SB 826: LIHTC; School Facilities Authority; Eligibility

A BILL FOR AN ACT

RELATING TO THE LOW-INCOME HOUSING TAX CREDIT.

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

     SECTION 1.  Section 235-110.8, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  Each taxpayer subject to the tax imposed by this chapter, who has filed a net income tax return for a taxable year may claim a low-income housing tax credit against the taxpayer's net income tax liability.  The amount of the credit shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed on a timely basis.  A credit under this section may be allocated by a partnership or limited liability company in any manner agreed to by the partners or members regardless of whether the individual or entity to receive the credit is deemed to be a partner or member for federal income tax purposes, so long as the individual or entity is deemed to be a partner or member pursuant to applicable state law.  The credit may be claimed whether or not the taxpayer is eligible to be allocated a federal low-income housing tax credit pursuant to section 42 of the Internal Revenue Code[.]; provided that this section shall not apply to chapter 302A, part VI, subpart C."

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  Statutory material to be repealed is bracketed and stricken.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

     SECTION 3.  This Act shall take effect on July 1, 3000.

Report Title:

LIHTC; School Facilities Authority; Eligibility

Description:

Specifies that the School Facilities Authority is not eligible as a housing developer for the purposes of the Low-Income Housing Tax Credit.  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 LOW-INCOME HOUSING TAX CREDIT.

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

     SECTION 1.  Section 235-110.8, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  Each taxpayer subject to the tax imposed by this chapter, who has filed a net income tax return for a taxable year may claim a low-income housing tax credit against the taxpayer's net income tax liability[.]; provided that the tax credit shall not be available for any development, planning, or construction by any department or agency of the State.  The amount of the credit shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed on a timely basis.  A credit under this section may be allocated by a partnership or limited liability company in any manner agreed to by the partners or members regardless of whether the individual or entity to receive the credit is deemed to be a partner or member for federal income tax purposes, so long as the individual or entity is deemed to be a partner or member pursuant to applicable state law.  The credit may be claimed whether or not the taxpayer is eligible to be allocated a federal low-income housing tax credit pursuant to section 42 of the Internal Revenue Code."

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

     SECTION 3.  This Act shall take effect on July 1, 2050, and apply to taxable years beginning after December 31, 2024.

Report Title:

DOTAX; Low-Income Housing Tax Credit; State Departments and Agencies

Description:

Exempts state departments and agencies from eligibility for the low-income housing tax credit.  Effective 7/1/2050.  (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 low-income housing tax credit.

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

     SECTION 1.  Section 235-110.8, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  Each taxpayer subject to the tax imposed by this chapter, who has filed a net income tax return for a taxable year may claim a low-income housing tax credit against the taxpayer's net income tax liability.  The amount of the credit shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed on a timely basis.  A credit under this section may be allocated by a partnership or limited liability company in any manner agreed to by the partners or members regardless of whether the individual or entity to receive the credit is deemed to be a partner or member for federal income tax purposes, so long as the individual or entity is deemed to be a partner or member pursuant to applicable state law.  The credit may be claimed whether or not the taxpayer is eligible to be allocated a federal low-income housing tax credit pursuant to section 42 of the Internal Revenue Code[.]; provided that this section shall not apply to chapter 302A, part VI, subpart C."

     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:

LIHTC; Developers; Applicability

Description:

Clarifies housing developers that are eligible for the Low Income Housing Tax Credit.

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.  1910

Honolulu, Hawaii

                , 2025

RE:   S.B. No. 826

      S.D. 1

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Finance, to which was referred S.B. No. 826, S.D. 1, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE LOW-INCOME HOUSING TAX CREDIT,"

begs leave to report as follows:

     The purpose of this measure is to specify that the School Facilities Authority is not eligible as a housing developer for the purposes of the Low-Income Housing Tax Credit.

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

     As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 826, S.D. 1, H.D. 1, and recommends that it pass Third Reading.

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

STAND. COM. REP. NO.  1352

Honolulu, Hawaii

                , 2025

RE:   S.B. No. 826

      S.D. 1

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Housing, to which was referred S.B. No. 826, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE LOW-INCOME HOUSING TAX CREDIT,"

begs leave to report as follows:

     The purpose of this measure is to exclude state departments and agencies from eligibility for the Low-Income Housing Tax Credit.

     Your Committee received testimony in opposition to this measure from the Department of Hawaiian Home Lands.  Your Committee received comments on this measure from the Department of Taxation; Hawaii Housing Finance and Development Corporation; Hawaii Public Housing Authority; and Tax Foundation of Hawaii.

     Your Committee finds that under this measure as currently drafted, the Low-Income Housing Tax Credit (LIHTC) would be unavailable for projects where the development, planning, or construction is done by any state department or agency, including the Hawaii Housing Finance and Development Corporation.  However, your Committee notes that it is unclear as to whether the exclusion in this measure applies to projects where state agencies act as co-developers with private entities and whether this would apply to projects where state funds are utilized in conjunction with LIHTC, such as the use of the Rental Housing Revolving Fund.  Your Committee believes that maintaining the State's ability to utilize the LIHTC is necessary to address the lack of affordable housing in the State.

     Accordingly, your Committee has amended this measure by:

     (1)  Reverting to the contents of this measure as it was introduced, which specifies that the School Facilities Authority is not eligible as a housing developer for purposes of the LIHTC; and

     (2)  Changing the effective date to July 1, 3000, to encourage further discussion.

     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. 826, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 826, S.D. 1, H.D. 1, and be referred to your Committee on Finance.

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

STAND. COM. REP. NO. 829

Honolulu, Hawaii

RE:    S.B. No. 826

       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 Ways and Means, to which was referred S.B. No. 826 entitled:

"A BILL FOR AN ACT RELATING TO THE LOW-INCOME HOUSING TAX CREDIT,"

begs leave to report as follows:

     The purpose and intent of this measure is to amend the Low-Income Housing Tax Credit.

     More specifically, this measure clarifies that the School Facilities Authority is not eligible as a housing developer for purposes of the Low-Income Housing Tax Credit.

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

     Your Committee finds that the Low-Income Housing Tax Credit program subsidizes the acquisition, construction, and rehabilitation of affordable rental housing for low- and moderate-income tenants.  Your Committee further finds that this measure will clarify which entities are eligible as housing developers for purposes of the Low-Income Housing Tax Credit.

     Your Committee has amended this measure by:

     (1)  Clarifying that all departments and agencies of the State are not eligible as a housing developer for purposes of the Low-Income Housing Tax Credit;

     (2)  Changing the effective date to July 1, 2050, to facilitate further discussion on the measure; and

     (3)  Specifying the taxable years to which the measure shall apply.

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 826, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 826, S.D. 1.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

STAND. COM. REP. NO. 142

Honolulu, Hawaii

RE:    S.B. No. 826

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. 826 entitled:

"A BILL FOR AN ACT RELATING TO THE LOW-INCOME HOUSING TAX CREDIT,"

begs leave to report as follows:

     The purpose and intent of this measure is to clarify housing developers that are eligible for the Low-Income Housing Tax Credit (LIHTC).

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

     Your Committee finds that LIHTC represents a subsidy for the portion of the total development costs for a housing project.  However, as LIHTC is reserved exclusively for housing developments offered to residents that make a certain percentage of the area median income, LIHTC is not suitable for all forms of development.  Therefore, this measure ensures effective utilization of LIHTC to support housing development in the State.

     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. 826 and recommends that it pass Second Reading and be referred to your Committee on Ways and Means.

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