STAND. COM. REP. NO. 664

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 657
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred H.B. No. 657 entitled: 

     "A BILL FOR AN ACT RELATING TO TIME SHARING PLANS,"

begs leave to report as follows:

     The purpose of this bill is to establish a streamlined
registration process for time share developers that would allow
time share developers to more quickly enter the marketplace, and
thereby reduce the cost of doing business in Hawaii.  As received
by your Committee, this bill would:

     (1)  Require acceptance of an out-of-state time share plan
          which has been previously registered in its situs
          state;

     (2)  Establish an alternative registration procedure for
          developers seeking to register time share plans located
          and registered outside the State in jurisdictions with
          disclosure requirements substantially equivalent to or
          greater than required under Hawaii law;

     (3)  Allow issuance of a six-month preliminary permit under
          which any developer may offer and sell time share
          interests during review of its application for
          registration by DCCA; and

     (3)  Provide for acceptance of a time share plan upon the
          posting of a $1,000,000 bond or letter of credit.

 
 
                                 STAND. COM. REP. NO. 664
                                 Page 2

 

     Your Committee received testimony in support of this bill
from the American Resort Development Association and a real
estate attorney.  The Department of Commerce and Consumer Affairs
(DCCA), testified in opposition to this bill, stating many
concerns as well as the belief that the bill would compromise the
department's ability to protect consumers.

     To address the DCCA's concerns, your Committee has adopted
modifications suggested by the real estate attorney, amending
this measure by:

     (1)  Deleting the provision authorizing project registration
          if the developer posts a bond to cover claims made by
          purchasers;

     (2)  Providing that a developer seeking to register an out-
          of-state time share plan registered in another state
          must show how the plan does or does not comply with the
          State's time share law, and if it does not comply, the
          measures that will be taken to satisfy State
          requirements;

     (3)  Increasing the amount of information that must be
          provided by a developer applying for a preliminary
          permit by requiring:

          (A)  Evidence of title, the declaration of covenants,
               conditions, and restrictions, and other time share
               plan condominium law documents; and

          (B)  Evidence that the developer is duly registered to
               do business in the State;

     (4)  Requiring developers to provide purchasers with a copy
          of the disclosure statement that must be filed when
          applying for registration;

     (5)  Giving purchasers the opportunity to cancel their
          purchase at any time during the term of the preliminary
          permit and receive full refund of all moneys paid;

     (6)  Mandating that upon expiration without extension of the
          six-month preliminary permit, the developer must cancel
          all sales contracts and refund all purchasers' funds;
          and

     (7)  Making technical, nonsubstantive amendments for
          purposes of clarity, consistency, and style.

 
                                 STAND. COM. REP. NO. 664
                                 Page 3

 
     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 657, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as H.B. No.
657, H.D. 1, and be referred to the Committee on Finance.

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



                                   ______________________________
                                   RON MENOR, Chair