House Standing Committee on Housing

Good morning. I'd like to call to order the House Committee on Housing public hearing for Wednesday, January 29th. It is 9:17ish a.m. and we are in room 430. Thank you all for coming out this morning. This is our first public hearing of the year so I'm excited to get it going. My name is Luke Evslin.

We have our Vice Chair here, Tyson Miyake. Actually other Members, maybe just a quick introduction. Tell us who you are and where you're from.

Aloha. Representative Tina Nakata Grandinetti. I represent House District 20 Kapahulu, Kaimuki, Kahala, Diamond Head.

Aloha, I'm Luke Evslin represent the east side of Kauai, District 16.

Good morning. I'm Representative Tyson Miyake, District 10, Wailuku, Maui.

Morning everyone. Representative Darius Kila, House District 44 the portions of Nanakuli, Maili, Honokai Hale and Ko Olina and I have the privilege to chair Transportation which is the sister committee to Housing.

Good morning everybody. Rep. Muraoka from the beautiful Waianae and Mauka, District 45.

Awesome. So I have some sort of housekeeping notes before we get started with our agenda here. We do have 15 items on the agenda and we have to get done by the start of our floor session here.

So we will be moving pretty quick and it means we're going to have a pretty strict 2 minute time limit per testifier and if it comes to it and we are running behind, then we may not be able to get to everybody's testimony.

I think we should be able to get through everything but we got to finish by 11:45ish, so we're gonna be- we're gonna be moving. Those who are testifying on Zoom, please keep yourself muted and your video off while waiting to testify.

And after your testimony is complete, the Zoom chat function will allow you to chat with the technical staff only. Please use the chat only for technical issues. If you're disconnected unexpectedly, you may attempt to rejoin the meeting. If disconnected while presenting testimony, you may be allowed to continue if time permits.

Please note that the House is not responsible for any bad Internet connections on the testifier's end. In the event of a network failure, it may be necessary to reschedule the hearing or schedule a meeting for decision making. In that case, an appropriate notice will be posted.

Please avoid using any trademarked or copyrighted images and please refrain from profanity or uncivil behavior. Such behavior may be grounds for removal from the hearing without the ability to rejoin. And just on that note, and this kind of goes for all of our hearings, housing issues can be contentious.

And be contentious. I think we are all passionate on all sides of these issues, and so I just urge everybody, members and the public, to remain respectful even when we disagree on these issues. But with that all said, we will jump into the agenda. First item on the agenda is HB 606, relating to the Department of Hawaiian Homelands. Vice Chair for the testimony.

Thank you, Chair. Chair Kali Watson, DHHL, in support.

Aloha. Excuse me. Katie Lambert, Deputy Chair, on behalf of Chair Kali Watson and the department. We are in strong support of this bill and we want to just take our--I know it's only two minutes--but we just want to express our gratitude to the community and to this legislative body for this effort. We greatly appreciate it.

It will go a long way towards keeping up the momentum that the department has initiated. As this body is aware, through its working group, Chair Kali Watson has been giving periodic updates, and we just appreciate this very much. Thank you.

Thank you. Phillip Shane Pale, Kupa'a Lahui Alliance, in support.

Yes, aloha. I'll try to keep it under two, two minutes. Just mahalo nui loa Chair, Vice Chair, and the committee for actually introducing and giving this bill a hearing. Mahalo nui to the Native Hawaiian Caucus of--Native Hawaiian Affairs Caucus from the House side. My name is Shane Pale. I'm with Kupa'a Lahui Alliance.

Mahalo for the opportunity to testify this morning on H of HB 606. This bill is not just about housing. It's about fulfilling a promise made to native Hawaiians nearly a century ago. Twenty-nine thousand Hawaiian individuals remain on the DHHL wait list, but this number represents far more than just those applicants.

Their families, which includes kupuna, keiki, educators, first responders, and small business owners, are all impacted. Too many native Hawaiians are being forced to leave Hawaii due to the high cost of living, which we all know. According to DBEDT's Hawaii Migration Flows 23-2017 report, native Hawaiians are leaving Hawaii at higher rates and they are not returning.

Hawaii's cost of living is one of the highest in the nation, and many native Hawaiians simply cannot afford to live and stay in their own homeland. The lack of affordable housing is forcing families to leave, and that's why HB 606 is so important and critical.

It helps address the housing crisis by making homeownership and stable housing more accessible for native Hawaiians. It keeps families rooted in Hawaii, ensuring our lahui can remain connected to their aina traditions and communities. It protects our culture and economic future. When native Hawaiians are forced to leave, it disrupts not just families, but our entire community--communities, weakening the very foundation of our culture.

I believe that HB 606 benefits all of Hawaii. Stable housing strengthens communities, families have a place to call home, keiki do better in school, houselessness numbers statistics decreases, and neighborhoods thrive. It eases pressure on the housing market. By building homes for native Hawaiians on the DHHL wait list, HB 606 directly relieves Hawaii's overburdened housing crisis.

With more native Hawaiian families securing housing through DHHL, demand in the broader market decreases, making housing more accessible for everyone. It boosts the economy. Construction creates jobs, supports local businesses, and stimulates growth that benefits everyone. Supporting HB 606 is not just about righting a historic wrong.

It's about keeping families connected to their aina, strengthening our lahui, and ensuring a future in native Hawaiian cultural practices, perspectives, and values continue to thrive. Mahalo nui loa for your time.

Thank you. Next up, DeMont Kalai Manaole, Ho'omana Pono, in support.

Hello, mai kakou. DeMont Kalai Manaole, co-manager, Ho'omana Pono LLC, a native Hawaiian advocacy corporation operating out of the Waianae Coast. Like to say hello to our Waianae reps over there, Chris and Darius. Right on.

Yeah, so we support this bill with the extension of the 600 million because it is important for the state to complete its promise to care for the Hawaiians under the Hawaiian Homes Commission Act. In order to become a state of the union, Hawaii had to agree to take care of fiduciary duties of the Homes Commission Act, and to this day, that has been sorely lacking. We got almost 30,000 people on a wait list and my mom died on a wait list. I don't want to be the second generation to die on a waitlist.

So, you know, Kali Watson, under the direction of Kali Watson, we now have an opportunity to expand the different opportunities for native Hawaiians to get on the land.

Just recently, last month, the commission just approved our pilot project to get indigent native Hawaiians who cannot afford a home, a mortgage, and whatnot to be able to at least get land, vacant, unmanaged lands. And so they're not going to cost us money, but it will cost us in terms of sweat equity.

We're going to go over there and clean up all the opala land that DHHL has. So as you can see, under Kali Watson's administration, they got a wide-ranging offering for native Hawaiians to reduce the wait list, and this is just one of them. So if we can continue to allow DHHL to spend that 600 million.

It was unrealistic to spend that 600 million in a couple years when things change all the time and this new Administration, they have new ideas and whatnot. You gotta be able to help your quarterback make that touchdown. So I thank you. If you can approve this bill, that'd be awesome. Aloha.

Thank you. Next we got Makana Hicks-Goo, LIMBY Hawaii, in support. We also got nine individuals in support, one with comments. Anyone online or in person wants to testify on this matter before us? Seeing none, Chair.

Thank you for your testimony. Members, any questions? Seeing none. The next item on the agenda is HB 1086, relating to housing. Vice Chair for the testimony.

Gary Suganuma, DOTAX, with comments.

Department of Taxation here. We stand on our written testimony.

Thank you. Chair Kali Watson, DHHL, in support.

Yes, aloha. We just want to make note in addition to our written testimony in strong support that currently under the EP for affordable housing, DHHL is exempt from general excise tax, but of course the EP will end at some point, so having it statutorily to allow us to save and then invest those GET savings into building more homes, we would, we would like to encourage a statutory change to that effect. Thank you.

Thank you. Next we got Tom Yamachika, Tax Foundation of Hawaii with comments on Zoom.

Yeah, good morning, Chair, Vice Chair, and members of the committee. Tom Yamachika from Tax Foundation of Hawaii. We will stand in our written comments and be available for any questions.

Thank you. We got Quentin Machida, Gentry Homes, in support, Makana Hicks-Goo, LIMBY Hawaii, in support, and DeMont Kalai Manaole, Ho'omana Pono LLC, in support. And I believe he just left, Chair. Anyone online or in person wants to testify on the matter before us? Seeing none, Chair.

All right, thank you for your testimony. Members, any questions? Yes, Representative Kila.

For the department. Director, this was the same bill you folks tried last year, right? And then what was the reason we didn't pass it last year?

It was, I believe, if I'm not mistaken, there were individual vehicles. There was also an attempt to package it within an omnibus bill. I think the preferred way was the omnibus bill which just didn't make it all the way through the legislative process.

And so because it only goes for the--we're looking to exempt just for the sole construction, the GET savings is upon the department, not necessarily the inheritor or purchaser of a lot?

That's right. It would allow the department to have the money to then develop more homes, excuse me. Excuse me--not homes because it's, it also applies--that was something that we did address in the last, in the previous version is that we don't just do residential, right. We also do agricultural and pastoral lots.

And so to that point then, like so the Kaupe'a subdivisions, the O'ahu subdivisions, with the estimated tax savings, does that then play into the overall cost when they're qualifying for the potential new home in sense of lowering the upfront cost, the final cost?

