Condo Reserves

Extends deadline from 1/1/00 to 1/1/02 by which a condominium has
to have its reserves paid in full.

HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  In 1991, the legislature required condominium
 2 associations to properly fund their replacement reserves so that
 3 owners would not be charged high, sudden fees for maintenance of
 4 condominium structures, grounds, and other common elements.  As
 5 initially enacted, the legislation gave condominiums a five-year
 6 deadline to achieve this goal, as specified in rules of the
 7 commission.  Such a short deadline caused significant hardship in
 8 some condominiums, as maintenance fees escalated precipitously to
 9 meet the deadline.  In recognition of this problem, in 1992, the
10 legislature extended the deadline from five years (which would
11 have been January 1, 1998) to January 1, 2000.
12      However, some condominium owners are still experiencing the
13 problem of sharply escalated maintenance fees.  The purpose of
14 this Act is to extend the deadline for complete funding of
15 reserves from January 1, 2000 to January 1, 2002.  Condominiums
16 that are experiencing no problems in meeting their reserve
17 requirements can continue to fast-track their funding, but
18 condominiums for which the funding is causing a significant
19 hardship for owners will now have the ability to stretch out

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                                     H.B. NO.           

 1 payments for another two years, which will afford substantial
 2 relief to their owners.
 3      SECTION 2.  Section 514A-83.6, Hawaii Revised Statutes, is
 4 amended by amending subsection (b) to read as follows:
 5      "(b)  The association shall assess the apartment owners to
 6 either fund a minimum of fifty per cent of the estimated
 7 replacement reserves or fund one hundred per cent of the
 8 estimated replacement reserves when using a cash flow plan;
 9 provided that a new association created after January 1, 1993,
10 need not collect estimated replacement reserves until the fiscal
11 year which begins after the association's first annual meeting.
12 For each fiscal year, the association shall collect the amount
13 assessed to fund the estimated replacement for that fiscal year
14 reserves, as determined by the association's plan, except:
15      (1)  The commission shall adopt rules to permit an existing
16           association to fund its estimated replacement reserves
17           in increments after January 1, 1993 and prior to
18           January 1, [2000;] 2002; and
19      (2)  The commission shall adopt rules to permit an
20           association to fund in increments, over three years,
21           estimated replacement reserves that have been
22           substantially depleted by an emergency."
23      SECTION 3.  Statutory material to be repealed is bracketed.

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                                     H.B. NO.           

 1 New statutory material is underscored.
 2      SECTION 4.  This Act shall take effect upon its approval.
 4                           INTRODUCED BY:_________________________