Senate Standing Committee on Housing

Good afternoon. It's 1:02 p.m., I am Stanley Chang, Chair of the Committee on Housing. I'd like to welcome our Vice Chair, Senator Hashimoto, and our Committee Member, Senator Elefante. This meeting is being streamed live on YouTube.

In the unlikely event that we have to end this hearing due to technical difficulties, the Committee will reconvene to discuss any outstanding business at Thursday, February 5, 1 p.m., in this room, 225. And a public notice will be posted on the legislature's website. We have a one minute per testifier time limit today.

We have three different agendas that we'll be taking up today. We have a one o' clock hearing. We. We also have a deferred decision making at 1:00 p.m. hearing. And that's the order that we'll be taking today's hearing. And so, our first agenda today is going to be the one o' clock hearing.

Our first measure on the one o' clock Agenda is SB 2189, relating to HHFTC, which repeals the requirement that the chairperson of HHFDC board of directors be a public Member and and repeals the prohibition on certain Members of HHFDC Board of Directors from serving as chairperson. Our first testifier is HHFDC with comments.

Good afternoon, Chair and Vice Chair. We stand our testimony offering comments.

Thank you. Is there anyone else wishing to testify on SB2189? Any Members, any questions? Our next Bill is SB2195 relating to HHFTC, which adds the Executive Director of HPHA to the board of directors of HHFTC. Our first testifier is HPHA with comments.

HPHA stands on its testimony.

Thank you. Is there anyone else wishing to testify on SB2195? Any questions, Members? All right. Our next Bill is Senate Bill 2196 relating to HPHA, which adds the Executive Director of HHFDC to the board of HPHA. Our first testifier is HHFDC with comments.

Stand on our testimony offering comments.

Okay. Followed by HPHA with comments. Thank you. Any other testimony on Senate Bill 2196? If not numbers, any questions or discussion? Okay. Seeing none.

Our next Bill today is Senate Bill 2190 relating to inclusionary zoning, which prohibits any law, ordinance or rule from imposing an inclusionary zoning requirement on housing offered exclusively for sale or rent in perpetuity to buyers and renters who are residents of the state, owner, occupants or renters, and own no other real property.

Our first Testifier is HHFDC in support.

HHFDC stands on its testimony in support.

Followed by Honolulu DPP with comments followed by Hawaii YIMBY and Support, Grassroots Institute of Hawaiian Support and Hawaii Appleseed in support. Housing Hawaii's Future in support for four individuals, Will Karan Tia Pearson, Emma Waters, and Pua Aoyang White in support. Is there anyone else wishing to testify on Senate Bill 2190? Okay, Members, any questions? Okay.

Our next Bill is Senate Bill 2234. Clarifies the definition of Qualified Nonprofit Housing Trust in Chapter 201H, Hawaii Revised Statutes to require qualifying organizations to exclusively serve qualified residents as defined in Section 201H-32HRS. Our first testifier for Senate Bill 2234 is HHFDC in support.

HHFDC stands on its testimony in support.

Thank you. Anyone else wishing to testify on SB2234?

If not, any questions or comments? Members okay seeing none. Our next Bill is SB2177 relating to housing, which clarifies that projects seeking exemptions from planning and development laws and rules may be modified by the HHFDC under certain conditions. Authorizes HHFDC to make recommendations to appropriate legislative bodies.

Requires HHFDC or our county to accept an application seeking certain exemptions within 30 days and to process the application within 120 days before final approval by a county legislative body for certain housing projects.

Provides that any application that is neither approved nor denied by the county within 120 days shall be approved unless the county can demonstrate why an approval of the project would not be appropriate or would adversely affect public safety. Our first testifier is HHFDC with comments.

HHFDC stands on its testimony in support and also offering comments.

Thank you. Anyone else wishing to testify on Senate Bill 2177? If not Members, Any questions or discussion? Okay. Seeing none.

Next we have Senate Bill 2424 relating to HHFDC removes the prohibition against qualified residents for HHFDC approved projects holding a majority interest in land and removes the requirement that qualified residents demonstrate financial viability or ability to pay rent.

Amends exemptions from statutes, ordinances, charter provisions and rules for certain housing projects developed by the corporation that satisfy certain conditions, including requirements related to employment, owner occupancy and deed restrictions. First testifiers HHFTC in support.

HHFDC stands on its testimony in support.

Okay, Next is Holomua Collaborative in support.

Matt Prellberg on behalf of Holomua Collaborative, we stand on our written testimony in support.

