Senate Standing Committee on Education

Good afternoon, and welcome to the Joint Committees on Housing and on Education. This meeting is being streamed live on YouTube. In the unlikely event that we have to end this hearing due to technical difficulties, the committee will reconvene to discuss any outstanding business on Thursday, March 19 at 1:07pm in this room, 225, and a public notice will be posted on the legislature's website.

We have a one minute per testifier time limit. This meeting will begin with a 1:00 joint agenda of the Committees on Housing and on Education and will be followed by the 1:05pm agenda of the Committee on Housing. If there are temporary technical glitches during your turn to testify via Zoom, we may have to move on to the next person due to time constraints.

We appreciate your understanding and remind you that the committee has your written testimony. And we'd like to welcome the Committee on Education. Senators Chair Kim and Vice Chair Kidani. I'd also like to welcome Members of the Committee on Housing, Vice Chair Hashimoto, and Senators Elefante, Rhoads, and DeCorte from Education.

Our first bill today is HB 1713 HD 1 relating to school impact fees, which appeals school impact fees, abolishes and transfers unencumbered balances of the school impact fee sub accounts and certain fair share contribution accounts to the school facilities special fund. Our first testifier is DOE in opposition.

Good afternoon, chairs, vice chairs, members of the committees. The DOE respectfully opposes the measure as drafted, and we rest on our testimony. Available for questions. Thank you.

Identify yourself, please.

Thank you.

I'm sorry.

I'll always forget, senator.

Oh, yeah. If you could identify yourself.

Jesse Suki, deputy superintendent of operations at the Department of Education.

Thank you.

We have HHFDC in support.

Afternoon chairs, vice chair, members. HHFDC sentiments, testimony in support.

Thank you. The attorney general's office, department with comments.

Good afternoon, chair Chang, chair Kim, members of committees. Randall Watt, Deputy Attorney General, Department. As for describing our written testimony, department has comments on this bill. To ensure that the bill meets certain constitutional limitations based upon Supreme Court case law. The department recommends amendments that are described in our testimony, and I'm available for questions. Thank you.

Thank you. Department of Hawaii Home Lands in support.

Hello chairs, vice chairs and members of the community. I'm here from the Department of Hawaii Home Lands in support. I'm available for questions.

Thank you. School facilities authority in support.

Riki Fujitani with the school facilities authorities here in support. Thank you.

Thank you. Gresford Institute of Hawaii in support. NIAAP Hawaii and Avalon Development Company and Mark Development in support. Tax Foundation of Hawaii with comments.

Aloha. The Tax Foundation stands on its written comments. Thank you very much.

Thank you. Maui Chamber of Commerce in support. Housing Hawaii's future in support. Landis Research Foundation in support. BIA Hawaii in support. And Johnnie-Mae L. Perry in support. Is there anyone else wishing to testify in House bill 1713? K. If not, do we have any questions?

Question for DOE.

Hi. Deputy superintendent Suki. So I I know that you're fairly new into this position, but there was some testimony that says, you know, for nineteen years, the funds haven't been encumbered. Can you explain to these committees perhaps why and the reasons for some of the funds being not encumbered?

Yeah. Jesse Suki, deputy superintendent of operations again. And I, yeah, started in September, but I've been in land use development for over twenty years and actually worked on some of these impact agreements way back when for projects in the both the private and public sector. So the fees, my understanding is that some have not been spent because the way these impact fees work or the fair share we're talking about the fair share specifically is that they are proportional share of the impact that the project being proposed is going to have on schools in particular. So the amount of money that's contributed or land that is contributed is just a part of the entire need for the district.

So the money that are in those accounts may not have been spent because they're not enough money to build like a full school. And the money is restricted to being used in the district where it's collected because the impact fee, like the AG had testified, is linked to the constitutional limitations of you know, it has to be a proportional share of the impact and can only be used for the purpose that it was exacted for. So that's another reason why those fees may not have been spent, but they are allocated to projects within those regions over time. So it's being used. But some of the funds still are in there, but the intent is to use them as the need becomes, you know, to to fruition.

Because it's, you know, because it's dedicated, doesn't mean at that time you need to build. You build when the need arises over the life of that project.

Are you able to share with the committees what projects that you're using the funding for?

I believe in our testimony, we named a couple. It was the let's see. We talked about the Koa Ridge and Ho'opili projects and the Central And West Maui projects.

Oh, I see it here later in the testimony. Okay. Thank you. Thank you, chairs.

Thank you.

Thank you. So how much of the school impact fees did you folks use on these projects?

I don't have that in front of me, but we reported and we have the, quarterly I believe it's quarterly reports on the website.

So of the $17,000,000 that was in the in the fund, is that what we have? How much is in the fund?

I'm sorry. I don't have those numbers in front of me.

How can you not have these numbers? I mean, you're here to to defend this measure. So wouldn't you, shouldn't you have that information available?

Yeah. I can.

