House Standing Committee on Consumer Protection & Commerce

Good afternoon. I'd like to call the Committee on Consumer Protection and Commerce to order. This is our Thursday, March 20th hearing. It's a little after. It's 2:04pm we're at State Capitol in Conference Room 329. Just gonna go over some housekeeping.

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Such behavior may be grounds for removal from the hearing without the ability to rejoin. So on our agenda today we have three measures. Well, concurrent and House Resolutions.

And so first up we have ACR 24 HR 23 requesting the Auditor to conduct a follow up sunrise review to Sunrise analysis Condominium Association managers report number 0510 which analyzed the regulation of condominium Association managers. First up to testify we have the Hawaii Realtors in support.

Aloha Chair, Vice Chair and Members. My name is Lindsey Garcia from Hawaii Realtors. We stand in support of this resolution. We believe it's a good idea and. We defer to the Real Estate Commission on any amendments that may be needed. Thank you.

Thank you. Next we have the Real Estate Commission in support.

Good afternoon, Chair, Vice Chair, Members of the Committee. Keating Klein, Hands Condominium Specialist Real Estate Commission. We'll stand on our written testimony in support of these resolutions. We do note that the resolutions do specifically cite three bills from past sessions.

And we would recommend that if the Committee were to consider maybe a more fresh bill from this session then HB 1312 also provides a similar framework and a definition for a community Association manager available for any questions. Thank you. Thank you.

Next up we have Jessica Herzog on Zoom in support.

Hello. Sorry I'm logging in from work, but I just wanted to appear and say that I do stand by my testimony as a victim of Association embezzlement at the hands of our property management company, someone within their own company was, you know, stealing from our Association and it totaled up to be over $330,000.

So I still have no proof of anybody being held accountable. We were told that there would be prosecution, they would investigate. Nothing has ever been, you know, responded back to us. And I think it's really important hold paid professionals accountable.

Everybody who involves themselves in Association business and gets paid for it should have to have some sort of consequences delivered should they break the law, be unethical? I feel like everybody should be a mandated reporter. I went to the attorneys, I went to the insurance agent.

We buy all testimony, condo bills, ask for an HOA office to be created so that there can be proper over of the laws that are already present that you make a few better laws on the way. So again, I stand by my testimony. My suggestions for amendments were in there and I thank you for your time.

Right, thank you. Next we have Greg Masakian in support.

Chair, Vice Chair, Members of the Committee. My name is Greg Masakian. I serve on a number of boards in Hawaii and I do speak on those boards for voices that sometimes aren't heard. And one of them is our kupuna and many residents in Hawaii that own condominiums.

As we know, there's many thousands of residents in Hawaii that own condominiums and are dealing on a day to day basis with many of the unfair issues that come up and misconduct.

The recent testifier, the last testifier actually, who I do know recently made a very clear statement and I'm experiencing the very same things at my condominium Association. So there's a lot of malfeasance and issues that I'm trying to deal with. So we. Share story and we both understand what's happening. Her story's out in the public.

It's been reported in Silver Beat and I'm hoping mine at some point will be also. Unfortunately, there's some legislators there that are not addressing concerns that have been brought to the table and in fact are retaliating against me in a way that's outside of the Legislature but within the Legislature. And I'll address that as a separate issue.

But I'm raising that today to this Committee because it's appalling. And there's two legislators that will be brought to the attention of the House, Speaker Nakamura and President of the Senate, Kauchi. So with that said, I do support this resolution, but it's unfair that you don't even understand what a manager is at an Association.

And by this point, everyone in this room at this Committee and the Legislature should understand what a community manager is after all of these years. And why do we need a sunrise study for that? Why can't you just address this issue with the bill? It was mentioned.

HB 1312 was the bill that was mentioned that was not scheduled for a hearing. I'll end there. I know my time is up. I ask that you do respect condominium owners much better than you have in the past. And I do hope that you listen to what I'm saying.

Thank you. Right. Thank you. That's all. I have registered to testify as our notes wishing to testify in this measure. Yeah. Please go ahead.

Hi. Good morning or good afternoon. I'm. I believe I submitted written testimony. But I'm also here on for Hawaii Council of Community Association and as an individual I'm the education chair for Hawaii Council of Committee HCCA and we totally support this measure and we really encourage some movement along.

I am a condo owner, been a condo owner since 1990. And like Jessica had relayed earlier about the embezzlement even for me to find out a little bit more about it and for me as education chair and as an individual, I want to know how he went about and did it.

Because with Makaha Surfside they were going on a renovation. We were not. We shared the same property manager. So I had suspected it and I realized it was actual when I went through the financials and saw the reimbursements coming in.

