STAND. COM. REP. NO. 3354

Honolulu, Hawaii

RE:    H.B. No. 2744

       H.D. 1

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred H.B. No. 2744, H.D. 1, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO HOUSING,"

begs leave to report as follows:

     The purpose and intent of this measure is to increase funding for affordable rental housing development.

     Specifically, this measure:

     (1)  Increases the aggregate state housing credit dollar amount available for award annually;

     (2)  Bases the amount of the state low-income housing tax credit, for qualified low-income buildings that receive an allocation after December 31, 2016, on whether or not a building is financed by tax-exempt bonds;

     (3)  Amends the state low-income housing tax credit by reducing the applicable credit period from ten years to five years;

     (4)  Limits the total amount of state low-income housing tax credits that may be claimed over a ten-year period; and

     (5)  Deletes provisions of the state low-income housing tax credit that required the application of Internal Revenue Code sections related to at-risk rules and limitation of passive activity losses and credits.

     Your Committee received written comments in support of this measure from the Building Industry Association of Hawaii; Catholic Charities Hawaii; Chamber of Commerce Hawaii; Hawaii Association of Realtors; Hawaii Laborers-Employers Cooperation and Education Trust; Land Use Research Foundation of Hawaii; Stanford Carr Development, LLC; and one individual.

     Your Committee received comments on this measure from the Department of Taxation and Hawaii Housing Finance and Development Corporation.

     Your Committee finds that the development of low-income affordable housing is necessary to address the issue of homelessness and to respond to the critical shortage of affordable housing inventory in the State.  Your Committee also finds that increasing the investment attractiveness of the state low-income housing tax credit would generate more equity to finance the development of affordable rental housing projects.

     Your Committee notes that this measure originally had an effective date of July 1, 2017.  Your Committee further notes that, using the original effective date, the Department of Taxation estimates that this measure will result in revenue losses of $9,000,000 in fiscal year 2019, $18,000,000 in fiscal year 2020, and $27,000,000 in fiscal year 2021.

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2744, H.D. 1, S.D. 1, and recommends that it pass Third Reading.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

________________________________

JILL N. TOKUDA, Chair