STAND. COM. REP. NO. 564

Honolulu, Hawaii

RE: S.B. No. 944

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

Your Committee on Housing, to which was referred S.B. No. 944 entitled:

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

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Authorize a partner or member in a partnership or limited liability company that has been allocated a Low‑Income Housing Tax Credit to further allocate the credit or transfer, sell, or assign up to one hundred percent of the tax credit, under certain conditions; and

(2) Extend the sunset date for certain provisions of the Low-Income Housing Tax Credit for low-income buildings.

Your Committee received testimony in support of this measure from the Hawaii Housing Finance and Development Corporation, Sugar Creek Capital, NAIOP Hawaii, EAH Housing, and Chamber of Commerce Hawaii.

Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that the Low-Income Housing Tax Credit is one of the most commonly utilized resources for creating affordable housing in the State. However, existing provisions concerning the State's Low-Income Housing Tax Credit do not provide for the transfer, allocation, sale, or assignment of a developer's total tax credit allocation. Providing greater flexibility that allows for more investors to participate in affordable housing developments will expand access to investment, enhance the utility of the credit, and promote housing development.

Your Committee notes that, presently, $1 in state Low-Income Housing Tax Credits sells for only 62 cents. Therefore, it is important to increase the value of the foregone tax revenue.

Your Committee has amended this measure by:

(1) Inserting language requiring the transferee to receive the transfer or assignment of the tax credit before the date the tax return, or amended return, is filed claiming the tax credit;

(2) Clarifying that the transferor shall notify the Department of Taxation at least thirty days before the transferee claims the tax credit (in a manner of notification prescribed by the Department); and

(3) Making it apply to taxable years beginning after December 31, 2025.

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. 944, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 944, 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