SB 1405: RELATING TO HOUSING.

A BILL FOR AN ACT

RELATING TO HOUSING.

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

     SECTION 1.  The legislature finds that homestead lots or housing developed for the department of Hawaiian home lands awarded to native Hawaiians are offered at affordable rates when compared to similar housing opportunities available in the State. 

     The purpose of this Act is to exempt any development of homestead lots or housing for the department of Hawaiian home lands from general excise and use 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 exempted from the tax imposed by this chapter, including but not limited to a project 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 families qualified under the Hawaiian Home Commission Act, 1920, as amended, in need of decent, low-cost housing; or

     (3)  To provide affordable rental housing 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 by the claimant.

     (c)  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(d).

     "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(d)."

     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 section 237-   ."

     SECTION 4.  The department of Hawaiian home lands shall submit an annual report to the legislature detailing cost savings, reinvestments, and housing production increases resulting from the tax exemption prior to the regular sessions of 2027, 2028, 2029, 2030, and 2031.

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect on January 1, 2026.

Report Title:

DHHL; General Excise Tax Exemption; Use Tax Exemption; Reports

Description:

Exempts any development of homestead lots or housing for the Department of Hawaiian Home Lands from general excise and use taxes.  Requires the Department of Hawaiian Home Lands to submit annual reports to the Legislature over a period of five years.  (SD1)

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 HOUSING.

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

     SECTION 1.  The legislature finds that homestead lots or housing developed for the department of Hawaiian home lands awarded to native Hawaiians are offered at affordable rates when compared to similar housing opportunities available in Hawaii.  The purpose of this Act is to exempt any development of homestead lots or housing for the department of Hawaiian home lands from general excise and use 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 exempted from the tax imposed by this chapter, including but not limited to a project 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 families qualified under the Hawaiian Home Commission Act, 1920, as amended, in need of decent, low-cost housing; or

     (3)  To provide affordable rental housing 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 by the claimant.

     (c)  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(d).

     "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(d)."

     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 section 237-   ."

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act, upon its approval, shall take effect on January 1, 2026.

Report Title:

DHHL; General Excise Tax Exemption; Use Tax Exemption

Description:

Exempts any development of homestead lots or housing for the Department of Hawaiian Home Lands from general excise and use taxes.

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. 451

Honolulu, Hawaii

RE:    S.B. No. 1405

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committees on Hawaiian Affairs and Housing, to which was referred S.B. No. 1405 entitled:

"A BILL FOR AN ACT RELATING TO HOUSING,"

beg leave to report as follows:

     The purpose and intent of this measure is to exempt any development of homestead lots or housing for the Department of Hawaiian Home Lands from general excise and use taxes.

     Your Committees received testimony in support of this measure from the Department of Hawaiian Home Lands; Dowling Company, Inc.; and one individual.

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

     Your Committees find that the Department of Hawaiian Home Lands currently has several development projects that are either underway or in the pipeline for construction, and that the general excise tax exemption established by this measure could produce cost savings for the Department that could be used to develop more homestead lots.  This measure will ensure that amounts received related to planning, design, financing, or construction activities conducted for a new construction, moderate rehabilitation, or substantial rehabilitation project for homestead lots or housing for the Department of Hawaiian Home Lands are exempt from general tax so that the Department of Homelands can fund their many projects.

     Your Committees have amended this measure by:

     (1)  Requiring the Department of Hawaiian Home Lands to submit annual reports to the Legislature detailing cost savings, reinvestments, and housing production increases resulting from the tax exemption for five years; and

     (2)  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 Hawaiian Affairs and Housing that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1405, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1405, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Hawaiian Affairs and Housing,