SB881

SECTION 1. The legislature finds that lands utilized by the department of Hawaiian home lands to provide housing for native Hawaiians are offered at affordable rates when compared to similar housing available in Hawaii. The purpose of this Act is to exempt any housing development for the department of Hawaiian home lands from general excise taxes.

SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237- Exemptions for any housing development for the department of Hawaiian home lands. (a) All gross income received by any qualified person or firm for the planning, design, financing, or construction of any housing development for the department of Hawaiian home lands shall be exempt from general excise taxes.

(b) The department of Hawaiian home lands may approve and certify for exemption from general excise taxes any qualified person or firm involved with a newly constructed, or a moderately or substantially rehabilitated, project that is:

(1) Developed under a government assistance program approved by the department of Hawaiian home lands;

(2) Developed under the sponsorship of a private nonprofit organization providing home rehabilitation or new homes for qualified families in need of decent, low-cost housing;

(3) Developed by a qualified person or firm to provide affordable rental housing where at least fifty per cent of the available units are for households with incomes at or below eighty per cent of the area median family income as determined by the United States Department of Housing and Urban Development; or

(4) Developed by contract or project developer agreement to provide affordable housing through new construction or substantial rehabilitation; provided that:

(A) The allowable general excise tax and use tax costs shall apply to contracting only and shall not exceed $30,000,000 per year in the aggregate for all projects approved and certified by the department of Hawaiian home lands; and

(B) At least twenty per cent of the available units are for households with incomes at or below eighty per cent of the area median family income as determined by the United States Department of Housing and Urban Development.

(c) To obtain certification for exemption under this section, housing projects shall, unless exempted by the department of Hawaiian home lands, be covered by a regulatory agreement with the department of Hawaiian home lands to ensure the project's continued compliance with the applicable eligibility requirements set forth in subsection (b).

(d) All claims for exemption under this section shall be filed with and certified by the department of Hawaiian home lands and forwarded to the department of taxation. Any claim for exemption that is filed and approved, shall not be considered a subsidy.

(e) For purposes of this section:

"Moderate rehabilitation" means rehabilitation to upgrade a dwelling unit to a decent, safe, and sanitary condition, or to repair or replace major building systems or components in danger of failure.

"Qualified person" means any individual, partnership, joint venture, corporation, association, limited liability partnership, limited liability company, business, trust, or any organized group of persons or legal entities, or any combination thereof, which possesses all professional or vocational licenses necessary to do business in the State of Hawaii in conjunction with the planning, design, financing, construction (including materials and supplies for new construction, moderate rehabilitation, and substantial rehabilitation) sale, or rental of projects under the sponsorship of the department of Hawaiian home lands.

"Substantial rehabilitation" means the improvement of a property to a decent, safe, and sanitary condition that requires more than routine or minor repairs or improvements. It may include but is not limited to the gutting and extensive reconstruction of a dwelling unit, or cosmetic improvements coupled with the curing of a substantial accumulation of deferred maintenance and includes renovation, alteration, or remodeling to convert or adapt structurally sound property to the design and condition required for a specific use, such as conversion of a hotel to housing for elders.

(f) The department of Hawaiian home lands 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 Hawaiian home administration account."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	881
THIRTY-FIRST LEGISLATURE, 2021
STATE OF HAWAII