Senate Standing Committee on Housing

Good afternoon. It's 1:00pm on Thursday, February 62025. We're in Conference Room 225. This is the Committee on Housing and we have three agendas. Today we have a 1:00 agenda joint with the Committee on Labor and Technology. We also have a 1:05pm housing only agenda and a 1:00pm deferred decision making.

And that's the order that we'll be taking the three agendas in first the joint with labor and Technology followed by the Housing only and then followed by the deferred DM for the Committee on Housing. This meeting is being streamed live 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 on Tuesday, February 11th at 1pm 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. So we'll get started with the 1 o'clock agenda of the Committee on Housing. Committee on labor and Technology.

We'd like to welcome our Chair and Technology Committee Senator Aquino as well as Senator kanuha. We have one Bill on this agenda.

Senate Bill 1235 relating to housing which requires the Hawaii Housing Finance and Development Corporation to establish a government employee Housing Revolving Fund program and government employee 99 year leasehold rent to own program establishes the Government Employee Housing Revolving Fund and appropriate funds. Our first testifier is HHFCC in support. Thank you.

We have Department of Budget and Finance with comments United Public Workers in support.

Good afternoon Chair Chang, Chair Aquino, Vice Chair Hashimoto, Members of Committee to lead to file on behalf of UPW testifying in support of this measure. I do note that in our testimony of support that there was an amendment that we were looking to include.

If you would just providing clarity for what would happen should the renter decide not to proceed with the purchase of of at home. But otherwise we stand in full support.

Thank you.

Hawaii Government Employees Association and support.

Good afternoon Chairs, Vice Chairs, Members of the Committees Nui Sebast here with HGA we we'll stand on a written testimony and support. I do just want to emphasize that this could be one of many tools that state government can use to recruit and retain employees. Hollow thank You.

We have Ellen Away in support and Gregory Misakyan in opposition.

Hi, Chair. Is it okay to make a brief statement?

Please, go ahead.

Thank you. So I did oppose this measure. I believe in the intent of this bill and I support what the intent of the bill is. But my concern is that it's specific to state workers and it's very specific to a specific group of people.

And I understand the need, but I also realize what's happening in Hawaii is pretty broad based. And I do know that there's many others that are in need of housing and support and additional funding. So while there may be other bills this year, I haven't gone through them all. I've been focusing on quite a few different bills.

But I'm hopeful that if you do look at this, there's a possibility that it could be amended to be a little bit more broad based and be a little bit more inclusive to the residents of Hawaii. Thank you very much.

Thank you. And those are all our registered testifiers. Is there anyone else wishing to testify on SB 1235? Okay. I'd also like to welcome Vice Chair.

I have Vice Chair Senator Lee and. We have Senator Pavelo and Senator Mori.

Okay, great. Do we have any questions, Members?

Okay. Came in late. I don't know who I got to ask a question to, but I like the no.

Okay. Do you have a question? No questions. Okay, thank you. All right. I think. Chair, are we ready to go into decision making? Yes, please. Okay, so we'll go straight into decision making for this measure. So having conferred, the Chair's recommendation will be to pass this measure with amendments. We have technical, non substantive amendments.

For the purposes of clarity and consistency, we'll also take HHFDC's amendment to appropriate 450,000 out of the dwelling unit revolving Fund for the two full time positions needed to help administrative administer the program.

We'll also delete the income restriction and expressly state that day one for sale projects, including leasehold, are eligible for the program and Fund not just rent to own projects.

Additionally, in the Committee report, we'll note that the program is available to Members of the General public and that the more units are produced, the more units will be available to the General public and not just government employees.

We'll further note UPW's question about what happens if the participants choose not to purchase the units and HHFTC's response to incentivize the renter to buy the property. Members, any questions or discussion? Okay. Seeing none for SB 1235. Chair's recommendation is to pass with amendments. Chair votes.

[Roll call]

There being no further business, the joint committees are adjourned. Good afternoon and welcome to our second agenda of the day, the Committee on Housing's 1:05 p.m. Agenda.

Our first bill today is Senate Bill 67 relating to inclusionary zoning, which prohibits any law, ordinance or rule from imposing an inclusionary zoning requirement on housing offered exclusively for sale or rent in pursuit to buyers or renters who are residents of the state our owner occupies or renter owner occupants or renters and do not own any other real property.

First testifier is HHFDC in support. Thank you. Next we have Grassroot Institute of Hawaii in support and Ellen Hawaiian support. Is there anyone else wishing to testify in SB67? Okay.

If not, we'll move next to SB 1133, which authorizes each county to establish by ordinances a rental unit price control that prohibits a landlord from increasing the rental price of a dwelling unit at a rate that exceeds the percentage calculated and published by the county based on changes in the applicable consumer price index beginning 812025.

