HB567 SD1

PART I

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 part is to exempt certain projects 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 development of homestead lots or housing for the department of Hawaiian home lands. (a) Any amounts related to planning, design, financing, or construction activities conducted by a qualified person or firm for a new construction, moderate rehabilitation, or substantial rehabilitation project for homestead lots or housing for the department of Hawaiian home lands shall be exempt from the tax imposed by this chapter. The project may also be developed:

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

(2) Under the sponsorship of a nonprofit organization providing home rehabilitation or new homes on Hawaiian home lands for qualified families in need of decent, low-cost housing; or

(3) To provide affordable rental housing on Hawaiian home lands 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.

(b) 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.

(c) The department of Hawaiian home lands may establish, revise, charge, and collect a reasonable service fee in connection with its approvals and certifications of the exemption under this section. The fees shall be deposited into the Hawaiian home operating fund pursuant to section 213(e) of the Hawaiian Homes Commission Act, 1920, as amended.

(d) For purposes of this section:

"Homestead lot" means a lot of residential, agricultural, or pastoral use to be awarded pursuant to the Hawaiian Homes Commission Act, 1920, as amended, including but not limited to on- and off-site infrastructure requirements, appurtenances, and dwelling units.

"Moderate rehabilitation" shall have the same meaning as defined in section 201H-36.

"Qualified person or firm" 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, that possesses all professional or vocational licenses necessary to do business in the State.

"Substantial rehabilitation" shall have the same meaning as defined in section 201H-36."

SECTION 3. Section 238-3, Hawaii Revised Statutes, is amended by amending subsection (j) to read as follows:

"(j) The tax imposed by this chapter shall not apply to any use of property, services, or contracting exempted by section 237-26 [~~or section~~], 237-29[.], or 237- ."

PART II

SECTION 4. 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. Since the enactment of the Hawaiian Homes Commission Act, 1920, as amended, lands set aside for use as Hawaiian home lands have been withdrawn for other purposes, including public schools. Moreover, development on Hawaiian home lands often accounts for educational facilities that may be needed to support the community with the siting of public schools, public charter schools, early learning facilities, and other similar facilities on or near Hawaiian home lands.

The purpose of this part is to make permanent the exemption of certain housing developed by the department of Hawaiian home lands from school impact fee requirements.

SECTION 5. Section 302A-1603, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The following shall be exempt from this section:

(1) Any form of housing permanently excluding school-aged children, with the necessary covenants or declarations of restrictions recorded on the property;

(2) Any form of housing that is or will be paying the transient accommodations tax under chapter 237D;

(3) All nonresidential development;

(4) Any development with an executed education contribution agreement or other like document with the authority or the department for the contribution of school sites or payment of fees for school land or school construction; and

(5) Any form of housing developed where new housing units are created by the department of Hawaiian home lands for use by beneficiaries of the Hawaiian Homes Commission Act, 1920, as amended."

SECTION 6. Act 197, Session Laws of Hawaii 2021, is amended by amending section 6 to read as follows:

"SECTION 6. This Act shall take effect upon its approval[; provided that on July 1, 2024, section 1 of this Act shall be repealed and section 302A-1603(b), Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act]."

PART III

SECTION 7. The purpose of this part is to correct the lapse date for the appropriation under Act 279, Session Laws of Hawaii 2022, and to appropriate funds for the purposes of Act 279, Session Laws of Hawaii 2022, for the current fiscal year.

SECTION 8. Act 279, Session Laws of Hawaii 2022, is amended by amending section 6 to read as follows:

"SECTION 6. There is appropriated out of the general revenues of the State of Hawaii the sum of $600,000,000 or so much there of as may be necessary for fiscal year 2021-2022 for the purposes of this Act; provided that any moneys not expended or encumbered for specific purposes shall lapse to the general fund on June 30, [~~2025.~~] 2023.

The sum appropriated shall be expended by the department of Hawaiian home lands for the purposes of this Act."

