Repeals certain public works wage laws to reduce the cost of government-subsidized affordable housing.

A BILL FOR AN ACT

SECTION 1. The legislature finds that the lack of housing, especially affordable housing, continues to be a critical problem in Hawaii. The problem is exacerbated by record housing prices that have caused a shrinking rental market and a growing homeless population.

Government housing agencies have been unable to meet the growing demand for affordable housing due primarily to exorbitant costs for land, building materials, labor, and other construction related expenses.

A University of California at Berkeley study reviewed the costs associated with building government-subsidized housing. The study, first released in September 2003 and updated in January 2004, discovered subsidized housing costs more to build than similar housing built by the private sector.

The University of California at Berkeley's center on real estate and urban economics has taken a look at the costs of building low-income housing and found that state-subsidized housing costs between ten to thirty-two per cent more to build than private housing projects. The Los Angeles-based Reason Foundation found that "... state subsidies come with politics, and from politics come requirements that drive up costs."

The Berkeley study also suggests that taxpayers would save between $100,000,000 and $320,000,000 if multifamily housing were built by the private sector.

The Berkeley study offers three explanations for why public housing costs are higher than in the private sector:

The purpose of this Act is to repeal public works wage laws that increase the cost of government financed housing projects to provide more affordable housing in Hawaii.

SECTION 2. Section 104-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) This chapter shall apply to every contract in excess of $2,000 for construction of a public work project to which a governmental contracting agency is a party[; provided that this chapter shall not apply to experimental and demonstration housing developed pursuant to section 46-15 or housing developed pursuant to chapter 201G if the cost of the project is less than $500,000 and the eligible bidder or eligible developer is a private nonprofit corporation].

For the purposes of this subsection:

"Contract" includes but is not limited to any agreement, purchase order, or voucher in excess of $2,000 for construction of a public work project.

"Governmental contracting agency" includes any person or entity that causes either directly or indirectly the building or development of a public work.

"Party" includes eligible bidders for and eligible developers of any public work [and any housing under chapter 201G; provided that this subsection shall not apply to any housing developed under section 46-15 or chapter 201G if the entire cost of the project is less than $500,000 and the eligible bidder or eligible developer is a private nonprofit corporation].

"Public work" means any project, including [development of any housing pursuant to section 46-15 or chapter 201G, and] the development, construction, renovation, and maintenance related to refurbishment of any real or personal property, where the funds or resources required to undertake the project are to any extent derived either directly or indirectly from public revenues of the State or any county, or from the sale of securities or bonds whose interest or dividends are exempt from state or federal taxes[.]; provided that "public work" does not include the development of any housing pursuant to section 46-15 or 46-15.1, chapter 201G, or any other law authorizing the development of housing financed with public revenues."

SECTION 3. Section 46-15.01, Hawaii Revised Statutes, is repealed.

["[§46-15.01] Limitation of application. This chapter shall not be construed to exempt counties from the application of chapter 104 to experimental and demonstration housing projects pursuant to section 46-15."]

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval and shall be repealed on June 30, 2016; provided that section 46-15.01 and section 104-2, Hawaii Revised Statutes, shall be reenacted in the form in which each section read on the day before the effective date of this Act.