Requires state and county agencies to give affordable housing projects priority in permitting process over other projects, except for public health and safety projects. Authorizes HCDA to issue revenue bonds to finance infrastructure improvements statewide. Imposes a luxury tax on real property classified as improved residential but not having a homeowners exemption and not used as a permanent residence or rented; appropriates funds to the counties. (SD1)

A BILL FOR AN ACT

PART I.

SECTION 1. The legislature finds that the present lack of a supply of affordable housing is turning the State into one of "haves" and "have nots". Desperately-needed affordable housing is a major problem this State is facing. Another related problem this State is facing is the myriad and complex land use permit processes faced by any real estate development project.

One of the purposes of this Act is to require all state and county agencies to give priority to affordable housing projects in the permit review and issuing process.

SECTION 2. Chapter 46, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§46-   Affordable housing projects; priority. (a) Any permit application for a housing project that is certified to be an affordable housing project by the housing and community development corporation of Hawaii or by any county agency that has been delegated or has assumed the powers under section 46-5.1 shall be given the highest priority over any other projects, except for projects involving the public health and safety, by all county agencies reviewing and issuing any permits required by the affordable housing project.

(b) For purposes of this section:

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

"§201G-   Affordable housing; priority. (a) Any permit application for a housing project that is certified to be an affordable housing project by the housing and community development corporation of Hawaii or by any county agency that has been delegated or has assumed the powers under section 46-5.1 shall be given the highest priority over any other projects, except for projects involving the public health and safety, by all state agencies reviewing and issuing any approvals or permits required by the affordable housing project.

(b) For purposes of this section:

SECTION 4. The legislature finds and declares that the health, safety, and general welfare of the people of the State require that every opportunity be taken to assist the redevelopment of residential land for affordable housing. The redevelopment and revitalization of these residential lands will alleviate community needs for affordable housing. However, a significant deterrent to redevelopment is the cost of public facilities; interest rates on moneys necessary to finance such public facilities add significantly to their cost, and more favorable interest rates would be available through the issuance of tax-exempt bonds. Thus, the availability of revenue bonds to finance the cost of public facilities will facilitate redevelopment of affordable residential units.

The legislature further finds that the powers conferred, the issuance of revenue bonds, and the expenditure of public moneys in this Act constitute service of a public interest.

The Hawaii community development authority is currently empowered to implement projects for Kakaako. The legislature is aware of the demands on counties and their inability to obtain financing for their infrastructure projects. It is the intent of the legislature to allow the authority to expand its financing capacity beyond the boundaries of Kakaako and to include projects throughout the State.

SECTION 5. Chapter 206E, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§206E-   District; bonds. The authority may implement improvement districts and issue revenue bonds for infrastructure improvements which are beyond the district boundaries contained in section 206E-32."

PART III.

SECTION 6. The legislature finds that sufficient affordable housing in Hawaii is a persistent problem. The problem is a shortage of units deemed affordable. In some instances, the purchase of condominiums and houses by individuals or entities from outside of the State contributes to the affordable housing shortage, especially if the property is bought for investment purposes or as a "trophy" property. Inasmuch as the amount of land in an island state is finite, the land must be devoted as much as possible to providing affordably priced homes and rentals for people who live here.

The legislature further finds that condominiums and single-family dwellings that are used for investment properties are generally luxury vacation properties that are owned by the wealthy. Many of these properties are uninhabited most of the year except for vacation visits. This situation exacerbates the affordable housing problem because the properties are taken out of the residential property marketplace.

The purpose of this Act is to establish a luxury tax on investment properties that are not used as permanent residences.

SECTION 7. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

§   -1 Definitions. As used in this chapter:

"Luxury real property" means real property that:

"Real property" or "property" means all land and appurtenances thereof and the buildings, structures, fences and improvements erected on or affixed to the same, and any fixture which is erected on or affixed to the land, buildings, structures, fences and improvements, including all machinery and other mechanical or other allied equipment and the foundations thereof, whose use is necessary to the utility of the land, buildings, structures, fences and improvements, or whose removal cannot be accomplished without substantial damage to the land, buildings, structures, fences and improvements.

§   -2 Imposition of tax; rates (a) The tax imposed under this section shall be based upon the value of the luxury real property based on the most recent assessment by the county that imposes the real property tax on that property.

(b) There is established a luxury real property tax to be assessed, levied, and collected annually from the owner of record of the property in an amount of twenty-five per cent on the value in excess of an assessed valuation of $          , rounded to the nearest hundredth.

§   -3 Collection; deposit. (a) The luxury real property tax shall be paid to and collected by the county that imposes the real property tax on that property.

(b) Realizations from the luxury real property tax shall be paid by the county into the housing finance revolving fund under section 201G-170.

§   -4 Not deemed real property tax. The luxury real property tax shall not be deemed a real property tax for purposes of Article VIII, section 3, of the State Constitution."

SECTION 8. Section 201G-170, Hawaii Revised Statutes, is amended to read as follows:

"§201G-170 Housing finance revolving fund; housing project bond special funds. (a) There is created a housing finance revolving fund to be administered by the corporation. Notwithstanding sections 36-21 and 201G-411, the proceeds in the fund shall be used for long-term and other special financings of the corporation and for the necessary expenses in administering this part.

(b) All moneys received and collected by the corporation, not otherwise pledged or obligated nor required by law to be placed in any other special fund, shall be deposited in the housing finance revolving fund.

(c) A separate special fund shall be established for each housing project or projects or loan program financed from the proceeds of bonds secured under the trust indenture. Each fund shall be designated "housing project bond special fund" or "housing loan program revenue bond special fund", as appropriate, and shall bear additional designation as the corporation deems appropriate to properly identify the fund.

(d) A separate special fund shall be established into which shall be deposited moneys collected from the luxury real property tax under chapter    . The moneys in the special fund shall be expended for:

[(d)] (e) Notwithstanding any other law to the contrary, all revenues, income, and receipts derived from a housing project or projects or loan program financed from the proceeds of bonds or pledged to the payment of principal of and interest and premium on bonds, shall be paid into the housing project bond special fund established for the housing project or projects or loan program and applied as provided in the proceedings authorizing the issuance of the bonds."

SECTION 9. 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 2005-2006, to assist the counties in implementing this Act:

City and County of Honolulu $          

County of Kauai $          

County of Maui $          

County of Hawaii $          

SECTION 10. The sums appropriated shall constitute the State's share of the cost of mandated programs under article VIII, section 5, of the State Constitution.

SECTION 11. New statutory material is underscored.

SECTION 12. This Act shall take effect on July 1, 2050.