STAND. COM. REP. NO. 2712

Honolulu, Hawaii

RE:    S.B. No. 2833

       S.D. 2

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 S.B. No. 2833, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE LOW-INCOME HOUSING TAX CREDIT,"

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 amends the state low-income housing tax credit by reducing the applicable credit period from ten years to five years.

     Your Committee received written comments in support of this measure from the Governor's Coordinator on Homelessness; Department of Business, Economic Development, and Tourism; Department of Human Services; Hawaii Housing Finance and Development Corporation; Catholic Charities Hawaii; The Chamber of Commerce Hawaii; and Hawaii Association of Realtors.

     Your Committee received comments on this measure from the Department of Taxation and the Tax Foundation of Hawaii.

     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 the Department of Taxation estimates that this measure, as received by your Committee, will result in revenue losses of $4,000,000 in fiscal year 2019, $8,000,000 in fiscal year 2020, and $12,000,000 in fiscal year 2021.

     Your Committee has amended this measure by providing that the amount of the state low-income housing tax credit shall not exceed fifty per cent of the total federal credits allocated to a qualified low-income building.  The amendment was recommended by the Department of Taxation.  Your Committee believes that this amendment reflects the intent of the measure.

     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 S.B. No. 2833, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2833, S.D. 2.

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

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JILL N. TOKUDA, Chair