Senate Standing Committee on Housing

Good afternoon everyone. It's 1:30pm. We are in Conference Room 225, and this is the Committee on Housing. This is our first hearing for the 2025 Legislature. So welcome back everyone. This hearing is being live streamed on YouTube. In the unlikely event that we have to abruptly end this hearing due to technical difficulties, the committee will reconvene to discuss any outstanding business at 1pm on Tuesday, January 28th in this, room 225.

And a public notice will be posted on the Legislature's website. We have a one minute per testifier time limit. If there are temporary technical glitches during your turn to testify via Zoom, we may have to move on to the next person due to time constraints. We appreciate your understanding and remind you that the committee has your written testimony.

Our first bill on today's hearing agenda is Senate Bill 65, related to housing, which appropriates monies to the Hawaii Public Housing Authority for the rehabilitation, remodeling, renovation, and repair of housing units. Our first testifier is the Department of Human Services in support, followed by Hawaii Public Housing Authority in support. Thank you. And Catholic Charities Hawaii in support. Are they with us?

I think now I can start my video. Thank you. Aloha, Chair Chang and Members of the Committee. I'm Betty Lou Larson representing Catholic Charities Hawaii. We strongly support this bill. We feel that this will really expedite opening up more available units in the public housing.

It's desperately needed to house our homeless, our elderly who are facing homelessness, et cetera. And this is also low hanging fruit. Doesn't need permits and additional real construction, so it could be done in a very fast manner. And so we feel this is a good use of state funds.

We do ask that you fund, that you approve significant funding for this purpose. We feel it really will add to the safe and decent housing in our community. As you know, many seniors are becoming homeless, and we're very concerned about that. So any openings and any more openings we can provide in senior housing would be really critical for their health and their welfare. So we thank you for listening to this, and we hope you will approve this bill.

Thank you. That brings us to the end of the registered testifiers. Is there anyone else wishing to testify on Senate Bill 65? Please state your name for the record.

Aloha, Chair Chang and the Housing Committee. Angela Melody Young, I'm testifying on behalf of ROAR, CARES. And Happy New Year. So I will be testifying in strongest support of the Hawaii Public Housing Authority's funding appropriations for rehabilitation, remodeling, and renovations.

So the rehabilitation of affordable housing is a process of making housing units safer, more comfortable, and more energy efficient. And it can involve repairs and additions to properties. So benefits of rehabilitation can help stabilize housing units and the neighborhoods that they're in.

And so, from studies that I point to in our research, which you can access in the PDF links that I filed as a testimony online, you can read it. And the data says that exposure to urban green space and energy efficiency improvements helps to improve health. And so to kind of keep up with those remodeling standards of the housing units, it is a good idea to be energy efficient for the health of the community.

Is there anyone else wishing to testify on Senate Bill 65? If not, I have one question for HPHA.

Good afternoon, Chair Chang. Ben Park, Hawaii Public Housing Authority. Director Ouansafi sends his sincere apologies for not attending today. Still ill.

Thank you. How many vacant units does HPHA have, and how much money is needed to renovate them to bring them up to federal health and safety requirements?

Currently, as a snapshot in time, we currently have 139 vacant units. The approximate cost to fix this would be about 73,000 per unit average. So it comes out to about $10,150,000.

Actually. One more question. Do your tenants in HPHA Section 9 housing ever pay more than 30% of their incomes in rent?

Public housing?

That's right.

No. Okay. We'll move next to our next Bill on the agenda today, which is Senate Bill 40 relating to stack finances, which authorizes the Hawaii Housing Finance and Development Corporation to secure a line of credit or other instrument of indebtedness for the bond volume cap recycling program. Our first testifier is HHFTC in support.

Good afternoon, Chair Chang. Dean Minakami, second Hub Director of the Hawaii Housing Finance Development Corporation. We stand on our testimony in support. We also like to note that last year the Legislature passed House Bill 1760, which became Act 35, which provided a $150 million line of credit for a bond recycling program.

But that was only for fiscal year 25. So this proposal would allow the line of credit to be extended for the biennium. And in reference to the Department of Budget and Finance's question about type of bonds, it would be revenue bonds.

Thank you. And then we have Budget and Finance with comments. Is there anyone else wishing to testify on SB40?

Aloha Housing Committee, Angela Melody Young, Rory Cares, testifying in strongest support of HHFDC's bond volume cap recycling program for private equity activity. Bonds to unlimit HHFDC secure line of credit to meet the federal law requirements under the Hawaii state law, hrs 39B2F.