Yes.

Okay, perfect. Thank you. Thank you, Chair.

Thank you. Members, any further questions? Seeing none, the next item is HB 1408 relating to the Department of Hawaiian Homelands. This bill allows the Department to utilize the Dwelling Unit Revolving Fund as collateral when the Department acts as an eligible borrower for a loan agreement. Vice Chair, for the testimony.

Thank you.

We got Dean Minakami, HHFDC in support.

Morning, Chair, Vice Chair, Committee Members. Dean Minakami, Executive Director of HHFDC. We stand on our testimony in support. The collateral basically allows DHHL to receive more favorable loan terms. So that reduces their cost of housing, constructing housing.

Thank you. Next we got Chair Kali Watson, DHHL in support.

Aloha. Katie Lambert on behalf of the Chair and the Department, we are in strong support. And we'll send our written testimony. Thank you.

Thank you. We got Master Shelby Pikachu Billionaire in support. And De MONT Kalai Manaole LLC in support. Anyone online or in person wants to testify on the matter before us? Seeing none. Chair.

Members, any questions?

I have a question.

Representative Kila.

For Dean, please. Dean, do we have any other state agencies that are kind of tasked with the same development of housing that has access to this fund or no.

There is a project which has a similar structure. They used a Rental Housing Revolving Fund as collateral for a HUD loan. So that was the Hale Moiliili project, which broke ground just last year. So there is a model for using state funds as collateral for a HUD loan.

Do other states do this?

I'm not aware. I'm not sure.

Okay. Okay. Thank you. Thank you, Chair.

Dean, I have a follow up. So with this, the bill, as I understand it, would appropriate 75 million to DURF, and then it would use that 75 million appropriate out of DURF to be used as collateral when needed by HHFDC.

That's correct.

So when it gets appropriate out, that then just sort of sits in an account as collateral until the loan is paid off or how does that actually work?

Yes, basically it would sit. It would be encumbered for that loan and it would be on hold. Basically as collateral for the loan.

And so you mentioned sounds like Rental Housing Revolving Fund has been used as collateral. Was that a similar structure? It was money that was appropriated out of Rental Housing Revolving Fund? And there's no way to use--my understanding is like the rental housing involving Fund has something like 500 million.

Is it not possible to use the funding that's sitting in there instead of appropriating out of the account?

Well, because it's restricted in use, it's committed towards a use. I don't think we could use it for two purposes at the same time.

Okay. Okay, thank you very much. Follow up from Lila.

So even though it's relating for construction, does the department have the chance to utilize it also for infrastructure improvements or?

Well, I think the bill is specifically for collateral. They can always apply for their funding for infrastructure or other purposes.

So it can't. It can be expanded just outside of sole construction.

I believe the way the bill is worded now, it'd be strictly for collateral for--for loans.

Okay. Okay. Thank you.

So using this funded as collateral. In the highly unlikeable probability that something goes wrong, would this affect future building?

Well, if something were to go wrong, then the collateral line of the collateral will be drawn upon. Right. So then the $75 million would be used to pay down the commitment basically that DHHL had. So instead of if that were to happen, there wouldn't be 75 million available.

It'd be 75 million less whatever had to be paid out to the lender.

And of that 500 million that you said is set aside for specified--is being a collateral one of those specified?

Well, the 500 million is the cash balance and Rental Housing Revolving Fund. But most of those funds are committed towards loans. The loans don't flow out of Rental Housing Revolving Fund until it's called financial closing.

So there are many times when we're waiting from the time we award a project to the time that they receive all their permits and they're ready to financially close, those funds are committed and they're just waiting for those projects to get to the point where we can disperse the funds so they couldn't be used for another purpose because they're committed towards a use.

Further questions for Dean? All right, thank you, Dean. Actually, I have a question for the Department. Are you guys able to use land or other assets as collateral currently, or do you?

I believe what this bill is trying to do is have us have an alternative collateral source other than our trust funds.

So you know, we would prefer to save our trust funds for in the case of collateralization, we would just like to have an alternative source as opposed to our trust funds which we do actually actively use for other programmatic reasons.

Okay, thank you so much. All right, Members for the questions. Seeing none, the next item on the agenda is HB 739 relating to housing. This establishes the Kamaaina Homes Program to provide funding to the counties to purchase voluntary deed restrictions from eligible homeowners or home buyers. Vice Chair for the testimony.

Thank you. We got Ed Sniffen, Department of Transportation in support. Gary Suganuma Department of Taxation with comments. Thank you. Dean Minakami, HHFDC in support.

We stand on our testimony in support.

Thank you.

Thank you. Anne Lopez, Attorney General with comments on Zoom. Or in person.

Good morning Chair Evslin, Vice Chair Miyake and Members of the Committee. I'm Deputy Attorney General Chase Suzumoto and we have provided our written comments on House Bill 739. And in our testimony we suggest amendments to the bill to remove the duration requirements. Specifically on page 9, lines 3 and 8 through 10.

This is to avoid any challenges for violations of the constitutional right to travel. I am available if you have any questions. Thank you.

Thank you. Arjuna Heim, Hawaii Appleseed in support.

Arjuna Heim on behalf of Hawaii Appleseed in strong support. We'd like the committee just to consider what use this money could be towards, especially looking at outer islands that have limited infrastructure and are having a harder time building.

If we could invest some of this money and buy up existing homes, it would be very beneficial for our community.

Thank you. Thank you. Sarah Malia Wisch, Wall to Wall Studios in support. Damien Waikoloa, Hawaii YIMBY in support. Josh Wisch Holomua Collaborative.

Chair, Vice Chair, and members of the committee, thank you very much. Josh Wish with Holomua Collaborative in support. Obviously we all know about the challenges we're facing with the lack of housing.

We note in our testimony a recent survey that was done showing that when asked a number of respondents, do you think you'll need to move to a less expensive state? Almost 70% said yes or I'm unsure. And 2/3 of those said that they'd have to do it because of the cost of housing.

And so what we're excited about with this particular idea is that it is something that can use existing housing. It is completely voluntary and it is really laser focused on keeping workforce here in Hawaii, being able to keep people in their communities.

And it applies to both owners and renters in a way that as Arjuna was saying right before me, kind of home by home, you can be reserving housing across the islands for local workers and local communities. And the other part that's key of it is that we know it's worked successfully in other jurisdictions.

So other places that have similar challenges where the housing has skyrocketed beyond the potential of the people who live there to afford it, like Aspen and Vail, have actually been the folks who've been deploying this and been doing it successfully.

And along those lines, the one last thing I just wanted to note was we did see the AG's concerns in the testimony and in a couple of those other jurisdictions, it does appear that they've solved for that.

So I'll just note briefly, for example, in Vail, and Vail was really the place that pioneered this, they do have a retirement provision defining qualified resident as also including an individual who is retired, was 60 years or older at the time of retirement for the five years immediately prior to retirement, worked an average of up to 30 hours or more per week at a business in Eagle County.

And Aspen has a similar provision for retirees and for folks who are disabled. Because those jurisdictions would have faced the same federal constitutional obligations that we do, it does appear that they've solved for that.

So we'll be happy to talk more with those places, see what they did to account for it and we'd be happy to work with the Committee, if at all helpful, to be able to address those concerns. Concerns. We're very excited about this one. Thank you very much for considering it.

Thank you. We got Albert Perez, Maui Tomorrow foundation in support Alana Pakala, Kobayashi Group in support Perry Arrow Smith, Hawaii Housing, Housing Hawaii's Future and support Hawaii Community Foundation Title Guarantee, Mana Up, Hawaii Gas, HBM Building Supply, AIO Tory Richards and support Lindsay Garcia, Hawaii Realtors with comments. Thank you, Chair. We also got 14 individuals in support.

Anyone online or in person wants to testify on the matter before us?

Yes, Vice Chair. Tom Yamachika, Tax Foundation of Hawaii. We just have a technical comment on the conveyance tax exemption on page 24, lines 436 of the bill.

And the comment basically is that I think you want to extend the exemption not only to the conveyance of real property with a restriction, but also the instrument that puts the restriction on the property.

Thank you.

That's my, that's my comment. Thank you very much. I'll be able for questions.

Thank you. Anyone else online or in person wants to testify on the matter before us?

Seeing none. Chair.

Members, any questions, Pierick?

This question is for Tom Yamashika with the Tax Foundation. Hey, thanks for being here. My question I'm trying to understand the bill better. Would this use tax dollars to help people buy houses?

I don't read the bill that way, no, but you may want to ask the bill sponsor. We weren't really tracking this bill until this morning, so I'm not as familiar with it as I should be.

Okay, no worries. Thank you, Tom. Maybe Lindsay from the Hawaii Realtors. Do you know if tax dollars are used to build homes or buy homes for this bill?

Oh, I thank you for the question representative. I don't believe that's how I read the bill as well, but I could be mistaken. But I defer to your expertise and knowledge.

Thank you. Mind if I?

Maybe, Josh, if you want to come up and--

Thanks for the question, rep. The way that the bill is structured and the way that it's been rolled out in other jurisdictions across the country is that there is government funding that is used to give to people that can be used for a variety of options.

There's never enough money to just given to outright buy a home, but there is an assessment done on the home that can be used by that person.

