House Standing Committee on Housing

Good morning. I'd like to call to order our House Committee on Housing Public hearing for Wednesday, February 11th. We are on our 9am agenda in Conference Room 4:30 and it is currently 9:02am Couple of quick notes before we dive in. We are going to DM out of order here. It's our triple referral deadline today.

So we want to make sure that. We want to make sure that we get our triple referrals out as soon as we can to give make sure there's adequate time to file those Committee reports. So we will be DMing on HB 2611 and HB 2102 before moving on to the rest of our agenda. And 1710. No.

It'S not. Yeah, just those two. At the beginning of the agenda and before we dive into the testimony, just some quick housekeeping notes. We will have a two minute time limit per testifier to ensure that we can get through our entire agenda today. We do have to make sure we adjourn prior to the noon floor session.

So it's possible that not all testifiers will have the opportunity to testify. But I'm pretty sure we're going to be okay today. If you're on Zoom, please keep yourself muted and your video off while waiting to testify. Zoom chat function will allow you to chat with the technical staff only. Please use the chat only for technical issues.

Please avoid using any trademarked or copyrighted images. Please refrain from profanity or unsettled behavior. Such behavior may be grounds for removal from the hearing without the ability to rejoin. And as always, just Members of the Committee and Members of the public. I know everybody's passionate and we have some potentially controversial issues on the agenda today.

Just everybody, please communicate that passion while remaining respectful. So that said, the first item on the agenda is HB2611 related to antitrust. This bill prohibits the use of algorithmic price setting in Hawaii's rental market and requires the Department of the Attorney General to develop and undertake a public education program regarding the prohibition. Establish these fines and penalties.

Vice Chair for the testimony.

Attorney General's office in opposition.

Yes. Good morning, Chair Evslin. Good morning, Vice Chair. Members of the Committee, my name is Rod Kimura. I'm with the Department of the Attorney General. Our filed testimony sets forth a number of issues stemming from the language of the bill.

Basically, we express concern that the lack of clarity in the bill will raise enforcement issues and legal issues. Importantly, consider the impact of the bill as it's written on some of your constituents, which will make it difficult for Landlords and their agents to determine whether and to what extent their activities may expose them to criminal penalties.

Penalties include a fine up to $100,000 for an individual or up to a million dollars for a corporation, and there is even a provision for three years imprisonment. These penalties imposed for actions that are currently that currently makes sense.

For example, a landlord will typically set their rent based on the cost and expenses they need to recover and will look at prevailing rents in the vicinity. Data on prevailing rents in the vicinity is easily available without a fee or subscription on the Internet from sites such as rentalsource or Zumper.

And due to gaps that may be in the information available to a landlord, they may enlist a professional such as a rental agent, property manager, realtors, or an asset manager for assistance. And they too will likely look at the cost and expenses that need to recover and look at prevailing rents as well.

Overall, greater clarity is needed to guard against acts that will inadvertently bring exposure to criminal liability, civil liability, and for these reasons, what is and what's Stating our testimony, we recommend that this Bill be held.

Thank you, thank you. Hawaii Civil Rights Commission in support Hawaii Realtors with comment. 50501 Hawaii and General Strike, Hawaii in support Hoaloha Project in support and also 13 individuals in support and one in opposition. Anyone online or in person wishing to. Testify on HB 2611.

Members? Any questions.

For the AGS? Thank you so much for your extensive testimony and raising those points. I was wondering, in your testimony you talk about how a Section 483 complaint has to allege more than conclusory allocations, but has to set forth enough factual matter to suggest that an agreement was made.

Can you elaborate on that and how that might work if a third party is facilitating an agreement?

That's hard to say because it depends on how the suit is brought and who is the alleged defendant. But generally speaking, there are requirements that are tended to an antitrust action.

It's not a matter of just saying party A has been colluding and therefore we're entitled to judgment that explodes open to an examination of the product market, geographic market, and things of that sort of, many of which require expert testimony.

It's one of those cases where the antitrust law explodes open with a lot of intricacies and technicalities that the conventional person, the normal person, may not know about. As an example, the term tacit agreement. There's a lot of debate over what is a tacit agreement. When I took economics, it wasn't even discussed in economic literature.

It's become a vogue. And if you ask a normal person on the street what, what is a tacit agreement versus a tacit collusion, I think you'll have some confusing answers for you.

And that explains why definitions are needed in this bill to clearly identify what is the conduct that's being prescribed so that someone who is deciding on an enforcement action can decide whether this is worth their time and effort.

Can I ask one more question? I was also wondering. You raised a lot of concerns about definitions, but I was particularly interested in one. Would adding clarity that these coordinating functions apply only between two or more property owners or managers that are not part of the same parent entity or managed by the same property owner or manager?

Would that address some of those concerns? Or is it like that the practices are happening between competing landlords instead of. I think the language maybe now suggests that it could apply to a landlord who owns multiple properties and is setting prices between those properties.

Okay, so I think what you're getting at is what happens if you have property owner 1 and property owner 2 getting together to make an agreement? Is that what you're getting to?

Yeah.

Well, that would be collusion.

Okay, I think that's not quite my question, but I probably need to think more on it. So thank you. That's. That's good enough for now. Thank you so much. Thanks, Chair.

Thank you. I have a question. So I have a rental unit in my own home. I follow the county of Kauai publishes or has a long term affordable rental program, and they publish rates that to qualify for the program, you have to rent your unit under the published rates.

And they're based off of 90% of area median income for the island. And so I have always just used those rates to set my rent at. And I know others who do similar things. I've never colluded with those other people to do so. But we're just following the county's guidelines.

And, you know, I think technically that county, the 90% AMI is an algorithm of sorts. It's based on a formula. So would me setting rates based off of the county's published rate schedule be unlawful under this Bill?

My unofficial opinion is no, it would not be unlawful to do that because you're using basically public information. You have to collude with anyone. I mean, it's. To give the example of the typical tacit collusion. You've got gas stations on two corners. Each can see what the other is charging.

One person goes out of his gas station, looks at the competitor and says, zero, they're charging 349. Great. I'm going to charge 349. They never communicate. It's public information easily available that would not necessarily be condemned under the antitrust law.

Now if they had another agreement that said, look, I'm going to raise my prices, I want you to follow my prices, so just take a look outside and see my signage. Now, that's what was going on. That's a whole other situation. Okay, thank you.

Appreciate that. Members, other questions? Seeing none. Next item on the agenda is HB 2102 related to historic preservation. This bill clarifies that residential projects involving ground disturbance and high risk areas remains subject to review under the State Historic Preservation Program. Removes the historic review exception for lands presumed nominally sensitive. Vice Chair for the testimony.

State Historic. Preservation Division with comments. Thank you. Office of Planning and Sustainable Development and Support.

Vice Chair Members of the Committee, Diana Setness with the Office of Planning Sustainable Development OPSD stands on its written testimony and support and we are questions. Thank you.

Thank you. Naya Hawaii in opposition.

Good morning, Chair. Vice Chair, Members of the Committee of Inouye, on behalf of Niapoi, we respectfully oppose this bill. While we acknowledge the intent that this bill is trying to accomplish, I think this largely undoes a lot of the the progress that we made for, you know, on this front just last year.

And, you know, we did want to note that the process still incorporates, you know, protections for inadvertent findings and allowing that to continue while promoting efficiency within the review process and the overall volume that's sent to the Department.

You know, the definition change as well as the exemptions in 6042 were placed in there to be a more balanced approach and, you know, try to reduce review times for lower and nominally sensitive areas. So for those reasons, we respectfully oppose.

Thank you. Thank you. Kailua Hawaiian Civics Club in support. Nae Poolanui Laau Lapaau foundation in support. Office of Hawaiian affairs and support.

Chair Evslin and Vice Chair Miyake Leilohama K. On behalf of the Office of Hawaiian Affairs, we're in strong support, but also want to thank the Committee for setting this for hearing. This is one of our OHA legislative package bills.

We mostly stand on our written comments, but I would like to provide a little bit more context because of our background here and the reason for introducing this bill. We've received a lot of beneficiary complaints about this. This bill that was passed last year. We were also aware of it at the last minute.

So providing some context there. This bill was passed after crossover with late term amendments. So most of the stakeholders caught on late to that process. We did submit letters to the Governor and such, and it went onto the veto list, but ultimately did pass.

And I think that is relevant here because the amendments that went in are so potentially harmful to EV Kupuna that it has brought out a lot of stakeholders in support of removing some of that language, particularly the nominally sensitive area language which was drawn from another bill during the same session.

What makes it so harmful here compared to where it came from is that in the other one, SHPDA was making the determination on whether an area is nominally census or not. And here that is actually done by either proponents or state and county agencies which don't have that historic preservation experience.

The other bill also had consultation requirements and conditions on how those sensitivity determinations are made. And so that's why dropping this language in last minute caused a lot of. Alarm for all of the stakeholders involved. And why we think it's so important that that we remove moved beyond that. If you have additional questions, we'll be.

Available for questions while.

Thank you. Native Hawaiian Legal Corporation and support Shelby Billionaire and support on Zoom. Not. Not present.

Oh, hello guys. How are you? Hello, Chairs. How are you? Pikachu Shelby billionaire represent Ohana Unity Party King of the Hawaiian Islands. I support this because OHA actually came out from downtown. They came to Hawaiian Board, which is very rare.