Thank you. Hawaii Appleseed in support. Kobayashi Group in support.

Yes, Kobayashi Group in support and we provided our testimony. May I share a few additional thoughts?

Yes, please.

Thank you. Thank you, Chair. I'm Alana Pakkala, CEO of Kobayashi Group. And thank you for the opportunity to testify in support of SB 2424. I know we all know that Hawaii continues to face a significant shortage of housing. The Hawaii Planning Housing Planning Study estimates we need 60 over 64,000 additional homes by next year.

And the shortage does span the entire income spectrum including almost 10,000 homes needed for households above 140% AMI. We just wanted to note in that significant amount of buyers at our Kuilei Place project were over income or sometimes only by a few hundred dollars, but they could not afford market rate housing.

And so this opportunity to open up housing for a broader pool of local households would be significant. Thank you.

Thank you very much. Housing Hawaii's future in support. IO Family of companies in support. Hawaii YIMBY in support. Sam Dorios, Will Nguyen in support. Anyone else wishing to testify on Senate Bill 2424? Okay, if not, any questions or comments, Members? Seeing none.

Our next Bill today is SB2194 relating to housing which requires applicants for Rental Housing Revolving fund monies to be either organizations that are required to use all financial surplus excluding fees to develop additional housing in the state or government agencies. Our first testifier is HHFDC with comments.

Stand on our testimony in support and also offering comments.

Thank you. Hawaii Public Housing Authority in support.

HPHA stands on its testimony in support.

Thank you. Anyone else wishing to testify on Senate Bill 2194? Okay, if not, any questions or comments, Members? Okay. Our next Bill is Senate Bill 2342 relating to housing.

It establishes a working group to revise the HHFDC Qualified Allocation Plan and proposed revisions to the prioritization of the Rental Housing Revolving Fund in the terms of loans made from the Rental Housing Revolving Fund. Requires report to the Legislature, appropriates funds, requires HHFTC to make certain revisions to the 2026.

QAP prohibits HHFDC from allocating low income housing tax credits or monies from the Rental Housing Revolving Fund to projects without a perpetual affordability commitment. First testifiers HHFDC with comments.

HHFDC stands by its testimony offering comments.

And HPHA in support.

HPHA stands on his testimony in support.

Okay, any questions, Members or discussion or is anyone else wishing to testify on Senate Bill 2342?

Yes, Deja Ostrowski here for Office of Applied Affairs.

Thank you. Okay, Chair has one question for HHFDC. How much money has the Legislature appropriated to the Rental Housing Revolving Fund since 2016?

Since 2016, I believe the number is about $1.1 billion, including conveyance tax revenue.

Can you get us the final numbers on that? Okay. Okay, thank you.

Okay, that brings us to the end of this agenda. Do we need to take recess Members or should we just go straight into decision making? Actually, yeah, we do. Yeah. We'll take a recess to allow other Members of the Committee to return to the hearing room before decision making. We're in recess. Good afternoon and welcome back.

We are now entering decision making for the Housing Committee's 1pm hearing on February 3rd. Our first bill for IS 20, Senate Bill 2189 relating to HHFDC. Chair's recommendation will be to pass this measure unamended.

And in the Committee report will note the major financial decisions made by HHFTC, including awarding $299,224,078 in rental housing revolving fund loans in their 2025 funding round and the need for transparency and accountability in these decision making processes.

We'll note that the scores are never made public and that there are no public explanations for why some projects with high scores go unawarded and others with lower scores do get awarded. We'll note that some applicants have argued that 75% of state HFAs have less discretion than HHFTC in awarding these loans.

And 90% of state HFA directors have less discretion than HHFDC Members. Any questions or comments? If not Chair's recommendation for Senate Bill 2189 is to pass unamended. Chair votes aye.

Members SB2189, Chair's recommendations passed on amended. Chair votes aye. Vice Chair votes aye. Senator Elefante, aye. Senator Rhodes is excused. Senator Favel is excused. Chair recommendations adopted.

Thank you. Our next Bill 2195, Senate Bill 2195. We'll defer that one based on the comments of the testimony. And as for our following Bill after that, Senate Bill 2196, we'll also be deferring that due to the comments and testimony. Next we have Senate Bill 2190 relating to inclusionary zoning.

Chair's recommendation we to pass this measure with amendments. The amendments will be to insert a clean date and also to correct to insert technical, non substantive amendments for the purposes of clarity and consistency. Members, any questions or discussion? Vice Chair. Okay. Okay. So For Senate Bill 2190, recommendation to pass with amendments. Chair votes Aye.

