SB 2062: HHFDC; Department of Budget and Finance; RHRF; Mixed-Income Subaccount; Financing; Perpetual Affordability; Early Repayment; Reserved Funds; Appropriations

THE SENATE	S.B. NO.	2062
THIRTY-THIRD LEGISLATURE, 2026		S.D. 1
STATE OF HAWAII		Proposed

A BILL FOR AN ACT

 

 

RELATING TO THE HAWAII HOUSING FINANCE AND DEVELOPMENT CORPORATION.

 

 

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

 

     SECTION 1.  The legislature finds that the rental housing revolving fund often carries a significant cash balance, comprised of moneys that have been administratively reserved by the Hawaii housing finance and development corporation for specific projects, but have not yet been legally encumbered.  The legislature believes that authorizing the Hawaii housing finance and development corporation to actively manage this cash flow would allow for more efficient and immediate deployment of funds to address the State's housing shortage.  

     Accordingly, the purpose of this Act is to:

     (1)  Authorize the rental housing revolving fund and its mixed-income subaccount to be used to provide any and all forms of financing;

     (2)  Require preference to be given to certain projects utilizing funding from the mixed-income subaccount;

     (3)  Authorize the Hawaii housing finance and development corporation, with the authorization of the director of finance, to transfer moneys between the rental housing revolving fund and any subaccount established thereunder without further legislative authorization and return unexpended or uncommitted funds from a subaccount to the rental housing revolving fund;

     (4)  Authorize the Hawaii housing finance and development corporation to use moneys in the rental housing revolving fund that have been reserved or awarded by the corporation for specific projects but have not yet been encumbered to fund other rental housing projects or for other authorized purposes of the fund, subject to certain conditions;

     (5)  Repeal the sunset date for Act 159, Session Laws of Hawaii 2025, thereby making the mixed-income subaccount of the rental housing revolving fund permanent; and

     (6)  Appropriate funds.

     SECTION 2.  Section 201H-201, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

     ""Mixed-income rental project" means a rental housing development that provides units for households at a range of income levels, primarily for households with an income at or below one hundred forty per cent of the area median income."

     SECTION 3.  Section 201H-202, Hawaii Revised Statutes, is amended to read as follows:

     "§201H-202  Rental housing revolving fund.  (a)  There is established the rental housing revolving fund to be administered by the corporation.

     (b)  An amount from the fund, to be set by the corporation and authorized by the legislature, may be used for administrative expenses incurred by the corporation in administering the corporation's housing finance programs; provided that fund moneys shall not be used to finance day‑to‑day administrative expenses of projects allotted fund moneys.

     (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.

     (e)  Except as provided in subsection (f), moneys available in the fund shall be used for the purpose of providing, in whole or in part, loans for rental housing projects demonstrating project readiness, efficiency, and feasibility acceptable to the corporation in the following order of priority:

     (1)  Projects or units in projects that are allocated low-income housing credits pursuant to the state housing credit ceiling under section 42(h) of the Internal Revenue Code of 1986, as amended, or projects or units in projects that are funded by programs of the United States Department of Housing and Urban Development and United States Department of Agriculture Rural Development wherein:

          (A)  At least fifty per cent of the available units are for persons and families with incomes at or below eighty per cent of the median family income of which at least five per cent of the available units are for persons and families with incomes at or below thirty per cent of the median family income; and

          (B)  The remaining units are for persons and families with incomes at or below one hundred per cent of the median family income;

          provided that the corporation may establish rules to ensure full occupancy of fund projects; provided further that for projects that were awarded low-income housing credits pursuant to this paragraph, priority shall be given to projects with a perpetual affordability commitment.  For the purposes of this paragraph, "perpetual" means the useful life of the project; and

     (2)  Mixed-income rental projects or units in a mixed-income rental project primarily for persons and families with incomes at or below one hundred forty per cent of the median family income[.], as provided by this section.

     (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 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] 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)  Projects with a perpetual affordability commitment;

     (6)  Projects proposed by applicants with a demonstrated history of early repayment to the fund; 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.

     (g)  There is established within the fund a bond volume cap recycling program subaccount.  The bond volume cap recycling program subaccount shall be maintained as a reserve for the bond volume cap recycling program established pursuant to section 39B-2(f).

     (h)  The corporation shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session describing the projects funded and, with respect to rental housing projects targeted for persons and families with incomes at or below thirty per cent of the median family income, its efforts to develop those rental housing projects, a description of proposals submitted for this target group and action taken on the proposals, and any barriers to developing housing units for this target group.

     (i)  For the purposes of this subpart, the applicable median family income shall be the median family income for the county or standard metropolitan statistical area in which the project is located as determined by the United States Department of Housing and Urban Development, as adjusted from time to time.

     (j)  The corporation may provide loans under this section; provided that the corporation shall establish loan-to-value ratios to protect the fund from inordinate risk and that under no circumstances shall the rules permit the loan-to-value ratio to exceed one hundred per cent; provided further that the underwriting guidelines include a debt-coverage ratio of no less than 1.0 to 1.