In the middle of the just this past week they ran over the all the priorities and one of them is this. They only had six. So luckily I testified in this advance and through my experience with SHPDA with all these bills and laws and Kukai, I can tell you straight.

They found dead bones in Pokai Bay last year. What does DLNR do when you call them? They'll call shifty. Takes them time. They don't actually dig the bones back, they just covered back up.

So when you discover Evie Kapuna on real estate and construction, you're supposed to stop that, call the burial council, call Dilonar and they're supposed to protect that. You put the Hawaiian headstone of your family, Paki Kalani, whoever it is, and they're supposed to protect that. That's the law. How it's supposed to work with shpd.

Then you file your Hawaiian legal paperwork, your royal patent LCA with the Bureau of Conveyance. And that's how Uncle Ken Moku taught me. So how you guys work yourself together, we need a Hawaiian Legal Corporation. Bureau of Conveyance. Auntie Don Chang D Lennar OHA dhhl that's up to you guys so I thank you appreciate support the Bill.

Add any amendments you need to.

Thank you. Bianca Isaki in support. Who Bianca Isaki not present Claire Apana Malama Kakani Lua and support on Zoom not present not present we also got 48 individuals in support. Anyone online or in person wishing to testify on HB 2102.

Michael Kat here on behalf of Department of Planning at Kermit the Department of Planning and Permitting offers comments with suggested amendments on House Bill number 2102, which clarifies that residential projects involving ground disturbance in high risk areas remain subject to review under the State Historic Preservation Program and removes the historic review exemption for lands presumed nominally sensitive.

TPP recognizes the importance of ensuring that projects with potential to affect historic properties and EV Kupuna receive appropriate review. At the same time, we are mindful of the State Historic Preservation Division's current capacity constraints and need to avoid creating additional review backlogs that could delay housing and other residential projects.

Recent statutory changes have created uncertainty for both agencies and applicants regarding when residential projects should be routed for review. Greater clarity and predictability would benefit implementation and help ensure that review is focused on projects that present the greatest potential risk, particularly those involving ground disturbing activities in sensitive areas.

As this measure moves forward, DPP encourages consideration of an approach that balances the need for meaningful historic preservation review with practical realities of agency capacity and timely delivery of housing.

We recommend one clarifying edit to section 6E 42 2A paragraph 2A to read occurs on or adjacent to land containing sandy soil and this revision would more clearly identify lands containing sandy soils that are culturally sensitive in relation to features identified in Item B and would support more consistent interpretation and application.

Thank you for the opportunity to testify. I'm here for any comments or questions that you have. Thank you. Thank you.

Anyone else online or person wishing to testify on HB 2102.

Members? Any questions? I have a question for SHPDA. Hi Jessica, thank you for being here. Could you walk us through what nominally sensitive means and the work that you guys are doing to further define or map out what areas are nominally sensitive.

So based on the definitions passed last year of nominally sensitive, SHPDA has been working particularly with DPP and Maui county to identify areas that are less likely to encounter historic properties or EV capuna under the ground. And this this classification is nominally sensitive.

We've interpreted it to mean that we we determine which locations are less likely to have EV capuna or historic properties under the ground based on previous survey data. Based on previous archaeological monitoring Reports and based on previous projects to determine if anything has been found during the execution of survey monitoring or projects.

So and then using that data, it creates a sensitivity map that shows that these parcels of land or TMLKs are less likely and therefore are determined to have historic properties and therefore are nominally sensitive. So internally, that's how we determine nominal sensitivity.

And like I said, we've been working with particularly Maui County and city and county of Honolulu to make sure that our data matches up.

So our GIS maps match up with their GIS maps, which is a mapping program that we all use to determine such a sensitivity and stuff like that, based on where historic sites are found or EV corona.

And is that work still ongoing or you guys, are the maps being utilized currently?

I believe so. I mean, we're still working on them and we're focusing right now our efforts with Maui County and city and county of Honolulu on Lahaina because of all the recovery work going on and trying to streamline that process so that survivors can get back home as quickly as possible.

And then also with DPP, places that are most sensitive, like Kailua, for example, to make sure that property owners are aware of what's on their property when they go to develop and the need to come to Shiftee to take into account the likelihood.

But then also, we've been talking about places like city and county Honolulu, like Magic Island, that we know is likely is nominally sensitive. There's pretty much nothing there. And we've determined that based on, like I said, past projects, archaeological surveys, stuff like that.

And we got a number of testimonies that described a story in Kailua where it sounds like there was an excavation of a swimming pool and there were inadvertent discovery of four IBU kupuna in the area. And the testimony said that the area was considered nominally sensitive.

And so it's part of the argument for why the nominally sensitive definition should go away. Yua just said that Kailua is a highly sensitive area. So could you clarify whether Kailua is nominally sensitive or not and maybe how that determination might have been made or not made?

Yeah, Kailua is not nominally sensitive. It's the opposite of nominally sensitive. We know based on past projects, survey data, monitoring, all of that. It is a highly sensitive area. There are a number of individuals who are buried there.

My best guess of why a project might have moved forward forward is likely due to the exemptions passed last session and misinterpretation, perhaps at DPP by someone who was handling a permit to understand the sensitivity of that area. So it might have just been human error and that does happen.

But we would like it not, we would all like it not to happen ever. But I do understand that sometimes things happen. But yeah, in that case, in many other cases, we anticipate that, yes, almost every project that happens in Kailua has a very high chance of encountering when you're doing ground disturbance.

And OHA brought up in their testimony that it's potentially problematic that the lobby sensitive areas can be defined by you guys or by the planning agencies or possibly by project opponents. So I guess could you clarify whether a project proponent could just say, zero, this is nominally sensitive, it doesn't need further review? How would that work?

I. I think in the wording of the language under 6042.2, I can understand why it would be interpreted that an individual might like a project proponent might be able to determine their property to be nominally sensitive.

There was another bill passed last session that allows certified, I can't remember the language, but self certification for individuals to self certify that a property would result in no historic properties affected when they go through the permitting review process.

So I think that there is theoretically a framework for a bad actor to come along and self certify that their property or the property that they're hired to work on is an anomaly sensitive area and would result in no historic properties affected.

I think one way to resolve that is to tighten up the language throughout 60 to specify that nominally sensitive areas are determined by the state Historic Preservation Division in coordination with the counties.

That might be one way to resolve that issue, but I would want to talk to OHA and the counties just to make sure that that was language you are comfortable with.

Okay, one second, let me just finish writing that. And then given that you're mapping this out currently in what sounds like a shared resource between you folks and the counties, how likely is it going forward that counties will make a determination that say, a highly sensitive area is. Highly sensitive area is nominal?

I think that's hard to predict. I think that as long as we are all sharing the same data and working off the same data and are interpreting the same data in the same way, that it will minimize the potential for human error or a misinterpretation to happen.

So I can't give you an exact percentage, but I think that as long as we're continuing to be in this agreement where we're sharing the same data and the same interpretations, that it'll definitely lessen the possibility for an Area that we all agree to be nominal sensitive or not sensitive and not mistake a highly sensitive area for an area that's nominally sensitive or has no sensitivity at all because there's nothing there.

And then in your testimony you suggested some amendments, one of which includes adding language around high density residential properties, which seems like it would infer that excluded activities could include high density, high density. Properties as long as there's no ground disturbance.

And could you talk through the rationale or maybe the current determination and whether high density is included or not in the definition of excluded and then why you think high density should be added and how this would be applied?

Okay, so if we're going based off on the 6042.2 language that exists now before any amendments, it's limited to existing privately owned single family detached dwelling unit, townhome and I can't remember, I'm looking at a bill that's got crosses out but it's like single family residential dwelling, town home.

And then there was another language category but that didn't include. And because it didn't include the assumption is that it's not a property type of multi. A high density property is not eligible for this exemption.

But it ships determination that a high density say condo unit that exists right now should be equally eligible for an exemption on this for anything from routine maintenance and repair to renovations of condo units to things that the HOA has to regularly do, like if they have to replace an elevator or something like that, any, anything that might trigger a building permit from the county.

And those building types should also be eligible for the exemption. Not because the exemption exists, but because those activities are the type that would not adversely affect the historic property and are already in keeping with SOI standards. Unless they're going to tear the entire building down.

There's very little that you can do to a high density building that would make it ineligible for listing. And therefore those are project types that it would be fine for them to be extended.

Thank you. And what if there was ground disturbance just no deeper than like the original foundation?

Yeah. So if there was ground disturbing activities for a high density property, say for example, a condo unit has a swimming pool pool, but they have to re dig for a swimming pool.

If they stayed within the existing swimming pools depth, like if they were putting a new liner in or something like that, or doing some plumbing repairs and they stayed within the area of previous ground disturbance, they would likely be okay.

The only exception to that might be is if they're in a high sensitive area in which Case, one of the other triggers would, based on OHA's bill, would require that property to come to. Should be familiar with you.

And just to be clear, you said they'd likely be okay, meaning you think that they likely should be included in the list of excluded activities. Exactly. Okay, Members. Thank you, Jessica. Further questions.

How many instances will it take, or does it take for you guys to identify an area as sensitive?

How many instances? It's not necessarily per se the instances. It might be the type of finding. So in archaeology, if you find, say we were just having this conversation with the Navy this morning where they were doing archaeological monitoring for a project, and they found a historic dog tag in the soil.