I can provide this last year as well, and we had proposed to do away with the with the impact fees last year, and the measure got watered down? But, you know, this is serious. If you're gonna tell tell us that you're using the funds, but you don't have the money, then how are we to trust that what you're telling us is is accurate? Did you read the did you read the audit report by the auditor about the impact fees?

The impact fees. Yeah. Yeah. That came out a while ago. Yeah.

Yes. And you know you know what they stated about the formula, about the fact that you folks haven't used the monies, about how residents are being are being assessed these these amounts, and yet those monies don't go back into the schools in that district.

So the impact fee program has already been transferred to SFA. So what we're really talking about is just the fair share, already negotiated, agreements that were part of entitlements like land use commission or change of zone. So those are already, entered into agreements with funds allocated to the district or area where those agreements were entered into and finalized. So that's that's the focus of this bill to scoop up that last remaining part of the of the program. And our our ask is that, it not be scooped, that we'd be allowed to use that for the schools that are

So where's that list of how much how much you're talking about that you don't want us to scoop?

We can provide that to you.

Well, you should have it now.

Yeah. I don't have it in front of me.

Okay. Jesse, so if we're gonna come in and you're going to be opposed to this, and you gotta give us every reason why we should agree with you. And we cannot agree with you unless you have the information, unless you can give us the facts. And when you don't give us the facts, which is not the first time because all the hearings that I've held, the DOE come unprepared. So it leads me to believe that, you know, I don't trust what you folks are saying.

Thank you.

Any further questions?

Thank you, deputy superintendent. Did I hear you say that the funds from the school impact fees have already been transferred to SFA? And you folks are currently using fair share funding for these Koa Ridge projects?

Yeah. Two different buckets, the impact fee and then the fair share. Yeah.

Yeah. So we're. Okay so. Sorry. My question is, so has school impact fees already been transferred over to SFA?

As far as I know, the program is under SFA now. It was transferred. Yeah.

Okay. And then so I think a lot of the also the concern is that this fee is not only collected from big developers, but also from local families, owner occupants, those kinds of things is that that would be imposed on local families as well. Is that your understanding?

The school impact fees that were negotiated as part of, like, land use commission entitlements. And so it's like a proportionate share of, you know, if you're gonna have so many students that, households that generate so many students, that's the proportionate share. And that's exacted from the project developer, and they may pass that cost on to homeowners.

Okay. So as far as the school impact fees specifically, has DOE spent or encumbered any of those funds?

Some of the money for the, the fair share money has been allocated to projects.

Yeah. But the fair share is different. Right? Like, this is a different bucket. Right?

Yeah. I'm just talking about fair share.

Okay. Are you prepared to respond on school impact fees? Because because that's what my questioning is, so I don't wanna belabor it.

For this particular bill, we we only focused on the fair share because that's what the bill is talking about.

Yeah. Okay. So as far as the well, my questions are school impact fees. So it doesn't sound like he's

You should probably ask the SFA.

Oh, Ricky. Hi. Oh.

They have the program though, sir.

Yeah. And when when he does come up, then I'll ask my question, but whoever has questions for a deputy superintendent. Thank you, Jack.

Because I have a follow-up. I think she I have a follow-up. Okay. So of the of the fair share, how old are these projects that have this fair share?

They they can have been around for some time. Like, you know, we talked around, Koa Ridge and Ho'opili were approved through the Land Use Commission, you know, quite a while ago.

So the phase two of Kapolei High School, the Kamaliʻi Elementary School, those are, according to the audit, were part of the fair share $8,000,000. Is that some of the money you're talking about as well?

Fair share money. Yes.

But these projects are old.

Yeah. Because they don't they don't get built until there's a need for them. Because the projects are not fully built, and so there aren't is not a demand for school. Yeah. But we are asking for funding in in this supplement to budget for three schools. Right?

So So which three?

Ho'opili Planning, the Camtree School replacement school and Kapolei.

Yeah. Okay. So the others that have received fair share contribution, the money just sits there?

Until we need it. Yes.

So so some of these schools is from 2002, 2010, portables for schools in 2010. So what if if the money's just sitting there, you're not utilizing it. Why wouldn't we why wouldn't we we take the money?

Then then we wouldn't have it to build the school when we need the school.

But there's not enough to build the school already. Right? Some of these monies are not even enough to build the school. What you got? A million dollars? I don't know if this is $6,000,000 or $6,000. So for Kamaliʻi Elementary School, you had a million dollars. In FY 2005, you got $993,000. And then in FY 2010 $6,000 or that's could be I don't think that's $6,000,000. Doesn't tell me. But that's not even enough.

That's correct. The fair share supplements, the the CIP ask that we would come in with the rest.

We're talking about a million dollars sitting there.

Until it's ready to be developed. Yeah.

When do you think Kamaliʻi Elementary is gonna be developed?

I don't have a prioritization list in front of me, but I can get back to you on that.

Okay. Well, I think you need to make a better case as to where all these monies are sitting and when can we expect to build it. Because at some point, if they're not expected to get built, then what if what happens to the funds?

