Authorizes State Rent Supplement Program funds to be used for operating subsidies for state low-income housing units. (SD1)

A BILL FOR AN ACT

SECTION 1. Act 196, Session Laws of Hawaii 2005 (Act 196), was passed by the legislature to address Hawaii's affordable housing and homeless crisis. Act 196 provided a number of mechanisms and incentives to increase the supply of low-income rental housing. In addition, the legislature, recognizing that more meaningful solutions to Hawaii's housing and homeless crisis were needed, established a joint legislative housing and homeless task force to further identify near-term solutions to Hawaii's affordable housing and homeless problem.

The task force spent many hours researching data and meeting with state and county officials, private developers, and nonprofit organizations in the city and county of Honolulu and the counties of Hawaii, Kauai, and Maui, and also held public hearings and briefings in each county. The task force relied on the information collected in developing its recommendations.

The purpose of this Act is to implement many of the recommendations of the task force.

SECTION 2. Chapter 201G, Hawaii Revised Statutes, is amended by adding a new section to subpart F of part II to be appropriately designated and to read as follows:

"§201G-   Credit against income taxes. (a) In accordance with section 235-A, the administration may approve and certify for credit against state income taxes the qualified basis of any newly constructed or moderately or substantially rehabilitated project:

(b) All claims for tax credit under this section shall be certified by the administration and filed with the department of taxation. Any claim for tax credit that is filed and approved shall not be considered a subsidy for the purpose of this subpart.

(c) For the purposes of this section, "moderate rehabilitation" and "substantial rehabilitation" shall have the same meanings as in section 201G-116.

(d) For the purposes of this section, "qualified basis" shall have the same meaning as in section 235-110.8; provided that the administration may by rule establish criteria for the determination of qualified basis for the purposes of this section.

(e) The administration may establish, revise, charge, and collect a reasonable service fee, as necessary, in connection with its approvals and certifications under this section. The fees shall be deposited into the dwelling unit revolving fund."

SECTION 3. Chapter 201G, Hawaii Revised Statutes, is amended by adding a new section to subpart H of part III to be appropriately designated and to read as follows:

"§201G-   Downpayment loan program revolving fund. There is created within the state treasury a revolving fund to be administered by the administration and to be known as the downpayment loan revolving fund. The revolving fund shall be funded from the proceeds of general obligation bonds or other appropriations from the state legislature, and shall be used to carry out the purposes of this subpart."

SECTION 4. Chapter 201H, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§201H-   Leases; self-help housing. (a) The administration may lease parcels that it deems suitable for affordable housing at $1 per year for up to fifty years to organizations or community trusts to develop the parcel with ownership units through self-help development.

(c) Parcels leased under this section may be transferred or assigned by devise, bequest, or intestate succession, and may be sublet with the approval of the administration."

SECTION 5. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to part VI to be appropriately designated and to read as follows:

"§235-   Affordable housing tax credit. (a) Each taxpayer subject to the tax imposed by this chapter, who has filed a net income tax return for a taxable year, may claim an affordable housing tax credit against the taxpayer's net income tax liability. The amount of the credit shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed on a timely basis. A credit under this section shall not be claimed if the taxpayer claims a low-income housing tax credit pursuant to section 235-110.8.

(b) The affordable housing tax credit shall be fifteen per cent of the qualified basis of each project calculated pursuant to section 201G-A.

(c) The credit allowed under this section shall be claimed against net income tax liability for the taxable year. For the purpose of deducting this tax credit, net income tax liability means net income tax liability reduced by all other credits allowed the taxpayer under this chapter. A tax credit under this section which exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

(d) All claims for a tax credit under this section must be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to properly and timely claim the credit shall constitute a waiver of the right to claim the credit. A taxpayer may claim a credit under this section only if the project is a qualified project approved and certified under section 201G-A.

(e) The director of taxation may adopt any rules under chapter 91 and forms necessary to carry out this section."

SECTION 6. Section 201G-44, Hawaii Revised Statutes, is amended to read as follows:

"§201G-44 Administration of state low-income public housing projects and programs. (a) The administration [may] shall construct, develop, and administer property or housing for the purpose of state low-income public housing projects and programs.