But trying to get the documents to figure out how he did it as an education, you know, even for our new board Members because we had an annual meeting. So some of the rogue ones were voted out. So the new ones need to know.

So what they need to can key in on what to look for in the financials. If something looks out of order. It's a learning lesson and I'm hitting a wall with the management company. So. And it's creating a target on my back with the management company.

And I have a lot of RICO complaints that are going to go in of all the wrongdoings that they're doing, especially in relationship to 125A. So both boards and management companies and as Hawaii Council to take care of the registrations. I have a lot of board Members calling.

Well, my property manager says that I don't need to go. And I'm like, why do you need their approval? The hardest part is to get them to want to go. Why do we put walls up? Why is anybody putting up walls to prevent them from going? You know, the cost is paid for by the Association.

Why do they need approval from their property manager to go? That wall has to come down, you know. So I'm testifying in 100% support of this getting done and there's any questions, they'll be available. If there's any help needed by the Committee or whoever, I will be happy to volunteer my additional volunteer time. Thank you.

Thank you. Anyone else wishing to testify on this measure? Seeing none. Members, any questions? Seeing none. Let's move on to the next measure. Next up, we have HCR 85, HR 79, requesting the insurance Commissioner to conduct a study of alternative insurance models that may provide viable solutions for condominium associations and condominium unit owners in the state.

First, we have the real estate. Sorry, DCCA Insurance Division with comments.

Good afternoon. Chair Matayoshi, Vice Chair Chun and Members of the Committee. Jerry Bump, Acting Insurance Commissioner. You have our written testimony. I'll stand on that. And available for any questions. Just offering comments. Thank you. Thank you.

Next, we have Greg Masakian in support.

About the delay. Yeah, first, I. Again, first, I'm Greg Masakian. Let's start with that. You just saw me a moment ago. I do support both of these. There's actually two. It's HCR 85 and HR 79. So there's a companion. So what I will say is this. I'm happy to see Acting Commissioner Jerry Blump here today.

On March 132025 I participated in a discussion regarding the insurance crisis in Hawaii. It was televised on Insights on PBS Hawaii. So we had an open discussion.

I was representing more of the public, the condominium owners, myself, and as an advocate for many of the people that don't have the voice, they don't know how to come to the Legislature. They don't know how to submit testimony. They don't know where to go. They try to speak to you.

They try to come to your offices sometimes, but unfortunately, many times they're not heard. So hopefully, going forward, not just this measure, but condominium measures in general, hopefully you'll listen more. I'm trying to give that voice to people. My mode is a little different.

And I know Hawaii has a certain way of doing things, but we don't have time for that certain way. And unfortunately, that certain way isn't the right way. It's just a little off topic here. We're justifying on the measure, but it's delaying the process. So I do support this. But I believe that.

What I would like to say is I did see $1.5 million that was recommended to be spent. And I would suggest that the Commission, the Insurance Commission, just simply have staff that are expert experts on the things that they need to be experts on.

And instead of having consultants come in, which is what we tend to do quite often in Hawaii, let's have the people that are professionals being, being there daily on a regular basis available to address these issues. So that's the main point that I wanted to make.

The 1.5 million that I did see is a concern that that would be spent where that could be used for staff over a number of years. Thank you for that, that moment. Appreciate it.

All right, thank you. That's all I have for register to testify. Is there anyone else wishing to testify on this measure? Seeing none. Members, any questions? Do you have a question for Commissioner?

Mr. Bump? So you indicated that, I guess one of the leading costs would be attorneys. You specifically mentioned attorneys to verify and consult with. Do you not have access to the Attorney General's Office?

We do, but to conduct a study and I guess to address it on a broader level.

So within the division we have certain key functions, core functions that we undertake, protecting consumers, making sure our licensees live up to regulations and you know, ensuring that companies remain financially solvent so they can pay those claims, developing a model for launching a new company that we don't have in house expertise on.

So legal counsel is part of it. There would be also, you know, I guess regulatory government experts to set up this type of structure. And then I think other insurance expertise like actuarial, you know, a lot of the consultants that would be needed are costly.

I did try to reach out to some companies that could potentially conduct this type of study to get a cost estimate. I didn't just pluck the 1.5 million out of thin air and. But that was sort of the consensus ballpark figure that would be needed based on how the study is worded and the complexity in that study.

So it could also be a survey of what other states may or may not be doing or what other countries may or may not be doing.

Right.

If the resolution is revised to only limit it to things that are like you just referred to. Sure. That would decrease the cost.

Well, okay, so a study isn't a study. Could be.

