HB 1723: HHFDC; Rental Housing Revolving Fund; Mixed-Income Subaccount; Transfer of Moneys; Project Criteria; Appropriation

A BILL FOR AN ACT

RELATING TO THE RENTAL HOUSING REVOLVING FUND.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Chapter 201H, Hawaii Revised Statutes, is amended by adding a new section to part III, subpart J, to be appropriately designated and to read as follows:

     "§201H-     Transfer of moneys; subaccounts.  Notwithstanding any law to the contrary, the corporation, with the approval of the director of finance, may transfer moneys between the rental housing revolving fund and any subaccount established under this part, and between subaccounts established under this chapter, without further legislative authorization, for purposes consistent with this part.  The corporation may also return unexpended or uncommitted funds from any subaccount established under this part to the rental housing revolving fund, to be used for any lawful purpose of the fund."

     SECTION 2.  Section 201H-202, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (d) to read:

     "(d)  [Except] Notwithstanding any law to the contrary, and except as provided in subsection (f), the fund shall be used to provide [loans] any and all forms of financing, including but not limited to loans, equity investments, credit enhancement, and collateral for the development, pre-development, construction, acquisition, preservation, and substantial rehabilitation of rental housing units.  The corporation shall not forgive any loan made from the fund unless the corporation forecloses on the project.  Permitted uses of the fund may include but are not limited to planning, design, land acquisition, costs of options, agreements of sale, downpayments, equity financing, capacity building of nonprofit housing developers, credit enhancement, gap financing, or other housing development services or activities as provided in rules adopted by the corporation pursuant to chapter 91.  The rules may provide for a means of recapturing loans or grants made from the fund if a rental housing project financed under the fund is refinanced or sold at a later date.  The rules may also provide that moneys from the fund shall be leveraged with other financial resources to the extent possible."

     2.  By amending subsection (f) to read:

     "(f)  There is established within the fund a mixed-income subaccount.  Moneys in the mixed-income subaccount shall be used for financing, including but not limited to loans, equity investments, and credit enhancement, for mixed-income rentals for qualified residents as defined in section 201H-32.  The corporation shall establish an application process for the allocation of funds in the mixed‑income subaccount, separate from the fund allocation process pursuant to section 201H-204(c), that gives preference to projects meeting the following criteria:

     (1)  A diverse range of affordability, prioritizing persons and families with incomes up to one hundred forty per cent of the median family income;

     (2)  Projects located on state or county owned land or developed in partnership with the State or a county;

     (3)  Projects that efficiently use state funding;

     (4)  Mixed-income rental projects or units in a mixed‑income rental project in an area that satisfy transit‑supportive density requirements, as defined in section 206E-246; [and]

     (5)  Rental housing projects that price units at the minimum level to be revenue neutral, as determined by rules adopted by the corporation pursuant to chapter 91;

     (6)  Projects with a perpetual affordability commitment; and

    [(5)] (7)  Any other criteria as the corporation deems necessary to carry out the purposes of this subsection.

     If the corporation, after applying the process described in this subsection, finds a nonprofit or government project equally ranked with a for-profit project, the corporation shall give preference to the nonprofit or government project in allotting funds from the mixed-income subaccount.

     Moneys derived from the repayment of loans funded by the mixed-income subaccount, interest thereon, and related fees and returns shall be deposited into the [fund.] subaccount."

     SECTION 3.  Section 201H-204, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

     "(a)  Activities eligible for assistance from the fund shall include but not be limited to:

     (1)  New construction, rehabilitation, or preservation of low-income or mixed-income rental housing units that meet the criteria for eligibility described in subsection (c) or section 201H-202(f);

     (2)  The leveraging of moneys with the use of fund assets;

     (3)  Pre-development activity grants or loans to nonprofit organizations; and

     (4)  Acquisition of housing units for the purpose of preservation as low-income or very low-income housing.

     (b)  Preference shall be given to projects producing units in at least one of the following categories:

     (1)  Multifamily units;

     (2)  Attached single-family units;

     (3)  Apartments;

     (4)  Townhouses;

     (5)  Housing units above commercial or industrial space;

     (6)  Single room occupancy units;

     (7)  Accessory apartment units;

     (8)  Employee housing;

     (9)  United States Department of Housing and Urban Development mixed finance development of public housing units; and

    (10)  Other types of units meeting the criteria for eligibility set forth in subsection (c)[.] or section 201H-202(f)."

     SECTION 4.  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 2026-2027 to be deposited into the mixed-income subaccount for the rental housing revolving fund established pursuant to section 201H‑202(f), Hawaii Revised Statutes.

     SECTION 5.  There is appropriated out of the mixed-income subaccount of the rental housing revolving fund established pursuant to section 201H-202(f), Hawaii Revised Statutes, the sum of $           or so much thereof as may be necessary for fiscal year 2026-2027 for the purposes of the subaccount.

     The sum appropriated shall be expended by the Hawaii housing finance and development corporation for the purposes of this Act.

