HB1001 HD1

PART I

SECTION 1. The legislature finds that the shortage of affordable housing in Hawaii cannot be solved by any single action. Both the state and counties must employ a multifaceted approach to a multifarious problem.

Government must provide an adequate amount of financial incentives to encourage the construction of affordable housing projects by private developers. The government must also provide an expedited permitting process to allow immediate construction of new dwelling units while providing for proper environmental and cultural resources protection. Therefore, the legislature also finds that new construction of these affordable housing units should be focused on existing urban areas to allay regulatory and environmental concerns. To focus development on existing urban areas, support to expand existing infrastructure capacity must be provided to county governments to take advantage of underutilized urban zoned areas.

The purpose of this Act is to increase the inventory of affordable and workforce for-sale housing, and affordable rentals, by encouraging the counties to adopt an expedited permitting process and providing financial support for increased infrastructure capacity.

PART II

COUNTY-EXPEDITED PERMIT APPROVAL FOR AFFORDABLE AND WORKFORCE HOUSING PILOT PROJECT

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

"PART . EXPEDITED APPROVAL FOR AFFORDABLE AND WORKFORCE HOUSING PILOT PROJECT

§46-A Findings and purpose. The legislature finds that the counties are best equipped to determine where affordable and workforce for-sale and rental housing developments should be appropriately located within geographic areas designated for population growth under the county’s general plan and development or community plans and the county’s defined urban growth boundary or equivalent.

§46-B Expedited approval process. (a) Notwithstanding any other law to the contrary, counties with populations above five hundred thousand shall develop an expedited approval process to increase the amount of affordable and workforce for-sale housing projects and affordable rental housing projects. Counties with populations below five hundred thousand may develop an expedited approval process under this part. The expedited process shall, at a minimum, require:

(1) Standards and guidelines that do not compromise public health and safety;

(2) That no less than twenty-five per cent of the units in a for-sale development shall be affordable to households with incomes at or below one hundred forty per cent of the area median family income as determined by the United States Department of Housing and Urban Development, and shall have at least one-bedroom;

(3) That no less than twenty-five per cent of the units in a for-sale development shall be affordable to households with incomes at or below one hundred forty per cent of the area median family income as determined by the United States Department of Housing and Urban Development, and shall have at least two-bedrooms;

(4) That buyer resale of units under paragraphs (2) and (3) shall be subject to equity sharing, of which twenty per cent of net revenues shall be paid to the Hawaii housing finance and development corporation;

(5) That rental projects maintain affordability of a certain number of units in the form of credits equal to at least fifty per cent of the total number of units, as described in section 46-F;

(6) Opportunities for mixed-use development;

(7) That projects shall consist of at least fifteen units; and

(8) Projects to offer its for-sale dwelling units only to homebuyers that are residents of the State who have not owned a home within the previous three years.

§46-C Requirements prior to application. Applications for projects under this part shall meet the following requirements prior to submittal to the county:

(1) An environmental assessment and environmental impact statement under chapter 343 shall be completed, if required;

(2) A study under section 6E-8 shall be completed, if required;

(3) A permit under chapter 195D shall be obtained, if required; and

(4) A permit under chapter 205A shall be obtained, if required.

§46-D County approval; time limits. (a) The county agencies responsible for approving the planning and permitting of the projects under this part, including any necessary time extensions, shall approve or disapprove the project within forty-five days of the date an accepted application by the county was received for processing.

(b) The expedited approval process developed by the counties, including possible time extensions on required deadlines, shall occur over a period no longer than one-year from the initial application date. The process shall include all county permits and other approvals necessary for the project to proceed.

(c) The legislative body of the county shall have forty-five days after the initial approval from the county agencies. (d) Upon approval of a project, the county agency responsible for issuing building permits, subdivision application, and other ministerial permits and approvals, shall have one year upon receipt of the application to complete its review of a building permit application.

(e) If the time limits under subsections (a) through (d) have elapsed and the required actions have not been taken by the respective county bodies, the counties shall automatically forfeit jurisdiction over the application to the Hawaii housing finance and development corporation.

