Appropriates funds for homeless and transitional housing programs. Appropriates funds to repair vacant public housing units. Adjusts allocation of conveyance tax revenues. 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. (SD1)

A BILL FOR AN ACT

SECTION 1. Act 196, Session Laws of Hawaii (SLH) 2005, was passed by the legislature to address Hawaii's affordable housing and homeless crisis. Act 196, SLH 2005, provided a number of mechanisms and incentives to increase the supply of low-income rental housing. In addition, the legislature recognized that more meaningful solutions to Hawaii's housing and homeless crisis were needed, and 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 and meeting with state and county officials, private developers, and nonprofit organizations in the City and County of Honolulu and in the Counties of Hawaii, Kauai, and Maui, and the task force 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 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, including ceded lands, 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 3. 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.

(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 are rented to persons or families whose income does not exceed fifty per cent of the median family income as determined by the U.S. Department of Housing and Urban Development; and provided further that the remainder of the units are rented to persons or families whose income does not exceed sixty per cent of the median family income as determined by the U.S. Department of Housing and Urban Development."

SECTION 4. 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 U.S. 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 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 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 5. Section 247-7, Hawaii Revised Statutes, is amended to read as follows:

"§247-7 Disposition of taxes. All taxes collected 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 6. 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 in Appendix F of the Joint Legislative Housing and Homeless Task Force Report to the 2006 session of the Legislature as suitable for affordable housing development.

SECTION 7. 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 grant-in-aids 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 Act; provided that any unencumbered balance on June 30, 2007, shall lapse to the rental housing trust fund.

SECTION 8. 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 9. 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 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 11. This Act shall take effect on July 1, 2006; provided that section 5 shall be repealed on June 30, 2011 and section 247-7, Hawaii Revised Statutes is reenacted in the form in which it read on the day before the approval of this Act.