     SECTION 6.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 7.  This Act shall take effect on July 1, 3000; provided that sections 2 and 3 of this Act shall be repealed on June 30, 2030, and sections 201H-202 and 201H-204, Hawaii Revised Statutes, shall be reenacted in the form in which they read on the day before the effective date of Act 159, Session Laws of Hawaii 2025.

Report Title:

HHFDC; Rental Housing Revolving Fund; Mixed-Income Subaccount; Transfer of Moneys; Project Criteria; Appropriation

Description:

Specifies the conditions upon which the Hawaii Housing Finance and Development Corporation may transfer moneys from within the Rental Housing Revolving Fund to a subaccount and between subaccounts of the revolving fund.  Authorizes the Rental Housing Revolving Fund to be used to provide any and all forms of financing.  Expands the funding priorities of, and appropriates funds into and out of, the Mixed-Income Subaccount.  Effective 7/1/3000.  (HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

relating to the rental housing REVOLVING fund.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Section 201H-202, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsections (c) and (d) to read:

     "(c)  The following may be deposited into the fund[:] or into the mixed-income subaccount established under subsection (f):

     (1)  Appropriations made by the legislature;

     (2)  Conveyance taxes pursuant to section 247-7;

     (3)  Private contributions;

     (4)  Repayment of loans;

     (5)  Interest;

     (6)  Other returns; and

     (7)  Moneys from other sources.

     (d)  [Except] Notwithstanding any law to the contrary, and except as provided in subsection (f), the fund shall be used to provide [loans] any and all forms of financing, including but not limited to loans, equity investments, credit enhancement, and collateral for the development, pre-development, construction, acquisition, preservation, and substantial rehabilitation of rental housing units.  The corporation shall not forgive any loan made from the fund unless the corporation forecloses on the project.  Permitted uses of the fund may include but are not limited to planning, design, land acquisition, costs of options, agreements of sale, downpayments, equity financing, capacity building of nonprofit housing developers, credit enhancement, gap financing, or other housing development services or activities as provided in rules adopted by the corporation pursuant to chapter 91.  The rules may provide for a means of recapturing loans or grants made from the fund if a rental housing project financed under the fund is refinanced or sold at a later date.  The rules may also provide that moneys from the fund shall be leveraged with other financial resources to the extent possible."

     2.  By amending subsection (f) to read:

     "(f)  There is established within the fund a mixed-income subaccount.  Moneys in the mixed-income subaccount shall be used for any and all forms of financing, including but not limited to loans, equity investments, [and] credit enhancement, and collateral, for mixed-income rentals or for-sale projects, or units in a mixed‑income rental or for-sale project, exclusively for qualified residents as defined in section 201H-32.  The corporation may transfer moneys between the mixed-income subaccount and the rental housing revolving fund without requiring legislative approval.  The corporation shall establish an application process for the allocation of funds in the mixed‑income subaccount, separate from the fund allocation process pursuant to section 201H-204(c), that gives preference to projects meeting the following criteria:

    [(1)  A diverse range of affordability, prioritizing persons and families with incomes up to one hundred forty per cent of the median family income;

     (2)] (1)  Projects located on state or county owned land or developed in partnership with the State or a county;

    [(3)] (2)  Projects that [efficiently use state funding;] require the least state funding per unit and have the shortest loan repayment term;

    [(4)] (3)  Mixed-income rental projects or units in a mixed‑income rental project in an area that satisfy transit‑supportive density requirements, as defined in section 206E-246; [and]

     (4)  Rental and for-sale housing projects that price units at the minimum level to be revenue neutral, as determined by rules adopted by the corporation pursuant to chapter 91;

     (5)  Projects with a perpetual affordability commitment; and

    [(5)] (6)  Any other criteria as the corporation deems necessary to carry out the purposes of this subsection.

     If the corporation, after applying the process described in this subsection, finds a nonprofit or government project equally ranked with a for-profit project, the corporation shall give preference to the nonprofit or government project in allotting funds from the mixed-income subaccount.

     Moneys derived from the repayment of loans funded by the mixed-income subaccount, interest thereon, and related fees and returns shall be deposited into the [fund.] subaccount."

     SECTION 2.  Section 201H-204, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

     "(a)  Activities eligible for assistance from the fund shall include but not be limited to:

     (1)  New construction, rehabilitation, or preservation of low-income or mixed-income rental housing units that meet the criteria for eligibility described in subsection (c) or section 201H-202(f);

     (2)  The leveraging of moneys with the use of fund assets;

     (3)  Pre-development activity grants or loans to nonprofit organizations; and

     (4)  Acquisition of housing units for the purpose of preservation as low-income or very low-income housing.

     (b)  Preference shall be given to projects producing units in at least one of the following categories:

     (1)  Multifamily units;

     (2)  Attached single-family units;

     (3)  Apartments;

     (4)  Townhouses;

     (5)  Housing units above commercial or industrial space;

     (6)  Single room occupancy units;

     (7)  Accessory apartment units;

     (8)  Employee housing;

     (9)  United States Department of Housing and Urban Development mixed finance development of public housing units; and

    (10)  Other types of units meeting the criteria for eligibility set forth in subsection (c)[.] or section 201H-202(f)."