That dog tag that they found would not necessarily constitute a remapping of that area to be highly sensitive. That could have just been because an individual's dog tag fell off when they were doing work. So it depends. When it comes to ev, however, that is different.

So an individual who has found subsurface EV Kupuna, one individual, makes that property highly sensitive. Because if you find one individual, the likelihood of finding another individual is very high, either on the same parcel or within a very close proximity to that individual and another person.

The reason I asked that is you've seen a testimony from Pikachu. I was there that day that they found the skull. They notified. They verified SHPDA came out, and it was. It was verified that it is EV Kupuna. They also even contacted family Members which came out and identified the area as the Kila family burial dunes.

Till today. This was over five months ago. Till today, there's nothing been done yet. They haven't come out. They haven't put cones, fencing, signage, anything yet. It still remains unopened. The HPD still runs it over every day with their UTVs while doing their surveillance. So how many instances does it take for something like that to demand attention?

Secondly, right across the street from that area, they're planning on building homes. Up to 24 homes is what the developer talked about when they came to the neighborhood board. So maybe this isn't the place to get the answers. Maybe you want to come to my office later on and we can talk more in depth about the situation.

But to identify an area that's sensitive, where can they find mapping? Can we find mapping that we might be able to talk to this developer that his area is potentially a sensitive area?

Yeah, that I would have to look more into it to see exactly what is going on with that burial? We definitely should not have burials that are open or in A situation where they can be damaged in those instances. I will put it this way.

Best practices in consultation with many descendants is to try to preserve EV component in place. And so if EV is found, say because of coastal erosion or because it's in a high trafficked area or something like that, we try to preserve the EV in place on the site.

And so we might cover until we coordinate with descendants and the burial council rep for that region on what to do in terms of preserving the EV in place or trying to find a new location for it to be reinterred at based on like the safety of the site.

So yes, I could see our staff leaving a burial in place, but if it's in a unsafe location, meaning that it's could be disturbed or damaged or whatever, our staff should be removing that individual to a protected location, either on site or with a descendant or in the last case scenario to have shifty remove that individual to a safe secure spot until it can be reimbur reinterred.

So I'll follow up with them on that situation because that doesn't sound right if you can.

I don't mean to hijack it, but it's just that I was there that day. Homeless individual digging whatever picked up the. Skull. Family came down, they took it out, took possession of it. I waited on site DLNR, SHPDA, they came did their thing, nothing was done. We looked at the area and then they walked.

I sent emails, I sent several emails to DLNR shipti, got no response. Until today there was nothing done. This is highly trafficked area and you know, we can meet later on and I can give you more details if you need.

Sorry Jessica, one more question. DPP offered a proposed amendment to say instead of the current language of the bill which says occurs on or adjacent to land containing sandy soils or the non disturbing activity exceeds exhibition and has previously identified burials, etc. Etc.

They're suggesting instead of a war that would be and that both would have to apply essentially sandy soil and previous findings in the area. Could I have your thoughts on that proposed amendment?

I think that amendment is likely reasonable.

We do have properties where there are sandy soil that have been previously identified because the soil has been infilled. Soil has been. So there are properties that are sandy. I'll put it through this logic. There are sandy.

There are properties with sandy soil where they are nominally sensitive properties or properties that don't have historic properties or likely don't have historic properties or any component in it. So I think adding language to that effect can be reasonable to Take into account those properties with sandy soil that don't have historic properties or EVK Kabuna on them.

So I think yes, that kind of an edit is likely reasonable. Yeah.

Thank. Thank you.

Hi. Good morning. Hi. Nice to see you. Sorry for my tardiness. So in your testimony you did mention you've been working with County of Maui. In what way?

We meet with them every. Every week or every other week. But most recently we've been meeting with Maui County to develop what's called a memorial memorandum of understanding to help facilitate the 60 review process for property owners who have to rebuild in Lahaina.

That MOU would help to establish a set of archaeological monitoring provisions that are preset so that a property owner doesn't have to hire an archaeologist or consultant to either one, do an archaeological inventory survey before rebuild, or two, to hire someone to write archaeological monitoring provisions.

They would only need to potentially contract with an archaeological monitor to watch the ground disturbing activities while they rebuild. And those requirements are put into place in certain circumstances where projects may be like a family might be reconstructing their house but adding square footage.

For example, that property owner might have to do archaeological monitoring, but if you were rebuilding in the existing footprint of your house, you might not.

So it's building out the framework for that to expedite permits and reconstruction so that property owners are in the whole inspiration of it is so that property ownership aren't potentially losing out on insurance money or any kind of funding that might be available to them to rebuild.

So we're trying to figure out ways that we can expedite while still taking into consideration the high sensitivity of that area and the likelihood of encountering.

Okay, and one follow up. And so is it a mandatory thing, this what you're saying in the Lahaina Historic District itself? Just, you know, because it's the historic district one and then anywhere outside of it, basically above Onoa PI' I Lani, you know, Highway 30. Then there's where, you know, there's maybe, maybe not needed for the survey.

Yeah, so we're using survey data that was collected by FEMA during debris removal and the initial recovery or emergency response debris removal and now into the construction phase. There's a bunch of data that FEMA has collected that we're using to develop sensitivity maps for the burn scar area.

Some of that data does include sites above Honaopi' Iulani highway, but the sensitivity of that area is slightly different. Where it's not necessarily that we're encountering ev, we're likely more more likely encountering historic sites like Heiau and things like that.

And we have a lot of good data on that, not from the recovery project, but because of the Hona Opioani highway project. So we have good data to help streamline reconstruction projects due to those two efforts.

Okay, thank you. And just one last. This portion about existing privately owned properties, is this enhancing more oversight or giving them a little more leeway? I'm just trying to figure that out. For this portion about excluded activities for existing privately owned properties.

I think that. I think that.

Trying to figure out, like if it's a category all in of itself, if it's an existing privately owned property and they're keeping the project type to the restricted types that are allowed under this bill in terms of ground disturbance or under 6042.2 as it's currently defined.

I think that what OHA is proposing in terms of adding these restrictions restricts the type of residential properties, existing residential property types that are exempted. I don't know if this is answering your question. So it doesn't allow for just any existing residential property or any residential property from being exempted from 6042.

It's saying that in these areas, you're likely going to encounter something particularly EV, and because of that, you have to come to SHPDA. You're no longer exempt. So I think it pulls back the exemption on certain property types that likely will encounter a historic property or like I said, more importantly, ED component.

Okay. Yeah, no, that's. That's good. Thank you. Yeah. Your time. Thank you, Chair.

Thank you, Jessica. I have a question for DPP. Two related questions. You know, so I think you probably heard my question to Jessica regarding testimony, but told a story about anomalies, a potential declaration of an area as anomalies that's been okay with.

Do you know the details of that and whether DPP made that determination and was that actually considered nominally sensitive or what?

It wasn't considered nominally sensitive. So the issue with that is how our systems interact with the data that we get from shift. And so we are reliant on warnings and advisories to inform us of when something has burials or archaeological resources on that site or even adjacent.

But even when we put buffers or try to, you know, do our best effort to flag properties for that review, sometimes things get missed. And we've been working to try and sync our data up with shifties. We've been getting new data every few months or so and trying to integrate that into our system as best we can.

But unfortunately, Sometimes things get missed. Thank you.

And so as it relates to this bill and our determination of whether to delete the definitions of nominally sensitive, just so I'm totally clear, you're saying that the definition of nominally sensitive, which was added to statute last year, was not a factor in that, you conclude that was fine and could do?

No, it's been really hard to interpret what that exactly means because there's a lot of ambiguity in that definition and we understand the intent, but it's hard for us to make that kind of call. We've had applicants certainly ask about it, but no one has, to my knowledge, tried to implement that.

Okay, so DPP is then relying on SHPDA's determination of nominally. You're not making your own determination.

Even if an applicant submits to us, we still have the opportunity to be make that decision as whether or not we agree, and then we can SHPDA.

Okay, and the last question, you gave us a proposed amendment which I appreciate. What are your thoughts on the bill as written, which deletes the definition of nominally sensitive and would delete the exemption for nominally sensitive areas?

I. I think if we're deleting that and taking on these new amendments, then it's at least a step in the right direction to try to get to that intent of trying to find that middle ground of which projects require review and those that probably have low risk. Okay, thank you.

Members, further questions.

Same question I asked SHPDA. How many do you folks. Are you aware of that? Excuse me. Not the same question, but are you aware of the situation?

I asked SHPDA a little bit.

You are. So did that. I don't know if this is a right question. Chair, Excuse me, if I. Did that permit for those homes in that area come through yet and is it flagged? Was it flagged?

I. zero, sorry. I thought you meant about the speech, but I'm not certain if there's advisory. But I certainly could follow up with you outside to check about that.

Appreciate it.

Thank you.

Thank you, Members, for the questions. Okay, seeing none, we are going to recess again. We're taking these items out of order. So we'll be voting decision making on HB2611 and HB 2102 momentarily. But I want to recess to give Members a chance to get here for.

Reconvening the House Housing Committee for our 9am agenda for decision making on two items only. We're taking this out of order. So we're DMing on HB2611 and HB 2102 and then we'll take up the rest of our agenda after that. First item on the agenda, HB 2611 related to antitrust. I appreciate the introducer's work on this.

