Requires public housing set asides for grandparents raising grandchildren; makes appropriations for repair and maintenance of public housing, improvements to infrastructure for new and existing transitional housing, support services provided by homeless shelters, shelter care plus program, housing placement program, habitat for humanity, and rental housing trust fund. Authorizes bond issuance for affordable housing. Allows public assistance recipients to receive rental income supplements. Amends rental income supplements. Appropriates funds for homeless and transitional housing programs. Appropriates funds to repair vacant public housing units. Allows state-owned parcels to be leased for the development of self-help housing. Amends the state low-income housing tax credit to be used for construction and rehabilitation of existing affordable housing units. Assists low and moderate income home buyers by providing a state income tax mortgage credit certificate program. Also requires the Hawaii Public Housing Administration to actively partner with the counties to identify locations for temporary emergency shelters for homeless individuals and families. Appropriates funds. (SD2)

A BILL FOR AN ACT

PART I. THE HOMELESS

SECTION 1. Chapter 201G, Hawaii Revised Statutes, is amended by adding a new section in part IV to be appropriately designated and to read as follows:

"§201G-   Temporary emergency housing. (a) In addition to any other duties prescribed by law, the administration shall develop in consultation with the four counties a procedure for identifying locations that shall be used for temporary emergency shelters for homeless individuals and families. The administration shall actively partner with and monitor the efforts of the counties.

(b) Each county shall be responsible for partnering with non-profit organizations to locate, designate, and maintain the areas that shall be used for temporary emergency shelters. The designated locations may include private, county, and state lands and federal lands at Kalaeloa.

(c) The administration shall pursue and secure Barbers Point Barracks as temporary housing for homeless families and individuals.

(d) The administration shall submit an annual report to the legislature detailing the activities and outcomes under this section no later than twenty days prior to the convening of each regular session."

SECTION 2. Section 201G-3, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read as follows:

"(a) There is created a board consisting of [nine] eleven members, of whom [eight] ten shall be public members appointed by the governor as provided in section 26-34. Public members shall be appointed from each of the counties of Honolulu, Hawaii, Maui, and Kauai. At least one public member shall be a person who is directly assisted by the administration under the federal low-rent public housing or federal section 8 tenant-based housing assistance payments program while serving on the board. One public member shall be an advocate for low-income or homeless persons. One public member shall be a person with a disability or an advocate for persons with disabilities. The public members of the board shall serve four-year staggered terms; provided that the initial appointments shall be as follows: four members to be appointed for four years; three members to be appointed for three years; and three members to be appointed for two years. The director of human services, or a designated representative, shall be an ex officio voting member. The administration shall be headed by the board."

2. By amending subsection (c) to read as follows:

"(c) [Five] Seven members shall constitute a quorum, whose affirmative vote shall be necessary for all actions by the administration. The members shall receive no compensation for services, but shall be entitled to necessary expenses, including travel expenses, incurred in the performance of their duties."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the following sums for transitional housing:

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

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $          , or so much thereof as may be necessary for fiscal year 2006-2007, for support services for the homeless population located at homeless shelters.

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

SECTION 5. There is appropriated out of the general revenues of the State of Hawaii the sum of $          , or so much thereof as may be necessary for fiscal year 2006-2007, for the shelter plus care program.

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

SECTION 6. There is appropriated out of the general revenues of the State of Hawaii the sum of $          , or so much thereof as may be necessary for fiscal year 2006-2007, for housing placement programs for the homeless population.

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

SECTION 7. There is appropriated out of the general revenues of the State of Hawaii the sum of $ , 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 8. There is appropriated out of the general revenues of the State of Hawaii the following sums, or so much thereof as may be necessary for fiscal year 2006-2007, to assist the counties in implementing section 201G-  (b), Hawaii Revised Statutes, and this Act:

City and county of Honolulu $          

County of Kauai $          

County of Maui $          

County of Hawaii $          

Total $          

The sums appropriated shall be expended by the department of budget and finance for the purposes of this Act.

SECTION 9. The sums appropriated under section 8 of this Act shall constitute the State's share of the cost of mandated programs under article VIII, section 5, of the state constitution.

SECTION 10. There is appropriated out of the general revenues of the State of Hawaii the following sum, or so much thereof as may be necessary for fiscal year 2006-2007, to assist the administration in implementing section 201G-  (c), Hawaii Revised Statutes, and this Act:

Hawaii public housing administration $          

The sum appropriated shall be expended by the department of human services for the purposes of this Act.

PART II. LOW-INCOME HOUSING

SECTION 11. Section 201G-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Relative caregiver" means a relative of a minor child by blood or marriage, who is a resident of the State and who:

SECTION 12. Section 201G-1, Hawaii Revised Statutes, is amended by amending the definition of "elder or elderly households" to read as follows:

""Elder or elderly households" means households in which at least one member is sixty-two years of age, the spouse or partner has attained the age of majority, and the remaining members have attained the age of fifty-five years at the time of application to the project[.]; provided that in public housing projects, it also may include households in which an elder is the relative caregiver for one or more minor children. Such a child shall cease to be a resident of the household upon attaining the age of majority or upon the removal from the project of the elder. A live-in aide shall cease to be a resident therein upon the recovery of, or removal from the project of, the elder."

