STAND. COM. REP. NO.768

Honolulu, Hawaii

, 2003

RE: S.B. No. 1492

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Human Services, to which was referred S.B. No. 1492 entitled:

"A BILL FOR AN ACT RELATING TO ASSISTED LIVING FACILITIES,"

begs leave to report as follows:

The purpose of this measure is to amend the definition of "assisted living facility" to clarify that it does not apply to privately owned single family homes or condominiums.

Testimony in support of this measure was submitted by Hawaii Independent Condominium & Cooperative Owners and seven concerned citizens. Oral testimony in support of this measure was presented by the Hawaii Association of Certified Nurse Aides and three concerned citizens. The Hawaii Council of Associations of Apartment Owners submitted testimony in support of the intent of this measure. Testimony in opposition to this measure was submitted by the Hawaii Long-Term Care Association; One Kalakaua Senior Living Association; Sound Health Management Company; and three concerned citizens. Oral testimony in opposition to this measure was presented by three concerned citizens. The Department of Health provided oral comments on this measure in response to your Committee's questions.

Your Committee finds that, as the number of assisted living facilities being planned or in development continues to grow, concerns have arisen as a result of the experiences of owners at One Kalakaua, a fee-simple condominium project for independent elders that opened in 1997, just prior to the enactment of the State's assisted living facility law. One Kalakaua offered many special services and amenities not usually found in typical condominiums, including weekly maid service, daily meals, a wellness program, and social programs. Residents were assessed maintenance fees and "club dues" ranging from $1,026 to $1,525 a month to cover the cost of some of these additional services. Additional services, including skilled nursing services, were also available, on a "pay as you go" basis, to those residents who required a higher level of care. The assisted living services were provided by a health care provider contracted by the association of apartment owners of One Kalakaua (condo association).

In 1999, under the authority of section 321-11, Hawaii Revised Statutes, the Department of Health adopted rules requiring the licensing of assisted living facilities by the Department. In 2000, the Department determined that One Kalakaua was likely providing assisted living services to residents. The Department subsequently licensed the condo association as an assisted living facility.

As a licensee, the condo association had to obtain insurance coverage for the assisted living services provided by the contracted health care provider, and the employees of the provider became employees of the condo association. These expenses, which would generally be considered administrative costs of the provider, have instead been assumed by the condo association and included in the maintenance fees charged to all owners, regardless of whether they utilized the assisted living services or not.

One Kalakaua is a unique case. It is the only currently licensed assisted living facility that is also a fee-simple condominium project subject to Chapter 514A, Hawaii Revised Statutes. Your Committee recognizes that, in light of current demographic trends and the expected graying of Hawaii's baby boomer population, it is likely that more existing condominium projects may, at some future time, consider offering some of the amenities or assisted living services that One Kalakaua offers. Your Committee notes that nothing in the Department of Health rules would appear to prohibit an existing condominium project from becoming a licensed assisted living facility.

After further discussions with the Department of Health, real estate experts, the Hawaii Council of Associations of Apartment Owners, and other interested parties, on the issues raised and lessons learned from One Kalakaua's experience, your Committee finds that, before an existing condominium can become an assisted living facility, certain infrastructure changes must be made in order to ensure accountability to owners and to enable those owners who do not subscribe to assisted living services to "opt out" of the assisted living facility without being penalized. At a minimum, your Committee finds that the establishment of a new association of apartment owners for the assisted living facility (assisted living association), separate from and independent of the condo association, and the licensing of the contracted assisted living services provider, rather than the association, would help ensure that any additional costs incurred by the assisted living facility or in the provision of assisted living services, would be assessed only against those owners who subscribe to or utilize assisted living services, and not against all condominium owners.

Accordingly, your Committee has amended this measure by:

(1) Adding a new section to Chapter 321, Hawaii Revised Statutes, to allow an existing condominium project to become an assisted living facility subject to rules adopted by the Department of Health pursuant to section 321-11, Hawaii Revised Statutes, if:

(a) A new entity, which is separate from and independent of the association of apartment owners, is formed for the purpose of becoming a licensed assisted living facility and is registered with the Department of Health, and each unit owner determines whether the owner's unit is placed in the assisted living facility or in the condominium project; and

(b) The association contracts with a provider of assisted living services, which shall obtain a license for the assisted living facility in accordance with rules adopted by the Department of Health for the licensing of assisted living facilities;

(2) Adding a definition of "assisted living services" consistent with rules adopted by the Department of Health for the licensing of assisted living facilities; and

(3) Amending the definition of "assisted living facility" to add a definition of "health care services" and to clarify that an assisted living facility does not include a privately-owned single family home or condominium, unless the condominium project instruments explicitly and prominently authorize a licensed assisted living facility or the provision of assisted living services.

As affirmed by the record of votes of the members of your Committee on Human Services that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1492, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1492, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Human Services,

____________________________

SUZANNE CHUN OAKLAND, Chair