In other jurisdictions a typical example is that someone who might not be able to afford the down payment for a home can get an assessment done on it and they'll get an offer back from the government entity. In the case of Vail, it's Eagle County and they would see negotiate back and forth.

We'll give you this amount of money in return, the government gets the deed restriction. So what happens, in essence, is that the government entity is buying a deed restriction in return for the funding, which also means that the government actually does have that interest in the property in return. Does that that?

That helps. Thank you so do you know who's eligible for this deed restriction?

Pretty much anybody is eligible to apply. It's completely voluntary. The only thing that is a requirement once you buy the deed, once you sell the deed restriction is that you do have to agree to live and work in our case, in our version of the bill, within the state for a qualified local employer.

So this is specifically trying to address that concern for so many local residents. They just can't afford to live in their own community anymore.

Well, thank you. So if you're rich or low income, you could apply for this?

That's correct. It is completely voluntary and it is income blind. Okay. Thanks a lot.

Any further questions? Rep Grandinetti.

I think this is for Holomua Collaborative as well. If is the bill says if a property with a deed restriction in place is sold to a non resident the corporation may bring action and shall be entitled to 50% of appreciation at the time of sale.

Does that mean that the deed restriction is then like nullified or does it move with the property even though it's been sort of violated because that money has been paid?

Sorry, just moving that up. So again from the experience of Vail, one of the things that they said was that it was pretty important that you make sure that you're actually enforcing this.

And so they have people who are going out on an annual basis and going out to make sure that the deed restrictions are enforced and people I believe also do have to sign a bit of an attestation that they're going to abide by the deed restriction.

In the bill as written there is the provision you're talking about and I believe there are additional possible penalty provisions. So to give some enforcement latitude depending upon how you want to do it, including for instance specific performance.

And the specific performance would be for instance, you can still own this but now you have to rent it to someone who lives here. Right because that would be an option as well. The idea is just that whoever is in that property has to live and work in the state.

So if you're out of compliance, one way you could be income come back into compliance is to rent it to someone who would actually comply.

But then you would still in some way be penalized for if you sell to a buyer that's out of state. Okay. Thank you.

Members further questions? I have a question for HGFDC. Dean, in your folks testimony you recommended allowing revocable trust to qualify under the definition of an eligible home owner home buyer. Could you maybe elaborate on why that would be important?

It's because some properties are held in trust. So it opens the I guess the potential number of properties which will be eligible for this because again if the intent is to ensure that they are occupied by local residents and this is a means to ensure that those properties held in trust are occupied by a residential.

And I think some of the concern around that would be, you know, ensuring that the owner is a resident of Hawaii and with a revocable trust, would that open it to possibly outside interest in some capacity?

It could if the trust is for a person who was not a Hawaii resident. Yes. That is true.

Okay. Okay.

Thank you. Then I have a question for the Office of the Attorney General.

Just to clarify what you're recommending. So currently we say something like you would be eligible to be in the unit if you've worked for 10 years within the county and then retired after that, or if you worked five years and then were disabled after that.

In your recommendation, you're saying we could keep the retirement and disability provisions, just no durational requirement.

Yeah. The Attorney General wants to get rid of the duration requirements because, for example, with the retiree provision, an individual could meet the 65 years of age or older, and then also the amount of time worked at a qualified business.

But then you run into an issue, say if a kamaʻāina would want to come back to Hawaii and live in the unit, if they don't meet that 10 consecutive years immediately preceding retirement, then it kind of works against and contravenes the purpose the bill seeks to achieve.

For the retirees and also those with disabilities that's the concern that we have with the duration requirements.

Yeah, and I certainly hear that. The concern around removing that requirement would be the potential for kind of abuse of the program in that youth, theoretically, in my mind, could have somebody, say, 65 years old or older come to.

So even if we said you have to have, like, worked 30 hours per week immediately proceeding, like, I think somebody could just come here, work 30 hours for two weeks, and then qualify to live in that unit as a full retiree.

Yeah, well, if they satisfy all the other requirements as a retiree. But then I guess for that example, if you say you had grandparents who wanted to relocate back and had already worked and satisfied all the requirements and worked at the qualified business, then you run into the issue that they cannot live in these units because they didn't satisfy the duration requirement.

And I mean, there's certainly a policy call to be made there on whether to broaden this or not. I think our major concern would be ensuring that we are passing sort of constitutional muster here. And so given what Josh elaborated on, that other municipalities like Vail do have a durational requirement.

Do you think that there is a way to sort of wordsmith this, that we could get a durational requirement to fly?

Well, I think it brings up with Vail and Aspen, it brings up a good, I guess, a point we can look further into. And I can work with the Attorney General and then work with the committee as well on figuring out wording to pass constitutional muster.

But initially this was our concern just with the purpose of the bill. But, but we can work further with, with all of you on figuring out wording.

Great, I really appreciate that. Thank you.

Members, further questions. Okay. Seeing none. Sorry, I gotta go back to my agenda here. Oh, sorry. You know what, I got one question for Tom Yamachika. Tom, could you just elaborate on your concern? I don't think we got written testimony from you.

And I want to make sure that we can address the concern here regarding the conveyance tax.

The conveyance tax exemption of the bill relates to when you convey property that has a deed restriction on it. We just mentioned that getting the deed restriction on the bill will require some payment of money so that. So a conveyance is going to be required and it has a consideration attached to it.

I don't know if the existing conveyance tax exemptions, like one for easements only, would apply to that situation. And I guess to prevent controversy regarding that, you may want to broaden the exemption in the conveyance tax to the instrument by which the restrictions are added to the property.

Okay, thank you. I understand dotex is here. So under the current language in the exemption, would the purchase of the deed restriction be subject to conveyance tax or do we need to broaden.

It would be not subject to conveyance tax. This would exempt it from conveyance tax.

So it would exempt. Definitely exempt the property itself when it's sold. But you're also, you're saying that also when the county purchases the deed restriction, that purchase of the interest in that home would not be subject to conveyance tax either, which I think is what Tom Yamachika is concerned about.

I believe they both would be exempt. I will confirm and get back to you on that. Okay, let me just. Yeah, thank you so much.

Thank you so much. All right. Members, further questions? Seeing none. We can move on to the next item, which is HB 740? HB 740, related to housing. Establishes the ADU Dwelling Unit Financing and Deed Restriction Program, which is broadly similar to...homes program. Vice Chair for the testimony.

First, we got Gary Suganuma, DOTAX, with comments. Thank you. Dean Minakami, Hawaii HHFDC, in support. Thank you. Chair Alice Lee, County of Maui, in support. Arjuna Heim, Hawaii Apple Seed, in support. Thank you. Betty Lou Larson, Catholic Charities Hawaii, in support. Thank you. Damian Waikoloa, Hawaii YIMB, in support. Josh Wisch, Holomua Collaborative, in support.

Most of our comments would be very similar to the last one. We'll stand on our comments in support.

Thank you. Perry Arrasmith, Housing Hawaii's Future, in support. Hawaii Community Foundation Title Guarantee Mana up, Hawaii Gas, HBM Building Supply, AIO, and Tori Richards in support. Lyndsey Garcia, Hawaii Realtors, with comments. Thank you. Pamela Tumpap, Maui Chambers, in support, and four individuals in support, Chair.

Anyone online or in person want to testify on this matter before us?

Thank you, Mr. Chair, Members of the Committee. Tom Yamachika for Tax Foundation of Hawaii. Same comment as in the previous Bill.

Thank you.

Any questions? Thank you.

Anyone else online or in person want to testify on the matter before us? Seeing none, Chair.

Members, questions? Rep. Pierick.

Josh, by chance, would you know if this Bill is different than the previous Bill and how?

I'm sorry, can you ask that again?

No worries. Do you know how this Bill is different than the previous Bill?

So, the way that I read this Bill being different is primarily the deed restriction provisions, I believe, are similar to identical. I think the primary difference is that the money that would be given in return for purchasing the deed restriction in this Bill must be used for the construction of an ADU. In the previous Bill, that money could be used for pretty much anything. It's fairly unrestricted.

Thank you. So, let's say somebody uses this government program and the government owns the deed. When the resident sells the house, the sale price from the equity, I guess built, they can then build a dwelling unit on additional house. Can you help me understand that?

Well, so, one piece—just to correct—the government would not own the deed. The government would owe the deed restriction, which is an important difference. But they can use those proceeds to then build an ADU on that property. That's, that's the primary difference with this Bill, as opposed to the previous one.

So, the government would fund the construction of the dwelling unit?

Of the ADU, to it—to the extent that it would actually cover that construction.

Okay. And that—sorry that I don't understand the Bill very well. Where is the money coming from to build this?

Right. I believe the way that this is currently crafted is that it would come out of the Dwelling Unit Revolving Fund.

So, our taxes.

Well, sure. I mean, ultimately, of course, anything coming out of the government coffers would be coming from all of our taxes. Yeah.

Okay. So, in short form, our taxes are building other people's houses?

Well, I would look at it as saying that the taxes are actually building our houses because this is also focused on workforce development. But quite literally and just down the middle, the funding for this, the money that the resident would get, would be to aid in the construction of an ADU, on this Bill, under property.

So, yes, it would be government funding to build those ADUs.