It's there until we need it.

Yeah. But if you never need it or you never build it because you do you take it and put it to some other school?

No. We we cannot do that under the Fair Share program. Okay.

Yeah. So it's gonna just sit there forever and ever. Even though there's a school that might need it, it's just gonna sit there until we take it.

Based on the agreement for, the proportionate share of the school based on the impact of the project at the time, there is gonna be some forecasted need. And when that need arises because the project has built their development and because they knew that there was a school coming up as part of their fair share agreement and the environmental documents that they're doing, the permitting, it's properly infrastructured, which is also important part of the fair share program is that people think about the future need for schools. So when that need finally arises because they've built out, then we would come in for CIP to pay for part of it, and we use the fair share to us offset some of that cost.

Okay. But when this cost is so minimal or the amount is so minimal and the school's not built for years, at some point, it doesn't make any sense to keep that dollars there.

I mean, some money is better than no money. I mean, it's money that we'll use.

How? If you can't move it to something else, how are you gonna use it if that school doesn't get built?

Yeah. We so we we cannot move the money. I'm supposed if the developers who contributed the money agreed that the money could move, that would because the the constitutional right flows to them, not not to us. Right?

Yeah. But we can we can move it. We can take it and then possibly move it.

I check with the AG on that.

Well, this bill this bill moves the impact or you're away with that impact.

Can we clarify where the money comes from?

The the impact fee?

Yes. It comes from the construction.

Yeah. It comes from

Homeowners that pay for the homes.

Correct? So Yeah. So I think why the money can't be moved is that those homeowners are assuming that there will be a school there for their children to attend.

Yes.

Yes.

But there's no promise as to when the school will be built. And I guess until the development is fully developed and you have enough to fill, say, an elementary school, then that's when the projections are made as to when the school is built?

That's correct, senator.

But in the case of, like, Kalihi, where you have charged homeowners with impact fees and the money and there's no school to be built, What happens to those fees? Those fees goes within that district, right, which is one of the things that the audit pointed out that the formula that was used to assess the impact fees on these homeowners. You know, it's one thing if it's a homeowner in an area in which up and coming like in Kapolei where there are schools being built and even then, some of the schools are not being built. But then your your the fees were being levied on areas in which we did not get new schools.

That that's about the impact fees. I'll defer to the the impact fee program is with SFA now. So

Yeah. But the the impact fees that was used for some of these with some of these other bucket came from the same thing, right, for your shared the shared contribution. Right? It came out of the whole impact fees. Right?

It may have been combined, but I'm I'm just focused on the fair share of money which is currently dealing.

I understand. But I'm just saying because in in in response is that people have paid into it, not necessarily for their particular area or that particular school. So it's really not been associated with, you know, we're gonna we're gonna charge you an impact fee because we're gonna build Kamaliʻi school.

It's not never been like that. Right? It's it's a whole area that was that was assessed the fees, which was then used and contributed to a particular school.

So the the the the shared the proportionate share fair share fee that we're talking about, that was before the impact fee statute was developed. And that that took some effort to develop that statute. I was around when that happened. But that that impact fee schedule is very much more precise and and listed and enumerated the requirements for the impact fee and the district and how it was designated. The share fair program was more focused on you going into the LUC, for example, to build a 350 unit mixed use project, as part of your environmental analysis and your project analysis and how you evaluate how much infrastructure you're going to use.

You kind of have a forecast about how many families are going to be there. And based on that forecast for the this is the fair share I'm talking about, you're going to kind of predict how many students. And based on that, there's some discussion with DOE back then and the LDC about what kind of contribution it would be either money or land or both. So it's a little different, the impact fee from the.

Okay. Maybe we can hear from from SFA.

Yeah. I I think it's a little unfair for you to only limit your testimony or the discussion based on the fair share program because in your written testimony, the department started off their first statement by, opposing this bill because repealing the statute from the the statutory school impact program would weaken one of the state's primary tools for ensuring that school facilities keep pace with residential growth. So we we we seem to have a conflict with your written toast testimony and then with your oral testimony because ten years ago, DOE had called for 12 new schools on Lee Road Oahu by 2030. And where are we at with that? None.

Okay.

Twelve minutes. Okay. So so again, I wanna be fair to the discussion and to the committee here that we have that the answers that we need when we're trying to decide on where is the best place for these funds. And so I think it's a little unfair to the committee that you're not able or prepared to discuss the school impact fees, only the fair share where in your testimony you had opposed it. So I'm not sure if the department is in the business of opposing bills that they can't provide the factual data on, but it's a little difficult for us to be able to get behind your testimony when in fact you you haven't come prepared?

So the the bill is about the fair share amount and we talked about the impact fee because the impact fee and the fair share was sort of the state and legislature solution to addressing the need for schools when developments happen. The impact fee program has already been transferred to SFA. That's why the focus here is on the fair share.

