STAND. COM. REP. NO. 894

Honolulu, Hawaii

RE: S.B. No. 1133

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

Your Committees on Commerce and Consumer Protection and Ways and Means, to which was referred S.B. No. 1133, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO HOUSING,"

beg leave to report as follows:

The purpose and intent of this measure is to:

(1) Authorize counties in which over one percent of housing stock was destroyed or rendered uninhabitable by a disaster to establish a rental unit price ceiling ordinance to prohibit landlords from increasing the rental price of a dwelling unit at a rate that exceeds the percentage calculated and published by the county based on changes in the applicable Consumer Price Index;

(2) Beginning August 1, 2025, require counties that adopt such an ordinance to annually calculate and publish the maximum rate at which a landlord may increase the rental price of a dwelling unit during the immediately succeeding twelve-month period; and

(3) For taxable years beginning after December 31, 2025, establish a Long-Term Residential Lease Tax Credit for taxpayers who own and lease a dwelling unit located in a county that has adopted a rental unit price ceiling ordinance to a person as the person's principal residence in the State pursuant to a fixed-term lease of at least one year.

Your Committees received testimony in support of this measure from Lāhainā Strong and twenty-three individuals.

Your Committees received testimony in opposition to this measure from the Hawaiʻi Association of REALTORS, NAIOP Hawaii, and eleven individuals.

Your Committees received comments on this measure from the Department of Taxation, Tax Foundation of Hawaii, Mortgage Bankers Association of Hawaii, and Grassroot Institute of Hawaii.

Your Committees find that long-term residential leases can provide housing security and stability for renters in the State. In the aftermath of the devastating 2023 Maui wildfires, many landlords engaged in predatory practices by increasing rents and displacing many long-term tenants, which only further exacerbated the ongoing housing shortage. This measure aims to prevent such predatory practices from further displacing renters.

Your Committees have amended this measure by:

(1) Removing duplicative language and specifying that the income tax credit shall be available for owners of dwelling units located in counties that have adopted a rental unit price ceiling ordinance;

(2) Clarifying that the tax credit shall be nonrefundable and that any excess of credit over liability may be carried forward for three years;

(3) Amending section 1 to reflect its amended purpose; and

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

As affirmed by the records of votes of the members of your Committees on Commerce and Consumer Protection and Ways and Means that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1133, S.D. 1, as amended herein, and recommend that it pass Third Reading in the form attached hereto as S.B. No. 1133, S.D. 2.

Respectfully submitted on behalf of the members of the Committees on Commerce and Consumer Protection and Ways and Means,

________________________________ DONOVAN M. DELA CRUZ, Chair

________________________________ JARRETT KEOHOKALOLE, Chair