 percent of the cases that we've submitted to the process so I think it is a valuable process I've had I participated as a witness in one recently and and I found it very helpful because these judges take the gloves off on both sides and and clearly tell in the strengths the weaknesses of their case and are pretty much able to even tell one side if they're wrong they're wrong and and resolve the suit without getting legal fees and all the rest of the sum bug you get when you get into the legal process yeah so what we're gonna do is this is very entertaining we're gonna take a short break for one minute we'll be right back with Chris Porter thank you aloha Howard wig I am the proud host of cold green think tech away I appear every other Monday at three in the afternoon do not tune in in the morning my topic is energy efficiency it sounds dry as heck but it's not we're paying five billion dollars a year for imported oil my job is to shave that shave that shave that down in homes and buildings while delivering better comfort better light better air conditioning better everything so if you're interested in your future you'd better tune in to me three o'clock every other Monday cold green aloha and thank you very much we're back to condo insider talking about what we might anticipate for association legislation in 2017 we're talking about the act 187 and solving owner disputes and last year there when as a part of this mediation there was a group trying to fight for what they call an ombudsman to have some state agency at this case was the attorney general's office they actually called it a condo czar in the meeting to kind of take responsibility for when homeowners have a dispute they followed with the condo czar is that something is viable it's the actual bill that was moving throughout or through the legislature and it did die because it didn't keep going I use the word condo czar and it did create or attempt to create an office within the attorney general to basically give that particular condo czar a lot of power to resolve or at least get involved with a lot of association disputes it basically as we label that it was attack on self-governance because associations are supposed to be able to govern themselves like many governments and they have the rules and regs to be able to do that so the industry wasn't in favor of it just because it was such a drastic change it could leads to two potential constitutional fights lead to fights over whether it was legal under the governing documents of an association and could government impose these types of requirements so I expect it to come up again maybe in a different form or different fashion but and I think it again it's potentially to address some of the issues that are being brought by owners that have concerns with their boards and they just don't know how to address those concerns because the concern I had is if you look at a the association governing documents it's really a contract between the owners and the association and I can see where the government could force you to follow your contract but I don't think they could pass legislation to override your contract and then and and say even though you have a contract this is how it's going to work we're going to give some person some omnipotent power to override however they feel that that'd be a constitutional issue to me yeah and that's those are some of the issues that we raised and that was one of the reasons I believe that it was defeated I think that the legislature is still looking for some mechanism whether it's the ombudsman at a different level and I agree with you that I think all they could do is as an odd bins ombudsman or a czar is to suggest amendments or changes but there were a lot of things that were in there that would cross the line in my view but I think again I think the industry has to come together and go to the legislature at least have something prepared to go to the to the legislature I think you would agree to address these pockets of concern you know I think we have to the way and a mechanism that's why I like Act 187 to solve these disputes but you know one of the issues that came up last year was term limits for example for board members that comes up almost every year and my argument's always been look we have term limits all you as the owner have to do is go get your owners to change your own governing documents to have term limits in your association and what happens is they can't do that so you seem to try to go around the legislature to pass some law to affect everybody you know so it's it's almost like they can't there are processes within the governing documents to make changes but because they can't get their homeowners to support it they look for a law to change it because of their view and and they're not getting what they want so and I think it is a that I think all of us agree that there are pockets or minority pockets of potential problems just like there aren't any community or industry and there has to be some way to address those but again the condos are as pretty drastic I think some of these other methods are much more drastic and I and I believe that if we can amend or clean some way tighten up 187 like you're talking about to create a process that would force this mediation program and give it a chance because I think Senator Baker who is one of the proponents of 187 I agree with her I think we really need to give this a chance but we need to come up with a way to force people into it without having to go to court to force them into it. I agree because homeowners don't have the resources and their knowledge and we need to find a way to amicably to solve these disputes when we can yeah and that kind of brings me up to another issue that I saw the bill draft bill recently where they were talking about a topic I brought up in the show before that owners have a right to participate in board meetings and some boards have said well we let them speak at the forum we're not going to let them speak during the meeting and they say well we'd like to have you come to the executive session to discuss your private matter maybe your delinquency but you can't come to the executive session because the law says it's for board members only so there's been discussion about cleaning up the language to me it doesn't change what the rights are but have you heard about that and kind of what is the what are they trying to do on this amendment to that particular section of the law with regard to homeowner participation well I I think my personal opinion again this is as an attorney if I was representing or what when I do represent boards and I work with various associations and various management companies I would tell the board of directors that they have to allow for the owners to participate in the regular session there are ways in which to control it so that it doesn't totally disrupt the process and you can't get decisions made so there are ways within the law to be able to do that I personally don't think it's right to keep owners to commenting just at the forum before or after but I have I understand that some boards may have concerns that they want owners to be able to attend and address particular issues in executive