So so just to be clear, so what do you wanna go back to then? Do you wanna go back to what we the the land contribution agreement we had last year that we we left in? Or do you wanna go back to the land use commission and do more ECs? Like, what what is your in your mind, the ideal compromise here?

Well, our based on our testimony, and our position is not to let the bill move and just status quo.

Right. But the the the you know, at some point, this is gonna sunset. So if we have a bill moving, we're gonna try and fix as much as we can. So I need to understand what is your position then. So you're okay with the current statue then for land contributions?

Yep. That's it's been working. Yeah.

Okay. So did you go back and look at any of the ECs to see if any of the ECs have any type of requirements for for the construction portion of impact fees. Because this is, as you said before, it was pre this this statue, right, that you signed all these ECs. In theory, what I'm really concerned about, and I think some of the genesis of this bill, is that there's people still paying some of the construction portions that I assume is a part of those old ECs.

But I think we need to go clean that up to to follow the intent of the what we passed last year to make sure that nobody is really paying for construction fees at this point. Are you have we embarked on that review of current ECs?

Yeah. We can talk more about that, but because I I need clarity on what I mean, I drafted some of these things way back when, begrudgingly, for developers. Right. But so I I I don't

So so is it solely on land then? These and the ECs? Because you said there was no statute, so so then I don't I in in terms of extraction, I would assume you're gonna get more than what was than just a fair share land contribution.

No. I think I think we, you know, from the developer's perspective, we we fought to be sure that we were paying whatever the fair share was as it could be defined through the best data we had at the time working with the department. So I'm thinking I'm thinking from the other side now. And it was a a payment, a lump sum payment, or it was a land designation. I'm not familiar with ongoing.

Right. Because you're saying people are still paying a cash contribution. That's what you you said.

No. I didn't say that.

Okay. So your your people aren't still paying then as as things get developed because you can do it in lieu cash.

Mhmm. Mhmm.

Right?

I I think I think maybe my answer to the question wasn't clear from one of the previous senators, but the question was, are people paying, you know, these fees

For the ECs.

The fees to the developer, and the developer might bake that into the cost of the units they're selling. So they may pass the cost on.

Right. So you're not collecting anything from the ECs right now?

We've we've already either been paid and it's in the account or this is the land designation. Yeah.

Okay. So moving okay. So so so that should be fine then. No one should be every everything owed is owed then to the DOE on past EC projects.

Should be yeah.

Okay. So then moving forward then okay. So so then you shouldn't be concerned with past ECs then. Are you guys not concerned with past ECs?

If the if the bill doesn't affect past ECs, that's a good thing. Yeah. Yeah.

Okay. And then moving forward, what do you want then? You want the current statute to stay in place?

We would we would like it with the current statute to be in place because when these entitlements occur, you know, part of the impacts that a board would consider, like a county council issuing a change of zone or the Land Use Commission. They're looking at all impacts of the project. So they would be looking proportionate share of impact for off-site traffic improvements, for example, and they'd be looking at, you know, off-site impacts proportionate share to, drainage, for example.

So school is just one of the things that they're looking at. Yeah. And we wanna be considered, I think. Yeah.1

Okay. So that's that's your basic concern. As long as you you feel like you're gonna get something out of the decision and wherever it is, whether it's through the statue or the land use commission.

That kids that there's gonna be a a school built to meet the needs of the yeah. And that there's gonna be a proportionate share. Yeah.

So I I get so I get your point. I I think what what we gotta figure out, though, is you know, I I think there what the issue is is that you are owed certain things. Right? But I think when we we and this is what we brought up last year is that you guys aren't you're not taking possession of the things that you're owed. Developers are holding on to it.

So at a certain point, if you don't really need it, right, to a certain point, then why why is it owed to you if if it's you're not gonna take it. Right? And so I think we gotta we gotta figure all that out. I think this bill is aims to do some of that, and I think we're the the policy decision is essentially, okay. Well, none of it is working, so just repeal the whole thing.

Mhmm. Right?

Right? But until we know that the review is going on and we have a pretty good handle, I think we're gonna, you know, keep chipping away at it because I think it's a balance. Is it housing, or is it just making sure that we're gonna give money to an empty account that never gets used, right? And so I think the department has to show that this is an important tool, because if you're not using this important tool, then I think that's why we're kinda like, okay, maybe we just repeal the whole thing because it's just sitting there, and not being utilized. And I think that's what happened with the construction cost part of it, and now I think we're now coming back and we're like, okay, is the ECs, is is is all this land contribution stuff even worth it?

Mhmm.

Right? And so I think, hopefully, the DOE can work with us to figure out, okay, show something on your side that you're you're moving with these assets that are just sitting, and then we can reconsider, right, what what's the best way forward. So hopefully, we can come up with some solution.

I appreciate that.

Thank you, chair.

It was a question for somebody other than Mr. Suki is if that's if you guys are ready to move on. Okay. Thank you. From AG's office, if you don't mind. So, reading your testimony, there's a couple things I don't understand about of the bill, I guess. So you say that school impact fees are subject to constitutional limitations, undertakings. So what how does that play out in this situation?