§46-E Projects on lands owned by the State. Notwithstanding sections 10-13.6 and 171-18, State owned public non-ceded lands shall be made available to the Hawaii housing finance and development corporation, without the approval of the board of land and natural resources, for purposes of developing rental projects under this part. The Hawaii housing finance and development corporation shall make the land available for the development of eligible projects at a lease rent of $1 per year for thirty years.

§46-F Rental housing projects; affordability credits. (a) Rental housing projects that meet the requirements of this part shall maintain affordability credits equal to fifty per cent of the total number of units in the project for households with incomes at or below eighty per cent of the area median income as determined by the United States Department of Housing and Urban Development.

(b) Points shall be earned as follows:

(1) Construction of rental units affordable to households with incomes between sixty and eighty per cent of the area median income shall earn 2.0 credits per unit; and

(2) Construction of rental units affordable to households with incomes less than sixty per cent of the area median income shall earn 3.0 credits per unit.

§46-G Statutory waivers. Applications for housing projects under this part shall be exempt from all statutes, charter provisions, ordinances and rules of any state or county government agency relating to planning, land use, zoning, and other permits required for the development of residential housing; provided that the housing projects:

(1) Comply with the requirements set forth in this part; and

(2) Shall not be exempt from construction standards for subdivisions, applicable county building codes, and other construction standards for dwelling units.

Nothing in this part shall be construed to waive any labor or collective bargaining laws."

PART III

STATE-EXPEDITED APPROVAL FOR AFFORDABLE AND WORKFORCE HOUSING PILOT PROJECT

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

"§201H- Expedited approval for affordable, workforce and rental housing; exemption from statutes, ordinances, charter provisions, and rules. (a) The expedited process under this section shall only be available to applications for projects where the county has forfeited jurisdiction to the corporation pursuant to part of chapter 46.

(b) In coordination with the counties, the corporation shall develop an expedited approval process on behalf of the State, with an eligible developer, or any government assistance program in the development of affordable, workforce and rental housing projects that shall be exempt from all statutes, ordinances, charter provisions, and rules of any government agency relating to planning, zoning, construction standards for subdivisions, development and improvement of land, and the construction of dwelling units thereon; provided that:

(1) The corporation finds the housing project is consistent with the purpose and intent of this chapter, and meets minimum requirements of health and safety;

(2) The development of the proposed housing project does not contravene any safety standards, tariffs, or rates and fees approved by the public utilities commission for public utilities or of the various boards of water supply authorized under chapter 54;

(3) If applicable, the requirements of chapter 343, section 6E-8, chapter 195D, and chapter 205A, have been met prior to the submittal of the application; and

(4) The corporation may give final approval to proceed with the project without consent of the county in which the project is located; provided further that the corporation conducts public hearings pursuant to chapter 92.

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2007-2008 and the same sum or so much thereof as may be necessary for fiscal year 2008-2009 for the establishment of one full-time (1.00 FTE) planner position for the Hawaii housing finance and development corporation to facilitate the implementation of this Act.

The sum appropriated shall be expended by the Hawaii housing finance and development corporation for the purposes of this Act.

PART IV

INFRASTRUCTURE SUPPORT

SECTION 5. Chapter 46, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§46- County infrastructure capacity construction loan revolving fund. (a) There is established within the state treasury a county infrastructure capacity construction loan revolving fund. The revolving fund shall be administered by and moneys expended by the department of budget and finance in accordance with this section. The legislature finds that the provisions of this section satisfy the requirements of section 37-52.4.

(b) The county infrastructure capacity construction loan revolving fund shall consist of moneys:

(1) Received by the department of budget and finance from counties for the repayment of loan principal and payment of simple interest; provided that simple interest charged to a county for a loan shall be per cent below the prevailing market rate at the time the loan is made but in no event shall exceed_______ per cent;

(2) Appropriated by the legislature into the fund from surplus revenues derived from prior fiscal years;

(3) Appropriate federal grants and subsidies to the State or counties, if any; and

(4) Voluntary contributions.

(c) The department of budget and finance shall expend moneys in this fund to make loans to counties for the costs, in whole or in part, of infrastructure improvements that would increase the carrying capacity of infrastructure facilities, including sewer, water, drainage, and roads. Eligible costs shall be limited to construction and materials, excluding the initial costs of planning, engineering, and feasibility studies. No loan shall be made for maintenance costs, such as increasing the life of the facility, unless the construction would simultaneously increase the carrying capacity of the facility. No loan shall be made for mass transit or for electrical utilities. Loans shall be made only for capital improvement projects that support developments where a majority of the units built are affordable workforce and rental housing.