session I think there's already a mechanism built into the law to do that if it needs to be cleaned up I think we can do that but owners if you have an grievance or you have an issue and we don't want to make it public to all of the owners we we can invite you into the executive session have you give your piece have the board ask you questions and then when the board has to make its decision they can excuse you from the executive session but I don't think we can build into the system allowing for owners at their choosing to attend executive session I agree the way I look at this bill is first of all it's a perfect example of an owner who had an issue who came to the industry were working with that owner to try to find ways to clean up the language okay the strictly is just cleaning up the language it really isn't changing what you do is you get these volunteer board members who read it their way and when you look at the very basis of it with the law says they participate in deliberations you know so you have a motion or something on the table outside of the forum to me is patently clear if you're a parliamentarian that means that owner during the deliberative part of the the motion with before they vote an owner should be given a chance to say I agree disagree I recommend this or recommend the following and what this particular owner was saying is that it just needs to be clarified the language a little more clear so boards don't read into this or in their own interpretation and how they're going to prohibit owners from speaking at board meetings so I think this is an area with industry the trade organizations I've worked with support the idea of clarifying the language there really doesn't change anything just make it more clear for voluntary board members to understand what owners rights are at a board meeting without giving away the store and out losing control of the meetings I think it's pretty good yeah another one I've heard is you know we know there's five four kind of any of my right by statute 514 a and 514 b you know and they're kind of the same in a way they had 514 a forever and then 514 b came along with the recodification and now we have both there's some talk about repealing 514 a how do you feel about that what's the issues I think the right now if you don't opt in or you're not one of the newer projects then you can still be in this 514 a 514 b land as I call it you can opt into it but some boards for different reasons I think that it's going to give too much power to or some owners think it's going to give too much power to board so there's a tendency in a minority set of cases to not vote to opt in but what it's doing practically is that in fights or disputes between the association and owners or just the association and other groups whether it's contractors or other things that come up because we are like a small government government within the community or condo industry there are fights that come up and the other parties are using the language from 514 a sometimes to contradict 514 b so we've used it we've seen it used as a tool against associations which is not good I think I personally believe that we should just have one law which is 514 b I believe I believe that 514 a and feel that 514 a should be repealed there's going to be some cleanup and language that has to be done to do it I think within the industry of real estate attorneys that are doing these developments and just the industry in general I think the support is moving in that direction it just has to be done in the right way because I understand that there are still projects in the pipeline that were originally created under 514 a so there has to be a way to allow those to get through this system have 514 a die and make sure that 514 b covers whatever we need to cover from 514 a but again it's I really don't see the use of it anymore yeah I kind of agree I just stand at the beginning why we had 514 I 514 be kind of like training wheels give 514 be a chance to see what unintended consequences may come out of it or whatever but when you start think about 514 be part 5 which is kind of any management regardless whether you're an A or B applies to everybody correct there's a bunch of other sections that have this kind of gray area with with regard to it I think we're at a point in time in the industry where we don't really have any value of having 514 and 514 be any more all the issues have been cleaned up into amendments and the law and changes it's probably going to be easier for everybody if we don't have people going to both statutes and trying to find language to support their provision that it's probably a time that we recommend 514 a get appealed but I don't know how the Legislature reacted that I think it just depends on whether if the entire industry supports it then I think it there's a good shot at doing it whether it's this session or next session I think it's going to be coming up fairly quickly I know Gordon Arkaki who was one of the attorneys I'm not sure if you've had him up here on the show but Gordon was one of the instrumental folks in the industry that worked on the recodification and he is one of the proponents of trying to repeal 514 a so he may be someone to talk to in the future in terms of the original goals where he sees 514 be it has gone and then where does he see the future of in the timing in terms of hopefully getting rid of 514 a I know we're down to our last couple minutes of the show and I know last year we had priority of payment restrictions licensing of managing agents board term limits and in some cases they were looking at punitive measures if you didn't fund your reserves at some third party is liable for the additional costs do you think all that's gonna come back up again yeah it's it's come up every year term limits have come up almost every year the licensing of managing agents has come up and there's just a number of problems in hurdles with those the most recent one that I just heard about that I we were discussing a couple of minutes before the show was the cap on attorney's fees to be capped when an attorney is trying to collect a debt for an association what I think the proponents don't understand is that associations as you've educated me in the past operate on a zero base budget meaning that they don't operate to make money they're basically operating to pay the bills to pay the lights pay for the sewer pay to operate pay to you know the reserves and so there's an extra money so whenever there's a delinquent owner they're not anticipating attorney's fees and so they have to recover all of those attorney's fees there's an attempt I think this next session and I believe I've seen a draft of a bill to try to cap it well thank you for being here today I know it's going to be a interesting year this year in the 2017 legislature I do want to thank the legislators I know it's a very hard job with what they do and trying to sort out all the things that come before them every year and I know that they probably feel this way about all the people who testify that we're very biased on our opinion which is true I guess but we want to thank the legislators want to thank you for being here today thank you return good to see you again yeah