So if we, if we said do a survey of what's out there or you know, with technology and also I'm imagining that you're also a member or subscriber to different associations or associations of insurance commissioners or I mean, somebody else might be have gone down this path, but we don't know.

So I mean, so it all might be there if we just surveyed or just made some calls or sent some emails, but we don't know. It may not be 1.5 million is the point I'm making.

True. I mean, I guess the appropriation would be to meet the requirements that are in this particular study. The way it's worded doesn't mean we would actually have to spend the full 1.5 million if, as you say, that some of the information was already readily available.

But, but we're not aware of this particular idea, you know, and so I, you know, I can't speak to what's available and what's not available at this point.

Not to mention, I guess it's, you know, by the time this would get signed and then by the time the study needs to be completed to present it at the next Legislature, it's a pretty compressed time frame as well. So.

Can I ask a last question? What if insurer, maybe somebody who's already licensed to sell property insurance to buildings in Hawaii came to you already with a model in place? Are they allowed to start selling that new building life insurance to people, or do they need to get that model approved by you?

Can they just move forward with it?

We're always open to any of our admitted carriers. If they have a new product that they want to try to sell, they can present that to us and we would review it to make sure it's in compliance with statutes.

It would take some time, depending on the complexity of what they're trying to do, to make sure that again, that it, it meets the regulatory requirements. But they would need to get pre-approval before they. It depends on what it is. I mean, they would have. If it's a new product, most likely for sure.

If it's a new product that has a rate component and we're talking about property insurance. So property insurance, they have to file their rates and then we review those rates to make sure they're actuarially justified. So it is a process.

But yeah, I mean, we have admitted carriers all the time that develop new products and, you know, start to sell those. But in order to sell those, they usually have to file their rates with us, file their policies and forms.

So we make sure that those policies and forms also live up to the what's on in the regulations. Got it. Thank you so much. Sure. Thank you.

Thank you. Members, any other questions? Seeing none. Let's move on to the last measures on our agenda. HCR158 and HR153 requesting the Attorney General to convene a working group to develop landlord tenant code improvements to increase the supply of housing in Hawaii. First up, we have Attorney General's Office.

Good afternoon. Deputy Attorney General Christopher Hahn with comments on the measure. Given the subject matter and the scope of the working group, we believe that the Legislature would be better served by appointing another state agency with expertise in housing to convene the group.

As for the legal aspect of the working group, my understanding is that our Department does not practice in the area of the residential landlord tenant code. So when it comes to legislative solutions, LRB would be better suited since they have that General grant of authority to provide research in all areas. Thank you.

Great. Thank you. Next we have the Hawaii Realtors in support.

Vice Chair and Members of the Committee, Lindsey Garcia with the Hawaii Realtors. We send in strong support of this measure. We believe it's a good idea to be proactive. When you look at all the landlord tenant code related bills that are introduced.

This year and in previous years, that it just makes sense that we all get a group of stakeholders together to actively have a discussion about these issues. And see if there's any way that. We can be proactive at addressing them. Definitely acknowledge the Attorney General's comments and we understand the judiciary is comfortable with.

Leading the task force or the working group. I apologize. So if, if the, if that is your prerogative to change the chair to digest, we wouldn't have any problem with that. So thank you very much.

Right, thank you. Next, we have the Maui Tenants and Workers Association with comments.

Yes, comments only. I'm Alana Kei, Maui Tenants and Workers Association. I operate the hotline that we have and I talked to Andrew at the DCCA. He, he has the landlord tenant line there and there's some very common problems that people incur and there's a lot of very unscrupulous landlords.

So I'm concerned that a group of people that are not in, in rentals also. I've been a renter for 27 years on Maui and I haven't, I've been in court with landlords. There's some things happening, crimes perpetrated on tenants that people.

I'm not going to get into everything, but you'd have a tough time even imagining what people here on Maui are going through with landlords. So I'm really concerned that the tenants don't have really any avenues if they have a crazy landlord or an abusive landlord because they can, generally speaking, not get lawyers and so on.

And they also have trouble understanding the legal system. And they have trouble understanding their rights. So I wanted to see stronger tenant advocacy in this work group. And I think that some of the hotline operators would be valuable, have valuable input.

I'm concerned that based on the wording of this resolution for the working group, that it appears as though saying to create a more secure environment for the investor side of it. Sounds like tenants who already need more protections would be losing protections if you're trying to give investors incentives to enter the rental market.

So I definitely, strongly would like believe you should put better, stronger representation for the tenant viewpoint, because you don't know what you don't know. And we can tell you what you don't know. There's some really bad things going on. I think that's about it. Thank you for listening.

Okay, thank you. That's all. I have registered to testify. Is there anyone else wishing to test finest measure? Yeah, go ahead.

