SB903 SD1.DOC

SECTION 1. The legislature finds that the federal government helps support the production of low-income rental housing by providing subsidies to private owners of multifamily housing. The legislature also finds that the affordability of housing units that receive subsidies is not permanently assured. Restrictions on rent levels, tenant eligibility, and overall operations expire after a certain period of time. When a contract with the United States Department of Housing and Urban Development or the United States Department of Agriculture expires, the owner of the building can then convert to renting units at market rate prices. Hawaii has had to provide funds to preserve some of these affordable rental housing projects.

The legislature also finds that the cost of living in Hawaii has been and continues to be high. A significant contributing factor to the high cost of living in Hawaii is the high cost of housing. United States Department of Housing and Urban Development and United States Department of Agriculture housing projects are among very few low cost rental housing resources available to households with incomes at or below eighty per cent of the median family income, as determined by the United States Department of Housing and Urban Development.

The purpose of this Act is to preserve United States Department of Housing and Urban Development and United States Department of Agriculture housing projects in Hawaii as affordable rental housing projects in perpetuity.

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

"§201H‑ Affordable rental housing development program. (a) There is established the affordable rental housing development program under the Hawaii housing finance and development corporation.

(b) The purpose of this program shall be to preserve affordable rental housing units in perpetuity.

(c) For the purposes of this section, activities eligible for assistance from the affordable rental housing development program shall include rehabilitation, acquisition, or preservation of multifamily rental housing units for persons and families with incomes at or below eighty per cent of the median family income, as determined by the United States Department of Housing and Urban Development.

(d) The corporation shall identify properties whose contracts with either the United States Department of Housing and Urban Development or the United States Department of Agriculture are set to expire on or before January 1, 2012, and the corporation shall negotiate with the project owners to renew or preserve the existing subsidy contracts; provided that:

(1) Nonprofit organizations shall be given priority to take over expiring subsidy contracts; and

(2) Nonprofit organizations shall be given priority over for-profit organizations, if federal government funds are needed for the acquisition or rehabilitation of a project.

(e) Notwithstanding any law to the contrary, any public housing project that is managed with state or county funds or acquired by a nonprofit organization under the requirements of subsection (d) and provided to qualified tenants as rentals shall remain affordable in perpetuity, subject to any restrictions and conditions provided by law that are not contrary to the purposes of this section; provided that if a public housing project is redeveloped or reconstructed to provide for additional new units, different target income groups, or mixed use development, the number of affordable units shall increase or remain the same.

For the purposes of this section, "affordable" in the case of rental units for qualified tenants means available for households with incomes at or below eighty per cent of the median family income, as determined by the United States Department of Housing and Urban Development."

SECTION 3. (a) The Hawaii housing finance and development corporation shall submit a report to the legislature no later than twenty days prior to the convening of the 2012 regular session.

(b) The report shall include:

(1) The names and addresses of any rental housing projects in Hawaii that have a rental subsidy contract with the United States Department of Housing and Urban Development or United States Department of Agriculture;

(2) The dates on which the rental housing projects' federal rental subsidy contracts are set to expire; and

(3) The names and addresses of any rental housing projects obtained by nonprofit organizations that have since been designated affordable rental housing in perpetuity.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2050.

THE SENATE	S.B. NO.	903
TWENTY-SIXTH LEGISLATURE, 2011		S.D. 1
STATE OF HAWAII