HB948 HD1

SECTION 1. The purpose of this Act is to encourage the development of affordable rental housing units by providing an exemption from the general excise tax for the development of affordable housing projects.

SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237- Affordable housing development exemption. (a) There shall be an exemption from the taxes imposed by this chapter for the development of affordable housing. The Hawaii housing finance and development corporation may certify for exemption any qualified person involved with the planning, design, financing, construction, or marketing of affordable housing units developed by a private developer upon receipt of an application; provided that in the case of projects involving the development of market-price as well as affordable housing units, the exemption under this section shall apply exclusively to the units developed as affordable housing units as defined in subsection (e).

(b) All claims for exemption shall be filed with and certified by the Hawaii housing finance and development corporation and forwarded to the department of taxation. The Hawaii housing finance and development corporation shall not be considered a governmental contracting party when it approves any claim for exemption for the purposes of section 104-2.

(c) The exemption under this section shall apply to all amounts received by any certified person for the planning, design, financing, construction, or marketing in the State of affordable housing units as described in subsection (a), and on which actual construction has started between July 1, 2007, and December 31, 2008, and which is completed by June 30, 2010, as verified by the Hawaii housing finance and development corporation; provided that the exemption shall not be applied until verification by the Hawaii housing finance and development corporation has been completed; provided further that in the event that the developer is delayed or hindered from completing the project by reason of floods, earthquakes (or other acts of nature), strikes, lockouts, inability to procure materials, electrical power failures, riots, insurrection, war, civil or criminal proceedings, injunctions, writs, appeals, stays, or other reason of a like nature, that is not the fault of, or capable of being prevented by the developer, then the June 30, 2010 completion deadline may be extended for a period equivalent to the period of the delay. In the event of a delay, the developer shall submit verification of the date of commencement as well as the date of cessation of any of the delaying events, to the Hawaii housing finance and development corporation for verification.

(d) The exemption shall apply only to projects containing the first two thousand five hundred affordable housing units that are certified and completed by June 30, 2010. The amount of the exemption shall not exceed $4,000 in taxes exempted per affordable housing unit.

(e) For the purposes of this section:

"Actual construction" means the date that the first permit is issued for the development of the project, including permits for off-site improvements that may be required by the county zoning or land use agency.

"Affordable housing units" means housing units that are sold or rented at rates affordable to households earning up to one hundred forty per cent of the area median income as determined by the United States Department of Housing and Urban Development.

"Completion" means the date of the notice of completion for the affordable housing unit or the building or buildings that the affordable housing unit is located within.

(f) The provisions of this section shall apply to property subject to chapter 238."

SECTION 3. Section 201H-36, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) In accordance with section 237-29, the corporation may approve and certify for exemption from general excise taxes any qualified person or firm involved with [a] the planning, design, financing, construction, or marketing of a proposed newly constructed, or moderately or substantially rehabilitated project:

(1) Developed under this part;

(2) Developed under a government assistance program approved by the corporation, including but not limited to the United States Department of Agriculture 502 program and Federal Housing Administration 235 program;

(3) Developed under the sponsorship of a private nonprofit organization providing home rehabilitation or new homes for qualified families in need of decent, low-cost housing; or

(4) Developed by a qualified person or firm to provide affordable rental housing where at least fifty per cent of the available units are for households with incomes at or below eighty per cent of the area median family income as determined by the United States Department of Housing and Urban Development, of which at least twenty per cent of the available units are for households with incomes at or below sixty per cent of the area median family income as determined by the United States Department of Housing and Urban Development.

(b) All claims for exemption under this section shall be filed with and certified by the corporation and forwarded to the department of taxation. Any claim for exemption that is filed and approved, shall not be considered a subsidy for the purpose of this part. The corporation shall not be considered a contracting party when it approves any claim for exemption for the purposes of section 104-2."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

HOUSE OF REPRESENTATIVES	H.B. NO.	948
TWENTY-FOURTH LEGISLATURE, 2007		H.D. 1
STATE OF HAWAII