     (k)  For the period commencing July 1, 2005, through June 30, 2009, the fund may be used to provide grants for rental units set aside for persons and families with incomes at or below thirty per cent of the median family income in any project financed in whole or in part by the fund in proportion of those units to the total number of units in the project.  At the conclusion of the period described in this subsection, the corporation shall report to the legislature on the number and use of grants provided and whether the grants were an effective use of the funds for purposes of developing rental housing for families at or below thirty per cent of the median family income.

     (l)  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 section, and between subaccounts established under this section, without further legislative authorization, for purposes consistent with this chapter.  The corporation may also return unexpended or uncommitted funds from a subaccount established under this section to the rental housing revolving fund, to be used for any lawful purpose of the fund.

     (m)  Notwithstanding any law to the contrary, the corporation may use moneys in the rental housing revolving fund that have been reserved or awarded by the corporation for specific projects but have not yet been encumbered to fund other rental housing projects or for other authorized purposes of the fund; provided that any use of reserved funds under this subsection shall be subject to the following:

     (1)  Any loan or use of funds under this subsection shall be for a term not to exceed three years;

     (2)  The corporation shall ensure that the principal amount of any loan is fully repaid or replenished before the anticipated financial closing date of the project for which the funds were originally reserved;

     (3)  The corporation shall adopt policies establishing minimum liquidity requirements to ensure the timely availability of funds for all reserved projects; and

     (4)  The corporation shall submit a quarterly report to the legislature detailing the amount of reserved funds currently deployed for other purposes under this subsection and the schedule for the return of the reserved funds to the fund."

     SECTION 4.  Act 159, Session Laws of Hawaii 2025, is amended by amending section 8 to read as follows:

     "SECTION 8.  This Act shall take effect upon its approval[; 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 prior to the effective date of this Act]."

     SECTION 5.  The director of finance may transfer moneys from the rental housing revolving fund to the mixed-income subaccount in an amount that shall not exceed $           for fiscal year 2026-2027.

     SECTION 6.  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 of the rental housing revolving fund.

     SECTION 7.  There is appropriated out of the mixed-income subaccount of the rental housing revolving fund 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 8.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 9.  This Act shall take effect on July 1, 2026.

 

 

 

Report Title:

HHFDC; Department of Budget and Finance; RHRF; Mixed-Income Subaccount; Financing; Perpetual Affordability; Early Repayment; Reserved Funds; Appropriations

 

Description:

Authorizes the Hawaii Housing Finance and Development Corporation, with the approval of the Director of Finance, to transfer moneys between the Rental Housing Revolving Fund and its subaccounts without legislative authorization.  Authorizes the Rental Housing Revolving Fund to be used to provide any and all forms of financing for the development, pre-development, construction, acquisition, preservation, and substantial rehabilitation of rental housing units.  Requires HHFDC to give preference to certain projects with perpetual affordability commitments and to applicants with a demonstrated history of early repayment to the RHRF.  Authorizes HHFDC to use reserved but unencumbered funds for short term projects, subject to certain conditions.  Authorizes the Director of Finance to transfer moneys from the RHRF to its Mixed-Income Subaccount for FY 2026-2027.  Appropriates funds.  (Proposed SD1)

 

 

 

 

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

 

THE SENATE	S.B. NO.	2062
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII

A BILL FOR AN ACT

 

 

relating to the hawaii housing finance and development corporation.

 

 

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

 

     SECTION 1.  The legislature finds that the dwelling unit revolving fund equity pilot (DEP) program was established to create more homeownership opportunities for qualified purchasers, especially those who work in professions with critical shortages in the State, such as health care workers, educators, law enforcement and correctional officers, and agricultural field workers.  Under the DEP program, the Hawaii Housing Finance and Development Corporation uses funds in the dwelling unit revolving fund to work with developers of for-sale projects to purchase a specified amount of equity in designated units that are being sold to qualified residents, thus lowering the price of the qualifying home for the qualifying resident.

     The legislature further finds that early implementation of the DEP program demonstrates a viable, sustainable approach to increasing access to homeownership for residents of the State.

     Accordingly, the purpose of this Act is to codify the dwelling unit revolving fund equity pilot program established pursuant to Act 92, Session Laws of Hawaii 2023, as a permanent program in the Hawaii Revised Statutes.

     SECTION 2.  Chapter 201H, Hawaii Revised Statutes, is amended by adding a new subpart to part III to be appropriately designated and to read as follows:

"   .  Dwelling Unit Revolving Fund Equity Program

     §201H-A  Definitions.  As used in this subpart:

     "Housing development project" means a plan, design, or undertaking by the corporation or an eligible developer for the development of units.  "Housing development project" includes all real and personal property, buildings and improvements, commercial space, lands for farming and gardening, community facilities acquired or constructed or to be acquired or constructed, and all tangible or intangible assets held or used in connection with the housing development project.

     "Unit" means:

     (1)  The structure and land upon which the structure is constructed, whether on fee simple or leasehold property, developed for residential purposes pursuant to chapter 201H; or

     (2)  Improved or unimproved real property that is developed for residential purposes pursuant to chapter 201H.