SECTION 13. Section 201G-42, Hawaii Revised Statutes, is amended to read as follows:

"§201G-42 Housing, tenant selection[.]; grandparents. (a) Subject to the [following] limitations and preferences[,] set forth in this section, the administration shall select tenants upon the basis of those in greatest need for such housing.

(b) The administration may limit the tenants of any housing project to classes of persons when required by federal law or regulation as a term or condition of obtaining assistance from the federal government.

(c) Within the priorities established by the administration recognizing need, veterans with a permanent disability of ten per cent or more as certified by the United States Department of Veterans' Affairs, the dependent parents of the veteran, and the deceased veteran's widow shall be given first preference.

(d) Five per cent of state low-income public housing units shall be set aside as rentals for grandparents who are the primary caregivers for one or more of their grandchildren; provided that teachers housing under subpart G shall be excluded."

SECTION 14. Section 201G-152, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) In the administration of elder or elderly public housing, the administration shall observe the following with regard to resident selection, dwelling accommodations, and rentals:

SECTION 15. Section 201G-231, Hawaii Revised Statutes, is amended to read as follows:

"[[]§201G-231[]] Rent supplements. (a) The administration [is authorized to] may 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.

(b) The administration may 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:

SECTION 16. 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], exclusive of public assistance, 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 17. Section 235-110.8, Hawaii Revised Statutes, is amended to read as follows:

"§235-110.8 Low-income housing tax credit. (a) Section 42 (with respect to low-income housing credit) of the Internal Revenue Code shall be operative for the purposes of this chapter as provided in this section.

(b) Each taxpayer subject to the tax imposed by this chapter, who has filed [[]a[]] net income tax return for a taxable year may claim a low-income 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 may be claimed whether or not the taxpayer claims a federal low-income housing tax credit pursuant to section 42 of the Internal Revenue Code.

(c) The low-income housing tax credit shall be fifty per cent of the applicable percentage of the qualified basis of each building located in Hawaii. The applicable percentage shall be calculated as provided in section 42(b) of the Internal Revenue Code.

(d) Construction of new affordable housing units and rehabilitation of existing affordable housing units shall qualify a taxpayer to be eligible for the low-income housing tax credit. For purposes of this subsection, "affordable housing" means a housing unit for an individual or family at or below one hundred forty per cent of the median family income as determined by the United States Department of Housing and Urban Development.

[(d) For] (e) Except as provided in subsection (d), for the purposes of this section, the determination of:

of the Internal Revenue Code.

[(e)] (f) As provided in section 42(e), rehabilitation expenditures shall be treated as separate new building and their treatment under this section shall be the same as in section 42(e). The definitions and special rules relating to credit period in section 42(f) and the definitions and special rules in section 42(i) shall be operative for the purposes of this section.

[(f)] (g) The state housing credit ceiling under section 42(h) shall be zero for the calendar year immediately following the expiration of the federal low-income housing tax credit program and for any calendar year thereafter, except for the carryover of any credit ceiling amount for certain projects in progress which, at the time of the federal expiration, meet the requirements of section 42.

[(g)] (h) 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] that 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. All claims for a tax credit under this section [must] shall 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 building or project is a qualified low-income housing building or a qualified low-income housing project under section 42 of the Internal Revenue Code.

Section 469 (with respect to passive activity losses and credits limited) of the Internal Revenue Code shall be applied in claiming the credit under this section.

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

SECTION 18. There is appropriated out of the general revenues of the State of Hawaii the sum of $ , or so much thereof as may be necessary for fiscal year 2006-2007, for deposit into the rental housing trust fund under section 201G-432, Hawaii Revised Statutes.

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

SECTION 19. There is appropriated out of state low-income housing revolving fund under section 201G-45, Hawaii Revised Statutes, the sum of $          , or so much thereof as may be necessary for fiscal year 2006-2007, for repair and maintenance of public housing projects.

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

SECTION 20. There is appropriated out of the general revenues of the State of Hawaii the sum of $ , 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 part.

PART III. AFFORDABLE HOUSING

SECTION 21. Chapter 235, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . MORTGAGE CREDIT CERTIFICATES

§235-A Definitions. As used in this part:

"Certificate credit rate" means the rate of the credit allowable by this part that is specified in the mortgage credit certificate.

"Certified indebtedness amount" means the amount of indebtedness that is incurred by the taxpayer to acquire the principal residence of the taxpayer and specified in the mortgage credit certificate.

"Mortgage credit certificate" means any certificate that is issued under a qualified mortgage credit certificate program to the taxpayer in connection with the acquisition of the taxpayer's principal residence, specifies the certificate credit rate and the certified indebtedness amount, and is in a form as the director of taxation may prescribe.

