SB2584 SD1.DOC

SECTION 1. The legislature finds that self-help housing programs such as Habitat for Humanity and Hawaii Self-Help Housing 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, and a number of self-help housing homeowners in Hawaii have been homeless prior to building their homes.

Homelessness has been increasing rapidly in Hawaii and the State has opened many new shelters. However, a common problem is that there is no place where people can stay during their transition from a shelter or other transitional housing. Self-help housing offers a dignified alternative to some of the families transitioning out of homelessness and it provides homeless prevention to families who are living in precarious circumstances.

The legislature further finds that establishing a dedicated source of funding would provide grant funding for technical assistance and construction materials and possibly grants or low- or zero-interest loans for predevelopment costs and the purchase of land to build on. Self-help housing is not only more cost effective than shelters or rental housing, it also provides economic and community development in neighborhoods and is one of the best sources of asset building with very low-, low-, and moderate-income households.

Currently, there are eight organizations in Hawaii that have assisted in building more than one thousand self-help homes: Habitat for Humanity, Self-Help Housing Corporation of Hawaii, Hawaii Island Community Development Corporation, Hawaii Intergenerational Community Development Association, the Consuelo Foundation, Molokai Home Ownership Made E-ffordable Corporation, Hawaii county economic opportunity council, and Lokahi Pacific.

The average cost of a house built in Hawaii with the self-help method varies by program but most of the houses fall in the range of $80,000 to $110,000. Self-help housing programs attempt to build as much as possible on leasehold land from the department of Hawaiian home lands, the State, or the counties. In addition, the programs are sometimes offered land or money to buy land by developers who are required to meet a certain threshold of affordable homes, and self-help housing programs may also buy inexpensive lands when available.

The purpose of this Act is to establish a self-help housing trust fund and an advisory board that will be responsible for securing funding sources for the trust fund and performing other tasks necessary to prepare for the administration and operation of the trust fund.

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 trust fund. (a) There is established the self-help housing trust fund, which shall be attached to the corporation for administrative purposes only.

(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.

(c) The following may be deposited into the fund: appropriations made by the legislature, private contributions, repayment of loans, interest, other returns, and 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 the fund may include but are not limited to planning, design, land acquisition, costs of options, agreements of sale, down payments, 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 that 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. (a) The Hawaii housing finance and development corporation shall establish a self-help housing trust fund advisory board composed of the following members:

(1) A representative of Habitat for Humanity;

(2) A representative of the Self-Help Housing Corporation of Hawaii;

(3) A representative of the Hawaii Island Community Development Corporation;

(4) A representative of the Hawaii Intergenerational Community Development Association;

(5) A representative of the Consuelo Foundation;

(6) A representative of the Molokai Home Ownership Made E‑ffordable Corporation;

(7) A representative of the Hawaii county economic opportunity council;

(8) A representative of Lokahi Pacific;

(9) A representative of the Hawaii housing finance and development corporation; and

(10) Two representatives selected by the other members of the advisory board to contribute their expertise to the advisory board.

(b) The self-help housing trust fund advisory board shall prepare for the administration and operation of the self-help housing trust fund by:

(1) Identifying potential target groups and clientele to whom loans or grants should be made to promote the development of self-help housing in the State;

(2) Developing criteria for selecting recipients of grants and loans from the self-help housing trust fund;

(3) Developing a process by which applications for grants and loans from the self-help housing trust fund shall be made;

(4) Developing a process by which grant and loan applications shall be evaluated, awarded, and executed;

(5) Determining sustainable sources of funding for the self-help housing trust fund; and

(6) Performing other tasks necessary to prepare for the administration and operation of the self-help housing trust fund.

(c) The self-help housing trust fund advisory board shall submit a report on its recommendations to the legislature no later than twenty days prior to the 2011 regular session of the legislature. The self-help housing trust fund advisory board shall be dissolved upon the adjournment sine die of the 2011 regular session of the legislature.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2010.

THE SENATE	S.B. NO.	2584
TWENTY-FIFTH LEGISLATURE, 2010		S.D. 1
STATE OF HAWAII