Report Title:
Rental Housing Development
Description:
Provides financial incentives to developers to construct rental housing by freezing real property taxes and excise taxes at the level prior to the development, allowing a tax deduction to the developer for the costs of development, and increasing the threshold for loans or grants from the rental housing trust fund for affordable rental housing development to 140 per cent of the median family income.
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THE SENATE |
S.B. NO. |
2701 |
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TWENTY-THIRD LEGISLATURE, 2006 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO AFFORDABLE RENTAL HOUSING DEVELOPMENT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature find that there is a critical shortage of affordable rental housing in Hawaii's overpriced real estate market. The legislature further finds that developers of rental housing need financial incentives to construct rental projects.
The purpose of this Act is to provide financial incentives and loans to developers to construct rental housing projects.
SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§235- Deduction for costs of rental housing development. (a) There shall be allowed a deduction from gross income for the taxes imposed under this chapter upon a developer of rental housing of percent of the costs of development of an affordable rental housing project. The deduction shall be taken in equal increments over a three year period.
(b) If the developer or the developer's successor fails to keep all of the units as affordable rental housing during the ten year period, within three months of that date the developer shall lose entitlement to the deduction and shall recalculate the developer's tax for the years in which the developer took the deduction as though the deduction had not been taken, and shall pay the State the amount of back taxes owed plus any applicable penalties.
(c) The director of taxation shall adopt rules pursuant to chapter 91 for purposes of this section.
(d) For the purposes of this section:
"Affordable rental housing" means units rented at or below seventy-five percent of the fair market rental price for the same or similar units for a period of no less than ten years.
"Developer" has the same meaning as in section 46-141."
SECTION 3. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§237- Imposition of tax on developer of rental housing. (a) The taxes imposed under this chapter upon a developer, as defined in section 46-141, of rental housing shall not exceed the taxes imposed under this chapter immediately prior to the development of a rental housing project for a period of years, if the developer leases or rents the units at below market rates for ten years.
(b) If the developer or the developer's successor fails to keep all of the units as affordable rental housing during the ten year period, within three months of that date the developer shall so inform the county director of finance, and the director shall recalculate the developer's tax for the years in which the developer took the deduction as though the deduction had not been taken. The developer shall pay the county the amount of back taxes owed plus any applicable penalties.
(c) The counties shall adopt rules pursuant to chapter 91 for purposes of this section.
(d) For the purposes of this section:
"Affordable rental housing" means units rented at or below seventy-five percent of the fair market rental price for the same or similar units for a period of no less than ten years.
"Developer" has the same meaning as in section 46-141."
SECTION 4. Chapter 346, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§246- Suspension of imposition of real property tax on developers of rental housing. (a) The taxes imposed under this chapter upon a developer, as defined in section 46-141, of rental housing shall not exceed the taxes imposed under this chapter in the taxable year immediately prior to the development of a rental housing project, for a period of three years, if the developer leases or rents the units at below market rates for a ten year period.
(b) If the developer or the developer's successor fails to keep all of the units as affordable rental housing during the ten year period, the county may penalize the developer by imposing tax in an amount not to exceed the amount of taxes foregone plus ten percent.
(c) Each county shall adopt rules pursuant to chapter 91 for purposes of this section."
SECTION 5. Section 201G-432, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:
"(e) Moneys in the fund shall be used for the purpose of providing in whole or in part loans or grants for housing projects wherein:
(1) At least fifty per cent of the available units are for persons and families with incomes at or below sixty per cent of the median family income;
(2) At least ten per cent of the available units are for persons and families with incomes at or below thirty per cent of the median income; and
(3) The remaining units are for persons and families with incomes at or below one hundred forty per cent of the median family income; provided that the corporation may establish rules to ensure full occupancy of fund projects."
SECTION 6. New statutory material is underscored.
SECTION 7. This Act shall take effect upon its approval; provided that section 2 shall apply to taxable years beginning after December 31, 2006; and provided further that sections 3 and 4 shall take effect on July 1, 2006.
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INTRODUCED BY: |
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