I appreciate the intention of the bill on first read when I saw it, I thought this seems logical. However, based on the Attorney General's comments, it does seem like there has to be a lot of work done to make this work, make it not overly broad and make it, you know, ensure that we can enforce it.

So that said, my hope is that the introducer, you know, could do more work on this and we can look at it again for next year. So we will be deferring that bill. But I did want to give an opportunity to any Members, including the introducer, to make any comments if you want.

Thank you Chair, thank you for hearing the bill. Yeah, there's a lot of really helpful testimony from the ag and I just wanted to share that the language was based heavily on successful legislation from New York. Places like New York, California cities around the country are taking the lead against algorithmic price fixing.

And it's a problem that's not going to go away.

It's been recognized by the doj, subject of several federal lawsuits and it's been extensively reported The VP of RealPage, one of the leading companies that facilitates this kind of price fixing, has publicly claimed or like said that their software has driven double digit year over year rent increases in some places and they've some of their clients have seen turnover rates increase by like 15%.

So I think that one thing that stood out to me is like in the AG's testimony was that the term tacit agreement is becoming so prevalent.

And I think that that is because there's a lag between antitrust law and these technological advancements that allow corporate landlords and these tech companies to essentially raise prices and compound our existing affordability crisis. So I find that really concerning. But I acknowledge there's a ton of work to do.

So I totally support your decision to defer and I look forward to doing more work on this Bill and also tracking the settlements that are happening and the Federal Government's willingness to enforce them and then hopefully being able to take more decisive action.

Thank you so much. Thank you Representative. Other Members want to comment.

I just wanted to appreciate and Send my mahalo to the introducer. You know, when it comes to situations like this, my community takes a big hit. Yeah.

And then, you know, when we lose the sensitivity of large investors, they don't even pay attention. They buy these things, they don't monitor. It's just, they send it off to a management company and over time it just becomes so unaffordable and they don't relate. So just my appreciation to the introducer for the intent of it.

Thanks, Rep. Muraoka. Rep. Cochran.

Yeah, thank you. Do we know if our. If HUD and FEMA utilize these types of algorithms, especially after disasters? Because there's a really bad situation that's occurred in Lahaina since the fire in regards to rents and the pricing and then they point the figures back at the state. So they got their figures from the state. So.

Example is studios are going, they paid studio owners $5,3 bedrooms, they paid people $16,000. Now that the recovery is, I mean the fires, you know, kind of few years down the road, these homeowners, landowners want that same amount of money and talk about being priced out of paradise. This is happening.

But I'm just wondering where this algorithm thing maybe comes into play here somehow. I don't know. Do you?

Yeah, I don't necessarily want to have a long discussion.

That was just my.

Yeah, appreciate it. Yeah.

So thank you for the deferral because there needs to be work.

Thank you, Representative Cochran. Okay. See no further comments that measures deferred. Next item on the agenda is HB 2102 relating to historic preservation. I want to thank all the testifiers. We got a lot of testimony on this. I want to thank OHA for their work on this bill. And I want. To thank SHPDA and DPP and everybody.

Else who came out. We are going to move it forward. With an HD one. But just a little bit of context. Last year there were a number of SHPDA related bills. I believe four. And the reason for that, as I understood was I think there was broad recognition that SHPDA is has been traditionally overburdened.

We are sending a lot of permits. To SHPDA for review. Every 50 year old culvert was getting sent to SHPDA for review. Review times could be, you know, as. I've heard, six months best case scenario. But up to and up to three. Years plus sometimes in some outliers, a lot of projects.

I'm hearing of a project on Kauai right now in sandy soil. They're just trying to build a fence. They need to do 100% AIs. For that $10,000 to auger some holes in the ground. And so I think, you know, based. On recognition of Shipti being overburdened, that.

We're sending too much to them and maybe the over broad definitions that we had in statute. I think the Legislature recognized last year that we needed to try and figure out some reasonable ways to curtail what we were sending to SHPDA while still doing our best to protect the some of sensitive historic areas.

And even at the same time as trying to ensure that SHPDA can staff up. I think it's kind of a multifold approach. And the change in the definition. To historic was one of them. The expansion of excluded activities is one of them. The definition of nominally sensitive was one of those things.

And I do want to recognize OHA's. Concerns here that it's possible that some of what we did might have opened the door too much and we need to ensure that we are protecting Ive kupuna. At the same time, I want to ensure that we can let the process of defining nominally sensitive play out here.

I think it's too early to try and walk this back as they're still going through the work of mapping this out and determining what is nominally sensitive or not. And so, all that said, I'm going to move forward the bill with some comprehensive amendments. Going to go through those amendments in a second.

But the gist of it is we're going to retain the definition of nominally sensitive. We're going to keep the language in the bill for. Further defining that if. Something is on sandy soil and in an area with previous findings that this is not excluded from further SHPDA review.

So I think the core of that will continue to move forward for further discussion and also taking up some of SHPDA's amendments relating to higher density. So I'm going to go through it right now. Members, if you have questions afterwards, happy. To talk through and explain some of the changes that I made.

So again, recommending that move out in HD1, we'll be deleting paragraphs 2 and 3 of the preamble. Delete existing on page 3, line 8. Delete low unit on page 3, line 10. Delete low unit on page 3, line 13. Move paragraph 1 on page 3, line 17 into the end of subsection A, page 4, line 3.

Add local, state or nationally designated. We'll be clarifying that both A and B must occur in paragraph two on page four. And this is from DPP's testimony. Remove lava tubes, Karst features or caves. Under clause 2 on page 4 to subparagraph A, so that will read. And delete adjacent on line 6, so that will read.

Paragraph A will read. Occurs on land containing sandy soil, lava. Tubes, Karst features or caves. Adopt the language from SHPDA'stestimony as. It relates to clause 3 under subparagraph B. Expand the list of projects that would. Trigger 6042 review to include language showing. That the proposed project contains five or more dwelling units and ground disturbing activity.

Is deeper than the depth of the deepest existing foundation on the parcel. And we're adding that because we're opening. Up the excluded activities to include higher density projects. So we just want to put some boundaries on when the exclusion would apply to higher density projects.

So if, as Jessica said, you're just doing renovations of the interior of apartment complex, it wouldn't go to SHPDA for a view if they're doing extensive ground disturbance. It would. Reinstate the exemption and the definition of nominally sensitive areas to the. Language that currently exists in statute. Delete the definition of existing privately owned. Low unit residential property.

This is because we're no longer narrowly doing that just for low unit. So we're taking that definition out. Tech amendments as necessary and we will defect the date. Hold on one second. Sorry. And then also as we resave the exemption and the definition of anomaly sensitive areas, we will clarify that that definition.

Is determined by SHPDA in coordination with the counties. And then we'll give SHPDA rulemaking authority if they need to further refine and implement this. I think I said it already, but. Tech amendments and defect to date Members. Any questions? I know that was a lot. Yes Rep. Cochran.

In reference, can you reiterate the sandy portion, what you're changing there?

Good question. So we are going to take DPP's. Proposal where we will say that. Essentially. If an area, if a project involves. SO page four. So SEO is currently in page four. Paragraph two or subsection two. The Provost project involves ground disturbing activity and occurs on or adjacent to land.

Containing sandy soils or the ground disturbing activity exceeds the excavation of topsoil and occurs on or adjacent to land that contains previously identified burials or cemeteries. What we are saying is that a project won't be eligible for, you know, as an excluded activity if it occurs. On land containing sandy soils, lava tubes.

Karst features or caves, and the ground. Distributing activity exceeds the excavation of topsoil. And occurs on or adjacent to land previously identified burials or cemeteries or property previously determined to be significant under criteria E. So. Right. So we're saying it has to be. On sandy soil and have previous findings near it to not be excluded.

Okay, good.

Makes sense.

Yes. Okay.

And lastly, I want to say we made some big changes here. This is the First Committee. I'm sure there'll be more work to be done on this bill. It will likely have five more hearings if it's going to pass on to the Legislature. So there's plenty of more opportunities for input and for modifications.

I think, as we all recognize as. We're going through this, anything related to shifty gets extremely complicated, extremely fast. And we want to make sure that we're not, you know, that we're making the process better here. So encourage advocates to continue and stay engaged. And, Members, final comments before we vote.

Oh, wait. Thank you again. Members, vice chair for the vote.

Voting on HB 2102. The recommendation is to pass with amendments. [Roll Call] All right, the recommendation is adopted.

Thank you. Okay, back to our regular agenda. Actually, we'll take a quick recess.

Reconvening the House Housing Committee hearing We are still on our 9am agenda. We are on the third bill on our agenda HB 1710 HD1 related to historic preservation.

This bill authorizes shifty to conduct a phased review of a proposed project on private property under certain circumstances Amends a process and deadline by which ship must provide written concurrence or non concurrence for proposed projects on private property or certain projects that require state or county approval for entitlement for use after which concurrence may be assumed and the project may proceed.

Vice Chair for the testimony.

State Historic Preservation Division and support. Thank you. Hawaii Office of Recovery and Resiliency and support. Office of Planning and Sustainable Development and support.

Chair, Vice Chair, Members Committee. Diana Setness, the Office Planning Sustainable Development LPSD stands on its written testimony and support and we are available for any questions.

Thank you. Kauai Council Member Allison Addison in support Department of Planning and Permitting and support Hawaii Realtors in support thank you.