(b) The administration [may] shall offer any decommissioned low-income public housing project, except for federal housing projects, to nonprofit or for-profit organizations or government agencies for rehabilitation into emergency or transitional shelter facilities for the homeless or rehabilitation into rental units that set aside at least fifty per cent of the units to persons or families with incomes at or below fifty per cent of the area median family income; provided that:

The land and improvements may be leased to the nonprofit or for-profit organization or government agency for a period not to exceed ninety-nine years for a sum of $1 per year.

(c) The administration shall adopt necessary rules in accordance with chapter 91, including the establishment and collection of reasonable fees for administering the public housing projects or programs and to carry out any state program under subsection (a)."

SECTION 7. Section 201G-121, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) In any county, the administration may develop or may enter into agreements for housing projects with an eligible developer if in the administration's reasonable judgment a project [is primarily designed for lower income housing.] provides a reasonable number of lower income housing units. The agreement may provide for the housing to be placed under the control of the administration, or to be sold by the administration, or to be sold to the administration as soon as the units are completed and shall contain terms, conditions, and covenants as the administration, by rules, deems appropriate. Every agreement shall provide for the developer to furnish a performance bond, in favor of the administration, assuring the timely and complete performance of the housing project. Sureties on the bond must be satisfactory to the administration."

SECTION 8. Section 201G-161, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"(f) Any pledge made by the administration shall create a perfected security interest in the revenues, moneys, or property so pledged and thereafter received by the administration from and after the time that a financing statement with respect to the revenues, moneys, or property so pledged and thereafter received shall be filed with the bureau of conveyances. Upon the filing, the revenues, moneys, or property so pledged and thereafter received by the administration shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of any such pledge shall be [prior to the lien of all parties having claims by any kind in tort, contract, or otherwise against the administration, irrespective of whether such parties have notice thereof] subject to section 39-63 and part VIII of chapter 39 relating to security interests. This section shall apply to any financing statement heretofore or hereafter filed with the bureau of conveyances with respect to any pledge made to secure revenue bonds issued under this part."

SECTION 9. Section 201G-231, Hawaii Revised Statutes, is amended to read as follows:

"[[]§201G-231[]] Rent supplements. (a) The administration is authorized to make, and contract to make, annual payments to a "housing owner" on behalf of a "qualified tenant", as those terms are defined in this subpart, in such amounts and under such circumstances as are prescribed in [or pursuant to this subpart. No payment on behalf of a qualified tenant shall exceed a segregated amount of $160 a month.] rules adopted by the administration.

(b) The administration is authorized to use state rent supplement program funds for project-based operating subsidies for state low-income housing units that are transferred by the administration to private organizations for the purpose of managing and operating the units; provided that fifty per cent of the units shall be rented to persons or families whose income shall not exceed fifty per cent of the median family income as determined by the United States Department of Housing and Urban Development; and provided further that the remainder of the units shall be rented to persons or families whose income shall not exceed eighty per cent of the median family income as determined by the United States Department of Housing and Urban Development."

SECTION 10. Section 201G-232, Hawaii Revised Statutes, is amended to read as follows:

"§201G-232 Housing owner defined. As used in this subpart, the term "housing owner" means:

SECTION 11. Section 201G-233, Hawaii Revised Statutes, is amended to read as follows:

"§201G-233 Qualified tenant defined. As used in this subpart, the term "qualified tenant" means any single person or family, pursuant to criteria and procedures established by the administration, that has been determined to have an income not exceeding the very low income limit as determined by the administration pursuant to rules adopted by the administration; provided that the qualified tenant's primary place of residence shall be in the State of Hawaii or that the qualified tenant intends to make the State of Hawaii the qualified tenant's primary place of residence. The terms "qualified tenant" and "tenant" include a member of a cooperative who satisfies the foregoing requirements and who, upon resale of the member's membership to the cooperative, will not be reimbursed for more than fifty per cent of any equity increment accumulated through payments under this subpart. With respect to members of a cooperative, the terms "rental" and "rental charges" mean the charges under the occupancy agreements between the members and the cooperative. [The term "qualified tenant" shall not include any person receiving money payments for public assistance from the department of human services; provided that the term "public assistance" shall exclude aid provided through the federal Supplemental Security Income Program.]"