Members SB2190, chair's recommendation passed with amendment. Chair votes Aye. Any Members voting with reservations? Any Members voting no? With all others voting Aye. With the note of Senator Rhodes and Fevella excused, Recommendations adopted.

Thank you. Our next bill is Senate Bill 2234 relating to housing. Chair's recommendation will be to pass the measure with amendments and we have technical non substantive amendments for the purposes of clarity and consistency. Any questions? Okay, so for SB2234 Chair's recommendations pass with amendments. Chair votes Aye.

Members SB2234 Chair's recommendations passed with amendments. Chair votes Aye. Any Members voting with reservations? Any Members voting no with all others voting Aye with a note of excusal for Senator Rhodes and Fevella for this bill and all others. Your recommendations adopted.

Thank you. Our next bill is Senate Bill 2177 relating to housing. Chair's recommendation will be to pass this measure with amendments. First of all, they're technical non substantive amendments for the purposes of clarity and consistency.

We'll also be taking HHFDC suggested amendments to remove the proposed new language in Section 201 H-381A in order to provide HHFTC and the county's flexibility in administering the 201 H38 program. We'll also take their amendment to Section 201 H381C3.

No modifications are made to the original language for Section 201 H38B to make the following modifications to create accountability and allow applicants time to address issues that may arise while an application is being processed. So read. B.

The corporation or county shall have 30 days to accept a complete application submitted pursuant to this section provided the application satisfies the requirements of the corporation's administrative rules. The Corporation shall have 120 days from acceptance of an application to process the application and bring it before the corporation's board of directors unless the applicant requests additional time.

A county agency processing an application shall have 120 days from acceptance of of an application to transmit the application to the county legislative body unless the applicant requests additional time and that will allow applicants to time to address the issues that may arise while an application is being processed.

And then finally, we will eliminate the amendments to section 201H-38C because the county timeline for county legislative bodies to act upon a project will be set forth in 201H-38A1C. Further in the Committee report will note that the legislative intent to require counties to submit 201H-38 applications to the county councils in 201H-381C3.

And 38C is effectuated by the amendments to 201H-38B. Any questions or discussion, Members? We'll also like to welcome Senator Rhodes at this time. So again, the recommendation for Senate Bill 2177 is to pass with amendments. Chair votes Aye.

This is the Chair. So are you changing the timelines then? Are you just giving those the times the same?

Those are the same.

Those are the same, yeah. Okay, great. All right, so Recommendation to Chair SB2177 is passed with amendments.[Roll Call] Recommendations adopted.

Thank you. Our next bill today is Senate Bill 2424 relating to HHFTC. So there were some outstanding questions that we didn't get answered or fully fleshed out in time for this hearing. Namely, whether the bill would allow units to remain vacant after the initial one year owner occupancy required period.

Owner occupancy period, whether county income restrictions should apply to These projects, whether HHFDC's 10 year buyback program would apply to these projects, and whether the bill would still require County Council approval. So we're seeking some legal advice on the effect of some of these provisions in the Bill on these requirements.

And so we will be deferring decision making on this bill until Thursday, February 5th at 1:00pm in this room. 225. Our next bill is Senate Bill 2194 relating to housing Chair's recommendation will be to pass this measure with amendment. Sorry. Unamended the Committee report. We want to note that HHFDC's concerns.

Note their concerns, but also that the bill allows applicants to receive a development fee as they currently do. The bill merely prevents applicants from receiving the windfall profit of owning the building as well. And also note that HHFTC receives many more applications than they can fund. We'll also note the successful Vienna Austria Limited Profit Housing association model.

The model for this bill in which LPHAs are allowed to make a profit, but are required to invest those profits into developing more housing in the future, thus creating a large and sustainable source of capital for future housing development. Members, any questions or comments? If not for SB2194, Chair's recommendation is to pass unamended. Chair votes Aye.

Members SB2194 chairs recommendations to pass unamended. Chair votes Aye. Any Members voting with reservations? Any Members voting no? With all voting Aye. With the exception of Senator Fevella for this bill and all others. Recommendations adopted.

Thank you. Senate Bill 2342 relating to housing Chair's recommendation will be to pass this measure with amendments in part one. We'll correct 0.15% interest to 0.25% interest. We'll also correct $1.04 billion to $1,216,100,000 in both conveyance tax revenues and legislative appropriations. Part two will specify that the working group will comply with any and all federal requirements.