Senator Rex.

So the the and this is probably, like, impact fees 101 so excuse my ignorance. But so when when there's a new development, the developer pays school impact fees because the DOE is gonna have to build a new school in that area because generally, they're gonna have to build a new school in that area because there's more kids around and so they have to build a school.

So but if we decide, hey. We're not gonna do that anymore. Wouldn't the money have to go back to the developer as opposed to as opposed to going to the I'm sorry. I forgot the name of the fund. The

Yeah. It says that in the bill.

Well, yeah, if it's as it stands, if it's hasn't been expended for twenty years' time, then it's to be refunded to the developer.

To the developer. But you but your suggested testimony was that it was let's see. Okay. If

Because the bill also says that it used within the school impact district for which it was collected or refunded to the developer. So there's a

But there's act there's actually a choice between refunding it to the developer or giving it to somebody else? Cause I I would have thought that if there's an agreement with the developer and and it never gets used, the developer would have a a claim to take it back

pretty much regard

But I think

These are the funds already in the sub accounts. So just in order to make sure that, basically, the the the funds that were collected from a certain area need to benefit that area.

Right. Right.

So if it's there but if it has not been expended and it's been a long time and reflected

Then it does have to go back to the to the developer. Yes. Okay. Alright. So one other question. So if the if we did pass this bill, then how would we how are we gonna pay for school schools and new developments? Is it just a straight CIP request from the Department of Education or is it or something in the bill that says

It goes to SFA, the money. Right? It goes to SFA.

But the but we're still taking impact fees in? We're just not putting it in a different account?

All all the fees went to SFA already, and this remaining balance according to the bill would still over to SFA who's supposed to build schools. Right? Am I correct, Keith? Yes?

Well, right now

Well, let me let me let me let me hear what the legal guy has to say first, if you don't mind. No. That's

My understanding is that the bill would stop the collection of school impact fees going forward. So without going into policy or ever, essentially, school impact fees can then not be used.

So the developers don't the developers won't have to pay impact fees and then how do we build schools? We just we just have to build

That is a question I cannot answer. as far as

Okay. So that's what you wanted to ask, Riki. Okay. Yeah. Alright. Thank you.

What what happened you know, what happens then if if we pass this bill, then how do we fund schools in the future?

What do you want clarified?

Right. You even go back to the normal process before with the land use commission or zoning, or you could just fund it directly. That's a philosophical question. My point is that my perspective is that we've created all these rules, so it's so hard to develop policy, and now you've got to peel everything back off. And all this motion we've created has done very little money anyway.

So it has very little impact. So just fund it. Build and fund it. Build cheaper, faster. That's where the action is. Not in this whole administrative process to get an exaction to slow housing.

Okay. So then that's where the philosophical part comes up. Because then it's it's whether the the new neighborhood that's where the new housing is has to pay a more a disproportionate share not a disproportionate share, but a a larger share of building a new school or it's just spread out over society over the old neighborhoods, the new neighborhoods that have already paid their impact fees and built schools and then okay.

Yeah. Because overall, what's the impact? The total balance we're talking about right now is $31,000,000. That's both a combination of if we sweep all the fair share of money and all the impacts fees collected over twenty years is $31,000,000. The way it's broken out, you can't even afford a portable in a lot of these sections. It's, it's, it's twenty years of motion with no impact. Okay. Honestly, that's what we're trying to deal with right now.

Okay. Thank you. Thanks, Jerry.

So can I so the the monies now from the fair share goes over to SFA? Is that correct?

Right now all this is with the DOE. Nothing's been transferred. Right? So

last year's bill that we said that the impact fee is supposed to be transferred to SFA?

Nothing's been transferred. It's all still in DOE accounts. It has to come to our special fund first, and then we have to go to the ledge to get a legislative ceiling to actually spend it. So what this bill tries to do is do all of that in in one bill.

Oh, okay.

We can still spend the money. It doesn't have to be a DOE school. It can be a charter school. It can be a pre k. There are other ways to spend educational money for a far more efficient way, but just not for schools.

It can be kindergarten. It can be a charter school would have a which has a wider reach and a wider breadth. The second bill we're hearing today is specifically for Kali'u Ala Moana, where you could buy a building in Kali'u Ala Moana in order to house a charter school. So there's different ways to spend it. We've just been stuck in this one way. We have to build this big school.

But even though we passed the bill last year, none of that money transferred over. Why not?

Because it has to get transferred by again, we're an attached agency to the DOE. They have to transfer the money to our account, then we have to go in from the ledge to get a legislative ceiling to spend that money.

But why wasn't it transferred to your account?

I don't know. It hasn't been transferred.

Do you know why, Jesse? Why the money hasn't been transferred over? Who's who's responsible for to for that?

Is it DNF or is it DOE or who who is responsible?

It might be might be combined, but let me let me check on that.