Thank you. And do you know if there's a restriction on who can tap into this?

That should be the identical deed restrictions, as the last one. So, again, it would be completely voluntary. No one needs to do this. And it would also be income blind. So, it could be anyone from a schoolteacher to a firefighter to a doctor.

Thank you. And is there a cap on how much funds they can get to build an ADU?

Generally, the way that that works, and again, this is using the deed restriction examples from other jurisdictions, is that the government entity would negotiate with the home buyer, or the homeowner, on what the assessment value would be, and it would be at that level.

I think in Vail, and this is not hard and fast, this is just, I think kind of where it's averaged out over time, is that they've generally topped out at about 15 to 20% of the value in the home. Again, in Vail's case, it was the previous version of this Bill. It wasn't ADU.

But since the deed restrictions are similar, that's generally where they topped out. But they were also very clear that they negotiate that on a case-by-case basis.

Thank you so much.

Thanks a lot.

Members, further questions? I have a question for Dean, HHDC. Would you see an issue if, if the counties were able to get a—sort of a—lump sum in advance, which they then are issuing the deed restrictions from that lump sum?

The Bill right now is worded as if they would almost have to come periodically to like get reimbursed for the deed restrictions. And there's some concern around administrative burden, on both the county and you folks, if they keep—keep on having to come to you.

So, you know, one possible amendment in my mind would be to just clarify that the counties can come in advance for like a lump sum once per year, which they can then issue the deed restrictions from?

Yes, that could work. And they could come in once per year, and if the funds are not used within that year, then it could be returned.

Okay. Okay, thank you so much. So, I guess a question for the Attorney General's Office. Hust to clarify, you guys didn't submit testimony on this with the durational requirement concern, though it's in the Bill. I assume the concern is mirrored between both bills.

Sir, we did not submit testimony, but we submitted testimony for the companion Senate Bill 491, which addresses the duration requirement and then, also with the standards for grants, with the county in this case, but we did not submit testimony for, for this Bill.

Okay, and what's the concern with the standards for grants?

We can, I—we're still working on the—we, we just submitted the testimony, but if we can submit, I guess, more information to the Committee dealing with grants and then, we can also supplement with concerns for the durational requirement, as well.

But we, we weren't able to submit testimony on time for today.

And just—I don't want to move out a Bill that ends up having major red flags later.

Is there constitutional issues with the way that the grants are structured, that should be addressed right now or?

No, it's just the insertion of the standard grant—grant language—and then, we can provide examples to the Committee on standard grant language that can be inserted in the Bill, as it moves forward.

But the only constitutional issue we would see is with the duration requirement, which is similar to the last Bill.

Okay, thank you so much.

Thank you.

Oh, sorry. Rep. Grandinetti.

I'm not sure if this is best answered by maybe Arjuna or Josh, but I'm curious about the, kind of, value of having the program be income blind. Maybe it speaks a little to your testimony about like thinking about where we put these resources.

Like in my district, building—kind of assisting in the construction of an ADU and Kapulu is very different than doing that in Kahala. Arjuna, thanks.

So, the value of the income line—this might be a surprise from Appleseed, but I think we would hold the position to keep it income line because, in many situations, under the current way we judge revenue and assuming an ADU typically can be for one person, but it can also be for a couple, young people growing their careers, under our current system, income restrictions are really punishing for anybody other than a single individual.

So, for that case, I would stick with the income line situation, and I believe there are other programs that can be used on county level, to further price restrict as an option. Yeah, I don't know if Josh has a better answer.

Arjuna said it well. I can share additional comments, but I can also just say what she said.

I think my question—because I see that I get what you're saying about the, you know, whoever lives in the ADU—but I think my question is more about the eligible homeowner building the ADU.

I mean, I can—I'll share briefly that I think the way it's worked, and this is, again, kind of the advantage of the fact that it has been rolled out.

Again, not specifically the ADU version, but the same deed restriction idea. The way it's been rolled out in other jurisdictions is that, typically, the people who can completely just afford 100% regular market-based housing and don't generally need that assistance to stay there, generally, aren't participating as much.

And so, in some ways, it kind of organically does create a bit of a difference between who chooses to participate and who does not, because you are also putting a limit on your own property by doing this. Right?

And, and so, like a celebrity or a bank president like is probably not going to participate because they don't have to. And so, that kind of creates, in a sense, those two separate markets, as a result.

Thank you.

Oh, Rep. Muraoka.

So, you, you mentioned a celebrity—that's kind of, I was holding off on this question but thank you for bringing it up. So, ADUs, in its inception, were to help people who are having a hard time.

Mom, dad, you know, family members come home. Under this Program, what restrictions would, you know, being income blind, how does this restrict an outside investor from using this Program to put an ADU on his property to rent it to another individual?

Well, so it's still, this program would still have the identical deed restrictions as HB 739. And so, you would still—you'd still have to have someone living in there who lives and works for the 30 hours within the state.

And so, it is, as a result, whether the money is going to the construction of an ADU in HB 740, or whether it's going for many other purposes in HB 739, it still has to be for someone who is actually living and working within the state. So, it can't just go—you can't just have an outside investor living in the property.

But an outside investor can own the property, use the Program to build the ADU, to then rent it to someone who's working the 30 hours.

I'd want to go back and double check, but I think there's a Hawaii residency requirement actually in the program, in order to participate. So, to actually buy the property, I think you still actually have to be a Hawaii resident. So, no, you actually couldn't be an outside investor.

We have Hawaii investors. Let me take out the outside investor. Let me just be an investor. If you can find that out. I mean kind of—it's strange, it seems a little off putting to me that I can own the property. I can use the government program to build an ADU. I'm already renting this property.

Now, I'm going to use a government program to help me fund the additional dwelling unit on my same property, that I can then rent to someone else.

And I'm sorry, what's your question, Representative?

It's about being income blind. ADUs, in its inception, was to help with the housing problem. I don't see how it helps here when we go income blind.

Okay, I think we see what you're saying.

So, kind of getting back to the note I was making to Representative Grandinetti, what we have seen in other jurisdictions, where they've done this, is that just as a practical purpose, people who are, for lack of a better way of putting it, ultra rich, are generally not going to apply for funds in this program because they would, in a practical sense, unless they just wanted to do it, be putting a restriction on their property that they don't need to put on it and that they can afford not to put on it.

Of course, anybody who they wanted to, right now, could choose to put a deed restriction on their own property. But generally, you're not going to find too many people who are independently wealthy probably just choosing to do that.

And so, the folks who generally participate in these programs in other jurisdictions seem to be the ones who actually do need that extra bit of help to stay where they are. We're just trying to not put an artificial cap on what that income level would be. And so, we're allowing market forces to dictate a bit more.

But at a certain point, practicality takes hold.

Robert Kiyosaki, ultra rich, doesn't sell his properties, so that restriction wouldn't bother him. His portfolio is filled with rentals. This restriction wouldn't bother someone ultra rich like that because he wouldn't mind keeping the property forever and ever. His rentals is what makes him ultra rich.

And that, and by the way, that kind of person could participate, as long as they're Hawaii resident and if they're renting it to a local resident, then it's still serving the purpose because you've got a local workforce now living in those properties.

So, again, to my initial point, the government would help the ultra-rich build, to further his portfolio.

I think that would be a vanishingly small percentage of the people who would participate in this, most likely.

But it is possible.

Just to clarify, you can only—one of the requirements of the Bill, it says, owns no other property with the deed restriction. So, that ultra rich person could only get a single deed restriction on one of those pieces of property. They couldn't use it for all of their investments.

Thank you, Chair. Thank you.

Thanks, Representative.

Sorry, we do got to keep moving here, but I have one final question for the Attorney General's Office.

So, in the drafting of the Bill, for both this one and 739, we were uncertain if a deed restriction would be considered under the definition of a good, in Chapter 103-D, for the purposes of procurement and whether we would need to exempt it from the Chapter 103-D, to—do you—I know this is kind of an off the wall question for you to answer on this for the moment but...?

If, if possible, if I could, I guess, if I could get the question and then take it back to the Department and address it with, I guess myself or the other deputies who can explore the issue.

Okay, we can put it in the Committee Report. But just basically, would a deed restriction be considered under the definition of good in Chapter 103-D, for which the procurement code would apply to?

Okay.

Thank you.

Okay, thank you.

Members, further questions? Rep. Miyake.

Sorry, Chair. I just wanted to clarify on the testimony sheet, Title Guarantee Mana Up Hawaii Gas, HBM Building Supply AIO, and Tory Richards did not submit testimony on this Bill. It was a previous measure. HB 739. It was Micah Kane. It was just Micah Kane, Hawaii Community Foundation, testified in support.

Okay, thank you for the clarification. All right, Members, any final questions on HB 740? Seeing none. Next item is HB 949, relating to the Low Income Housing Tax Credit. Vice Chair for the testimony.

Gary Suganuma, DOTAX with comments? Thank you. Dean Minakami, HHFDC, in support? Thank you. Tom Yamachika, Tax Foundation of Hawaii with comments?

Morning, Chair, Vice Chair, Members of the Committee. Tom Yamachika from Tax Foundation. We only have technical comments, so we will stand our testimony. Be available for questions.