We stand in our testimony and support.

Thank you NIOP Hawaii and support thanks for standardized thank you ABC Stores and Support Hawaii Lessed Laborers Employers Cooperation and Education Trust and support General Contractors association of Hawaii in support the Gallery limited in support Housing Hawaii's Future in support AARP Hawaii in support Present Avalon Development and Support Grassroots Institute of Hawaiian Support Office of Hawaiian affairs with comments.

Chair, Vice Chair, Members of the Committee the Compliance Archaeologist with Office of Client affairs we stand on a written testimony that's providing comments on this bill but a few highlights. So first we are really appreciative of the language about a complete submittal. That is something that we have advocated for in the past.

There's a lot of blame going to SHPDA about there being delays, but there's a lot of submittals that are completed that just don't have basic information. I mean a lot of our office we send out RFIs all the time. It's the majority of emails that we send out statistically and it's because of incomplete spittles.

So we are really appreciative of that language here.

Second, in the HD1 version in the first hearing it was our impression that the 30 day concurrence was going to be removed from both 6042 and 6010, but it looks like it was only removed from 6042 and we would recommend that it also be applied to 6E10 because there is some uncertainty on who's making the determination of what's when, there's noticed or properties affected.

And then lastly we still have some issues with the language about phased review, mostly because 6042 already has language for phased review.

And if the intent truly is for preservation purposes, like maintenance actions or repairs for projects that don't require permits, we have some suggested amendment language that perhaps the project proponent should consider a preservation plan which is governed under 1377, which sets out maintenance intervals and also allows for certain forms of construction related to preservation.

The problem is that preservation plans are usually only allowed when there's a permanent activity. So Shipti won't review proactive preservation plans. So if this language was inserted, it would allow those proactive efforts to go forward. So that's all we have. You're available for any questions. Thank you. Thank you.

HGEA in support Stanford CAR Development and Support and seven individuals in support. Anyone online or in person wishing to testify on HB 1710, please.

Chair, Vice Chair, Members of the Committee. HTDA. So as HTA, we haven't taken an official position.

We will follow up on the bill and as a Member of the Speed Task Force, I can mention that this bill interacts and generates an instrument for what we have been discussing at the building permit group as well as in the 6e peak of the, of the, of the Speed Task Force. So we will see.

Thank you.

Could you just state your name for the record?

Martin Ancellini.

Thank you very much. Thank you. And anyone else online or in person wishing to testify on HB 1710 Members, any questions?

Quick question for OHA. Could you just clarify why you folks are concerned with a 30 day concurrence for properties if there's no historic we're.

Worried about like who's making that determination because there have been times where we've reviewed applications and the project proponent will assert that no historic properties are affected.

So if that's the assertion and they're looking for a 30 day concurrence, oftentimes that assertion is being made without review by historic preservation personnel or any evidence to to support their conclusion.

Okay, thank you. Jessica.

Hello.

I know that the 30 day language was passed last year in a separate bill in another section. What are your thoughts on OHA's concerns around the language?

I understand OHA's concerns about who's making the determination. No historic properties. If, especially in a submittal that comes to us, oftentimes depending on where it comes from, it might be made by the county or it might be made by the project proponent. Different counties do things differently.

I will say that the 30 day determination is in already in the process, Both in the 6042 and 68 rules where HTDA within the first initial 30 days is supposed to make a determination of no historic properties affected or ask for more information. And I believe that's where that 30 days is coming from.

I think OHA's concern with it then as the language in this bill states that if after those 30 days a project proponent could assume concurrence with the no historic properties affected determination, I can understand their concern with that being the trigger, but I can't say whatever how to resolve that at this moment.

I think I'd have to look at the language again on if the assumed concurrence comes into play after those initial 30 days or after the totality of what is it, 120 if you add 90 plus 30 together 30 day in and then than the 90 day. I'm not, I'm not sure.

Okay, so just back up one second. So the 30 days is currently in your rules. So we are just putting in statute what's in the rule. Yeah, I'm a little confused I guess. On the 90 days this.

If the Department fails to provide written concurrence or not concurrence within 90 day calendar days or within 30 calendar days, if no historic properties are adversely affected by the post project, I don't see how those would be added together.

Oh yeah, you're right. Never mind.

Okay, so it is. So it's 90s.

Yeah, it's 90 days total if. Yeah. So it's the, the way that the rules are is within the first 30 days we're supposed to either concur with the determination of no historic properties affected. Yeah, I had this flipped in my head.

Or ask for more information like an AIs or an rls, an archaeological inventory survey or a reconnaissance level architectural survey because the submittal is incomplete and we don't have enough information to determine if there's historic properties or not.

And then once we receive that information, we have a further 60 days to review those documents, concur with their findings and then determine whether or not mitigation is appropriate and then settle on that.

Thanks. Thank you, Jessica.

Sorry, question. Thank you, Chair. Thank you, Jessica. I know this was a Bill. Just wanted to share with the Committee that the. It was a speed task force priority. Right. Like we worked on it during the speed task force. And that language you write, Chair, it is from the admin rules.

But the Bill also allows you an extra five days for intake, correct?

Yeah.

Meaning your staff will review there's a definition for complete submittal.

In Chapter 6e. And following the complete submittal, the division will have five days if this law passes, to intake, for your staff to upload onto hi Chris, etc.

Yeah.

Yeah. And just to. To certify that at least the initial submittal is complete and that it isn't uploaded with a bunch of misinformation or blank documents or incomplete.

Correct. So any back and forth should happen before that period. Like if it's incomplete submittal.

Yeah. So within that first five days. I believe what we were talking about in Speed Task Force is our intake specialist will assert that the basic requirements that are in our rules of having, like the project scope of work, the permit set of the drawings, your 60 application form or.

And your permit application form is all submittal submitted. So we can use that information to assess whether or not we need like an AIs or an RLS or something like that. Okay.

So are you comfortable to reinstate that 30 days back since it's in your rules, like the exact language we took out of that admin rules and we added it into here. Right. And based on the discussions from the speed task.

Yeah, I am. I'm. Oh, I'm fine with it being included in.

Yeah.

Okay.

Thank you.

Appreciate that.

Thank you. Chair Members, further questions sure. Representative Cochran.

There's so many dates and timelines in here for edit. Seems like for different things. I mean, I don't know if some of this is pointing to the rail project, if it's pointing to, you know, I'm just, I'm just trying. Is this submitted by you, Vice Chair?

Yes, this. Well, this was. I, I was the introducer. But this is a bill from the Speed Task Force which was unanimously approved by the Speed Task Force Members that we worked on this interim.

Right.

And just. Rep. Cochran, if you have questions for the testifiers, we can take those now. If you have. I'm open to having. If you have questions on the intent of the bill or to the introducer, we can take those at the end. We're doing decision making if you're okay with that, just so we can keep moving.

Yeah.

Yeah.

Good.

Okay. Thank you. Members, further questions Seeing none. Next item on the agenda is HB 1868 related to housing. This, among many other things, establishes a working group to revise the Hawaii Housing Finance and Development Corporation's QAP Vice Chair for the testimony.

Hawaii Public Housing Authority and support. HK stands on his testimony in support.

Thank you. HHFDC with comments.

Chair, Vice Chair Members Demon economy. White housing Finance. We do have concerns about this Bill. The QAP sets for by which federal tax credits are allocated for tax credit projects. We update the QAP with a qualified allocation plan every year or two years, sometimes to address needs or comments by stakeholders. We go through a public transparent process.

We have stakeholder meetings to get input and do that input. So if the Legislature wants to create a task force, that's fine. What we're concerned about are sections 3 and 4 of the Bill mandates changes to the QAP. So this is putting the cart before the horse.

You're mandating changes before you even have a working, before you even have input. So that is our concern bill.

Thank you. Catholic Charities Hawaii with comments on two.

Chair, can you hear me? Yes. Okay. I don't know if you can see me, but okay, you can. This is Betty Lou Larson from Catholic Church Hawaii. We provided comments. We'll stand on our comments and request that you defer this bill due to the comments. Thank you.

Thank you. NIOP Hawaii in opposition, we send our testimony. Opposition. Thank you. And one individual with comments. Anyone else online or in person wishing to testify on HB 1868 Members, any questions?

This 1868 then the Rep. Chica. Yeah.

Yes. D&P.HHFDC do you know for the perpetual affordability requirement, how many if this were to be mandated, like how many projects this could potentially like affect or would not be able to proceed?

Perpetual affordability is not something we are pose per se, but we do have concerns about how projects will be maintained in the long term. These light tech projects, they don't generate enough revenue to pay for capital expenses, you know, in the long run.

So this past year we did incorporate into our criteria that projects could up to commit to perpetual affordability. And a number of projects did commit to that.

And so about half of the units that government projects where they may not be committed to perpetual affordability, but the government projects, so they likely will be or private projects that did commit to perpetual affordability.

Our concern still is though that some of those developers don't have a long term plan to maintain their property in the long run.

Do you have that data on like at least the number of units or number of projects that did commit to perpetual affordability?

I can provide that to you.

Do you know if the scoring criteria for perpetual affordability is given more weight than the other types of criteria?

It is given the most points under affordability commitment.

And then what is the current process that you undergo right now to either change or update the QAP scoring criteria?