Yeah. Because, you know, we passed measures, and then we don't know that this not it's not implemented. So

Right. And more importantly, we need legislative approval to then once spend that money once it's transferred to our account.

So then you need to you need to have a bill, right, or something?

Well, the bill makes

This bill does.

Forces everything.

This bill does. Okay. Thank you.

Yeah. It sweeps everything.

Thank you. So I'm I'm sure you're paying attention to the conversation where deputy superintendent had expressed that those funds were already transferred to SFA. So you're telling us today that it has not been transferred?

No.

Okay. So

It's a process. It's you know, what happened last year was

Or the law was changed. Yes.

Has the process started? I mean, the bill was passed.

The law was changed. The bill was passed. Has the transfer started?

No.

Okay. Alright. For the sake of calling you back up here, deputy superintendent, please make sure that your statements are factual, because it's very frustrating to, at least myself, when I have questions, you make a statement and it is not true. So let me just move on to my next point. Out of the $31,000,000 how many, how much Do you know how much money is school impact fees and how much is fair share?

Yeah. 9,000,000 in fair share balances and 22,000,000 in impact fees. So it's a total of 31,000,000 we're talking about. But, again, because there needs to be a constitutional nexus, it has to be narrowly tailored on where you spend it. Right? It has to be tailored for the Kali'u Ala Moana area. It has to be tailored for Central Maui. It has to be sent into Pearl City. That's the challenges. Right?

Meaning the constitutional test of Noland Dolan so you don't go follow the US Supreme Court language and you use it properly for pre k, charter, or or new schools to increase capacity, not to improve, renovate, or retrofit. It has to increase capacity because that's the exaction.

Are you in favor of repealing the school impact fee?

Yes.

Okay.

Yeah. My my point is twenty years of nothing. No impact. Just clean slate, figure something better.

Okay.

Spend what we have before we have to return it to the developers. We've we've figured out a way to to do that. It'll probably use for pre k or charters, but we can spend that money. Make it put it to some use. Right?

Okay. What about the old system, the fair share develop?

I mean, we have to we could sweep that money and use it for the same use because it's for education. Right?

I have a follow-up, Chairs, if I may.

Mister Fujitani has a question.

Mister Fujitani, if the legislature's intent is to repeal these sections, sort of part two from last year, would SFA if you were given that authority to do all these things, would you be able to execute?

Again, we need the money to come to us first in our account, and then we need approval from the legislature to spend to that ceiling. We need a ledge. We need to

But this is if you were given that mandate.

You would be able to do it?

Absolutely.

Yes.

K. Thank you.

Senator Kidani.

Thank you. So Riki, for the school impact fees, the developer puts it into an account. And is it only for certain schools in that district?

Right. There's four impact districts, Leeward, Central, Kali'u Ala Moana, and West Hawaii.

K. But it doesn't have to be for a new school. It could be to renovate older schools?

right now. Can't can't be for renovation. It has to increase capacity. So if you were to add capacity Right.

If you add a capacity to a current school, you could do that.

Yes.

Has any of that been done?

No.

And one of the problems is that the Kalihi to the downtown or that area, a lot of the condos are coming up, but there's no need for new schools because the schools there, The growth isn't there as far as families. Right. And so even though that area is getting the impact fees, we don't have new schools. But if if you folks get it and then you can we can do childcare, preschools.

Yeah. Or charter capacity. Yes. Yeah. Yep.

So we need that flexibility.

Yes.

We need that flexibility.

Yeah. But first, we need the money transferred to us and then a legislative ceiling to spend the money.

To the OEA. So they said it's transferred. So Two points. I'm gonna follow-up on that.

Yep. Great. Any further questions? Great none, thank you so much. Thank you.

We move to our next bill on this agenda.

House Bill 2297, HD 2, relating to school facilities. Transfers school impact fees from the Kalihi-Ala Moana School Impact District to the School Impact Fee Sub Account of the School Facilities Special Fund for the acquisition and renovation of one or more buildings in the Downtown Honolulu area to develop and expand pre k and charter school capacity. Our first testifier is the Attorney General with comments.

Afternoon again, Chair Chang, Chair Kim, Members of the Committee. Randall Wat, Deputy Attorney General. Department, as described in our written testimony, similar to the last bill, to address those constitutional limitations, concerns talked about earlier about nexus and direct proportionality, we have committed amendments to this bill. I'm available for questions. Thank you.

Thank you. School Facilities Authority in support. Hawaii State Public Charter School Commission in support.

Chair Chang, Chair Kim, Members of the Committee. Ed Noh, Executive Director of Charter School Commission, and we stand on our written testimony in support.

And Johnnie-Mae L. Perry in opposition. Is there anyone else wishing to testify on House Bill 2397? If not, do we have any questions?

I have questions for SFA. Thank you. So in that, in the measure, the bill transfers school impact fees from Kalihi-Ala Moana School Impact District to the Schools Impact Fees Sub Account for the School Facility Special Fund for acquisition and renovation of one or more buildings in Downtown Honolulu area to develop and expand pre kindergarten and charter schools. Can it also be used for renovation?