Requires each county to annually calculate and publish the maximum rate at which a landlord may increase the rental price of a dwarf during the immediately succeeding 12 month period. Establishes a long term residential lease tax credit for taxpayers who own and lease a dwelling unit located in a county that has adopted a resident.

A rental unit price ceiling ordinance to a person as the person's principal residence in the state pursuant to a lease agreement of a term of one year or longer. The tax credit applies to taxable years beginning after 12312024. Our first testifier is Department of Taxation with Commons. Thank you.

Followed by Hawaii Realtors in opposition, NIOP Hawaii in opposition.

They're present on Zoom Aloha.

Chair, Vice Chair, Members of the Committee Evan Oue on behalf of Nye Hawaii, you know, we do respectfully oppose this measure.

While we appreciate the intent that this bill has in order to address, you know, rental affordability, you know, we are concerned with rent control measures as there's a lot of unintended consequences such as disincentivizing property maintenance and improvement, discouraging new housing development and reducing the availability of rental units as property owners look to opt out of the rental market if, you know, measures like this continue to move forward.

So, you know, we do respectfully oppose this measure and we will be available for any questions. Thank you, Chair.

Thank you. Grassroots Institute of Hawaii in opposition and Elena Y. In support. Is there anyone else wishing to testify on SB 1133? Okay, Members, do we have any questions?

Sorry, I don't kiss the gentleman. Okay, Senator, go ahead. I know you, I guess you guys are in a position, but you can, you can you understand where, where and why we coming up with this kind of bill. Do you understand?

I do understand, Senator, and I appreciate the question. And you know, we do, we do understand, you know, the, that this is to really address rental affordability. But we, you know, we are concerned just on the other side of it when it comes to the unintended consequences that it does have.

But, you know, to answer your question directly, we do, you know, understand the intent of the measure and the reason.

Why I bring it up is because I just got to talk from experience. So in my community, person sold the home. You own a boat, bought the home, raised the rent 500, same thing, nothing fixed, nothing done, same property. But they raised, they raised it outrageous with no justification.

Now the person looking for a home to get out by the first of the month.

And that's the reason I kind of understand the concept, I understand what you guys are saying, but there should be some safety parameters for the consumer because when people from the continent or foreign countries buy the land, they just go with whatever they can go.

They probably never even see the house, but they know they can get that market value and they Jack it up even though the roof go on hole and the plumbing is shot. I'm just exaggerating, but I'm just saying.

So that's the reason why these kinds of bills are going to keep coming up unless we can get control on the people that own the homes to be able to realize that we are a different kind of people here.

And I understand what you're saying, too, but at the same, the second side of the coin is that that's the kind of inflation we're looking at. So these guys getting homeless, houseless or not in homes or living with family, because that's what happens when they're paying rent.

And I'm not saying the rent need to be controlled in that sense, but there should be a tier system. You raising the rent Because I want to go renovate the electrical and the plumbing or I want to go fix the roof. Somebody's house never been touched for 20 years. How are you justifying the rate increase?

That's the part I'm seeing. I'm not saying that the guys who rent the house shouldn't make money, but not to the extent that somebody going to be homeless. So that's just what it is. I understand what you're saying, but just understand the other side of the coin. Appreciate it Chair, Appreciate it.

Senator.

Thank you. Any further questions? Okay. If not, thank you very much. We'll move to our final measure on this agenda which is SB 1333 relating to taxation and authorizes the use of county surcharge revenues for transportation and housing infrastructure in counties having a population of 500,000 or less.

Authorizes counties that have previously adopted a surcharge on state tax ordinance after July 12015 to amend the uses of the surcharge.

Extends the period within which a county with a population of 500,000 or less that collect a surcharge on state tax under certain conditions to 12312047 authorizes cost sharing with private or other public developers for housing infrastructure projects funded by surcharge revenues. Our first testifier is DBED in support followed. Thank you. Next we have OPSD in support.

Chair, Vice chairs and Members, if you will allow me to not read our testimony but just summarize some important points. We we understand the cost of upfront infrastructure for transit Oriented Development type housing and this measure would allow the neighbor island counties to use their county surcharge get surcharge for housing and transportation.

Now Maui allows that Senator Hashimoto and we think the other two neighbor island counties should also be able to do that as well. It also allows the counties a lot of the infrastructure is county infrastructure.

As you know Chair Chang, because of your experience on the County Council and so we we really think this is a good measure and we ask for your support.

Thank you very much. Next we have HCDA and support. Thank you. DOE Tax with comments. Thank you. County of Hawaii Mayor's Office in support County of Kauai in support Maui County Council and support County of Hawaii Office of Housing and Community Development and Support Grassroots Institute of Hawaii and Opposition and Tax Foundation of Hawaii with comments.

