STAND. COM. REP. NO. 1188

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 1018
                                        H.D. 2
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Government Operations and Housing, to
which was referred H.B. No. 1018, H.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO THE HOUSING AND COMMUNITY
     DEVELOPMENT CORPORATION OF HAWAII,"

begs leave to report as follows:

     The purpose of this measure is to amend the qualifications
for housing and rental assistance by, among other things:

     (1)  Lowering from low and moderate to very low the maximum
          income a person may have and still qualify for
          participation in the State Rent Supplement Program
          (Program);

     (2)  Increasing the amount of supplemental rent paid by the
          housing and community development corporation from one-
          fifth to thirty percent of a qualified tenant's income;

     (3)  Amending the definition of "qualified tenant" under the
          Program to enable eligible single persons who are not
          elderly or disabled to participate in the Program; and

     (4)  Phasing in an increase of the tenant's annual payment
          from one-fifth to thirty per cent of the tenant's
          annual income.


 
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     The measure also adds an appropriation section, leaving the
amount blank for purposes of further discussion.

     Prior to the hearing, your Committee circulated a proposed
Senate draft.  Testimony was received on this proposed H.B.
No. 1018, H.D. 2, S.D. 1.

     The proposed H.B. No. 1018, H.D. 2, S.D. 1, added to the
measure as received, language to establish a Federal Assisted
Rental Housing Preservation Program which:

     (1)  Requires owners of federally assisted rental housing
          projects to provide a one-year notice to both tenants
          and the corporation of any intent to terminate a
          subsidy contract on assisted housing development or
          prepay its mortgage; and

     (2)  Requires the owners of federally assisted rental
          housing projects to provide a right of first refusal to
          the tenant association of the development and certain
          nonprofit organizations for a one hundred eighty-day
          period following the notice to sell the project. 

     Testimony in favor of proposed H.B. No. 1018, H.D. 2,
S.D. 1, was received from the Affordable Housing and Homeless
Alliance and Legal Aid Society of Hawaii.

     Testimony in favor of the section relating to the housing
and rental supplemental program was received from Catholic
Charities and one individual.

     Testimony in favor, with amendments, on the section relating
to housing and rental supplemental program was received from the
Housing and Community Development Corporation of Hawaii.

     Testimony opposed to the section on the Federally Assisted
Rental Housing Preservation was received from the Housing and
Community Development Corporation of Hawaii. 

State Rental and Housing Assistance

     Your Committee finds that the greatest housing need is among
those below thirty percent of median income, where nearly two-
thirds of households cannot afford their housing payments every
month.  There is a need for affordable housing in this state.
The housing and rental assistance programs will place more
families in homes, and decrease the instances of homelessness.


 
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     Your Committee finds that persons who are most in need of
housing assistance will be served by the Rent Supplement Program
and will be more consistent with Housing and Urban Development's
Section 8 Rent Subsidy program.

     Your Committee finds that the Housing and Community
Development Corporation of Hawaii will hold public hearings when
making rules to implement this program, as required by
section 91, Hawaii Revised Statutes.

     Your Committee finds that the amount of supplemental rent
paid by the corporation and the tenant's annual payment should be
left blank at this time, to be decided by the Committee on Ways
and Means.

Federal Assisted Rental Housing Preservation Program

     Your Committee finds that the supply of the Section 8
low-income rental housing projects subsidized by the United
States Department of Housing and Urban Development may decrease
in the future due to anticipated reductions in the subsidies
offered by the federal government to the housing project owners.
Decreased subsidies increase the risks that owners will terminate
the federal subsidy contracts, pay off their mortgages, increase
rents, sell the buildings, or convert them to condominiums.  

     Your Committee believes that the proposed H.B. No. 1018,
H.D. 2, S.D. 1, is necessary to protect low-income renters from
the financial devastation that will befall them in trying to
secure market rate rental units.  Low income residents who may
lose their homes should be given time to plan for this change.

     Your Committee finds that during the year after the notice
is given, residents of low income housing could form a non-profit
organization or work with an existing non-profit organization to
purchase the building.  Giving first right of refusal to a
non-profit entity is a sensible way to continue offering
affordable housing and avoid low income residents having to find
alternative housing accommodations.

     Your Committee has amended the measure, as received, by
replacing the contents of this measure with the proposed H.B.
No. 1018, H.D. 2, S.D. 1, with:

     (1)  The deletion of the twenty-five and thirty percent
          references to the tenant's annual payment and the
          corporation's supplemental rent; and 


 
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     (2)  Technical, nonsubstantive changes for the purposes of
          clarity and style.

     As affirmed by the record of votes of the members of your
Committee on Government Operations and Housing that is attached
to this report, your Committee is in accord with the intent and
purpose of H.B. No. 1018, H.D. 2, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as H.B. No. 1018, H.D. 2, S.D. 1, and be referred to the
Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Government
                                   Operations and Housing,



                                   ______________________________
                                   ROD TAM, Chair

 
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