Thank you. Kyle Watase, Mark Development, in support. Karen Seddon, EAH Housing, in support. Makani Maeva, Ahe Group, in support. Reyn Tanaka, NAIOP Hawaii, in support. Thank you. Alana Kobayashi, Kobayashi Group, in support. Anyone online or in person wants to testify on the matter before us? Seeing none. Oh, I'm sorry. Go ahead.

Vice Chair, Members of the Committee, thank you for allowing me to just testify in strong support of House Bill 949.

Sorry, can you state your name and organization?

Name is Tommy Lowmon. I'm here with Sugar Creek Capital. We invest in affordable housing in Hawaii. We have over the last nine years put about 124 million in investment in affordable housing development in Hawaii. In 2025, we look to do 22 more deals and that will equate to about 2,500 units.

This bill will allow us to continue to do that and be able to invest in Hawaii and affordable housing. We did notice the testimony from DOTAX and the Tax Foundation of Hawaii which I think we will be able to work through the technical issues there. And I'll be standing by for questions if you need.

Thank you. Anyone else online or in person want to testify on the matter before us? Seeing none Chair

Members, any questions?

Right. Seeing none. We will move on to the next item on the agenda which is HB 916 relating to the low income housing tax credit by serve the testimony.

Gary Suganuma Dotax with comments. Thank you. Dean Minakami, HHFDC and support. Thank you. Tom Yamachika, Tax foundation of Hawaii with comments.

Thank you Chair Vice Chair is the Committee Tom Yamachika from Tax Foundation. I will stand on written testimony and be available for questions. Thank you.

Thank you. Anyone online or in person wants to testify on the matter before us?

See none Chair Members, any questions? Rep here.

Thank you. I'm not sure who would be able to answer this question but my question is who is getting the TAT tax break? Who's getting the funds from elsewhere?

Could we have DOTEX come? Thank you.

So whoever has the low income housing credit can apply that to their TAT tax liability.

Well, thank you. Do you know who's eligible for the low income tax credit?

Whoever is building these houses under 201H can apply for that credit and it is being certified by hhfdc.

Okay. So basically developers.

Okay, thank you.

Yes.

Yeah.

Members, further questions. All right, seeing none. Next item is HP 1298 relating to housing.

Vice Chair for the testimony Dean Minakami, HHFDC and support.

Yes, Chair Vice Chair Members, we support the bill. We do have some comments. We do ask that the maximum income household provision be amended so that 60% of available units would be for households at 140% AMI and below. And regarding the development contracts and construction contracts, we do ask that they not be subject to 103D.

Typically the means that we develop projects is to procure a developer through an RFP process and that developer is not subject to 103D for their construction contracts.

Chair Vice Chair Members of the Committee Kamakana Kamala, Government Affairs Manager for UPW. We largely stand on our written testimony in strong support. You know, we just asked for some clarifying language in the bill. It provides that the rental income collected from the participant during the 10 year period is put toward the purchase of the unit.

Thank you. Luis Saliveria, the Department of Budget and Finance with comments Kamakana Kaimul Loa UPW in support.

We're asking for some clarifying language as to what happens to that accumulated amount should they opt out in purchasing the unit at the end of the 10 year period.

Obviously we'd like to see that return to the participant in its entirety, but we also understand that there may be some costs associated with the rehabilitation to turn it over to the next participant. Thank you very much.

Thank you. Randy Perera, HGEA in support Tom Yamachika, Tax foundation of Hawaii with comments.

Thank you. Chair Vice Chair Members of the Committee Tom Yamachika from Tax foundation we echo Budget and Finance's concerns that the Revolving Fund does not meet the criteria in 37.52.4 and we don't think this is a good idea. For that reason. I'd be happy to answer any questions. Thank you very much.

Thank you. Anyone online or in person wants to testify on the matter before us? Seeing none.

Chair Members, any questions? Rep.

This is a question for upw. So the question is who in the government can have access to this housing?

I believe it's based on 140% of the average median income for the I believe it's air in that range. I believe so a number of folks actually would be eligible.

Do you know what that number is? Like $80,000 a year and less?

I do not have that number off the top of my head.

I'm sorry, just to clarify, this would be tax dollars going towards people who are employed by the government to have housing.

Actually they'd be paying lease rent with the hope that they would be able to purchase that at the end of a 10 year period.

Okay. Is there any incentive for them to be in this program versus like a bank?

The incentive is they may not be able to qualify or afford it. It really depend on what the rent income is and based on that it's some sort of percentage of what the value of the sales price is.

Okay. So besides their like credit score being eligible to get the into this rent program where they can potentially buy is the government paying any of the rent or paying any of the down payment or anything like that?

Under this I do not believe they are.

Okay, thank you.

Sorry, I was trying to find the answer to your 140% Am I question for a single person in all who 140% Am I would be a salary of $136,000. Thank you. Thank you. Members, further questions all right, seeing none we're Moving on to HB 1317 relating to workforce housing.

This would establish the Housing Workforce Housing Regulatory Sandbox Program Vice Chair for the Testimony, Dean Minakami, HHFDC in support.

Thank you. Sherry Manor, McNamara Chamber of Commerce in support.

Aloha. Good morning. Chair, Vice Chair, Members of the Committee, thank you for the opportunity to testify. We support hospital 1317 because we believe it will address our housing crisis and that advancing permitting regulatory procedures is necessary to accelerate the development of affordable hous workforce housing. So what is a regulatory sandbox?

Sandbox is a framework that allows enterprises to develop new products, services or models in a controlled environment under regulatory supervision. The proposed sandbox will create a controlled environment. Sorry.

So for a housing sandbox, this approach can expedite permitting and enhanced coordination between agencies, as well as supporting our commitment to adopting technologies and processes that improve efficiency and economic sustainability. And with the sandbox, it will also spur new businesses to support these kind of efforts.

So for these reasons, we respectfully ask the Committee to support this measure. Thank you.

Thank you. Anyone online or in person wants to testify on the matter before us? Seeing none.

Chair Members, any questions? All right, next item on the agenda is HB 1325.

Vice Chair of the Testimony, Dean Minakami, HHFDC with comments.

Chair, Vice Chair, Committee Members, we offer comments on this Bill. We note that most HHF DC projects do not displace residents. There are some, however, that do displace residents. In those cases, if there are federal funds involved, then there are requirements that developer must meet. Even for those which do not trigger any regulatory programs.

Though our board in the past has required relocation assistance to be provided to residents. And so we just ask that there be some flexibility provided in that the displaced persons can be either offered a unit in the new project or provided with a relocation program.

Thank you. Nadine Ortega, Tagnawa in support. Sergio Alcubila, Hawaii Workers center in support.

Morning. Chair. Chair. Vice Chair. My name is Serge Alkobili. I'm the Executive Director of the Hawaii Workers center and we stand in strong support of this, this Bill. You know our office is located in the towers of Kahio Park.

I know it's a, it's a age old housing development that's really need of repair and you know we really feel for our neighbors. I know there's a few here in this room and a few other organizations here that testify after me, but we really feel for them in terms of what's happening right now with the redevelopment.

And this Bill would really help ameliorate some of those issues. Not just for the redevelopment for towers of Kahila park, but in the future for other housing projects.

As Mayor Wright, you know we have, we did have Representative Grandnetti come and check out what's the situation there and I would like to invite the Members of this Committee to come visit our office, to come visit the towers and actually see the real situation on the ground.

So thank you again for this opportunity to testify and support.

Thank you. Next we got Damian Waikoloa, Hawaii Yimby in support. Arjuna Heim, Hawaii Appleseed in support Arjuna Heim on behalf of Hawaii Appleseed.

We really like this measure in part because it's, it secures tenants that do qualify under this and really helps to lower anxieties of trying to find a new place when you're old. Probably naturally occurring affordable housing rental is likely to be demolished.

In addition to that we think it would be a really good step in a direction to help community come become a little less NIMBY and maybe more towards yimby and knowing that we have a process in place that can help when displacement occurs. Thank you.

Thank you. Next we got Deja Ostrowski, Medical Legal Partnership with four children in support.

Aloha chair Evelyn, Members of the Committee. My name is Deja Ostrowski. I'm an attorney with the Medical Legal Partnership. We provide free legal direct services to folks at a community health center. And I know we have a lot of folks here, so I'm going to keep my comments short.

I know we talk a lot about building the new units and I think what's really important is talking about who gets those new units. This is a very technical Bill and I think I want to focus on two things.

Just from what we're seeing with folks at KPT is that we need to make sure we have a communication program and I submitted amendments in my testimony and I have here for you Things that the tenants have prepared to talk about all the problems that we're seeing that I hope you will look at that.

It's very important what you're requiring as part of that communication program. It's not just communicating with tenants for the relocation, but through the duration and then offering that right to return. I think there's been a lot of talk about can they actually qualify for the new units that are being built that they've been displaced for.

And I think what tenants are looking for is at least the opportunity.

And I think every time we talk about building these new units for our local families, we're asking you as our representatives to have regulations in place that are clear and enforceable so that tenants can say, I should at least be offered the right to return to this new unit that you demolished my community for so that I, as a local, can return to where I've lived for generations.

And I think there's a lot of folks who have brought up lots of small little pieces for that. I think we can find a way to make this Bill work for the tenants that we see every day.