"Unit" includes dwelling units.

     §201H-B  Dwelling unit revolving fund equity program.  (a)  There is established a dwelling unit revolving fund equity program, which shall be funded by the dwelling unit revolving fund and administered by the corporation, to address the high, unmet demand for for-sale units by residents of the State.

     (b)  The corporation may purchase equity in for-sale housing development projects secured by a recorded instrument as determined by the corporation; provided that:

     (1)  The equity shall be allocated to specific units within the housing development project; and

     (2)  The contribution from each eligible buyer of a unit shall be reduced by the corporation's equity amount for that unit.

     (c)  An eligible buyer of a unit shall be a qualified resident as defined in section 201H-32.

     (d)  The corporation may establish criteria for the prioritization of eligible buyers.

     (e)  A buyer shall repay to the corporation the corporation's purchased equity and equity percentage share, if any, in the buyer's unit upon the earliest of any of the following occurrences:

     (1)  The buyer's sale of the unit;

     (2)  The buyer's refinancing of the unit;

     (3)  The buyer's procurement of additional financing secured by the unit;

     (4)  The buyer's transfer of title to the unit;

     (5)  Commencement of non-owner occupancy or rental of the unit or any part of the unit;

     (6)  Expiration of thirty years from the date of the buyer's purchase of the unit; or

     (7)  At any earlier time at will of the buyer; provided that the buyer agrees to certain conditions, as deemed reasonable by the corporation.

     (f)  The repayment obligation described in subsection (e) shall run with the deed or lease initially conveyed for each unit until the obligation to repay the corporation's purchased equity and equity percentage share, if any, has been satisfied.

     (g)  All payments made to the corporation pursuant to subsection (e) and all interests and fees collected by the corporation under this subpart shall be deposited into the dwelling unit revolving fund.

     §201H-C  Additional powers.  The powers conferred upon the corporation by this subpart shall be in addition and supplemental to the powers conferred by any other law, and nothing in this subpart shall be construed as limiting any powers, rights, privileges, or immunities so conferred.

     §201H-D  Rules.  The corporation shall adopt rules pursuant to chapter 91 to carry out the purposes of this subpart."

     SECTION 3.  Section 201H-191, Hawaii Revised Statutes, is amended to read as follows:

     "201H-191  Dwelling unit revolving fund.  (a)  There is created a dwelling unit revolving fund.  The funds appropriated for the purpose of the dwelling unit revolving fund and all moneys received or collected by the corporation for the purpose of the revolving fund shall be deposited [in] into the revolving fund.  The proceeds in the revolving fund shall be used:

     (1)  To reimburse the general fund to pay the interest on general obligation bonds issued for the purposes of the revolving fund;

     (2)  For necessary expenses in administering housing development programs, regional state infrastructure programs, the dwelling unit revolving fund equity program pursuant to subpart      , and the government employee housing program pursuant to part V; and

     (3)  To carry out the purposes of housing development programs, regional state infrastructure programs, the dwelling unit revolving fund equity program pursuant to subpart      , and the government employee housing program pursuant to part V, including but not limited to the expansion of community facilities and regional state infrastructure constructed in conjunction with housing and mixed-use transit-oriented development projects, purchasing equity in for-sale housing development projects pursuant to subpart      , interim primary or secondary financing, permanent primary or secondary financing, and supplementing building costs, federal guarantees required for operational losses, and all things required by any federal agency in the construction and receipt of federal funds or low-income housing tax credits for housing projects.

     (b)  Subject to the requirements of subsection (a), proceeds in the revolving fund may be used to:

     (1)  Establish and operate regional state infrastructure subaccounts pursuant to section 201H-191.5; and

     (2)  Administer, implement, and finance the government employee housing program pursuant to part V[.] and the dwelling unit revolving fund equity program pursuant to subpart      ."

     SECTION 4.  Act 92, Session Laws of Hawaii 2023, is amended by amending section 5 to read as follows:

     "SECTION 5.  This Act shall take effect on July 1, 2023, and section 2 shall be repealed on June 30, [2028;] 2026; provided that[:

     (1)  Section 201H-47, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act; and

     (2)  The] the requirements imposed pursuant to section 2(c) of this Act shall remain in effect and run with the deed after June 30, [2028.] 2026."

     SECTION 5.  In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in 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 June 29, 2050.

 

INTRODUCED BY:	_____________________________

 

 

 

Report Title:

HHFDC; Dwelling Unit Revolving Fund; Dwelling Unit Revolving Fund Equity Program

 

Description:

Establishes the Dwelling Unit Revolving Fund Equity Program as a permanent program to be administered by the Hawaii Housing Finance and Development Corporation.  Authorizes the Hawaii Housing Finance and Development Corporation to purchase equity in for-sale housing development projects for qualified residents of the State using moneys in the Dwelling Unit Revolving Fund to lower the initial purchasing price.  Establishes equity repayment requirements.  Effective 6/29/2050.

 

 

 

 

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