Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred S.B. No. 1010 entitled:

begs leave to report as follows:

The purpose of this measure is to generate funding for the development of affordable housing by establishing a new conveyance tax on sales of residential condominiums and single family homes for $600,000 or more.

The Department of Community Services of the City and County of Honolulu, Pacific Housing Assistance Corporation, and Hawaii Government Employees Association testified in support of this measure. The Department of Taxation, Department of Land and Natural Resources, Housing and Community Development Corporation of Hawaii, Nature Conservancy, Hawaii Association of Realtors, Land Use Research Foundation of Hawaii, Cendant Timeshare Resort Group, and The Chamber of Commerce of Hawaii opposed the measure. The Tax Foundation of Hawaii submitted comments.

This measure establishes a conveyance tax on sales of residential condominiums and homes of $600,000 or more and requires the deposit of these revenues into the Housing Finance Revolving Fund (HFRF) to support the construction of affordable housing.

Your Committee has amended this measure by increasing the threshold for the imposition of the new conveyance tax from $600,000 to $850,000. Your Committee also made technical amendments for purposes of clarity and style.

Finally, while your Committee supports additional funding for affording housing, it has concerns about this measure's effect upon other beneficiaries of conveyance tax revenues. It is not your Committee's intent, in the process of generating additional funding for affordable home development, to reduce funding for other conveyance tax beneficiaries, including the Natural Area Reserve Fund and the Rental Housing Trust Fund. Accordingly, your Committee respectfully requests that, that upon the receipt of this measure, the Committee on Ways and Means further review this issue.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1010, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1010, S.D. 1, and be referred to the Committee on Ways and Means.