So the private activity bonds, the eligible activities are inclusive of new construction, acquisition or rehabilitation of housing for Low income people as well as qualified redevelopment bonds for acquiring condemned and blighted properties and areas for redevelopment purposes.

So if the Bill is not enacted, the reality is the bonds are limited and will expire, and then the State of Hawaii won't be able to help those Low income people groups.

So if it is enacted, it will be unlimited and the state should concentrate efforts on asking Congress to unlimit the IRS Chapter 146, which is what the Hawaii state law is founded upon. Thank you.

Is there anyone else wishing to testify on Senate Bill 40? Okay. If not, Chair has a question for HHFDC. If you could state your name for the record, please.

Dean, Executive Director, Whitey Halsey, Finest Development Corporation.

David Oi, Finance Manager, Housing Finance and Development Corporation.

Thank you. So does the Legislature have to pass a Bill like this every biennium unless.

There is another mechanism by way by which the funds can be allocated for the line of credit? Yes. What would be another mechanism? I'm not sure off of hand. I think ask DNF that question.

So this was at the request of discussions we had last year with the Department of Budget and Finance when we were passing the Act 35. They stated that this would be the route to take, but that we would have to do this every biennium.

The Bill mentions the line of credit, but also alternate sources of indebtedness, which is what the question regarding the bonds was referring to. So the alternate sources of indebtedness are just other sources of cash to use with the bond recycling program, such as private bank loans, taxable bonds.

But all of those would impact the state's debt ceiling negatively and they would be at greater cost to the state. So the most efficient use is to use the line of credit for an amount that's approved.

Are there any other similar state programs that require a Bill like this every biennium to sustain financial.

I'm not sure about the other states and what their legislation is like, but the warehouse line of credit is a federally required component of the bond recycling program. So whatever other states need to do to authorize that would have to be done in a similar way.

Okay, thank you.

Thank you, Chair.

All right, our next bill today is Senate Bill 35, relating to the Rental Housing Revolving Fund, which establishes the Housing Efficiency and Innovation Subaccount. It specifies permissible uses of funding and priorities and authorizes HHFDC to transfer funds between the subaccount and RHRF without legislative approval. Our first testifier is HHFDC in support. Thank you. Our next testifier is the Tax Foundation of Hawaii with comments.

Hi. Good afternoon, Chair. This is Jade McMillen on behalf of the Tax Foundation of Hawaii. We have submitted some comments on this measure. We'll send on our written comments. Thank you.

Thank you. We have Galen Fox in support and Holomua Collaborative in support. Thank you. We'd also like to welcome Committee Member Senator Kanuha to our hearing. Is there anyone else wishing to testify on Senate Bill 35?

Aloha, Housing Committee. Angela Melody Young from ROAR, CARES testifying in strong support. So without requiring legislative approval is a key here because it will not require an amendment every time for more efficiency and effectiveness in moving around the RHRF funds.

So the eligible applicants include qualified nonprofit and for profit corporations, limited liability companies, partnerships, and government agencies. So when we're talking about transfer of funds within these groups and releasing funds, moving funds around, the least restrictive process is going to be the most restrictive, what's going to be the most effective process. Thank you.

Thank you. Anyone else wish to testify on SB 35? Okay.

We'll next move to SB 42, relating to the Rental Housing Revolving Fund, which repeals statutory language requiring certain housing housing projects have at least 5% of available units for persons with incomes at or below 30% of the median family income to be eligible for loans from Rental Housing Revolving Fund.

And it repeals statutory language providing grants to developers for rental units set aside for persons at 30% of AMI. And it also repeals statutory language requiring HHFDC to establish an application process that gives preference to projects at 30% of amount area median income. Our first testifier is HHFDC with comments.

Good afternoon, Chair Chang, Committee Members. Dean Minakami Secretary Director, Hawaii Housing Finance Development Corporation. We stand on our comments. Would also like to note that there is a high demand for rental units at the 30% AMI level.

And to provide these units requires a a patient capital source such as the Rental Housing Revolving Fund that can provide that long term financing so that it makes so that developers find it feasible to provide 30% AMI units. The reason why more units are not provided that level is not because developers don't want to provide them. It's because they just can't afford to provide them. So this measure does have the potential to reduce the amount of 30% AMI units that are produced.