No.

No? Can we change the language to say that? No.

No. That's a exaction because it was taken for new capacity.

Okay. So it has to be. So it can't be for any of our existing Kalihi schools that might need... What about if they needed, like, a portable or something?

That might make it because you're adding more capacity.

Capacity. Yeah. So you could do that?

Yep.

Oh, sorry. Please stay right there. Do you know how much is in the account for the Kalihi-Ala Moana area?

Yes. Half a million in construction, 3 million in land. But because of the recent condo boom in Kaka'ako and that whole area, there's gonna be probably an additional 8 million more being collected soon as the units get sold. So that's why the bill, we anticipate based on all those construction being sold now.

The balance may balloon up to 15 million soon. And that's why the bill has a $15 million transfer anticipating all those funds. See, because the, as the units get sold, that's when the fees get paid for. Right? So it'll be a sizable amount of money by next year.

Yeah. So it's funds that you can actually do something with?

Right. If we apply it to additional capacity, it would be a great for preschools, for pre k, or it would be also great for a charter school. You just have to think of different uses on the money.

So the cutoff for charging developers for new development with impact fee is of this past year?

Well, that's, this is just the land component, but they don't pay for it until the units are sold. Right? The agreement kind of says when we sell the units because developers don't have that cash.

But I'm just saying that so is the is the law now that you're done, going forward, any new development of of buildings that had no agreement would not get would not...

It'd be all gone with... But you have 2 bills. Right? One bill was just transfer the fee, let us spend it. The other bill, House went for it and said, let's change it, and they modified it on House Draft 1 to a complete repeal. Right. So.

But last year's bill, didn't we stop some of the affordable units or some units? Or...

Right. The problem with last year's... This initial bill that now is a repeal was a cleanup bill because the law killed the construction component, but it wasn't clear that an exemption applied. So when it came out, it was a conflict of law. The the bill sought to clean that up. The Housing Committee decided to just repeal the whole thing. Just start again. So now you have two different bills. Right? One just to transfer fees in one specific district, one to just tabula rasa.

So if we pass the one, then we don't need the second bill?

Probably, you would just sweep the fees, transfer it to us, give us the expenditure ceiling, and we try our best to spend it before we have to give it back.

Clarification. So impact fees, not necessarily needed to build new schools, but additional units to a school to allow more students. What about facilities on a current school that would bring more students, like a band room, music auditorium? I don't know.

Yeah. I think as long as it meets, well, you'd have to check with our esteemed counsel, Randall Wat. But it's additional as long as it's increasing capacity. Right? The risk is that a developer sues us and says, wait a minute. This exaction doesn't meet what you'd what you're looking for.

Band kids. Kids in the school that are taking band.

Yeah. Yeah. That would be harder, but additional capacity clearly. Right? You're increasing the footprint of the school too.

Well, I guess what I'm getting at is that maybe more students from the area would go to that school if they had the facilities that that student was looking for.

Oh, for that programming. Yeah. Yeah. That would be a little more difficult to to justify. But, again, it's just a risk, right, we wanna take in terms of litigation.

Okay. Any further questions? Okay. If not, that brings us to the end of this... Okay.

Hello again. Jesse Souki, Deputy Superintendent of Operations. I believe the question on the past bill is germane to this bill, and it was raised. So I just like to say that the impact fee money was transferred to SFA. It's an account that is in DOE because they're an attached agency.

SFA doesn't have its own. It's managed by DOE. So I just wanted to make that clear. The school impact fee money, which is the subject of the other bill, was not transferred, and we're asking you not to transfer.

So you're saying last year's bill to transfer the funds, that the funds were, in fact, transferred?

Yes. I confirmed. Yes.

Transferred into what account?

They have an account in our fiscal office for SFA.

Okay. So, Riki, is that correct?

Not to my knowledge, but I'll try to confirm.

Yeah. Can you get back to us on that?

Unless there's other questions. Thank you.

Okay. Thank you. That brings us to the end of this agenda. We're now in recess.

Good afternoon. Welcome back to the joint hearing of the committees on housing and education. We're back for decision making on the two bills on the agenda today. First bill is House Bill 1713 HD1 relating to school impact fees. Thanks for a robust discussion on this bill. Having conferred, the Chair's recommendation will be to pass this measure with amendments.

We'll take the Attorney General's suggested amendments to ensure the constitutionality of this bill. Section five, paragraph one will read, used within the school impact district for which the funds were collected to provide new or expanded school facilities serving students residing within that school impact district, or two, refunded to the developer if collected as a fee in lieu, or two, refunded to the developer if collected as a fee in lieu or construction cost component impact fee and remain unexpended twenty years after the date of collection.

The school facilities authority shall administer these funds in accordance with applicable law and ensure that expenditures remain reasonably proportionate to the impacts generated within the district. Further, we'll take the school facilities authority's amendments.

