STAND. COM. REP. NO. 2871

Honolulu, Hawaii

RE: S.B. No. 3138

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2020

State of Hawaii

Sir:

Your Committee on Housing, to which was referred S.B. No. 3138 entitled:

"A BILL FOR AN ACT RELATING TO HOUSING,"

begs leave to report as follows:

The purpose and intent of this measure is to encourage the development of affordable housing by removing the limit on costs eligible for exemption from general excise tax for development costs of affordable rental housing certified by the Hawaii Housing Finance and Development Corporation.

Your Committee received testimony in support of this measure from the Hawaii Housing Finance and Development Corporation, Hawaii Regional Council of Carpenters; Pacific Resource Partnership; and Schatz Collaborative, LLC. Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that under current law, projects certified by the Hawaii Housing Finance and Development Corporation under section 201H-36(a)(5), Hawaii Revised Statutes, are granted general excise tax exemptions limited to contracting costs only. This measure would expand the exemption to cover all costs included in the source provision at section 237-29, Hawaii Revised Statutes, which would include financing, sales, and leasing costs.

Your Committee notes the testimonies of the Hawaii Regional Council of Carpenters and Pacific Resource Partnership who state that this measure will enable Act 54, Session Laws of Hawaii 2017, as amended by Act 39, Session Laws of Hawaii 2018, to be used in combination with county level incentives such as City and County of Honolulu Ordinance 18-01, which provides fee and property tax waivers for creating affordable units.

Your Committee has amended this measure by making a technical, nonsubstantive amendment 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. 3138, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3138, 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