(d) The department of budget and finance shall comply with section 37-47. The department shall adopt rules in accordance with chapter 91 for the purposes of this section."

PART V

ACCEPTANCE OF INFRASTRUCTURE

SECTION 6. "§46- Required acceptance of affordable, workforce and rental housing infrastructure dedicated to counties. The county shall accept dedication and allow a project constructed under chapter 201H-___ to connect its infrastructure to the county's infrastructure, including but not limited to its water, sewer, and drainage systems, upon the payment of the applicable meter and connection fees and utility costs; provided that the infrastructure conforms to county building codes; and provided further that the dedicated infrastructure is certified to be in compliance by either the county inspector responsible for accepting dedicated infrastructure, or a third-party licensed building inspector."

SECTION 7. There is appropriated out of the general revenues of the State of Hawaii the sum of $ for fiscal year 2007-2008 and the same sum for fiscal year 2008-2009 for deposit into the county infrastructure capacity construction loan revolving fund.

PART VI

INCENTIVES

SECTION 8. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- New markets tax credit. (a) Section 45D (with respect to new markets tax credit) of the Internal Revenue Code shall be operative for the purposes of this chapter, except as otherwise provided in this section.

(b) Each taxpayer subject to the tax imposed by this chapter who holds a qualified equity investment on a credit allowance date of that investment, which occurs during the taxable year, may claim a credit against the taxpayer's net income tax liability for the taxable year. 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.

(c) The amount of the credit shall be equal to the applicable percentage of the amount paid to the qualified community development entity for the investment at its original issue. As used in this section, "applicable percentage" means:

(1) per cent with respect to the first three credit allowance dates; and

(2) per cent with respect to the remainder of the credit allowance dates.

(d) The total amount of credits taken under this section shall not exceed $ per taxable year. An application for a new markets tax credit shall be submitted to the director of taxation on forms established by the director of taxation prior to the use of the credit. The allocation of tax credits under this section shall be made by the director of taxation to qualified community development entities on a first-come, first-served basis.

(e) For the purpose of deducting this tax credit, "net income tax liability" means net income tax liability reduced by all other credits allowed to the taxpayer under this chapter.

(f) A tax credit under this section that exceeds the taxpayer's net income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

(g) All claims for a tax credit under this section shall 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.

(h) 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.

(i) The director of taxation may adopt rules under chapter 91 and prepare any forms necessary to carry out this section."

SECTION 9. Section 235-2.3, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The following Internal Revenue Code subchapters, parts of subchapters, sections, subsections, and parts of subsections shall not be operative for the purposes of this chapter, unless otherwise provided:

(1) Subchapter A (sections 1 to 59A) (with respect to determination of tax liability), except section 1(h)(2) (relating to net capital gain reduced by the amount taken into account as investment income), except sections 2(a), 2(b), and 2(c) (with respect to the definition of "surviving spouse" and "head of household"), except section 41 (with respect to the credit for increasing research activities), except section 42 (with respect to low-income housing credit), except section 45D (with respect to new markets tax credit; and except sections 47 and 48, as amended, as of December 31, 1984 (with respect to certain depreciable tangible personal property). For treatment, see sections 235-110.91, 235-110.7, [~~and~~] 235-110.8[;], and section 235-____;

(2) Section 78 (with respect to dividends received from certain foreign corporations by domestic corporations choosing foreign tax credit);

(3) Section 86 (with respect to social security and tier 1 railroad retirement benefits);

(4) Section 103 (with respect to interest on state and local bonds). For treatment, see section 235-7(b);

(5) Section 114 (with respect to extraterritorial income). For treatment, any transaction as specified in the transitional rule for 2005 and 2006 as specified in the American Jobs Creation Act of 2004 section 101(d) and any transaction that has occurred pursuant to a binding contract as specified in the American Jobs Creation Act of 2004 section 101(f) are inoperative;

(6) Section 120 (with respect to amounts received under qualified group legal services plans). For treatment, see section 235-7(a)(9) to (11);

(7) Section 122 (with respect to certain reduced uniformed services retirement pay). For treatment, see section 235-7(a)(3);

