SB1277 HD1.DOC

SECTION 1. The legislature finds that self-help housing programs offer low- and moderate-income families an opportunity to own their own homes by using "sweat equity" to build their homes. Families who have built their own homes show greatly improved financial stability, the children do better in school, and the families rarely move, which often provides increased employment opportunities. Self-help housing is a hand up from circumstances that frequently lead to homelessness. In fact, a number of self-help housing homeowners in Hawaii have been homeless prior to building their homes.

The purpose of this Act is to establish a dedicated source of funding for self-help housing by establishing a self-help housing special fund with revenue from the conveyance tax.

SECTION 2. Chapter 201H, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§201H- Self-help housing special fund. (a) There is established the self-help housing special fund to be administered by the corporation.

(b) An amount from the fund, to be set by the corporation and authorized by the legislature, may be used for administrative expenses incurred by the corporation in administering the fund; provided that fund moneys may not be used to finance day-to-day administrative expenses of projects allotted fund moneys.

(1) Appropriations made by the legislature;

(2) Private contributions;

(3) Repayment of loans;

(4) Interest and other returns; and

(5) Moneys from other sources.

(d) The fund shall be used to provide loans or grants for the development, pre-development, construction, acquisition, preservation, and substantial rehabilitation of self-help housing units. Permitted uses of moneys from the fund may include planning, design, land acquisition, costs of options, agreements of sale, downpayments, equity financing, capacity building of nonprofit housing developers, and other housing development services or activities as provided in rules adopted by the corporation pursuant to chapter 91. The rules may provide for a means of recapturing loans or grants made from the fund if a self-help housing project financed under the fund is refinanced or sold at a later date. The rules may also provide that moneys from the fund shall be leveraged with other financial resources to the extent possible.

(e) The corporation may provide loans and grants under this section; provided that the corporation shall establish loan-to-value ratios to protect the fund from inordinate risk and under no circumstances shall the rules permit the loan‑to-value ratio to exceed one hundred per cent; and provided further that the underwriting guidelines include a debt-coverage ratio of not less than one to one.

(f) The corporation shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session describing the projects funded and its efforts to develop self-help housing projects, including any assistance or other partnership efforts with private or other governmental self-help housing organizations.

(g) For the purposes of this section, "self-help housing" means housing in which prospective homeowners have contributed labor, materials, or real property."

SECTION 3. 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:

(1) Ten per cent shall be paid into the land conservation fund established pursuant to section 173A-5;

(2) [~~Thirty~~] Forty-five per cent shall be paid into the rental housing trust fund established by section 201H‑202; [~~and~~]

(3) Twenty-five per cent shall be paid into the natural area reserve fund established by section 195-9; provided that the funds paid into the natural area reserve fund shall be annually disbursed by the department of land and natural resources in the following priority:

(A) To natural area partnership and forest stewardship programs after joint consultation with the forest stewardship committee and the natural area reserves system commission;

(B) Projects undertaken in accordance with watershed management plans pursuant to section 171-58 or watershed management plans negotiated with private landowners, and management of the natural area reserves system pursuant to section 195-3; and

and

(4) per cent shall be paid into the self-help housing special fund established by section 201H- ."

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

SECTION 5. This Act shall take effect on July 1, 2035.

THE SENATE	S.B. NO.	1277
TWENTY-FIFTH LEGISLATURE, 2009		S.D. 2
STATE OF HAWAII		H.D. 1