STAND. COM. REP. NO. 315

Honolulu, Hawaii

RE: S.B. No. 867

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2019

State of Hawaii

Sir:

Your Committee on Housing, to which was referred S.B. No. 867 entitled:

"A BILL FOR AN ACT RELATING TO HOUSING,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Remove certain limits on costs eligible for a general excise tax exemption for newly constructed or renovated affordable rental housing projects; and

(2) Make permanent provisions relating to the types of rental housing projects that are exempt from the general excise tax and prevailing wages for the construction of certain rental housing projects.

Your Committee received testimony in support of this measure from the O‘ahu County Committee on Legislative Priorities of the Democratic Party of Hawai‘i. Your Committee received comments on this measure from the Department of Taxation and Hawaii Housing Finance and Development Corporation.

Your Committee finds that additional incentives are needed to increase rental housing development to meet housing demand, particularly for affordable housing units. Under existing law, the Hawaii Housing Finance and Development Corporation is authorized to certify general excise tax exemptions for affordable rental housing projects that meet certain criteria. This measure proposes the repeal of some of those criteria, thereby allowing more projects to be certified for the tax exemption and inducing the development of more affordable housing in Hawaii.

Your Committee has heard the testimony of the Hawaii Housing Finance and Development Corporation in regard to the lack of participation in this general excise tax exemption. Your Committee believes that this exemption is advantageous for developers and requests further information as to why this exemption has had no applicants since its inception pursuant to Act 54, Session Laws of Hawaii 2017.

Your Committee has amended this measure by:

(1) Inserting an effective date of July 1, 2050, to encourage further discussion; and

(2) 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. 867, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 867, 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,

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STANLEY CHANG, Chair