SB 35: RELATING TO THE RENTAL HOUSING REVOLVING FUND.

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 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:  appropriations made by the legislature, conveyance taxes pursuant to section 247-7, private contributions, repayment of loans, interest, other returns, and moneys from other sources.

     (d)  [The] Except as provided in subsection (f), the fund shall be used to provide loans 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)  [Moneys] 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)  For projects that were awarded low-income housing credits pursuant to paragraph (2), priority shall be given to projects with a perpetual affordability commitment;

     (2)  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; and

     (3)  Mixed-income rental projects or units in a mixed‑income rental project wherein all of the available units are for persons and families with incomes at or below one hundred forty per cent of the median family income.

     (f)  There is established within the fund a housing efficiency and innovation subaccount that shall consist of revenues from appropriations from the legislature.  The corporation may transfer moneys between the housing efficiency and innovation subaccount and the rental housing revolving fund without requiring legislative approval.  Notwithstanding the order of priority established in subsection (e), the subaccount moneys shall be:

     (1)  Expended to make loans to housing projects; provided that the units in the project shall be made available, for sale or rent, exclusively to qualified residents as defined in section 201H-32; provided further that priority shall be given to:

          (A)  Projects on land owned or developed by the State or a county, or projects owned by entities required to use all financial surplus to develop more housing in the State; and

          (B)  Projects that require the least state funding per housing unit per year; and

     (2)  Used to provide credit enhancement to projects meeting the conditions of paragraph (1).

The corporation shall establish an application process for moneys allocated from the subaccount, separate from the fund allocation process pursuant to section 201H-204(c), that gives preference to projects meeting the criteria established in this subsection.  The corporation may include other criteria as it deems necessary to effectuate the purposes of this subsection.  Moneys derived from the repayment of loans funded by the subaccount, interest thereon, and related fees and returns, shall be deposited into the subaccount.

     [(f)] (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).

     [(g)] (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.

     [(h)] (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.

     [(i)] (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] not less than 1.0 to 1.

     [(j)] (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."

     SECTION 2.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect upon its approval.

Report Title:

HHFDC; RHRF; Housing Efficiency and Innovation Subaccount; Housing; Priorities

Description:

Establishes the Housing Efficiency and Innovation Subaccount within the Rental Housing Revolving Fund.  Specifies permissible uses of funding and priorities.  Authorizes the Hawaii Housing Finance and Development Corporation to transfer moneys between the Housing Efficiency and Innovation Subaccount and the RHRF without legislative approval.  (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 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 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:  appropriations made by the legislature, conveyance taxes pursuant to section 247-7, private contributions, repayment of loans, interest, other returns, and moneys from other sources.

     (d)  [The] Except as provided in subsection (f), the fund shall be used to provide loans 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)  [Moneys] 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)  For projects that were awarded low-income housing credits pursuant to paragraph (2), priority shall be given to projects with a perpetual affordability commitment;

     (2)  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; and

     (3)  Mixed-income rental projects or units in a mixed-income rental project wherein all of the available units are for persons and families with incomes at or below one hundred forty per cent of the median family income.

     (f)  There is established within the fund a housing efficiency and innovation subaccount that shall consist of revenues from appropriations from the legislature.  The corporation may transfer funds between the housing efficiency and innovation subaccount and the rental housing revolving fund without requiring legislative approval.  Notwithstanding the order of priority established in subsection (e), the subaccount revenues shall be:

     (1)  Expended to make loans to housing projects; provided that the units in the project shall be made available, for sale or rent, exclusively to qualified residents as defined in section 201H-32; provided further that priority shall be given to:

          (A)  Projects on land owned or developed by the State or a county; and

          (B)  Projects that require the least state funding per housing unit per year; and

     (2)  Used to provide credit enhancement to projects meeting the conditions of paragraph (1).

The corporation shall establish an application process for subaccount revenues allocation, separate from the fund allocation process pursuant to section 201H-204(c), that gives preference to projects meeting the criteria established in this subsection.  The corporation may include other criteria as it deems necessary to effectuate the purposes of this subsection.  Moneys derived from the repayment of loans funded by the subaccount, interest thereon, and related fees and returns, shall be deposited into the subaccount.

     [(f)] (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).

     [(g)] (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.

     [(h)] (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.

     [(i)] (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.

     [(j)] (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."

     SECTION 2.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect upon its approval.

Report Title:

HHFDC; RHRF; Housing Efficiency and Innovation Subaccount; Housing; Priorities

Description:

Establishes the Housing Efficiency and Innovation Subaccount within the Rental Housing Revolving Fund.  Specifies permissible uses of funding and priorities.  Authorizes the Hawaii Housing Finance and Development Corporation to transfer funds between the Housing Efficiency and Innovation Subaccount and the RHRF without legislative approval.

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. 2

Honolulu, Hawaii

RE:    S.B. No. 35

       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. 35 entitled:

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

begs leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Establish the Housing Efficiency and Innovation Subaccount within the Rental Housing Revolving Fund; 

     (2)  Specify permissible uses of funding and priorities; and

     (3)  Authorize the Hawaii Housing Finance and Development Corporation to transfer moneys between the Housing Efficiency and Innovation Subaccount and the Rental Housing Revolving Fund without legislative approval.

     Your Committee received testimony in support of this measure from the Hawaii Housing Finance and Development Corporation, Holomua Collaborative, and one individual.

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

     Your Committee finds that the Hawaii Housing Finance and Development Corporation (HHFDC) has a mandate to address the housing shortage statewide through financing and development of various housing projects for the State's residents.  As the State diversifies its economy, more innovative housing developments, such as workforce housing rentals, are needed to provide residents with reliable housing options.  Providing a dedicated source of funding for various housing models will enable HHFDC to achieve its mandate.  Accordingly, this measure offers HHFDC an additional flexible method of funding to address workforce rental housing projects and new programs to support rental housing development and preservation.

     Your Committee heard testimony that requested that projects developed by nonprofit housing developers be added to the priority list for funds from the Housing Efficiency and Innovation Subaccount.  However, your Committee notes that nonprofit housing developers can qualify for prioritization for funds from the Subaccount by developing projects that require the least state funding per housing unit per year.

Your Committee has amended this measure by:

     (1)  Clarifying that, in addition to projects on land owned or developed by the State or a county, projects owned by entities required to use all financial surplus to develop more housing in the State shall also be prioritized; and

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

     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. 35, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 35, 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,