Further, in the Committee report, we'll note the request for a $75,000 appropriation for a consultant and meeting facilitator Members. Any questions or discussion? If not for SB2342, Chair's recommendation is to pass with amendments. Chair votes Aye.

Members SB2342 Chair's recommendation is passed with amendments. Chair votes Aye. Any Members voting with reservations? Any Members voting no? With all others voting Aye. Recommendations Adoption adopted.

Thank you very much. And that brings us to the end of that agenda. Okay, so we can move now into the deferred decision making agenda at 1pm this bill had this agenda had three different bills on it, the first of which is Senate Bill 2060 relating to the Rental Housing Revolving Fund.

And at the outset the Chair wants to note that even though Chair had previously announced that SB 2062 would be the vehicle for amending the Rental Housing Revolving Fund mixed income sub account, due to legal concerns that that bill those amendments would not be germane, we're instead pivoting and making the amendments to this bill, SB 2060 instead.

And so the amendments so the Chair's recommendation will be to pass this bill with amendments and the mess the amendments include expressly including any and all forms of financing, including but not limited to equity, credit enhancement and collateral.

We'll also prioritize perpetual affordability, prioritize applicants that have a demonstrated history of early repayment to the rental Housing Revolving Fund. We'll also take technical, non substantive amendments for the purposes of clarity and consistency from SMA.

And we'll also insert language that requires that loans applied for and awarded after December 31, 2026 under the section shall be subject to review and renegotiation when any mortgage debt to which the loan is subordinate except bond volume cap mortgage debt made available to the bond volume cap recycling program referenced in subsection G is refinanced or retired.

Members. Any questions or discussion? Okay. If not so for Senate Bill 2060 Chair's recommendation is to pass with amendments. Chair votes Aye.

Members SB 2060 Chair's recommendations to pass with amendments. Chair votes Aye. Vice Chair Aye. Any Members voting with reservations? Any Members voting no. With all others voting Aye. Recommendations adopted.

Thank you. For Senate Bill 2063 relating to the RHRF, we are going to defer this measure because we are going to use Senate Bill 2060 as the vehicle for making changes to the mixed income sub account for Senate Bill 2070 relating to housing.

The Chair's recommendation will be to pass this measure with amendments will rename the program from Permanently Affordable for Sale Housing Program to Housing for Locals Forever program will allow ownership of another home for only one year after buying one of these homes. Ownership of other real property for only one year after buying one of these homes.

Otherwise ownership of other homes will be banned. In Section five on pages four to five, we'll also make clear that this is the program that will apply to the majority of the project units under HRS 201H-38 replacing existing requirements to have a 10 year buyback restriction, et cetera.

Further in the Committee report we'll note the concerns of OPSD and Stanford Car Development regarding building equity for future home purposes purchases and note HHFTC's intent to allow appreciation of 4.4% per year consistent with previous long term appreciation patterns that this will price the units out of reach to 140% AMI buyers over time just as how as home prices have outpaced income growth in Hawaii for decades.

Members, do we have any questions or comments? If not For Senate Bill 2070, Chair's recommendation is to pass with amendments. Chair votes Aye.

Members SB2070 Chair's recommendations passed with amendment. Chair votes Aye. Any Members voting with reservations? Any Members voting no? With all others voting Aye. Recommendations adopted.

Thank you very much. And that brings us to the end of the deferred decision making agenda at 1pm we have one final agenda today which is the 101pm agenda. There's only one item on this agenda which is SB2062.

We posted a proposed SD1, but because we've already made the amendments to that, we want to Senate Bill 2060 because we were advised that amending this bill in the manner we've proposed would not be germane. We do not intend to move this SD1 forward at this time. So we do have some testimony for this bill.

So we'll take that testimony quickly. But again we'll note that it is the Chair's intent to defer this measure. First is HHFDC with comments. Thank you. OPSD with comments. Thank you. Hawaii Community Foundation Support. Olumu Collaborative in support. Thank you and University of Hawaii in support. Anyone else wishing to testify on SB2062 and the proposed SD1?

Thank you Chair, Vice Chair. Arjuna Heim, on behalf of Hawaii Appleseed we're in support of SB2062 as it is and not the SD1. Thank you very much.

Thank you. Members. Any questions or comments?

Okay, if not, that brings us to the end of the agenda. And as stated earlier, Chair will be deferring this measure because Chair has already passed. Because this Committee has already passed Senate Bill 2060, SD1, which included the relevant contents of the proposed posted SD1. Okay, that brings us to the end of the agenda.

And there being no further business, this Committee is now adjourned.