And I'm going to stop so, because I know we have a lot of folks here who can talk about what their everyday experiences are. And these are the folks that we are supposedly building this housing for. So I really appreciate the opportunity to bring up their stories to you. Thank you.

What's that?

Yeah.

Okay.

Yeah, thank you. Sorry, just to clarify, was this test. This was not submitted via testimony, right?

No, it wasn't. We actually found out so late. I tried to get the testimony in time and this is like compiled with them to kind of show you what they're dealing with, which what's being offered is comparable units, the problems they're having with the communication.

And I think this is like a canary in a coal mine for what we're going to see. Most of these development schemes, as you know, are layered with layers of financing that are provided to the developers. So I'm available for questions now or even afterwards.

I would like to make sure that we solve this problem so we don't see this in the future.

Thank you. And we'll work to get this uploaded as late testimony for the online.

Thank you. Bianca Isaki, an individual in support on Zoom. Okay, thank you, chair. We got 22 other individuals in support and one with comments. Are there any other persons online or in person here to testify on this matter before us?

Hi, my name is Linda Tomonico and I'm a resident in KPT community. I live in the low rise. So a lot of us in Kpt, there's a lot of fear. Yeah. Because residents need to be moved out by March 16th. I am one and a lot of others who are not able to be here.

I am against the redevelopment due to the fact is we asked if on paper we could get statement, if we could return. Not only that, a lot of families are being displaced. The disabled people don't have a place to live. They're still stuck where we're at. They haven't found decent places for them to live.

The old people where I live, they really don't want to move. Yeah. And even the children, the youth, the young children. We've been standing every Thursday this whole month of January holding our signs up and saying that we don't want redevelopment to take place. I feel that our rights have been violated.

I really feel if Michael's Development would sit down with the community and talk to us what we want to happen in our community, it will be a better place for all of us to work together. You know, we're. We're. We want. We. We're people that because we live in the housing, we're being looked over. Yeah.

And we will fight till the end. Even if they're going to demolish the plate, we're not going to give up because we feel we have rights. I lived in the housing there 20 years. I've been brought up in Palolo housing. I take pride in where we live in and I love our community. We're different cultures. Yeah.

Another thing I wanted to ask. Is it possible that we can speak in our native tongue when we come up? Because we have. We do have Members here that speak, you know, in our own Samoan language or Chukis language or whatever the language would be. That's another thing Michaels have not provided us with.

When we do go to the meetings, there's no language interpreter. So the other people, they cannot understand what they're talking about. So, you know, my thing is, you know, if you could help us, work together with us, even with hpa. Yeah.

I mean, we're people, too, you know, and we don't feel like we should be displaced all over this island because they want to make something, you know, built and, you know, money shouldn't be the purpose. They should have compassion for everybody. Thank you so much.

Thank you.

And just let me.

Ma'am, just to clarify. So the house does provide volunteer interpreters. I believe it does have to be coordinated in advance so we can ensure that they're here. But in the future, we certainly can provide those services. Thank you so much. Yeah, thank you.

This means hello. My name is. I live KPT for so many years. Like 30 years. The place where I live, I like for your grandkids. They know like change school. They like leave, go hill. They love the neighbors. Our neighbors are good. I go clean their site, they always call me mama or mom.

Other kids around where I live. But I'm asking, please don't redevelop when we leave other people near. They are like my family. We all get along good. I scold the kids if they do something bad. They listen to me because they know I'm there for them.

If any people come and chase them or do something bad for them. But just come and fix what is wrong. But the place where we live is good. That's all I'm asking. Please.

Thank you. Thank you. Anyone else online or in person wants to testify on the matter before us.

Pass us not o panel of legislators hear our humble cries. My name is Sister Auntie June. I am also a longtime resident of Kuhill Park Terrace. My problem is if they would have done this in a better way to perpetuate the righteousness of the people, I don't think our island people would have had a problem of redevelopment.

But because the compassion people feel wasn't there, that's why there's a problem. Even moving all of our keikis, o Ka'ainas, Ikuponas and Laos to the different places of the island is cause for bullying. We don't live in a society like we used to. Aunties and uncles could scold your kids no problem.

Today you even look at somebody's kid the wrong way, zero wow, they like beef already. And if they don't fix this problem with all the redevelopments from the mainland that is coming in every single housing throughout our whole state island gonna have one problem.

You know, I live in Kalihi, but I attend church way out in Waianae like in the days of Moses. And on my way coming back to Kaliha, I see all these tents on what we used to call our beautiful, what they say west side, but we used to say leeward side of the island.

And it's gonna get worse. We are living in trying times. And if we don't nip it in the bud now on how redevelopment is going along, it's going to be worse. And I'm asking all of you to please help be the voice behind our voice and help us island people. We don't live mainland, travel upstate downstate.

Like I said, on the news we live on an island where we only can go round and round the mulberry Bush. So I'm asking you to help fix this problem. Now they bring in a company from the mainland and I know time is of the essence.

Forgive me but if you invite me back, I would like to share my mana with you. But you know they bring this company in from the mainland Seneca. I have nothing against them but the way they go about doing the relocation is cracks, I tell you, cracks.

They send out people to camp for the house is all bust up who like living there. I might as well stay right where I am. They sent them to Halawa. Halawa is going to be torn down. They sent them to me soon to be bused on as well. You know it's just a mess.

So once again I'm asking you to please help be the voice behind our island voices. Much love.

Thank you. Anyone else online or in person want to testify on this matter before us?

Good morning. My name is Rona Mangayam, the Youth Services Director of Kokua Kalihi Valley. We provide safe spaces for youth in Kalihi with hope that we'll be able to provide also a healthy living for them in holistic way. One of the questions that we continue to ask in our conversation is what keeps you awake at night?

And one of the student in one of our program wrote this her reflection. She said in the redevelopment concerns and issues that's going on in the kpt. She lives in the low rise. She said one thing I know it will affect our accessibility to school, work and other resources.

We most really rely on the bus for transportation and here we live in close range bus stops. Our current location is in walking distance to my school, my dad's work and the research center which has been very helpful to my mom.

My parents are worried about having to start over not having transportation to my dad's job and my mom not knowing where to go to help get resources in a new place.

They also like that here we have our own yard as well as our own washing machines which we may not have in the next place we move to. We also don't like the idea of moving away from our neighbors.

We have come to love them and we're afraid we may not have the same bond with neighbors if or when we move. And he said I don't really like how they're doing this. Knowing some people have been here most of their lives creating memories for generations. To us this is home.

The Bill says the right to return as tenant is not just returning to a place of or to a space to live.

But for them, it is the right to go back to their home, to the many stories that their ancestors have built, to the many connections that they have been part of, who they are, into a neighborhood where they felt connected, loved and accepted and live safely with one another. So please consider this. Thank you.

Thank you. Anyone else online or in person want to testify on this matter before us?

Seeing None Chair Members, any questions for the test drivers? All right, Seeing None. Thank you all for your passionate testimony. We will be Moving on to HB 1409 related to transit oriented development.

Dean Minakami, HHFDC, in support. Thank you. Mary Alice Evans, OPSD, in support. Thank you. Don Takeuchi, Department of Planning and Permitting with comments. Thank you. Arjun Ahim, Hawaii Apple Seed, in support. Thank you. Damian Waikoloa, Hawaii yimby, in support. Ted Kelis, Grassroots Institute of Hawaiian support. Thank you. Josh Wish, Holomua Collaborative, in support.

We'll also stand on our testimony in support.

Thank you.

Thank you. Perry Arra Smith, Housing Hawaii's Future, in support. And Deja Ostrowski with comments. Thank you. Anyone else online or in person wants to testify on this matter before us?

Seeing None Chair Members, any questions? All right, seeing none. HB 1410 related to housing Chair for the testimony.

Yeah, sorry. Thanks, Chair. Chair Don Chang, DLNR with comments. Dean Minakami, HHFDC and support. Thank you. Gary Suganuma, Dotax with comments. Thank you. Louis Salivaria, Department of Budget and Finance, with comments. Tina Andrade, Catholic Charities of Hawaii and support.

Good morning, Chair, Vice Chair and Members of the Committee. I'm Betty Lou Larson representing Catholic Chairs. We support this bill. We feel that 10% to DURF is needed. The 8% for permanent support of Housing Special Fund is very needed to create housing permanently for people who have special needs.

However, we do ask for one amendment and that is that we retain the 50% of the conveyance tax revenues to the Rental Housing Revolving Fund. That's what it's currently at. We do support raising the cap to 50 to 50 million.

However, we feel that lowering the cap to 38 million or I'm sorry, lowering the cap to 38% sends the wrong message to the community. We need to have a strong support of affordable housing in the future and it gives us options to look at the 50% or the cap in the future.

So we really hope that you'll make that amendment to keep the 50% in and the rest of the bill is great. Thanks a lot.

Aloha Chair Vice Chair Members of the Committee just want to clarify a couple of things. We do want to change our original testimony from opposition to comments only. Our calculations were done doing some different numbers and we sincerely apologize for any confusion that may have caused.

Thank you. Betty Lou. Ted Kaphalis, Grassroots Institute of Hawaii with comments.