Good afternoon Chair, Members of the Committee, this is Jake McMillan on behalf of Tom Yamachika and the Tax Foundation of Hawaii just submitted comments on the measure. Our comments are directed for the county surcharge. The Idea that the over time every there are bills to continue extending the sunset date.

So what would appear to be a temporary surcharge is continually being extended. So it's the idea that the temporary taxes are now becoming permanent is something that we have concern with. Thank you.

Thank you. Is there anyone else wishing to testify on Senate Bill 1333? If not, do we have any questions? Okay. If not Members, are we ready to go straight into decision making? Okay, then we'll go straight into decision making. Our first measure is SB67 relating to inclusionary zoning.

The recommendation from the Chair will be to pass this measure with amendments. We have technical non substantive amendments. Okay, so for SB67, chair's recommendation is to pass with amendments.

[Roll call]

Chair recognition is adopted. Thank you. Our next measure is SB 1133 relating to housing. Chair's recommendation will be to pass this measure with amendments. We'll take DOE tax's recommendation to make the credit non refundable, to allow it to be carried forward and to include a 33 year limit on the carry forward period for unused credits.

We'll also limit credit claims to one taxpayer per property in cases where multiple persons own a leased dwelling unit and prohibit credit claims by taxpayers who lease the dwelling unit to an immediate family Member of any owner and require credit claims to be made within 12 months after the close of the taxable year for which a quality qualified dwelling unit is rented.

Inserting the following language for subsection C, Starting on page five, line 18, all claims for the tax credit under this section, including amended claims, shall be filed on or before the end of the 12th month following the close of the taxable year for which the credit may be claimed.

Failure to comply with foregoing provisions shall constitute a waiver of any claim to the credit. Will apply it to taxable years beginning after December 312025 will also apply it to counties where over 1% of the housing stock was destroyed or rendered uninhabitable by disaster and will defect the date. In addition, we'll take the. Let's see.

I think that's it in the Committee report. We'll also note that the DOE tax challenges in administering the proposed credit, including new reporting requirements for property ownership and lease details.

We'll also note the challenges in the Maui rental market after federal rental assistance became available for Lahaina fire victims and further note the concerns raised in testimony that Rent control reduces the quantity and quality of housing made available for rent Members. Any questions or discussion?

Okay, if not so for SB 1133 Chair's recommendation will you pass this measure with amendments? Chair votes Aye.

Embrasser's recommendation for SB 1133 is passed with amendments. Chair votes aye. Noting the excusal of Senator Aquino and Kanuha. Any Members voting with reservations Senator Aquino and Favela. Any any Members voting with reservations or no's hearing None. Recommendations adopted.

Thank you very much. And finally on this agenda SB 1333 relating to taxation. The Chair's recommendation will be to pass this measure with amendments. We have technical non substance substantive amendments. Any questions or discussion? Okay, if not again, go ahead.

So I think if this was really important to the counties I would have hoped that they were they would be here in person with us.

I think as the person that shepherd this through in that when I was the Housing Chair on the House site to allow Maui county to get there extended get surcharge I have to say that I have been very disappointed in the incident infrastructure developments that they have used for the surcharge for housing related purposes.

So you know I think we carved it out specifically for housing and we didn't include transportation because we felt that housing was going to be important. But we still haven't seen any more housing projects get off the ground as a result of the get Surge. Surge.

So I don't know if this is what we think it will help with. I think Maui County was supposed to be the test and we haven't seen that happen yet. So I think this is premature. But you know I fully aware that I could kill this bill right now. But we will keep it moving, I suppose.

Thank you. Vice Chair, should we note your concerns in the Committee report? That'd be great. Thank you. Okay, we will do. All right. So noting those concerns. Any further discussion or questions Members? Okay, so again if not SB 1333 Chair's recommendation is to pass with amendments. Chair votes aye.

Embers SB 1333. Chair recommendations passed with amendments Noting the excuse of Senator Aquino and Fevella. Any Members voting with reservations. Any Members voting no? Without others voting Aye. Recommendations adopted.

That brings us to the end of the 1:05pm agenda.

Thank you.

PM deferred decision making.

Chair, I have to count you back in. Let me going back live in.

All right, we're back for our final agenda of the day which is the deferred decision making of SB 834 at 1:00. This Bill was actually deferred indefinitely by the Hawaiian Affairs Committee. So for the Housing Committee, we'll also be deferring this measure indefinitely. Any questions or discussions? Okay.

If not, that brings us to the end of our last agenda today. There being no further business, the Committee on Housing subject.