STAND. COM. REP. NO. 1102

Honolulu, Hawaii

, 2021

RE: S.B. No. 659

S.D. 2

H.D. 1

Honorable Scott K. Saiki

Speaker, House of Representatives

Thirty-First State Legislature

Regular Session of 2021

State of Hawaii

Sir:

Your Committee on Housing, to which was referred S.B. No. 659, S.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO LOW-INCOME HOUSING TAX CREDIT,"

begs leave to report as follows:

The purpose of this measure is to amend the Low-Income Housing Tax Credit by:

(1) Allowing the tax credit to be allocated among the partners or members of the partnership or limited liability company earning the credit in any manner agreed to by the partners or members;

(2) Extending the increases made to the tax credit until December 31, 2027; and

(3) Applying the amendments to taxable years beginning after December 31, 2024.

Your Committee received testimony in support of this measure from the Hawaii Housing Finance and Development Corporation; The Michaels Organization; Bank of Hawaii; NAIOP Hawaii; Stanford Carr Development, LLC; Dowling Company, Inc.; Maui Chamber of Commerce; Pacific Resource Partnership; and Hawaii Appleseed Center for Law and Economic Justice. Your Committee received comments on this measure from the Department of Taxation, Department of Budget and Finance, Tax Foundation of Hawaii, Hunt Companies – Hawaii, Hunt Capital Partners LLC, and Sugar Creek Capital.

Your Committee finds that this measure broadens how partners or members of a partnership or limited liability company may decide to allocate any low-income housing tax credits earned during a taxable year. This will expand the availability of the tax credit at little to no cost to the State. This measure therefore supports the development of affordable housing by increasing the available equity and feasibility of the construction and operation of affordable rental housing development projects in the State.

Your Committee has amended this measure by:

(1) Specifying that the Low-Income Housing Tax Credit shall apply to taxable years beginning after December 31, 2020;

(2) Changing the effective date to December 1, 2050, to encourage further discussion; and

(3) Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

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. 659, S.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 659, S.D. 2, H.D. 1, and be referred to your Committee on Consumer Protection & Commerce.

Respectfully submitted on behalf of the members of the Committee on Housing,

____________________________

NADINE K. NAKAMURA, Chair