STAND. COM. REP. NO. 1598

Honolulu, Hawaii

, 2005

RE: H.B. No. 393

H.D. 1

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 393, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE COUNTIES,"

begs leave to report as follows:

The purpose of this measure is to clarify that unpaid civil fines and unpaid administratively imposed civil fines that are added by the counties to taxes, fees, or charges shall not become part of those taxes, fees, or charges or constitute a lien in favor of the counties on the debtor's real or personal property.

Your Committee recognizes that the present law, which was enacted in 1993 to permit the counties to collect otherwise uncollectible amounts, has a negative impact on commercial lending institutions. The law allows the counties to add unpaid civil fines, plus interest, to real property taxes owed to the county, superseding other liens that may have been recorded prior to the assessment of the civil fines.

Your Committee finds that, depending upon the amount of the fine and the daily accrual, the mortgage lender may potentially be undersecured or even unsecured altogether. The effect is that a mortgage lender may become liable for paying the county lien in a mortgage foreclosure. In addition, a potential mortgage lender has no way of knowing that unpaid civil fines are owed to the county because such fines are not recorded anywhere.

As previously indicated by your Committees on Intergovernmental Affairs and Judiciary and Hawaiian Affairs, the parties with a stake in this issue have been trying to reach a compromise that will preserve the counties' ability to collect unpaid fines while protecting the security interests of commercial lenders. To that end, your Committee has amended the measure by:

(1) Requiring that notice of the unpaid fines be recorded in the Bureau of Conveyances as a condition of the fines becoming a lien on the debtor's real property;

(2) Providing that recordation of the notice of unpaid civil fines in the Bureau of Conveyances shall be deemed to procure a lien against land registered in Land Court pursuant to Chapter 501;

(3) Providing that the lien in favor of the county shall be subordinate to previously recorded or registered liens but senior to those recorded or registered thereafter;

(4) Authorizing the counties to condition the issuance or renewal of a license, approval, or permit for which a fee is assessed, except for water for residential use and sewer charges, on payment of the unpaid civil fines;

(5) Requiring the notice of unpaid civil fines to state the amount of the fine as of the date of the notice and the maximum permissible daily increase in the fine; and

(6) Providing that the lien shall continue until the unpaid civil fines are paid in full or until a certificate of release or partial release, prepared by the county at the owner's expense, is recorded.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 393, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 393, H.D. 1, S.D. 1.

 

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

BRIAN T. TANIGUCHI, Chair