"Principal residence" has the same meaning as used in section 121 of the federal Internal Revenue Code of 1986, as amended.

"Qualified mortgage credit certificate program" means any program:

§235-B Allowance of credit. (a) There shall be allowed as a credit against the tax imposed by this chapter, for the taxable year, an amount equal to the product of:

(b) If the certificate credit rate exceeds twenty per cent, the amount of the credit allowed to the taxpayer under this section for any taxable year shall not exceed $2,000.

(c) If two or more persons hold interests in any residence, the limitation of subsection (b) shall be allocated among the persons in proportion to their respective interests in the residence.

§235-C Determination of certificate credit rate. For purposes of this part, the certificate credit rate specified in any mortgage credit certificate shall not be less than ten per cent or more than fifty per cent.

§235-D Aggregate limit on certificate credit rates. In the case of each qualified mortgage credit certificate program, the sum of the products determined by multiplying the certified indebtedness amount of each mortgage credit certificate issued under the program, by the certificate credit rate with respect to the certificate, shall not exceed the amount authorized by the legislature for that year by adoption of a concurrent resolution.

§235-E Carry forward of unused credit. (a) If the credit allowable under this part for any taxable year exceeds the applicable tax limit for the taxable year, the excess shall carryover to each of the three succeeding taxable years and, subject to the limitations of subsection (b), shall be added to the credit allowable by this part for the succeeding taxable year.

(b) The amount of the unused credit that may be taken into account under this section for any taxable year shall not exceed the amount, if any, by which the applicable tax limit for the taxable year exceeds the sum of:

§235-F Indebtedness not treated as certified where certain requirements not, in fact, met. (a) This part shall not apply to any indebtedness if all the requirements of section 235-   , were not, in fact, met with respect to the indebtedness.

(b) Except to the extent otherwise provided in rules adopted by the director, the requirements under this part shall be treated as met if there is a certification, under penalty of perjury, that the requirements are met.

§235-G Period for which certificate in effect. (a) Except as otherwise provided in this part, a mortgage credit certificate shall be treated as in effect with respect to interest attributable to the period:

(b) A certificate shall not apply to any indebtedness that is incurred after the close of the second calendar year following the calendar year in which the certificate is issued.

§235-H Interest paid or accrued to related persons. No credit shall be allowed under this part for any interest paid or accrued to a person who is a related person to the taxpayer, within the meaning of section 144(a)(3)(A) of the federal Internal Revenue Code of 1986, as amended.

§235-I Reporting requirements. (a) Each person who makes a loan that is a certified indebtedness amount under any mortgage credit certificate shall file a report with the director containing:

(b) Each person who issues a mortgage credit certificate shall file a report showing the information as the director shall prescribe by rules. Any report shall be filed at a time and in a manner as the director may require by rules.

§235-J Rules. The director shall adopt rules pursuant to chapter 91 as may be necessary to carry out the purposes of this part, including rules that may require recipients of mortgage credit certificates to pay a reasonable processing fee to defray the expenses incurred in administering the program."

SECTION 22. There is appropriated out of the general revenues of the State of Hawaii the sum of $          , or so much thereof as may be necessary for fiscal year 2006-2007, for the homeownership project of Habitat for Humanity, to prevent homelessness.

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

SECTION 23. The director of finance is authorized to issue general obligation bonds in the sum of $          , or so much thereof as may be necessary, and the same sum, or so much thereof as may be necessary, is appropriated for fiscal year 2006-2007, for the purpose of the development of affordable housing.

The bond issuance shall finance projects of for-profit and non-profit entities or organizations for development of mixed use projects; provided that        per cent of such projects shall be reserved for persons and families below fifty per cent of the state median income level, and        per cent shall be reserved for persons and families below thirty per cent of the state median income level.

SECTION 24. The appropriation made for the capital improvement project authorized by this part shall not lapse at the end of the fiscal biennium for which the appropriation is made; provided that all moneys from the appropriation unencumbered as of June 30, 2008, shall lapse as of that date.

SECTION 25. The sum appropriated shall be expended by the Hawaii public housing administration pursuant to section 201G-113(e), Hawaii Revised Statutes, for the purposes of this part.

SECTION 26. There is appropriated out of the general revenues of the State of Hawaii the sum of $          , or so much thereof as may be necessary for fiscal year 2006-2007, for the purposes of this part.

The sum appropriated shall be expended by the department of taxation for the purposes of this part.

SECTION 27. The department of land and natural resources shall initiate transfer to the Hawaii housing finance and development administration, no later than December 1, 2006, the lands identified in Appendix F of the Joint Legislative Housing and Homeless Task Force Report to the 2006 regular session of the legislature as suitable for affordable housing development.

SECTION 28. There is appropriated out of the general revenues of the State of Hawaii the sum of $          , 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 part.

PART IV. GENERAL PROVISIONS

SECTION 29. In codifying the new sections added by section 21 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 30. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 31. This Act shall take effect on July 1, 2006; provided that sections 17 and 21 shall apply to taxable years beginning after December 31, 2005.