We tried to submit a revised testimony explaining our position. I do want to caution one major concern we do have about this is the potential impact to adaptive reuse. You guys passed a great bill last year, Act 37, that would help, you know, convert old units or old commercial buildings or whatnot into residential units.

But increasing the conveyance tax on some of these older buildings, especially those that don't qualify as multifamily residential, may end up actually discouraging some of those adaptive reuse projects. So we appreciate your understanding of our issue earlier and apologies once again.

Thank you Arjuna Heim, Hawaii Appleseed in support.

Arjuna Heim on behalf of Hawaii Appleseed.

I also need to add a correction to my testimony in my shock of the actual tax amount I apparently overcorrected dropped a zero in my math when I first ran the numbers on the $4.5 million sale of an investment home in the current testimony, I think I reported that the new conveyance tax rates is much lower.

It actually would be $61,500 owed and that was such a big jump even to myself. I think I second guessed myself and ended up adding doing a lot of things. So my apologies for the error and I appreciate the chance to fix it.

HB 1410 does raise taxes on investment owned high end properties and that's a good thing. In addition to a strong remains tax ensures that when high end real estate changes hands, the state captures some of that value to reinvest in affordable housing infrastructure and public needs.

If we're talking about multimillion dollar sales, we should be talking about multimillion dollar contribution to the community. And right now we're leaving a lot of the money on the table. I'd also like to highlight an important issue with the way our conveyance tax is structured.

This tax applies a marginal rate, meaning the rate increases as the price of a home rises. However, a home sale price isn't set in stone, it's negotiable. Sellers and buyers can adjust the price to land in a lower tax bracket, effectively avoiding some of the tax burden to keep prices just below certain thresholds.

In practice, this means that our current structure may unintentionally incentivize higher home prices as sellers aim to offset their tax burden or pass it on to buyers. In a state where affordability is already a crisis, we should not have a tax system that contributes to the excess cost of housing.

For context, other states apply much higher conveyance tax rates. Delaware charges $3 million on any home, and they have a median home price of 300,000. Washington, 3% as well on a median home price of 600,000, and Vermont 1.5%, and only at the high end values. And their median home price is 350,000.

Meanwhile, Hawaii's median home price is around 1 million. Yet our highest tax bracket of 1.25% only applies to sales over $10 million. The result is that our tax structure does little to address the extreme price escalation we've seen, especially at the high end of the market. If our goal.

If the goal for our conveyance tax is to generate revenue fairly and encourage affordability, we should be rethinking these thresholds so that we're not unintentionally pushing prices even higher. I urge you to maintain the marginal rate structure. I really like it. And to move this bill forward.

Thank you.

Thank you. Next we got Tom Yamachika, Tax foundation of Hawaii with comments on Zoom.

Okay.

Lindsay Garcia, Hawaii Realtors, in opposition.

Thank you.

Thank you. David Arakawa, Land Use Research foundation of Hawaii, in opposition. And Stacy Alapai, individual in support. Anyone else online or in person wants to testify on the matter before us? Seeing none chair Members.

Any questions? Rep.

Berick, this question is for Appleseed. Thanks for coming here to testify. My question is, with the changing of this tax structure for these homes, can you give me an example of the new tax structure for this? Let's say the house is $1.0 million. It sells. What would the new taxes be for that house?

Yeah, so we have that in our testimony as well. I'm more than happy to talk about it. So I use an example of a $1.1 million home sale for a resident owner. Under our current tax structure, they would owe $3,300 in conveyance tax. Under this proposal, they would owe 2,600.

So you effectively drop the tax on probably the majority of residential homeowners when they sell their home, which I think is also a benefit.

Thank you. And then follow up questions with the grassroots teach. Thank you for assuming testimony. There's a part in this Bill that talks about Transient Oriented Development. Is this so that we're incentivizing development near the rail?

Yes. So I don't have the Bill in front of me, but yeah, I mean, certainly we want to incentivize more transit oriented development. As we've testified on the earlier bill, 1409, I think that the counties have also kind of pushed in that direction. If you look at all four counties, they all have some form of DOD zones.

So I do think that it is something that could help propel additional investment when it comes to that.

Well, thank you. And to kind of help me understand this Bill and the previous Bill, is it basically giving incentives or more taxes towards the developers to build next to the rail?

For this bill and the last bill, I would have to double check that. Representative, I can get back to you on that.

Thank you. Does anybody else submitting testimony know the answer to that question? Okay, thank you.

Sorry, could you repeat the question?

Does this bill and the last bill basically favoring developments or projects for the rail, like building homes next to the rail?

I can. No, there's nothing specifically that would give a tax incentive for development near the rail. There's incentives for reducing regulatory barriers around the rail, but nothing that would be a specific tax incentive. Thank you. Yeah, as far as I can see. Thanks. Members, further questions? All right, actually, sorry, I do have a question for dotex.

What are the approximate current annual conveyance tax collections?

Almost 100 million.

Okay.

97.4 in 2020.

And in prior discussions about the Bill, DOTEX had estimated additional revenue of somewhere around $30 million. With these changes.

Yeah.

Okay.

I mean, did we. Is this from last year?

This was from this year. This was.

Oh, okay. So I'm not. I'm not privy to the estimation.

Okay. That 100 million is helpful, though. Thank you. All right, Members, are there further questions? Seeing none, we move on to HB 1451 related to affordable housing. Establishes the Affordable Housing Land Inventory Tax Force. Vice Chair for the testimony.

Craig Nakamoto, Hawaii Community Development Authority, with comments. Thank you. Mary Alice Evans, OPSD, with comments. Thank you. Hakeem Wan Safi, Hawaii Public Housing Authority, in support. Thank you. Dean Minakami, HHFDC, in support. Thank you. Anyone else online or in person wants to testify on this matter before us?Seeing none, Chair.

Members, any questions?

All right, moving on to our final bill, HB 286 relating to the Individual Housing Account Program.

Vice Chair for the testimony, Tom Yamachika, Tax foundation of Hawaii, with comments on Zoom. Pamela Tunpap, Maui Chamber of Commerce, in support. There's 15 individuals also in support. Chair. Anyone else online or in person wants to testify on the matter before us? Seeing none, Chair.

Members, any questions? All right. Seeing none. We are going to recess briefly for decision making.

Decision making here. Thank you again to everybody who provided amazing and passionate testimony. We appreciate it and those of you who spent a lot of time with us this morning.

All right, for HB606 relating to the Department of Homelands, my intention here is to move out in HD1 with technical amendments for clarity, consistency and style and also with a defected date to July 1, 3000.

And just for clarity, for anybody here who doesn't know the reason we defect, the date is just to ensure continued dialogue on these bills through conference and then also to blank out the $600 million appropriation and reference the amount in the Committee report that that's the intended amount, but we want to move it forward without a.

Without an appropriation, as is our standard practice in the House. Members, any comments on HB 606? All right, Vice Chair for the vote.

Voting on House Bill 606. Chair's recommendation is to pass with amendments. [Roll Call] Chair, your recommendation is adopted.

All right, thank you, Vice Chair. Next item is HB 1086 relating to housing. My intention is to move out in HD1 with technical amendments for clarity, consistency and style and a defected date. Members, any comments seeing? None.

Vice Chair for the vote voting on HB 1086. Chair's recommendation is to pass with amendments. Chair, sorry. Noting the excused absence of Rep. Cochran. Are there any Members voting? No. Any with reservations?

Chair, your recommendation is adopted. Thank you, Vice Chair Miyake. Next bill is HB 1408 related to the Department of Hawaii and Homelands. I recommend we move out an HD one with a defected date and again to blank out the appropriation, but to reference that appropriation amount in the community report. Members, any comments?

All right, Vice Chair for the vote.

Voting on HB 1408. Chair's recommendation is to pass with amendments noting the excused absence of Rep. Cochran. Are there any Members voting no with the reservations seeing? None. Chair, your vote. Your recommendation is adopted.

Thank you, Vice Chair. Next item is HB739 related to housing. I recommend moving out NHD1 with technical amendments for clarity, consistent and sile with a defected date. And bear with me here.

We're going to adopt the amendments proposed by the Attorney General to remove the duration of requirements in the retirement and disability clauses of the Bill on page nine. The intention here is to make sure that we're moving forward a Bill that is constitutional in nature.

But I do want to reference in the Committee report that the hope is to add those durational requirements back in if we can find a constitutional manner to do so.

So this is an item of continued dialogue, but for the purpose of the Bill we're going to move remove just the durational requirement while leaving in the provisions allowing for retirement and disability just with no duration. Reference in the Committee report an effective date of January 12026 to give Dotex time to implement the contains tax exemption.

Further, we want to make a note in the Committee report the concerns brought up by Tom Yamachika around wanting to ensure that the conveyance tax is not charged on the purchase of the deed restriction.

And then based on HHFDC's concerns that CCNRs may have to be in first position in some planned communities, clarify that the deed restriction can be secondary only to CCRS.

CCNRs with a requisite first position based on the concerns raised by Appleseed and their testimony include language that would distribute the funding equally to each interested county rather than based on population to ensure that neighbor islands can have access to enough funding to make it worthwhile to establish a program.

Adopt the proposed amendment provided by Holomua Collaborative in their testimony to allow HHFTC to provide each county with an annual lump sum in advance for the county to use when purchasing deed restrictions and include a provision that if the money is not spent within a year, that HDFTC can recover those funds.

