STAND. COM. REP. NO. 1632

Honolulu, Hawaii

, 2005

RE: S.B. No. 179

S.D. 3

H.D. 2

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Finance, to which was referred S.B. No. 179, S.D. 3, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO HOUSING,"

begs leave to report as follows:

The purpose of this bill is to address Hawaii's critical affordable housing and homelessness problem by, among other things:

(1) Providing flexibility to the counties in their land use density restrictions to allow for the development of low-income housing rentals;

(2) Establishing a general excise tax exemption for developers of certified housing projects when:

(a) At least 50 percent of the available units are for households with incomes at or below 80 percent of the median family income; and

(b) At least 20 percent are for households with incomes at or below 60 percent of the median family income;

(3) Providing that through June 29, 2010, the Rental Housing Trust Fund (RHTF) loans and grants to developers may be provided when 50 percent or more of the available units are for persons with incomes at or below 80 percent, instead of 60 percent, of the median family income;

(4) Requiring ten percent of general excise taxes on residential rentals to be deposited into the RHTF;

(5) Establishing a sliding scale for the payment of conveyance taxes;

(6) Exempting from the conveyance tax, conveyances by nonprofit organizations certified for low-income housing development;

(7) Increasing the amount of conveyance taxes transferred into the RHTF from 25 to 50 percent;

(8) Appropriating general revenue funds into the RHTF;

(9) Declaring a moratorium on demolition of decommissioned public housing until it can be determined whether or not to rehabilitate them;

(10) Offering decommissioned public housing that will not be rehabilitated by the Housing and Community Development Corporation of Hawaii (HCDCH) to nonprofit entities or government agencies for rehabilitation into emergency transitional shelter facilities or rental units;

(11) Appropriating general revenue funds for the expansion of emergency and transitional shelter facilities serving the homeless upon meeting certain conditions;

(12) Refocusing HCDCH's housing developments on lower cost housing projects serving only persons with incomes 140 percent or less of the area median income;

(13) Splitting HCDCH into two entities:

(a) The Hawaii Public Housing Administration (HPHA) to perform the function of developing and maintaining public housing; and

(b) The Hawaii Housing Finance and Development Administration (HHFDA) to perform the function of housing financing and development;

(14) Establishing the Public Housing Revolving Fund;

(15) Repealing the RHTF Advisory Commission; and

(16) Establishing a Legislative Affordable Rental Housing and Homeless Task Force.

Kauai Economic Opportunity, Incorporated, The Nature Conservancy of Hawaii, Maui Land & Pineapple Company, Inc., and a concerned individual testified in support of this bill. The Governor's Office, HCDCH, Land Use Research Foundation of Hawaii, and Hawaii Community Reinvestment Corporation supported the intent of this measure. The Department of Taxation, a member of the Maui County Council, Hawaii Association of Realtors, and Tax Foundation of Hawaii provided comments.

Your Committee has amended this bill by:

(1) Clarifying the application of county land use density provisions for low-income rental housing;

(2) Moving the general excise tax exemption provisions from chapter 237, Hawaii Revised Statutes (HRS) to section 201G-116, and authorizing HCDCH to establish and collect service fees, if necessary, in connection with the approval and certification process;

(3) Further clarifying the provisions for RHTF loans and grants and establishing an order of priority in which the loans and grants may be provided;

(4) Including provisions for mixed finance development of public housing units;

(5) Deleting the requirement that at least one-third of construction funds be used for rental units for families with incomes less than 30 percent of the median income and replacing it with a requirement that HCDCH's yearly report describe its efforts to develop such rental housing projects, describe the proposals submitted and action taken on them, and the barriers to the development of units for this target group;

(6) Making it a priority for HCDCH to fund rental housing projects that provide:

(a) At least five percent of the total number of units for persons and families with incomes at or below 30 percent of the median family income; and

(b) A maximum number of units for persons or families with incomes at or below 80 percent of the median family income;

(7) Increasing the low-income housing tax credit to 50 percent of the applicable percentage of the qualified basis of each building located in Hawaii;

(8) Removing the requirement that ten percent of general excise taxes imposed on residential rentals be deposited into the RHTF;

(9) Changing the sliding scale for payment of conveyance taxes by:

(a) Charging 10 cents per $100 up to and including $600,000 of the consideration paid and 15 cents per $100 for consideration paid over $600,000; and

(b) Charging purchasers of residential property for which the purchaser is ineligible for a county homeowner's exemption on property tax, 15 cents per $100 up to and including $600,000 of the consideration paid and 20 cents per $100 for consideration paid over $600,000;

(10) Exempting from the conveyance tax, conveyances by for profit organizations certified for low-income housing development;

(11) Offering decommissioned low-income public housing projects to for profit entities, in addition to nonprofit or government agencies, for rehabilitation into emergency transitional shelter facilities or rental units;

(12) Requiring the organizations and agencies that rehabilitate decommissioned units to set aside at least 50 percent of the units to persons or families with incomes at or below 50 percent of the area median family income;

(13) Inserting an appropriation of $1,650,000 for the expansion of emergency and transition shelter facilities for the homeless;

(14) Inserting provisions that HCDCH interim loans may be secured by first or second mortgages;

(15) Authorizing funds in the Dwelling Unit Revolving Fund to be used for expenses related to permanent primary or secondary financing, and low-income housing tax credits;

(16) Amending the provisions establishing HHFDA by, among other things:

(a) Removing references to "public" housing projects;

(b) Adding definitions of "trustee" and "trust indenture";

(c) Amending provisions relating to the composition of the Board of Directors;

(d) Requiring HHFDA to develop and maintain a Housing Advocacy and Information System;

(e) Authorizing HHFDA to provide housing counseling services;

(f) Authorizing HHFDA to designate an agent to exercise its powers;

(g) Increasing the amount of public land that HHFDA may develop in agricultural districts without Land Use Commission approval from five acres or less to 15 acres or less;

(h) Authorizing HHFDA to execute public works contracts;

(i) Providing remedies of an obligee; and

(j) Requiring HHFDA to issue quitclaim deeds and leases;

(17) Making various amendments to the transfer of functions of and references in HRS to HCDCH to HHFDA and HPHA;

(18) Amending provisions relating to the composition of the HPHA Board of Directors;

(19) Expanding the composition and scope of the legislative task force;

(20) Inserting provisions allowing HCDCH funds to be expended by the Department of Budget and Finance in the event of federal action prior to the effective date of the separation of HCDCH;

(21) Changing the effective date to July 1, 2005, except for provisions relating to the separation of HCDCH, which shall be effective July 1, 2007, and repealing amendments to the RHTF law on June 30, 2010; and

(22) Making technical, nonsubstantive amendments for clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 179, S.D. 3, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 179, S.D. 3, H.D. 2.

Respectfully submitted on behalf of the members of the Committee on Finance,

 

____________________________

DWIGHT TAKAMINE, Chair