Thank you. Next, Catholic Charities Hawaii in opposition.

Aloha Chair, Chair Chang and Members of the Committee, I'm Betty Lou Larson representing Catholic Charities Hawaii. We oppose this bill because it would eliminate the 5% of units now mandated to and targeted to the people at 30% of the area median income. These are the most critical units to house the most vulnerable in our state.

They are mixed in with other higher priced units so that the project is feasible. Otherwise they could not be sustainable for the long term with the low rents that these particular units pay. However, a survey of the actual tenants show that many people who are at 30% of income are actually living there.

In fact, 57% of the elderly tenants in the Rental Housing Trust Fund projects are below 30%, 30% of the families. So it just shows what the demand is that in order to get safe and decent housing, they're struggling. They're paying much higher rents, they need that lower rent. But they're in the projects now, and so anything that would help them is greatly appreciated. So we ask you to defer this bill. And we need more of these units, not less. Thank you.

Thank you. We have Mark Development Inc. in opposition and Maui Chamber of Commerce in support. Is there anyone else wishing to testify on SB 42?

Angela Melody Young from ROAR, CARES. So this act repeals the statutory authority that requires certain housing projects to cater to a percentage of low income people. So the rationale here is, if I'm reading it, like, as it's supposed to be read, is that RHRF already provides long term and low interest loans that developers can utilize for low income people groups. And so although I'm testifying in support of the amendment and the repeal of the act, if one of the state offices of the housing office thinks it's an ineffective law, then I like to support that as a member of the public.

But I also think that laws should provide equity to disproportionate people groups, underserved and marginalized, such as low income demographics, seniors, those who are disadvantaged, and health disparities. My grandmother and mother has always taught me to, you know, care about the seniors and to provide equity for them and also other low income people groups. So yeah, thank you.

Anyone else wishing to testify on Senate Bill 42? Okay, seeing none. The next Bill today is Senate Bill 75 relating to housing.

It establishes a working group to revise the state's qualified application allocation plan, the prioritization of the rental housing revolving Fund and the term of terms of loans made from the RHRF and requires a report to the Legislature. Our first testifier is HHFDC with comments.

Stand all the comments.

Thank you. Followed by NIOP Hawaii with comments. Thank you. Catholic Charities Hawaii with comments.

Aloha. Chair Chang and Members of the Committee. I'm Betty Lou Larson with Catholic Charities Hawaii. We ask that you defer this Bill. We feel that HHFDC already has the capacity and the staffing and the interest to work with the community on these issues. They are important issues, but we feel a law is not needed.

We suggest that if they gather a wider participation of community Members through open meetings so anyone can attend and provide their input. Many of the community are really concerned about workforce housing, elderly housing, homelessness.

And I think an opening meeting with these people could bring about creative ways to look at how can we improve the system, how can we create more housing and really work on the issues that you brought up? Because these are very important issues.

But I think we need to have more community participation and input to really get solutions that will meet the needs of the community. But thank you very much. We ask you to defer this Bill.

Thank you. Next is Mark Development Inc. In opposition. Hawaii Public Housing Authority with comments. Okay. Maui Chamber of Commerce in support and Honolua Collaborative in support. Thank you. Is there anyone else wishing to testify on Senate Bill 75?

Angela Melody Young from ROAR cares in strong support of the working group to revise the state's qualified allocation plan. So to create a set of standards that could be more effective in allocating federal funds for state housing goals.

I think what could be for consideration within this working group is also to work with financial institutions and the stakeholders such as bankers and investment firms and the mortgage industry professionals and underwriters and financial asset managers to come up with terms for funding and loan parameters appropriate for state, counties and government standards and the real estate and financial sector standards.

So it looks like within this relevant stakeholders group. I'm just thinking out loud, is it like an exclusive party? I don't see the Board of Realtors on this. If the state is only inviting people within its own circle group, is it really equitable? I think the hardest thing is to get everyone to sit at the table. So.

So if the consideration for kind of like creating like an open invite to be inclusive of other industries in the State of Hawaii, I think that's a good idea. Thank you very much.

Is there anyone else wishing to testify on Senate Bill 75? Okay. If not, that brings us to the end of our agenda today. So we'll be going into recess and we'll be coming back for decision making. Welcome back. The Committee on Housing is now ready for Decision making.