SECTION 12. Section 201G-436, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) The administration shall establish an application process for fund allocation that gives preference to projects [meeting the criteria set forth below that are listed in descending order of priority:

in accordance with the priorities set forth in subsection 201G-432(e).

The administration may include other criteria in the above process as it deems necessary to carry out the purposes of this part[.], including but not limited to:

If the administration, after applying the process described in this subsection, finds a nonprofit project equally ranked with a for-profit or government project, the administration shall give preference to the nonprofit project in allotting fund moneys."

SECTION 13. Section 235-55.7, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) Each taxpayer with an adjusted gross income of less than [$30,000] $50,000 who has paid more than $1,000 in rent during the taxable year for which the credit is claimed may claim a tax credit of [$50] $75 multiplied by the number of qualified exemptions to which the taxpayer is entitled; provided that each taxpayer with an adjusted gross income less than $30,000 who has paid more than $1,000 in rent during the taxable year for which the credit is claimed may claim a tax credit of $100 multiplied by the number of qualified exemptions to which the taxpayer is entitled; provided further, that each taxpayer sixty-five years of age or over may claim double the tax credit; and provided that a resident individual who has no income or no income taxable under this chapter may also claim the tax credit as set forth in this section."

SECTION 14. Section 247-7, Hawaii Revised Statutes, is amended to read as follows:

"§247-7 Disposition of taxes. [All] Of the taxes collected each fiscal year under this chapter [shall be paid into the state treasury to the credit of the general fund of the State, to be used and expended for the purposes for which the general fund was created and exists by law; provided that of the taxes collected each fiscal year]:

SECTION 15. The department of land and natural resources shall initiate transfer to the Hawaii housing finance and development administration, no later than December 1, 2006, of the lands identified as suitable for affordable housing development in Appendix F of the Joint Legislative Housing and Homeless Task Force Report to the 2006 Session of the Legislature.

SECTION 16. The Hawaii housing finance and development administration, with the approval of the director of finance and the governor, is authorized pursuant to part III, chapter 39, Hawaii Revised Statutes, and part III, chapter 201G, Hawaii Revised Statutes, to issue general obligation bonds in an aggregate principal amount not to exceed $          , at such times and in such amounts as it deems advisable for the purpose of carrying out the provisions of subpart H of part III of chapter 201G, Hawaii Revised Statutes, relating to the downpayment loan program.

The proceeds of such general obligation bonds shall be deposited into the downpayment loan program revolving fund created in section 201G-B, Hawaii Revised Statutes.

SECTION 17. There is appropriated out of the downpayment loan program revolving fund the sum of $          , or so much thereof as may be necessary, for fiscal year 2006-2007, to carry out the purposes of the downpayment loan program revolving fund relating to direct downpayment loans to eligible borrowers.

The sum appropriated shall be expended by the Hawaii housing finance and development administration.

SECTION 18. There is appropriated out of the general revenues of the State of Hawaii the sum of $20,000,000, or so much thereof as may be necessary for fiscal year 2006-2007, for grants for homeless services and transitional housing program assistance.

The sum appropriated shall be expended by the Hawaii public housing administration for the purposes of this section; provided that any unencumbered balance on June 30, 2007, shall lapse to the rental housing trust fund under section 201G-432, Hawaii Revised Statutes.

SECTION 19. There is appropriated out of the general revenues of the State of Hawaii the sum of $10,000,000 or so much thereof as may be necessary for fiscal year 2006-2007 to repair and modernize vacant units in federal and state public housing projects.

The sum appropriated shall be expended by the Hawaii public housing administration for the purposes of this Act.

SECTION 20. There is appropriated out of the general revenues of the State of Hawaii the sum of $400,000 or so much thereof as may be necessary for fiscal year 2006-2007 for interim construction loans for up to ten homes to be developed as self-help ownership homes by private organizations or community trusts on land leased from the State and administered in accordance with subpart B of part III of chapter 201G, Hawaii Revised Statutes.

The sum appropriated shall be expended by the Hawaii housing finance and development administration for the purposes of this Act.

SECTION 21. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 22. This Act shall take effect on July 1, 2010; provided that on June 30, 2011, section 14 shall be repealed and section 247-7, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day before the approval of this Act.