SB3050

SECTION 1. The legislature finds that Hawaii has long struggled to balance the needs of our residents, our duty as responsible stewards of our limited and fragile natural and cultural resources, and the demands from outside markets for luxury vacation residential developments. The legislature further finds that these interests converge most strongly in the debate over how to develop and retain housing that is truly affordable for Hawaii's ohana, especially for our middle-, lower-, and fixed-income residents.

The legislature additionally finds that Oahu's mass transit, elevated rail project is a once in a lifetime opportunity to focus resources and policies to achieve a successful balance in this conflict. If done well, developing affordable housing along the transit line within the urban corridor will preserve agricultural and resource lands, provide residents with a livable and revitalized urban core, and reduce the need to subsidize transit operations by building ridership. If done poorly, residents will struggle for housing while new luxury developments march down the transit corridor, Hawaii's largest food farm operations will be shuttered by residential sprawl, and our young adults will continue moving out of State seeking an affordable future.

The legislature further finds that much of this affordable housing can be accomplished through building low-rise, infill developments that many of the State's small- and mid-size contractors can produce. However, due to Hawaii's high construction costs and the competing and more lucrative demand for higher-priced units, it is necessary to adopt additional incentives to attract more developers willing to build affordable housing units, and more property managers willing to manage affordable rental units.

Therefore, the purpose of this Act is to adopt two narrowly-tailored policies that streamline and reduce construction and management costs of truly affordable housing developments in the urban core along fixed mass transit systems, but not including land in historic districts, that are planned for population growth by the State and the city and county of Honolulu. Specifically, the purpose of this Act is to exempt certain developmental projects from the requirement to provide an environmental impact statement, and to exempt rental income for management of affordable housing from the general excise tax.

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

"§201H-A Environmental impact statement; exemption. (a) For purposes of this section, "qualified project" means an affordable housing development project under this chapter:

(1) That is located on lands placed in the urban district by the land use commission under chapter 205;

(2) That is located on lands zoned for any residential category, including mixed uses, by the applicable county council;

(3) That is not located within any state or county historic district;

(4) That is located within one-half mile of a fixed-rail mass transit system; and

(5) Of which all available units are for households with an adjusted gross income at or below the area median family income, or of which at least fifty per cent of the available units are for households with an adjusted gross income at or below eighty per cent of the area median family income, as determined by the Department of Housing and Urban Development.

(b) A qualified project shall not be subject to the requirements of chapter 343.

§201H-B Exemption from general excise taxes; management of qualified projects. (a) The corporation may approve and certify for exemption from general excise taxes the rental income received by any qualified person or firm for management of a qualified project; provided that:

(1) Only the rental income received from rental units reserved for households with an adjusted gross income at or below the area median family income shall qualify for an exemption pursuant to this section; and

(2) The rental income described in paragraph (1) shall qualify for an exemption pursuant to this section only for the term during which the rental units are reserved for households with an adjusted gross income at or below the area median family income.

(b) To obtain certification for exemption under this section, qualified projects shall enter into a regulatory agreement with the corporation to ensure the project's continued compliance with the applicable eligibility requirements set forth in subsection (a).

(c) All claims for exemption under this section shall be filed with and certified by the corporation and forwarded to the department of taxation. Any claim for exemption that is filed and approved shall not be considered a subsidy for the purpose of part II.

(d) The corporation may establish, revise, charge, and collect a reasonable service fee, as necessary, in connection with its approvals and certifications under this section. The fees shall be deposited into the dwelling unit revolving fund.

(e) For the purposes of this section, "qualified project" shall have the same meaning as in section 201H-A."

SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 4. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	3050
TWENTY-NINTH LEGISLATURE, 2018
STATE OF HAWAII