I'd also like to welcome Vice Chair Senator Hashimoto and Committee Member Center. Our first bill today is Senate Bill 65 relating to housing. The Chair's recommendation will be to pass this measure with amendments, including the 10,147,000 appropriation that HPHA noted in the Committee report.

We'll also note that there are 139 vacant units that need repair and maintenance, and the average cost to bring each of them up to federal standards is 73,000, which comes out to a total of 10,147,000.

We'll note that the vacant units are located in all four counties and in 20 out of the 25 Senate districts, that this is the fastest, cheapest way to create housing for the lowest income residents of Hawaii who will never have to pay more than 30% of their incomes in rent. Okay, Members, any questions or discussion?

If not so, For Senate Bill 65, Chair's recommendation is to pass with amendments. Chair votes Aye.

Members, SB65 recommendations passed with amendments. [Roll Call] Chair motion is passes.

Thank you. Our next bill is Senate Bill 40 relating to state finances. So Chair's recommendation for this bill will be to pass this measure with amendments. Specifically, the Department of Budget and Finance's request to specify that HHFDC is authorized to utilize revenue bonds when securing the line of credit.

And we'll also note in the Committee report that the Administration is encouraged to study other means of securing this line of credit without having to pass a bill through the Legislature every biennium. Members, any questions or discussion?

If not For Senate Bill 40, Chair's recommendation is to pass with amendments. Chair votes Aye.

Members, recommendations passed with amendments. Any voting Members voting with reservations. Any Members voting no. With all others voting aye. The recommendation is adopted. Thank you.

Next, we have Senate Bill 35 relating to the Rental Housing Revolving Fund. Chair's recommendation will be to pass this measure with amendments.

So on page five, line three through four, it will now read 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. State.

In addition, we'll note in the Committee report that nonprofit housing developers can qualify for prioritization under B, leased state funding per unit per year. Any questions or discussion? Members?

If not for Senate Bill 35, the chair's recommendation is to pass with amendments and Chair votes Aye.

Members, SB35 recommendations passed with amendments. Chair votes Aye. Any Any Members voting with reservations, Any Members voting no. With all his voting aye and Senator Aquino excused on this and all other measures. Recommendations adopted. Thank you.

For Senate Bill 42 relating to the Rental Housing Revolving Fund, we'll be deferring this measure. I do want to note that, you know, one thing that I learned from the testimony is that over 30% of all the LIHTC units being built in Hawaii are being occupied by families making only 30% of AMI.

So what that tells me is that LIHTC, we're really overbuilding that 60% AMI rental demographic because I don't think any landlords would accept a 30% AMI tenant over a 60% or 59.9% AMI tenant.

And therefore, if a 30% AMI tenant is living in a unit for 60% AMI, they're paying 60% of their income in rent, which is greatly rent burdened.

And I strongly feel that we really need to reevaluate whether this program has the moral high ground if these private developers are owning units that their tenants are paying 60% of their incomes to live in and that this whole program is, you know, authorized by and regulated by the federal and state governments.

So with that observation, again, we'll be deferring this measure. Any discussion or questions? Okay. Our final measure today is SB75 relating to housing, which establishes a working group. So the Chair's recommendation will be to pass this measure unamended.

Again, this is just a working group bill, so I'm a little confused as to why there would be opposition and such strong reaction to this measure. In the Committee report, the Chair wants to note that HHFDC has conducted two successive rounds of QAP revisions in 2023 and 2024 with manifestly inadequate public outreach processes.

The testimony from all parties on the 2024 QAP revision reveals a consensus that the process lacked two way communication and transparency in the decision making process. For example, testimony submitted by Mark Development Inc.

To HHFTC on October 4, 2024 stated that the proposed changes to the QAP are, quote, 'are such a significant departure from the previous QAP that it recommended the changes not be implemented before the calendar year 2030.'

A statutory working group would help ensure the participation of all stakeholders in a regular ongoing dialogue that would foster the most efficient, transparent and predictable possible use of these state taxpayer funds.

And finally, the Committee report will also note that HHFDC is again promising for the third time to convene a working group this year and that this Committee hopes that this working group will finally effectuate intent. The intent of this bill. Members, do we have any questions or discussion? Okay, seeing none.

Again, the recommendation For Senate Bill 75 is to pass unamended Members.

SB 75. Recommendations passed. Unamended chair votes aye. Any Members voting with reservations? Any Members voting no. With all others voting aye. Recommendations adopted. Thank you, Vice Chair. And with no further business, this Committee hearing is adjourned.