This past year our board formed the PIG to gather stakeholder input. We had also several public meetings with stakeholders. Then we had our board considered changes to the QAP board meeting, help us to draft QAP comments on that. It goes after public hearing, it gets adopted by the board, then goes to the Governor for approval.

We've had different processes in the past. We haven't had a pig, we just had stakeholder meetings. It's been done several different ways in the past.

Is it like a formal process that happens once a year or is there not?

It's not always once a year. In the past it's been more like once or, or every other year past, I think two years, it was twice.

The final question check to your knowledge, do you know if there's any other states that have figured out a way to mandate that as part of their petrol affordability?

Yeah, I believe there's only one state, I think it's the right. But they only have perpetual affordability for what's called 9% projects. There's 4% and 9% biotech projects. So this was only for the 9% projects that they require perpetual affordability. Most of our projects here are 4% projects.

We have a handful of 9% projects and those are called the 4% projects.

They tied it to their lihtag. Thank you.

Thanks for the question. Quick question. So you said in the beginning that most projects don't have the revenue to cover capital improvements. And in that case, like what is your expectation of what will happen to these privately developed projects that have a permanent affordability imposition on them at the end of their six year affordability period?

If they commit to perpetual affordability, then that is there's no 60 year period. It is permanently perpetually affordable. And that is, that's a concern for us. We don't probably what their assumption is that they're going to apply to the state for financing in the future to rehab their project. But all the projects are perpetually affordable.

Even right now we don't have enough funding to Fund rehab of current projects. That's a problem for us right now where we didn't award any funding for rehab this past year even though we had several projects applying. So as number of projects grow, that problem is going to continue to grow. So there's no easy answer to this.

And so currently if there is no permanent affordability requirement and the affordability period ends after 60 years, then these projects are refinancing to do some maybe improvements on the project and then they're going to market to pay off their new refinanced debt.

That's correct.

But they're aging units so likely lower rents than you'd expect from a brand new building.

Yes. I mean they're typically under 80% AMI. That is what the market rent would be, under 80%. AMI thank you, appreciate it.

Rep. Grandinetti.

On the other element in the bill I also has to de emphasize project readiness. I understand the downsides or trade offs to that slowing housing delivery, but are there any benefits like maybe preferencing mission driven nonprofits or smaller developers or what is. Yeah, what's the trade off?

Right now we emphasize project readiness because we don't want state funds to be sitting idle. We don't want to award a project funding and then wait three years for them to break ground. So if you were to just take that criteria out, it would be allocated to other criterion such as deeper affordability or amenities of the project.

That would be a concern for us because we're always looking at ways to provide housing quicker.

Thank you.

Thank you Members for the questions.

Representative Cochran.

Thank you Mr. Minakami. So I mean I'm happy to hear that you said you don't want to Wait for things to wait for three years for things to break ground. I think I mentioned, you know, the lots that are under HHFDC and HPHA Purview in Lahaina since the fire are sitting idle.

So, yeah, I'd like, you know, to see those words put into action. I'm reading in the preamble how the rental housing revolving Fund has gotten well over a billion dollars and it's the largest line item only after emergency in the budget. So saying, you know, as the years progress, there's not enough funding.

Things can't, you know, stay afloat. That's a lot of money that's been given to your division and Department specifically. So I, I'm not understanding. So perhaps a working group, this is why they're calling for a working group here to reassess and figure out, you know, where the shortfalls are or the inefficiencies are or something.

And I think to follow up with a question. Chair, you know, I'd like to. How are you? Or do we need this working group maybe to look into avoiding the situation that happened with the Front Street Apartments in Lahaina, that ltech project. You recall what happened there?

Yes. Were they. Well, we already addressed that situation.

Right.

Developer used a loophole to, I guess, get out of his affordability commitment early. We've already addressed that.

But I mean, moving forward, you know, with all these LIHTC potential developments to not just that loophole, but as you're saying down the road, if we keep it in affordable perpetuity type concept, it's just not feasible, which I beg to differ. But you know, so just kind of looking at.

And I'll note that yes, Light RHREF has received about $1.1 billion in the past 10 years. It's also delivered more than 10,000 units. So it's about $100,000 per unit, which is a pretty good return on the state's, you know, financing.

Okay. Anyways, Chair, so thanks.

Thank you. Members. Further questions seeing none, next item on the agenda is HB 1920 relating to the low Income Housing Tax Credit.

This clarifies that a partner or Member that is a partnership or limited liability company that has been allocated LIHTC credit may either further allocate the credit or transfer seller, assign all or a portion of the credit to any taxpayer and extends the sunset of Act 29 relating to the Low Income Housing Tax Credit until 123120.

Vice Chair for the testimony.

Department of Taxation with comments.

Department of Taxation stands on this testimony.

Thank you. HHFDC in support. Thank you. My Hawaiian support .Thank you American Council of Life Insurers in support. Sugar Creek Capital and support on Zoom.

Thank you Chairman and Members of the Committee. My name is Phil Gilman and I represent Sugarcreek Capital and Affordable Housing Investor. I'm testifying in support of House Bill 1920.

The Hawaii Housing Tax Credit's a longstanding proven tool to boost affordable housing supply and continuing to foster this kind of robust market of investors is and is good public policy for Hawaii.

This bill strengthens the demand for these housing credits in the investor market which will in turn boost investment directly into these developments and help lead to more homes being built. Thank you for allowing me to testify in support of 1920. I'm happy to answer any questions.

Thank you. AARP Hawaii in support Present and one individual with comments. Anyone else online or in person wishing to testify on HB 1920 seeing none.

Chair Members Any questions? Next item on the agenda is HB 1812 related to housing. This establishes a five year Hawaii builds pilot program within HHFDC authorizes HFC to utilize money from DURF for pre development activities or as active construction equity, etc. Etc. Vice Chair.

Office of Planning and Sustainable Development and Support Stand on our written testimony and support thank you.

HHFDC in support HHFDC stands on his testimony and support State Council on Developmental Disabilities in support Please stand on our testimony in support thank you State Procurement Office with comments AARP Hawaii and support One individual in support and one individual with comments. Anyone else online or in person wishing to testify on HB 1812 Members any.

Members, any questions on HB 1812? Seeing none. Next up on the agenda, HB 1733, relating to the Housing Loan and Mortgage Program; increases the Hula Mae Multifamily Revenue Bond authorization ceiling amount to continue financing affordable rental housing statewide. Vice Chair for this one.

Office of Planning and Sustainable Development, in support.

Stand on our written testimony in support.

Thank you. HHFDC, in support.

HHFDC stands on its testimony in support.

Thank you. Hawaii Realtors, in support.

Thank you. We stand on our testimony in support.

Thank you. AARP Hawaii, in support, one individual in support, and one individual with comments. Anyone else online or in-person wishing to testify on HB 1733? Seeing none, Chair.

Members, any questions?

Seeing none, next up on the agenda is HB 1715, relating to affordable housing; authorizes HHFDC to designate certain for-sale units as permanently affordable housing, subject to certain restrictions, clarifies that certain resale and occupancy restrictions apply only to projects developed prior to a certain date, and amends the definition of qualified resident for the purposes of HHFDC Housing Development Program. Vice Chair for testimony.

Office of Planning and Sustainable Development, in support.

We stand on our written testimony in support.

Thank you. HHFDC in support.

We stand on our testimony in support.

Hawaii State Council on Developmental Disabilities in support.

We stand on our testimony in support. Thank you.

Thank you. Hawaii Realtors with comments.

Thank you. We stand on our testimony.

Thank you. Mortgage Bankers Association of Hawaii with comments. Housing Hawaii's Future, in support. Myapp Hawaii, in support.

We stand on our testimony in support.

Thank you. The Democratic Party of Hawaii, in support, one individual, in support, and one individual, with comments. Anyone else online or in person wishing to testify on HB 1715?

Members, any questions? Dean, I have a quick question. I think there's some confusion on how this would work. Could you just walk us through the current program and how this would change-- how this would replace it as far as for the restrictions bill?

Sure. Currently, when our project users--one of our 201H program, for example was a for-sale project--there are, like, 10-year buyback and short appreciation restrictions. So basically, the 10-year buyback program must be owner-occupied.

If the homebuyer wants to sell the property, we typically will purchase it back from the owner, 1% simple appreciation per year. So if they want to sell it after year eight, for example, we purchase it back what they paid plus any capital improvements they put into the unit and multiply by 8% basically.

This has, you know, been a hardship for certain buyers where they're locked into a unit for 10 years. Circumstances change where some folks might get married, they have kids, they might need a larger unit, but they're locked into the unit for 10 years. So under this proposal, someone who purchased this unit could sell it at any time.

So there wouldn't be that 10-year restriction anymore. There would be short appreciation. They could sell it, but the price would be based on an index, and what we're looking at using is the 40-year long-term appreciation rate for multifamily units on Oahu, which is about 4.5% per year. That's the 40-year average.

So let's say after five years, someone wanted to sell their unit. They could sell it, but if we adopt this index, the Oahu Index, it'd be 4.5% compounded per year for five years. So that'd be 20-something percent appreciation that they would receive and that's appreciation that they would keep, so that's their equity that they receive.

There wouldn't be any short appreciation, so, you know, they don't share anything with us. So this seems to be a middle-ground where it allows homebuyers to gain equity but also the flexibility to move out of their unit when the rules change.

