Hawaii Condo Law

There is a hearing on Tuesday, April 25, 2006 at 3:50 p.m. in room 016 on a bill of interest to community associations before a Conference Committee.

House Conferees: Representatives Kahikina/Herkes/Nishimoto, Co-Chairs; Pine
Senate Conferees: Senators Menor, Chair; Taniguchi, Co-Chair; Baker, Espero, Kokubun, Hogue

The hearing notice discusses the following bill of interest to community associations:

SB2076 HD2 This bill will exempt from taxation 100% of the income received from the sale to a lessee of the leased fee interest in a residential house lot or multi-family residential leasehold property, or to the association of apartment owners, residential cooperative, or planned community of the multi-family residential leasehold building. Since Honolulu repealed Chapter 38 providing for mandatory conversion of the leased fee interest in condominiums and residential cooperatives, the tax incentive would be a welcome change to the law which may remove one reason a lessor may be unwilling to sell the leased fee interest to the lessees. The tax credit would be in effect for the years 2007 to 2011.The House placed an effective date of 2020 to insure that further discussion is held on the bill.

AS THIS IS A DECISION MAKING MEETING ONLY, NO PUBLIC TESTIMONY WILL BE ACCEPTED. You can of course contact any of the conferees.

The Senate Committee on Commerce, Consumer Protection, and Housing before Chair Ron Menor will hold an information briefing on Tuesday, April 25, 2006 at 5:00 p.m. on Hurricane Insurance. The hearing notice states that the purpose of the informational hearing is to briefing is to provide the public with a comprehensive overview of the issues related to the decision by the state’s largest insurer to discontinue selling hurricane insurance on a large segment of homes in the state, namely:

• homes with single-wall construction;
• those built before 1981 that have not been retrofitted with hurricane clips to meet 1993 or 1994 building codes; and
• homes located within 2,500 feet of the ocean without flood insurance — even if they are not in a flood zone.

As reported in the The Honolulu Star-Bulletin, Zephyr Insurance Co. will not be issuing policies to new customers that fall under one of the three types of dwellings described above. Zephyr stated that recent hurricanes have affected the availability and cost of reinsurance. Reinsurance is the process where an insurance company shares the risk covered by the policy with other insurers.

Update 4/24/2006: Sue Savio, insurance guru has informed me that Zephyr only writes policies for buildings with 4 or fewer residential units. So Zephyr’s decision will not affect larger buildings.