     SECTION 3.  Section 247-7, Hawaii Revised Statutes, is amended to read as follows:

     "§247-7  Disposition of taxes.  All taxes collected under this chapter shall be paid into the state treasury to the credit of the general fund of the State, to be used and expended for the purposes for which the general fund was created and exists by law; provided that of the taxes collected each fiscal year:

     (1)  Ten per cent or $5,100,000, whichever is less, shall be paid into the land conservation fund established pursuant to section 173A-5; and

     (2)  Fifty per cent or $38,000,000, whichever is less, shall be paid into the rental housing revolving fund established by section 201H-202[.]; provided that funds allocated under this paragraph may be transferred into the mixed-income subaccount established pursuant to section 201H-202(f)."

     SECTION 4.  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 2026-2027 to be deposited into the mixed-income subaccount for the rental housing revolving fund established pursuant to section 201H‑202(f), Hawaii Revised Statutes.

     SECTION 5.  There is appropriated out of the mixed-income subaccount of the rental housing revolving fund established pursuant to section 201H-202(f), Hawaii Revised Statutes, the sum of $           or so much thereof as may be necessary for fiscal year 2026-2027 for the purposes of the subaccount.

     The sum appropriated shall be expended by the Hawaii housing finance and development corporation for the purposes of this Act.

     SECTION 6.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 7.  This Act shall take effect on July 1, 2050; provided that sections 1, 2, and 3 of this Act shall be repealed on June 30, 2030, and sections 201H-202, 201H-204, and 247-7, Hawaii Revised Statutes, shall be reenacted in the form in which they read on the day before the effective date of Act 159, Session Laws of Hawaii 2025.

Report Title:

HHFDC; RHRF; Mixed-Income Subaccount; Project Criteria; Conveyance Tax; Appropriations

Description:

Revises the Mixed-Income Subaccount within the Rental Housing Revolving Fund by modifying the priority list for project funding and adding new project priority criteria.  Authorizes fund transfers between the Mixed-Income Subaccount without legislative approval.  Authorizes conveyance tax revenues deposited into the Rental Housing Revolving Fund to be transferred to the Mixed-Income Subaccount.  Appropriates funds.  Effective 7/1/2050.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO.  566-26

Honolulu, Hawaii

                , 2026

RE:   H.B. No. 1723

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

     Your Committee on Housing, to which was referred H.B. No. 1723 entitled:

"A BILL FOR AN ACT RELATING TO THE RENTAL HOUSING REVOLVING FUND,"

begs leave to report as follows:

     The purpose of this measure is to:

     (1)  Authorize the Rental Housing Revolving Fund to be used to provide any and all forms of financing for rental housing projects;

     (2)  Authorize the Mixed-Income Subaccount within the Rental Housing Revolving Fund to be used for any and all forms of financing and projects that are for-sale, or units in a mixed-income rental or for-sale project;

     (3)  Authorize the Hawaii Housing Finance and Development Corporation to transfer monies between the Rental Housing Revolving Fund and the Mixed-Income Subaccount;

     (4)  Amend the criteria of eligible projects under the Mixed-Income Subaccount;

     (5)  Authorize conveyance tax revenues deposited into the Rental Housing Revolving Fund to be transferred to the Mixed-Income Subaccount; and

     (6)  Appropriate funds into and out of the Mixed-Income Subaccount.

     Your Committee received testimony in support of this measure from the Hawaii Public Housing Authority; Hawaii Housing Finance and Development Corporation; Housing Hawaiʻi's Future; and AARP Hawaii.  Your Committee received comments on this measure from Catholic Charities Hawaiʻi and The Nature Conservancy, Hawaiʻi and Palmyra.

     Your Committee finds that the State's growing affordable and mixed-income housing needs require more flexible financing tools and greater efficiency in how rental housing resources are deployed.  Your Committee further finds that the existing structure of the Mixed‑Income Subaccount limits the State's ability to fully support projects that maximize affordability, minimize state subsidy per unit, and appropriately leverage publicly owned lands or partnerships.  Your Committee believes that expanding eligible financing types, clarifying project prioritization criteria, and allowing fund transfers will help the State better align housing investments with community needs and accelerate the production of mixed‑income housing.

     Your Committee has amended this measure by:

     (1)  Authorizing the Hawaii Housing Finance and Development Corporation to transfer monies between the Rental Housing Revolving Fund and its subaccounts;

     (2)  Reverting to existing statutory language relating to the uses of monies within the Mixed-Income Subaccount, but maintaining the expanded funding priorities of the Subaccount relating to revenue-neutral rental projects and projects with a perpetual affordability commitment;

     (3)  Deleting language relating to conveyance tax revenue transfers;

     (4)  Changing the effective date to July 1, 3000, to encourage further discussion; and

     (5)  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 H.B. No. 1723, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1723, H.D. 1, and be referred to your Committee on Finance.

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