Thank you. And so, just for clarity, so on the current 10-year restriction with the 1% appreciation, you guys would guarantee to buy the unit back if somebody wants out?

We don't guarantee that we buy it, but if not, then they have to sell it to another qualified resident.

At still at 1% though?

Yes.

And then under this new program, it'll be in the range of 4%. You guys won't necessarily be buying them back. It'll go to market with a capped price of 4%?

Yeah. They could sell it to anyone at that indexed rate.

Yeah. And then if-- say there's a higher AMI project out there over a 20-year period, it's possible that that 4% might exceed market?

It is whatever the market there is. Yeah.

Okay. Members, questions?

Yeah, I have a question for Dean.

Rep. Muraoka.

So Dean, let's say using your example, a family got into this affordable unit and then their family grew, they had some kids, so now they want to get a larger unit. You know, in here it says that inability to own any other property.

So would you folks take their current unit and sell it for them or do they have to sell it first before they can get into another unit? And let's say they got into another unit. Would you guys still mandate or-- I mean, you guys would have to mandate that they sell it, right? How would something like that work?

So part of this bill also does away with the first-time homebuyer requirement. So someone could-- HHFDC unit and then move into another HHFDC unit. They don't have to be a first-time buyer anymore. They would have to sell their current unit so that they could move into another larger unit.

Yeah, I'm sorry. That was my question. They cannot have two units? They have to sell--

Right, because under this program, it has to be owner-occupied. So in the admin rules we could set forth that, you know, if you own a unit, you have, say, 12 months or so to sell your current unit if you buy another unit.

And let's just say market takes a dump and they cannot sell it. What would then happen?

We could always have the option to foreclose, which is not what we would want to do.

I mean, wouldn't this-- wouldn't it be better for you guys to just buy it back? Foreclosing kind of hurts; goes against the whole situation of what we're trying to do and help, right?

So, I mean, buying it back or foreclosing, basically it's the same thing. If we buy it back, it's a lot more voluntary of a purchase by our department.

Okay. Thank you.

Thank you. Representative La Chica.

Can you explain again how equity will be affected? Do you get-- is there-- for the homeowner, is there less equity for this new program or how would that be?

You got it, and depends on how far below market the units are priced at initially. An example that I know of, let's say the Kapiolani Residence Project, where there are one-bedroom units that were sold in 2018 for as low as $400,000. Currently, the one-bedroom units in that building are selling for over $700,000.

So in two years, all the units there will be market units. So folks can probably sell the units at $750,000 at that point. So yes, there'll be a lot of equity for the buyer at that point. If we were to adopt that 4.5% index right now, the price for a one-bedroom unit that sold for $400,000 would be-- I think it was about $520,000. So after eight years, you know, a homebuyer would have gained $120,000 of equity which they can use to purchase, you know, their next home.

So, if you're looking at it from a buyer's perspective, you're not going to gain the windfall after 10 years, but you're still building substantial equity, getting the same equity percentage-wise as an investor does when they purchase real estate.

And then, would that unit remain to be-- the price for that unit would remain at 500,000?

No, it keeps on going up at 4.5% or so per year.

It just slows it down, but it doesn't trigger the market rate, is what you're saying. Okay.

Quick clarifying question. For the changes to the definition of 'qualified resident,' just expanding on Representative Muraoka's question, so currently, it is extremely difficult for somebody to purchase another restricted unit because they would have to sell their current unit within a year?

Currently, there is a provision where homebuyers of restricted units can move to a larger restricted unit if their family's circumstances change, but they must sell their current unit before they can purchase a new unit. So timing-wise it's just impractical.

So under the current system, it's essentially impossible for somebody to move up into a large unit as their family situation changes. With the changes to the definition of qualified resident here, where theoretically somebody could own two units simultaneously, it gives more flexibility for somebody to be able to purchase another unit while they work on selling their older unit? So the intention here is with flexibility so somebody can move up that ladder into a bigger unit? Okay. Thank you. Members, further questions? Representative Cochran.

You mentioned utilizing Honolulu Housing Affordability Index, and in this bill it states, or other reasonable affordable measures. Do you know what those could be?

We looked at neighbor island indices, but for Maui for example, is very volatile, so it's hard to-- you know, if you look at the Oahu Index, it's a pretty constant 4% rise. Maui is very volatile depending on, I guess, Maui's economy.

So it could be the consumer price index, but we're looking at the Honolulu Index because it's the most stable and it's probably most reflective of property appreciation rates statewide.

Chair, follow-up? Any other states, because I know Colorado has been looked at many times in this affordable perpetuity because they've done it and have been doing it. Vail, you know, resort town like Lahaina, resort town like-- whatever. You know, we have similar demographics. So did you folks look out of state, actually?

We did look at the Vail program. California also has programs where they offer affordability, but this was really just looking at our programs, how we can modify our program to meet objectives of providing equity growth while also maintaining affordability.

And one last-- Chair? So, I've always-- I like the direction this is moving, but do you--just a question, I think, for yourself, too--do you think that address-- we need to have two types of inventory of housing.

You have your market investment-type properties, which we have a ton, and I think, too much of, versus an inventory of this affordable-- talking about perpetual or perpetuity type, you know, affordability of housing. And that inventory needs-- we need to beef that inventory up to balance it out.

Right now, I think we're over on the market rate and we're very low obviously in every preamble we're talking about housing under in our affordability housing. So do you agree with that concept?

I think that is true that right now, there isn't really a market for kama'aina because everybody's competing in the same pool, even for the restricted units. For most buyers, they're going to hold on to that unit for 10 years, so it's not really available for the last years.

But-- sorry. Along that line, but after 10 years, it flips into market, so now we just like-- we're starting from square one again. So we lost that inventory on affordable housing. That's where I'm going with that. So for me, perpetuity and perpetual type concepts have to be implemented, you know? So anyways. Thank you, Mr. Minakami.

Thank you Members. Further questions? Seeing none. Next item The agenda is HB 1723 relating to the rental housing revolving fund, revises the mixed income sub-account within the Rental Housing Revolving Fund by modifying the priority list for project funding and adding new project priority criteria and authorizes transfers into and out of the account. Vice Chair for the testimony.

Hawaii Public Housing Authority in support. Thank you, HHFDC with comments.

Standing on testimony and support and offering comments.

Thank you Catholic Charities Hawaii.

With comments Aloha Chair and Vice Chair I'm Betty Lou Larson representing Catholic Church Hawaii. We have sparked the intent of this Bill. I think we feel that the state needs both for sale housing and of course rental housing. However there needs to be a separate process for for sale housing.

Mixing it up with the Rental House Revolving Fund we feel is not the right direction. You need something like DIRF or a mechanism would really provide a transparency.

It would provide a framework for the for sale affordable homeownership that needs to be addressed, has to be creative but also has to be clear to the public that this is for home, you know, for ownership and how they can participate, how they can provide input, et cetera, like that.

So we just encourage you to separate these issues so that there is no confusion between the state's efforts for the for sale which is a new I think initiative and the long term initiatives for rental housing which has been going on for the past 20 years plus years.

So we thank you for allowing us to give our comments.

Thank you the Nature Conservancy with comments Housing Hawaii's Future in support and AARP Hawaii in Support. Anyone else online or in person wishing to testify on HB 1723? Seeing none, Chair. Members, any questions?

Seeing none. Next item on the agenda is HB 1724, relating to the Hawaii Housing Finance and Development Corporation, makes the DIRF Equity Pilot program permanent and expands the use of proceeds in the Dwelling and Revolving Fund to include purchasing equity in for sale housing development projects and interim primary or secondary financing.

Vice Chair for the testimony HHFDC in support. Thank you. Office of Planning and Sustainable Development in support. Thank you. Hawaii Appleseed Center for Law and Economic justice in support. Housing Hawaii's future in support. AARP Hawaii in support. Hawaii Community foundation in support. Anyone else online or in person wishing to testify on HB 1724? Seeing none Chair.

Members, any questions?

Question

Representative La Chica.

For HHFDC. How much. Would we need to allocate? What is our current like in terms of like applications and like the amount that's currently capped or the amount that we have? Like what's the gap? In terms of how much?

If the Legislature had unlimited amount of funding, how much, how much would we need to allocate to.

We don't need to allocate any funding to make the program permanent. We would use our existing DIRF funds to continue funding this program. Generally under the Pilot we had $10 million to allocate and the amount has been roughly about $100,000 per unit.

Making the program permanent has the additional benefit of being able to pair loans out of DIRF so we can put our funding in earlier to help with project feasibility of these for sale projects. And instead of paying back the loan, we take equity in the units.

So that's a way to really get some projects off the ground where they're struggling because they don't have equity to start construction. They can be basically an equity investor to get the projects moving.

Do we currently have beyond the authorized 10 million? Do we have. Do you anticipate that there's more like that's beyond, you know, that I guess must could be allocated beyond like the 10 million?

Yes. The program has been quite popular with home builders. So we anticipate that going forward that there will be continued demand for the program.

Do you know what the current like amount is for, like the number of like applications?

We went through the $10 million in about two years. So it depends on the pace of construction. But 5 million per year is something that is probably achievable long term.

Again, this is something where the state gets paid back its equity, plus your depreciation when those home buyers sell their units, and typically home buyers, first time home buyers especially tend to sell their units about 10 years.

