STAND. COM. REP. NO. 2565

Honolulu, Hawaii

RE: S.B. No. 2756

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2756 entitled:

"A BILL FOR AN ACT RELATING TO THE CONVEYANCE TAX,"

begs leave to report as follows:

The purpose and intent of this measure is to increase the inventory of affordable rental units in the State by repealing the statutory cap on the allocation of conveyance tax revenue dedicated for deposit into the rental housing revolving fund.

Your Committee received testimony in support of this measure from the Office of the Governor; Department of Business, Economic Development, and Tourism; Hawaii Housing Finance and Development Corporation; Hawaii Association of REALTORS; Hawaii Appleseed Center for Law and Economic Justice; Hawaii Construction Alliance; Partners in Care; Catholic Charities Hawaii; IMUAlliance; and eight individuals.

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

Your Committee finds that the rental housing revolving fund provides crucial gap financing to build affordable rental housing projects in the State. Your Committee also finds that current law provides for fifty percent of conveyance tax revenues to be deposited into the rental housing revolving fund, up to a maximum of $38,000,000. Your Committee further finds that if the statutory cap of $38,000,000 did not exist, an additional $6,000,000 would have been deposited into the rental housing revolving fund during fiscal year 2016-2017, which would have been enough funding to make available an additional forty affordable rental housing units for the State.

Your Committee has amended this measure by:

(1) Changing the effective date to July 1, 2050, to facilitate further discussion on the measure; and

(2) Making a technical nonsubstantive amendment for the purpose of clarity.

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. 2756, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2756, S.D. 1, and be placed on the calendar for Third Reading.

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

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DONOVAN M. DELA CRUZ, Chair