STAND. COM. REP. NO. 112

Honolulu, Hawaii

RE:    S.B. No. 377

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2017

State of Hawaii

Sir:

     Your Committee on Housing, to which was referred S.B. No. 377 entitled:

"A BILL FOR AN ACT RELATING TO AFFORDABLE HOUSING,"

begs leave to report as follows:

     The purpose and intent of this measure is to establish an income tax credit for taxpayers who lease housing to certain low-income tenants.

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

     Your Committee finds that there is a shortage of affordable housing in the State, including a lack of affordable rental property.  Your Committee further finds that one contributing factor to the lack of affordable rental housing is the high costs of property ownership, which encourage many landlords to enter into interval or short-term rentals rather than workforce-eligible rentals.  This measure will incentivize landlords to offer workforce-eligible rentals by providing a tax credit that will reduce the costs of affordable rental property ownership.

     Your Committee has amended this measure by:

     (1)  Specifying the amount of the tax credit as ten percent of rent collected per housing unit, per month, up to a maximum of $2,000 per taxpayer per year;

     (2)  Removing the residency requirement for the tax credit;

     (3)  Changing the maximum income for an eligible tenant to eighty percent of the area median income;

     (4)  Applying the credit to taxable years beginning after December 31, 2017; and

     (5)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 377, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 377, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Housing,

________________________________

WILL ESPERO, Chair