(8) Section 135 (with respect to income from United States savings bonds used to pay higher education tuition and fees). For treatment, see section 235-7(a)(1);

(9) Subchapter B (sections 141 to 150) (with respect to tax exemption requirements for state and local bonds);

(10) Section 151 (with respect to allowance of deductions for personal exemptions). For treatment, see section 235-54;

(11) Section 179B (with respect to expensing of capital costs incurred in complying with Environmental Protection Agency sulphur regulations);

(12) Section 181 (with respect to special rules for certain film and television productions);

(13) Section 196 (with respect to deduction for certain unused investment credits);

(14) Section 199 (with respect to the U.S. production activities deduction);

(15) Section 222 (with respect to qualified tuition and related expenses);

(16) Sections 241 to 247 (with respect to special deductions for corporations). For treatment, see section 235-7(c);

(17) Section 280C (with respect to certain expenses for which credits are allowable). For treatment, see section 235-110.91;

(18) Section 291 (with respect to special rules relating to corporate preference items);

(19) Section 367 (with respect to foreign corporations);

(20) Section 501(c)(12), (15), (16) (with respect to exempt organizations);

(21) Section 515 (with respect to taxes of foreign countries and possessions of the United States);

(22) Subchapter G (sections 531 to 565) (with respect to corporations used to avoid income tax on shareholders);

(23) Subchapter H (sections 581 to 597) (with respect to banking institutions), except section 584 (with respect to common trust funds). For treatment, see chapter 241;

(24) Section 642(a) and (b) (with respect to special rules for credits and deductions applicable to trusts). For treatment, see sections 235-54(b) and 235-55;

(25) Section 646 (with respect to tax treatment of electing Alaska Native settlement trusts);

(26) Section 668 (with respect to interest charge on accumulation distributions from foreign trusts);

(27) Subchapter L (sections 801 to 848) (with respect to insurance companies). For treatment, see sections 431:7-202 and 431:7-204;

(28) Section 853 (with respect to foreign tax credit allowed to shareholders). For treatment, see section 235-55;

(29) Subchapter N (sections 861 to 999) (with respect to tax based on income from sources within or without the United States), except sections 985 to 989 (with respect to foreign currency transactions). For treatment, see sections 235-4, 235-5, and 235-7(b), and 235-55;

(30) Section 1042(g) (with respect to sales of stock in agricultural refiners and processors to eligible farm cooperatives);

(31) Section 1055 (with respect to redeemable ground rents);

(32) Section 1057 (with respect to election to treat transfer to foreign trust, etc., as taxable exchange);

(33) Sections 1291 to 1298 (with respect to treatment of passive foreign investment companies);

(34) Subchapter Q (sections 1311 to 1351) (with respect to readjustment of tax between years and special limitations);

(35) Subchapter R (sections 1352 to 1359) (with respect to election to determine corporate tax on certain international shipping activities using per ton rate);

(36) Subchapter U (sections 1391 to 1397F) (with respect to designation and treatment of empowerment zones, enterprise communities, and rural development investment areas). For treatment, see chapter 209E;

(37) Subchapter W (sections 1400 to 1400C) (with respect to District of Columbia enterprise zone);

(38) Section 1400O (with respect to education tax benefits);

(39) Section 1400P (with respect to housing tax benefits);

(40) Section 1400R (with respect to employment relief); and

(41) Section 1400T (with respect to special rules for mortgage revenue bonds)."

PART VII

SECTION 10. The Hawaii housing finance and development corporation and the city and county of Honolulu shall enter into a memorandum of understanding relating to the implementation of this Act and streamlining acceptance of project related infrastructure dedicated to the county which shall be executed prior to December 31, 2007. If the memorandum of understanding is not executed prior to December 31, 2007, the county shall not be eligible to receive moneys under the county infrastructure capacity construction loan revolving fund. The county shall be eligible to receive moneys under the county infrastructure capacity construction loan revolving fund upon entering into the memorandum of understanding as described above.

SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 12. This Act shall take effect on July 1, 2066.

HOUSE OF REPRESENTATIVES	H.B. NO.	1001
TWENTY-FOURTH LEGISLATURE, 2007		H.D. 1
STATE OF HAWAII