SB 70: 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 there are approximately fifteen thousand affordable housing units in the State whose affordability restrictions will expire by the year 2100.  In one prominent example, Kukui Gardens was built in 1970 with subsidized federal loans, however, when the affordability restrictions expired, the State was compelled to buy back the project from the owner for $132.5 million in 2006 to preserve the tenants in place.  The owner of Kukui Gardens then used the proceeds of the sale to fund other non-housing-related charitable donations.  The legislature further finds that action is needed to ensure that the value generated by taxpayer‑financed housing development is recycled to build more housing.

     Accordingly, the purpose of this Act is to require that, to be eligible for funds from the rental housing revolving fund, applicants shall be either governmental agencies or organizations that are required to use all financial surplus, excluding fees to the organizaitons, to develop additional housing in the State.

     SECTION 2.  Section 201H-203, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§201H-203[]]  Eligible applicants for funds.  [Eligible applicants] To be eligible for funds, applicants shall [include nonprofit and for-profit organizations, limited liability companies, partnerships, and government] be:

     (1)  Organizations that are required to use all financial surplus, excluding fees to the organizations, to develop additional housing in the State; or

     (2)  Government agencies[, who are].

Eligible applicants shall also be qualified in accordance with rules adopted by the corporation pursuant to chapter 91."

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect upon its approval.

Report Title:

RHRF; Eligible Applicants; Organizations; Profits; Government Agencies

Description:

Requires eligible applicants of the Rental Housing Revolving Fund to be either governmental agencies or organizations that are required to use all financial surplus, excluding fees, to develop additional housing in the State.  (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.  Section 201H-203, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§201H-203[]]  Eligible applicants for funds.  [Eligible applicants] To be eligible for funds, applicants shall [include nonprofit and for-profit organizations, limited liability companies, partnerships, and government] be:

     (1)  Organizations that are required to use all financial surplus to develop additional housing in the State; or

     (2)  Government agencies[, who are].

Eligible applicants shall also be qualified in accordance with rules adopted by the corporation pursuant to chapter 91."

     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:

RHRF; Eligible Applicants; Organizations; Profits; Government Agencies

Description:

Requires eligible applicants of the Rental Housing Revolving Fund to be either governmental agencies or organizations that are required to use all financial surplus to develop additional housing in the State.

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. 7

Honolulu, Hawaii

RE:    S.B. No. 70

       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. 70 entitled:

"A BILL FOR AN ACT RELATING TO HOUSING,"

begs leave to report as follows:

     The purpose and intent of this measure is to require eligible applicants of the Rental Housing Revolving Fund to be either governmental agencies or organizations that are required to use all financial surplus to develop additional housing in the State.

     Your Committee received testimony in support of this measure from the Hawaii Public Housing Authority and one individual.

     Your Committee received testimony in opposition to this measure from NAIOP Hawaii and Catholic Charities Hawaiʻi.

     Your Committee received comments on this measure from the Hawaii Housing Finance and Development Corporation and one individual.

     Your Committee finds that developers of affordable rental housing projects developed utilizing federal and state low-income housing tax credits are required to rent the units for a certain period of time to households making a certain percentage of the area median income.  This requirement can affect a developer's ability to obtain long-term private loans for additional development costs, due to limited projected cash-flow.  Accordingly, the Rental Housing Revolving Fund provides equity gap, low-interest loans to qualified owners and developers constructing or rehabilitating affordable rental housing units.  However, when the State allocates a low-income housing tax credit to a developer, the State does not, in return, receive an ownership interest in the development.  Further, when the affordability commitment period terminates, the State often purchases the low-income housing development project from the developer to guarantee tenant stability, resulting in taxpayers paying for the project twice.  Additionally, developers are not required to reinvest any profits generated by the housing project to construct additional housing in the State.  Rather, the profits remain with the project's developer, in addition to any equity.  This measure will ensure that funding from the Rental Housing Revolving Fund is used prudently to maximize housing production in the State and encourage government agencies to develop new affordable housing to ensure that units remain affordable in perpetuity. 

     Your Committee notes the concerns raised in testimony that this measure excludes for-profit developers from eligibility under the Rental Housing Revolving Fund.  Your Committee finds this assertion to be misplaced.  Not only does this measure not exclude for-profit developers, but Vienna, Austria's successful social housing model is based on for-profit developers, which are called "limited profit housing associations".

     Your Committee has amended this measure by:

     (1)  Clarifying that eligible organizations shall be organizations that are required to use all financial surplus, excluding fees to the organization, to develop additional housing in the State;

     (2)  Inserting legislative findings; and

     (3)  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. 70, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 70, 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,