Do you need any additional like staffing to manage this, at this new kind of model?

Current staff have stepped up and implementing this. So we seem to have it under our belt right now. So right now it's going okay.

Thank you. Thanks for putting in this measure.

Good Bill. Thank you, Representative Cochran.

So this started out as a pilot and now this is seeking to make a permanent aspect strictly out of your HHFDC. Is that what this is? And so you folks will have sole control of the funding and determining, I guess there's a portion equity percentage share share, the appreciation share.

I think maybe that's what was discussed earlier in the last Bill, maybe the index? Is that what that is speaking towards?

For this program, we do want to have an equity percentage share to make sure the program is fiscally responsible. So if the state is putting in $100,000 of equity into a unit to lower the price paid by the home buyer, well that's actually the state equity. That's not the home buyer's money.

So the state should be able to receive a return if the unit appreciates.

Right. Okay. And that's where I think, yeah, to figure out what that number is to make this a revolving per se type fund. Or on the flip side, what's taken. I mean, what's put into the DIRF could be tying up funds maybe too.

If it's over, too much is asked for or I mean, in the initial stages, I suppose once it's rolling out, you know, you can gauge more what's needed, not needed.

I guess that's why we're not asking for funding for this program. We. We have sufficient funds in DIRF, so we'll just use those funds for this program.

Okay. And did. Was that 10 million stated? You said in the last five years, two years. You've used 5 million per year?

Is that the amount? And that's again what you want to start with?

Yes.

Well, we. We have existing funds in DIRF.

And that is what's the existing total at this time. Was that stated?

The cash balance is about $30 million. We also have $50 million from an infusion. So we do have funds for this. We're balancing this with other funding needs also so. But we would use whatever sources we have available for this program, not asking for any additional funding.

Okay. And then Chair, I don't know if. But at the end of this Bill, it says it takes effect like three years back? 2023? Do I need glasses?

That might have been the original pilot program.

Is that shall take effect on July 1, 2023. Is that by- oh, amending that. Sorry. Yeah, I did need glasses. Sorry. Okay. Sorry. Okay, thanks. Sorry. Thank you, Mr. Minakami.

Thank you. Members, further questions. Seeing none next time. The agenda is HB 1727 relating to the rental house revolving fund. This allows for transfer of funds from the RHRF to a sub-account and between sub-accounts of the fund.

Clarifies what constitutes a mixed income rental project for purposes of loans funded through the mixed income sub account. Repeals the sunset date for the mixed income sub account. Authorizes the Director of Finance deposit rental housing revolving funds into a mixed income sub account and appropriate funds. Vice Chair for the testimony

HHFDC in support. Thank you. Catholic Charities Hawaii with comments.

Aloha, Chair. Vice Chair. I'm Betty Lou Larson with Catholic Charities. We definitely support the need for rental housing for the workforce. So we support the intent of this Bill.

We just raised the comment that we want to make sure that there remains a balance between the focus on the under 80% AMI the population that really is at risk for homelessness a lot. Our kupuna who are increasingly becoming homeless and just need to have affordable rentals.

So the balance in funding to make sure that both important initiatives move forward and not one at the expense of the other. So that's our only comment. Otherwise we support the intent of this girl. Thank you.

Thank you. Housing Hawaii's Future in support Hawaii YIMBY in support Cares in support on Zoom.

Yes, hello, can you hear me? Hi. Okay. Angela Melody Young Cares in strong support. So I think what this Bill is trying to do is to facilitate the transfer of funds for the rental housing revolving funds. And so it specifies the conditions of upon which the HHFDC may transfer.

And so I think this legislation is designed to accelerate development of affordable rental housing in Hawaii by providing HHFTC with greater financial flexibility and a permanent funding mechanism. And by allowing HHFTC to transfer funds between accounts without legislative approval repealing the sunset date on the mixed income sub account, it can streamline the financing for projects to help.

I think what it's trying to help is the tier 2 category, the classification of. The middle class families in this income range of 60 to 140AMI.

And so the legislation I think is you know, really helpful for the Rental Housing Revolving Fund, which is in high demand, often hitting its funding caps, which encourages the development of these alternative diversified and mixed-income housing strategies. So this is really helpful. I think it should be enacted in good faith to develop housing.

Thank you. Anyone else online or in person wishing to testify on HB 1727.

Members? Any questions? Seeing none. Wait, give me one second. Next item on the agenda is HB 1711 related to housing amendments for purposes of Hawaii Housing Finance and Development Corporation's Rent to Own program.

The period during which the sales price of a dwelling unit is required to remain fixed from five years to an option period to be determined by the corporation Vice chair for the testimony.

HHFDC in support. Thank you. Housing Hawaii's Future in support and one individual with comments. Anyone else online or in person wishing to testify on HB 1711. Seeing none Chair.

Members? Any questions? Seeing none. We will recess to get quorum for decision making.

Reconvening our House Housing Committee public hearing for decision making for our 9am agenda. We already DMed on HB 2611 and HB 2102, so we're moving on to HB 1710 relating to historic preservation.

I recommend that we move out in HD2 and that we ensure that subsection B in 6e-42 is consistent with subsection B in 6e-10 regarding review and concurrence time frames and that will I recommend adding language to the end of subsection B in 6e-10 that clarifies that the project may move to the next step in the compliance process.

Members, any questions or concerns? Seeing none, Vice Chair for the vote.

Voting on HB 1710 HD1. The recommendation is to pass with amendments. Chair and Vice Chair vote aye. Representative Cochran.

[Roll Call]

Representative Pierick. The recommendation is adopted.

Thank you, Vice Chair. Next. Next item. The agenda is HB 1868 related to housing. I want to note HHFTC's concerns in their testimony with mandating QAP changes in statute. And I'll quote them.

We respectfully note that prescribing detailed QAP criterion statute may limit the ability of the federally required public process to meaningfully inform the final plan. This creates tension between legislative direction and federal compliance obligations.

Also of note, and I share their concern that this is a little bit cart before the horse and Dean might use that term that I'm copying. But the idea that we are mandating what the changes are and then creating a working group to implement those changes.

And also I have concerns with mandating permanent affordability for the reasons that we discussed today and that I think it is important to ensure that projects can refinance at the end of their 60 year period. These things are going to be going to market, but they'll be much cheaper units because they're old.

And I think that we are obligating future state funding by requiring permanent affordability. I also think that we are really giving a huge boost to government projects when you have mandated permanent affordability at the expense of some private projects and government projects are great. Permanent affordability. Government projects obviously are great, but it's not.

We don't want all projects to be government. For example, in Louis, there's not a lot of government land there. Those can be private projects. So we need, where I'm from, we need to ensure that the private sector can develop these also. So my recommendation then is to delete the reference to Members of the working.

Sorry, move out in HD1 and we'll delete the reference to Members of the working group not being subject to Chapter 84. As the Ethics Commission has already stated that Chapter 84 does not apply in these circumstances. I recommend that we delete paragraphs 1 and 2 of the preamble.

I recommend that we delete the third sentence of paragraph 3 of the preamble. I recommend that we delete sections 45 and 6 of the Bill entirely. I recommend that we defect the date and I recommend technical amendments for clarity because it's the style. So essentially what we'll be doing is creating a working group.

We're not going to explicitly spell out how the working group is supposed to do their work. Let them figure it out as a working group should. Members, any questions, comments or concerns? Yes, Rep. Grandinetti.

Thank you, I actually participated over the interim in like community process on the QAP led by Appleseed and Poverty and Race Research and Action Council. And it was really cool to see how the QAP can be utilized as a tool for deeper community engagement.

So I kind of think, yeah, just echoing the fact that that public, public process is really important and that if we do it right, it can bring in new voices and people are trying to do that around the country. So I understand.

The kind of intent behind the working group, but I also think that we can improve that public process.

Thank you for commenting. Actually, based on that, I do want to note in the Committee report that the intention of this is to improve public input and public process through this. I know that QAP already has an extensive public input process.

If we're replicating that work through working group, we need to ensure that we have extensive public input, and that's not coming at the expense of the people. So thank you, Rep La Chica.

So, Chair, just to clarify your amendments, you're removing Section five,

Section 4, 5, and 6.

Four, five and six. So all the, you know, the restrictions on, I mean, prescribing the QAP, the perpetual affordability requirement, and tying that to, like, the funding.

Yeah.

Okay.

So moving forward. But we're not defining exactly what the work group is supposed to be.

Okay.

Okay. Members, further questions, comments, concerns? Seeing none real quick. I'm sorry.

The makeup of the working group stays the same.

Yes. Not touching the makeup of the working group. Seeing no further comments. Vice Chair for the vote.

Voting on HB 1868. The recommendation is to pass with amendments noting that all Members are present. Any Members voting with reservations.

Chair, Vice Chair, I mean.

Reservations for Representative Cochran. Any no votes? Seeing none. The recommendation is adopted.

The recommendation is adopted. Thank you. Next item. That is HB 1920 related to the low Income Housing Tax credit. I recommend that we move on HD1, that we adopt the recommended amendment from DOE taxes testimony, that we make it applicable to taxable years beginning after December 31, 2026 and that we defect the date.

Members, questions, comments or concerns? Seeing none.

Vice Chair for the vote voting on HB 1920. The recommendation is to pass with amendments. Any reservations? Any no votes? Seeing none. The recommendation is about it.