It's just a comment. So one of my other hats is I'm a volunteer mediator with Mediation Center of the Pacific. And I, they have me on a lot of that, LT. Because. But one thing in common that I find is because it goes to court, right? Small claims court, like especially a security deposit.

And one thing is the process of the court. So they file it and then someone does a counterclaim. And then I think they want to make sure there's another process that to file to make sure that they get that judgment, and then they make sure they file another piece of paper.

I think that's what's missing in the landlord tenant code. Is that procedure when you go to court? All that paperwork filing could help some of the. Some of the tenants, even the landlords, you know, because most of your tenants were not going to have attorneys. The landlords will have attorneys.

So I think that's kind of can be missing in the landlord tenant code. Thank you.

Thank you. Anybody else wishing to testify in this measure? Seeing none Members, any questions?

I'm sorry. Did Hawaii Worker center testify?

No.

Yes. Maui Tenants Association is a project of the Hawaii Workers Center.

Thank you so much.

No questions. Mr. Chair. Yes. Do you want to testify?

I'm on Zoom. Sorry. I did want to make a comment if that's allowable. I'm sorry, I didn't register for this particular testimony.

Yeah, sure, go ahead.

Okay. I'll keep it brief. I come from Catalina Island, where there's. In California. Sorry. Jessica Herzog, just a citizen commenting, but my previous experience for 20 years in an island environment where housing was limited. You have to get creative and you have to get the appropriate proportions of the people affected by your laws.

So when you have, let's say half a million people who are renters, I'm making up numbers. And then you only put 1% of their representation into your, you know, working group, you need to start balancing things by the proportion of the people affected by the law.

When you have a large number, like in the condo issues, you got over 300,000 units. Most of the people who live here that live in those units where they're renters or owners are not equally represented before you when you go making your laws.

So to translate that for this particular issue, I'm just asking you guys to start framing these decisions based on your constituents, based on our actual physical representation within the population, not the dollars that we're contributing because we're here as this indentured servitude labor for the most part.

As far as the large population that lives here, we are the working class. And yet the representation is so out of proportion when you bring these bodies together to develop legislation and it effectively turns against us.

So in order to do your jobs effectively and what I believe is the reason why you get elected to represent those people, I'm just asking you to start really putting it through that lens for especially this issue and all the other ones where you can clearly see the representation is not before you.

Like I said, it's a struggle as a working class person to come to this meeting and speak to you. But I'm doing my best because I have, you know, 40 owners behind me that can't do it either. But they really want to. And I'm the one that will drive myself crazy to do it.

So thank you for your time. That's my commentary.

Right. Thank you. Members, any questions? Seeing none, let's move right on into decision making. Oh, okay. Let's have a quick recession. We're reconvening the Committee on Commerce and Consumer protection on our 2pm agenda. We're now going into decision making. Members, first up we have HCR 24 and HR 23.

Recommendation is to adopt an HD 1 that will address the auditor's testimony and concerns regarding doing a follow up audit on a Bill that was introduced in 2003.

So in order to address the issue and comply with Section 26 H-6HRS, we're going to ask the auditor to do a sunrise analysis on HB 1312 that was introduced this year and has actually the scope of duties for resident managers and also technical amendments for clarity, consistency and style. Members, any questions or concerns seeing none.

Chair for the vote.

Chair's recommendation is to pass, pass HCR 24, HR 23 with amendments. Chair and Vice Chair vote aye. Rep. Ilagan. Aye. Rep. Ichiyama. Aye. Rep. Iwamoto. Aye. Rep. Kong. Aye. Rep. Lowen. Aye. Rep. Martien. Rep. Tam, Aye. Rep. Pierick Is excused. Jury recommendations adopted.

Thank you, Members. Next measure, HCR 85 and HR 79. You know, given the issue with the potential funding requests from DCCA and it seems like there could be a path forward if this scope is narrowed or changed, I'd like to defer this measure for now, maybe work with the introducer and see if we can bring something back.

So recommendation is to defer for now. And next we have HCR 158, HR 153. Recommendation is to adopt an HD1 to address the AG's concerns, to change the convening entity from the AG to the judiciary based on the judiciary's supportive testimony for SB 822, which this Committee previously heard.

Also to narrow the scope by removing subparagraph 1 on page 2, lines 13 to 14, and technical amendments for clarity, consistency and style. Members, any questions or concerns seeing? None. Chair for the vote.

Chair's recommendation is to pass HCR 158, HR 153, with amendments noting the excused absence of Representative Pierick. Any other Members voting with reservations? Any Members voting no. Chair recommendation is adopted.

All right, thank you, Members. We are adjourned.