And then clarify in the Committee report that the legislative intent for the amount paid to the property owner for the deed restriction is essentially what the market rate for that deed restriction is. Right.

So this is going to be a negotiation process between the county and the landowner to determine appropriate appropriate rate, with the goal being high enough to incentivize the property owner to sell the deed restriction while low enough that it's an effective use of government funds. That's all Members. Wait one second here. Yeah, we're good Members. Any comments?

All right, Vice Chair for the vote.

Voting on HB 739. The Chair's recommendation is to pass with amendments noting the excuse absence of Rep Cochran. Are there any Members voting? No. Any Reserve? No. Any Members with reservations? Chair, your recommendation is adopted.

Thank you, Vice Chair. Next item is HB 740 Housing Technical Amendments for clarity, consistency, style, defect the date.

Same amendment as the previous bill to delete the duration requirement in the provision relating to retirement and disability, but to reference the desire to work with the Attorney General's Office and bring that back in a later date if we can mirror the 103D exemption language from HB739 which would exempt it from the Procurement Code.

Clarify in the Committee report that the bill should have an effective date of January 1, 2026 to give do tax time to implement the conveyance tax exemption. Clarify that the deed restriction shall apply to both the main House and the ADU, based on HHFDC's concern that CCNRs may have to be in first position in some planned communities.

Clarified that the deed restriction can be secondary only to ccnrs with a requisite first position. Again based on Appleseed's testimony, apply the funding equally to each interested county and allow HGFTC to provide each county with a lump sum for the county to use when purchasing deed restrictions. Right.

The intention here is that the deed restriction part of this bill will essentially mirror the deed restriction component of the other bill with the difference that it has to go towards funding an ADU and that the deed restriction applies on the main house and the ADU and then again clarifying the Committee report the legislative intent of ensuring that the price that the county will pay for that deed restriction is essentially a negotiated price.

That's all. Members Comments? Great. Vice Chair for the vote.

Voting on HB740. The Chair's recommendation is to pass with amendments noting the excuse absence of Cochran. Are there any Members voting? No. Any reservations? No. Chair, your recommendation is adopted.

Thank you. Next item is HB949 related to the low income Housing Tax credit. I recommend we defect the date and adopt DOE Taxes amendment to provide a specific adopt the language in DOE Tax's recommended amendment to provide a specific time period for reporting Members. Any comments? Seeing none. Vice Chair for the vote.

Voting on HB949. Chair's recommendation is to pass with amendments noting the excused absence of Representative Cochran. Any Members voting no. Any Members with reservation? Seeing none. Chair, your recommendation is adopted.

Okay, this next bill I have some concerns with, really mainly given DOE Tax's testimony about the difficulties of implementation, the difficulties of determining TAT from each county and DOE Tax is I think strong urging that the effective date be moved to 2027.

The intention as I understand it with both HP 949 and HP 916 is to expand the eligible pool of people who can qualify for LIHTC credits in the state to ensure that we are fully funding lihtc, of which there has been a sort of a, hopefully a temporary contraction given turmoil in the insurance market.

So if we're pushing this out to 2027. I worry that this isn't going to actually fill the need that we need it to fill. That said, I think there is still value in continuing to move this forward for continued dialogue and that I think that the idea has a lot of merit.

So we are going to move it forward with an HD one. And I recommend adopting the amendment provided by testimony from DOE Tax to amend Chapter 237d with a provision allowing for the application of the low income housing tax credit to a taxpayer's liability defect the date.

Add in the Committee report a recommended effective date of January 1, 2027 to allow DOE Tax's time to figure out implement Members, any comments? Okay, Vice Chair for the vote.

Voting on HB916. Chair's recommendation is to pass with amendments noting the excuse absence of Rep. Cochran. Any Members voting no with reservations.

Chair recommendation is adopted. Thank you Vice Chair Miyake. Next bill is HB 1298 relating to housing technical amendments for clarity, consistency and style. Sorry, I recommend moving on an HD one with technical amendments needed for clarity, consistency and style with a defected date.

Well, I recommend adopting HHFDC's recommended amendment to require that at least 60% of available units shall be for persons and families with incomes at or below 140% of the median income.

I recommend adopting HHFTC's recommended amendment to exempt design and development contracts for condominiums within TODs and construction contracts from Chapter 1 of 3D on page 6, lines 1 and 19 to add interim and permanent before loans and then page 8 line 18 to change nonprofit organizations to State departments and attached agencies.

Page 10 line 15 Change shall to May to give HHFDC flexibility to credit rent towards the purchase of the unit and then to reference in the Committee report that the program would need $450,000 for two full time positions to administer the program and then to reference in the Committee report that we need to work on clarifying what happens with any accumulated funds that were intended to go towards UPW is concerned rental funds that were intended to go towards purchase of the unit.

If that person doesn't end up purchasing the unit, what happens to those funds?

And I want to note that I think there is still a decent amount of work to try and clarify the intent and the purpose of this fund, but given that it's going to the introducers Committee in Finance, I think that he can try and clarify some of this going forward. So that's my recommendation. Members, any comments?

Yeah Rep. Here.

Thank you. Great idea wanting to reduce the cost of housing, help people have housing. Those are values I coincided with with the introducer. But why I'm voting no is that, you know, people can apply for this if they make up to $136,000. And and I think there's $400,000 going towards two people's salaries.

If I'm mistaken, that's like $200,000 each just to manage who can get a loan. So and this is only for government workers. So my thoughts are let's reduce regulation to help the cost of housing go up versus let's spend more taxes so that government workers can have some housing.

Okay, thank you for your comments. And just to clarify real quick, if as the incomes go up for any affordable housing project, the essentially the price that can be charged for that unit goes up commensurate to that. So the subsidy required wouldn't be nearly as large for 140% unit. But definitely note your concerns there and appreciate them.

Thank you Members. Further Comments all right, Vice Chair for the vote.

Voting on HB 1298. Chair's recommendation is to pass with amendments noting the excused absence of Rep. Cochran. Are there any Members voting? No. Any with reservations? I got. Yeah, sure. Chair your recommendation is adopted.

Thank you Vice Chair. Next item is HP 1317 relating to workforce housing. I recommend moving out in HD1 with the defective Date with Tech amendments for clarity, consistency and style and to explicitly grant authority to the regulatory sandbox to waive or temporarily modify permitting processes or other regulatory requirements.

I think that was the clear intent, but it wasn't necessarily clearly stated in the bill. Add also the following Members to the Advisory Council. One representative from each county planning Department and one representative from each County County's respective building or public works divisions.

Also one representative from the Office of Planning and Sustainable Development and then to make the representative from the Office of Planning and Sustainable Development the Chair of the Committee.

And then for the work requirement in section section 7 of the bill to mirror the language from HB739 and HB740 regarding working 30 hours per week at a qualified business. This is just amending the current work requirement in the bill to mirror the others. And that's all. Members comments? Vice Chair for the vote.

Voting on HB 1317. Chair's recommendation is to pass with amendments noting the excuse absence of Rep. Cochran. Any Members voting? No.

Any with reservations

WI please.

Thank you. Chair your recommendation is adopted.

Thank you, Vice Chair. Next HB 1325 related to housing. I recommend moving on an HD one with technical amendments for clarity consistency and style and with a defected date.

And I would like to also adopt HHFDC's proposed amendment to allow the developer to have the option to offer a unit in the development at the same rate or Fund relocation benefits and create a relocation program for displaced tenants and in the event that a tenant is returning to the unit to ensure that there is a program to offer temporary relocation assistance during the time period of construction.

I'd also like to adopt the amendment proposed by Hawaii and ensure that in the case where a developer opts to Fund relocation benefits to ensure that the tenant has the option of choosing either rent in a comparable unit or a lump sum payment equivalent to what that rent would have been at the tenant's choice and then adopt both amendments provided in testimony by the Medical Legal Partnership to clarify communication throughout the process and to clarify that all federal requirements still apply in the case where federal relocation rules apply.

Members Any comments?

I just wanted to say thank you to the people who came to testify. I think most of them left but. Really appreciate them taking the time.

Thank you Rep Grandinetti. I mirror your appreciation. It's a big effort to come here and spend half a morning with us or all morning. Members further comments? All right. Vice Chair for the vote.

Voting on HB 1325. Chair's recommendation is to pass with amendments noting the excuse absence of Representative Cochran. Any Members voting no with reservations seeing none. Chair, your recommendation is adopted.

Thank You Vice Chair HP Next item is HB 1409 related to Transit Oriented Development.

I recommend moving out on HD1 with technical amendments with a defected date and then to further clarify the intent to delete section 2 of the bill in its entirety and then instead within the rental housing revolving fund, add a definition of transit supportive density using all of the provisions that currently exist in Section two of the bill.

But we have something broadly along the lines of Transit supportive density shall mean a county designated Transit Oriented Development Area that meets the following requirements and then listing all the requirements that were previously in Section 2 and also including the relevant requisite floor area ratios within the larger definition of transported density and all the other provisions listed in Section two of the bill.

That that is just to try and ensure that we have sort of clarity on the intent as as the existing language was a little bit muddy in Section three of the bill, changed the Tod priority proviso to instead reference the newly created definition of transit supportive density.