STAND. COM. REP. NO. 2487

Honolulu, Hawaii

,

RE: S.B. No. 3004

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2006

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred S.B. No. 3004 entitled:

"A BILL FOR AN ACT RELATING TO CONTRACTS,"

begs leave to report as follows:

The purpose of this Act is to accelerate a subcontractor's or materialman's right to payment upon completion of the subcontract or the furnishing of materials.

Testimony in support of this measure was submitted by Steel Fabricators and Erectors of Hawaii, AA Electric, Ltd., Mutual Welding Company, Ltd., V & C Drywall Contracts, Inc., Iron Workers Stabilization Fund, Swanson Steel Company, Inc., S and M Welding Co., Ltd., Alakai Mechanical, South Pacific Steel Corp., Subcontractors Association of Hawaii, and one individual. Testimony in opposition was received from the Department of Accounting and General Services, Laborers' International Union of North America Local 368 AFL-CIO, General Contractors Association of Hawaii, BIA-Hawaii, Willocks Construction Corporation, Hidano Construction Inc., Mouse Builders Inc., Co-Ha Builders, Inc., Isemoto Construction Co. Ltd., T.M.C. General Contracting Inc., Actus Lend Lease LLC, Metzler Contracting Co. LLC., Koga Engineering & Construction, Inc., Associated Builders and Contractors, Inc., Lehua Management Services, Inc., Walter Y. Arakaki General Contractor, Inc., Constructors Hawaii Inc., Walter Moody Construction Company, Ltd., Canaan Construction, Ltd., King & Neel, Inc., Thurston-Pacific, Inc., HSI Mechanical Inc., 3-D Builders, LYZ Inc., CC Engineering & Construction, Inc., Hawaii Surety Association, Ralph S. Inouye Co. Ltd., The Pacific Resource Partnership, Universal Construction, Inc., FLUOR, and two individuals.

This measure addresses a problem within the building industry. Materialmen and subcontractors often are at the mercy of general contractors when seeking the payment due to them upon completion of their work or upon their providing materials for a project. This problem is particularly serious for materialmen and subcontractors who are involved at the beginning of a project, when their work is completed or materials are furnished long before the project is completed. In many instances, subcontractors must wait many months, even years, before receiving full payment for their completed work. Often, the subcontractors are small family owned and run businesses that lack financial resources to withstand a long delay in receiving payments owed to them for work completed.

Your Committee finds that there is a need to give materialmen and subcontractors the right to payment upon furnishing of materials or completion of their work.

Your Committee has amended this measure by changing the effective date to July 1, 2050 to continue discussions.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3004, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3004, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Housing,

____________________________

RON MENOR, Chair