SECTION 9. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2023-2024 for the purposes of Act 279, Session Laws of Hawaii 2022; provided that any moneys not encumbered for specific purposes shall lapse to the general fund on June 30, 2025.

The sum appropriated shall be expended by the department of Hawaiian home lands for the purposes of Act 279, Session Laws of Hawaii 2022.

PART IV

SECTION 10. Section 46-15.1, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Each county shall recognize housing units developed by the department of Hawaiian home lands and issue affordable housing credits to the department of Hawaiian home lands[.] for development where new housing units are created. The credits shall be transferable and shall be issued on a one-credit for one-unit basis, unless the housing unit is eligible for additional credits as provided by adopted county ordinances, rules, or any memoranda of agreement between a county and the department of Hawaiian home lands. In the event that credits are transferred by the department of Hawaiian home lands, twenty-five per cent of any monetary proceeds from the transfer shall be used by the department of Hawaiian home lands to develop units for rental properties. Credits shall be issued for each single-family residence, multi-family unit, other residential unit, whether for purposes of sale or rental, or if allowed under the county's affordable housing programs, vacant lot, developed by the department of Hawaiian home lands. The credits may be applied county-wide within the same county in which the credits were earned to satisfy affordable housing obligations imposed by the county on market-priced residential and [~~non-residential~~] nonresidential developments. County-wide or project-specific requirements for housing class, use, or type; or construction time for affordable housing units shall not impair, restrict, or condition the county's obligation to apply the credits in full satisfaction of all county requirements, whether by rule, ordinance, or particular zoning conditions of a project. Notwithstanding any provisions herein to the contrary, the department may enter into a memorandum of agreement with the county of Kauai, the city and county of Honolulu, or the county of Hawaii, to establish, modify, or clarify the conditions for the issuance, transfer, and redemption of the affordable housing credits in accordance with [~~county~~] the applicable county's affordable housing ordinances or rules. [Notwithstanding any provisions herein to the contrary, the department may enter into a memorandum of agreement with the city and county of Honolulu to establish, modify, or clarify the conditions for the issuance, transfer, and redemption of the affordable housing credits in accordance with county affordable housing ordinances or rules.] At least half of the affordable housing credits issued by the city and county of Honolulu shall be subject to a memorandum of agreement pursuant to this subsection.

For purposes of this section, "affordable housing obligation" means the requirement imposed by a county, regardless of the date of its imposition, to develop vacant lots, single-family residences, multi-family residences, or any other type of residence for sale or rent to individuals within a specified income range."

SECTION 11. Act 141, Session Laws of Hawaii 2009, as amended by section 3 of Act 102, Session Laws of Hawaii 2015, as amended by section 1 of Act 80, Session laws of Hawaii 2019, is amended by amending section 3 to read as follows:

"SECTION 3. This Act shall take effect on July 1, 2009[~~; provided that on June 30, 2024, this Act shall be repealed and section 46-15.1, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day before the approval of this Act~~]."

SECTION 12. Act 98, Session Laws of Hawaii 2012, as amended by section 4 of Act 102, Session Laws of Hawaii 2015, as amended by section 50 of Act 55, Session Laws of Hawaii 2016, as amended by section 2 of Act 80, Session Laws of Hawaii 2019, is amended by amending section 3 to read as follows:

"SECTION 3. This Act shall take effect upon its approval[~~, and shall be repealed on~~ July 1, 2024; provided that section 46-15.1, Hawaii Revised Statutes, shall be reenacted pursuant to section 3 of Act 141, Session Laws of Hawaii 2009, and section 23 of Act 96, Session Laws of Hawaii 2014]."

PART V

SECTION 13. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 14. This Act shall take effect on January 1, 2024.

HOUSE OF REPRESENTATIVES	H.B. NO.	567
THIRTY-SECOND LEGISLATURE, 2023		H.D. 2
STATE OF HAWAII		S.D. 1