First, to add a new subsection to HRS 205-4 to prevent return to the fair share exaction process K, notwithstanding any law to the contrary, no petitioner condition imposed by the commission pursuant to this chapter shall require exactions from a residential development for educational purposes. Next, to ensure existing educational contribution agreements remain in effect.

In certain language, notwithstanding any law to the contrary, any existing educational agree, contribution agreements or written agreements educated with, executed with the Department of Education or the School Facilities Authority pursuant to Chapter 302 A part six, subpart B HRS prior to its repeal by this act shall remain in effect unless the parties to such an agreement mutually agree to terminate the agreement.

Transfer, next well transfer the school impact fees into SFA's special fund. Next, we'll establish an expenditure ceiling to allow for the disposition of existing balances for priority education facilities projects, including the expansion of pre kindergarten facilities. We'll transfer the executed fair share ECAs to SFA and insert the language to do so and eliminate the legislative report requirement that would be moot with the repeal of school impact fees. And that's it.

And also in the committee report, we'll note the amounts of money in unused fair share contributions and school impact fees and the duration of their existence. Members, do we have any discussion? Questions? Okay. So for the committee on Housing, Chair's recommendation for HB 1713 will be to pass this measure with amendments. Chair votes aye.

Members, HB 1713 HD1,Cchair's recommendations pass with amendment. [ROLL CALL] Chair, recommendation's adopted.

Thank you.

For the committee on Education, same recommendation, HB 1713 HD1 to an SD1 as articulated by the Housing Chair. Any questions or discussion? If not, Chair votes aye.

[ROLL CALL] Measure's adopted, Madam Chair.

Thank you.

Thank you. Our second bill is HB 2397 relating to school facilities. Having conferred the chair's recommendation will be to pass this measure with amendments to adopt the attorney general's amendment. Again, to ensure the constitutionality of this measure by inserting section a section, the funds appropriated and expended under this act shall be used to serve students residing within the Kalihi Ala Moana School impact District. Students residing outside the district may be enrolled only to the extent that space is available and in a manner consistent with the purpose of the fees under Section 302 a dash 1601 hourS.

The expending agency shall administer these funds in accordance with applicable law, ensuring that in district students are prioritized and that expenditures remain aligned with the impacts generated within the district. We'll also adopt the school facilities authorities amendment. There is appropriated out of the school impact fee subaccount of the school facilities special fund, the sum of $15,237,019 or so much thereof as may be necessary for a fiscal year 2026 to 27 to acquire and renovate one or more buildings or acquire land and construct a new building in the 96813 ZIP code to develop and expand pre kindergarten and charter school capacity on page two lines 15 to 20. Alright. Any discussion members?

K. Seeing none for HB 2397 chair's recommendation for the housing committee will be to pass this measure with amendments, chair votes aye.

Members, chair votes aye. Any members voting with reservations? Any members

Reservations.

Reservations with Senator Rhodes? Any members voting no. With all others voting, aye, no excuses. Senator Fevella, recommendation is adopted.

Thank you.

And for the Committee on Education, same recommendation, HB 2397 HD 22 an SD 1 as articulated by the housing chair. Any discussion? Any questions? If not, chair votes aye.

Aye.

Measure is adopted, madam chair.

Aye.

Senator DeCorte.

Senate Education Committee House Bill 2,397, pass with amendments. Chair votes aye, vice chair votes aye. Senator Fukunaga excused. Senator Hashimoto.

Thank you.

Thank you. There being no further business on the 01:00 agenda, this hearing will be adjourned and we'll be back in a few minutes or in a few moments for the 01:05 agenda of the housing committee. Thank you.

Good afternoon and welcome back to the committee on housing. We are now, moving to our 01:05PM hearing.

Thank you all for your patience. We had a robust discussion in the 1 o'clock agenda. Our first measure today is House Bill 1711, relating to housing; amends for the purposes of the HHFDC'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. Our first testifier is HHFDC with support.

Hello, Chair, Vice Chair, and members. HHFDC stands on its testimony in support.

Thank you. Followed by Hawaii Realtors, in support, Housing Hawaii's Future in support, and Johnnie-Mae L. Perry, with comments. Anyone else wishing to testify on House Bill 1711? If not, members, any questions or discussion?

Okay. We'll move on next to HB 1715, relating to affordable housing, which 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, amends the definition of qualified resident for the purposes of HHFDC housing programs. Our first testifier is HHFDC, in support.

HHFDC stands on its testimony in support.

Thank you. Followed by the Office of Hawaiian Affairs, in support. OPSD, in support.

Aloha, Chair, Vice Chair, and members of the committee. Diane Dennis with the Office of Planning and Sustainable Development. OPSD stands on its written testimony in support. We're available for any questions.

Thank you. Hawaii State Council on Developmental Disabilities, in support.

We'll stand on our testimony in support. Thank you.

Thank you. Hawaii Realtors, with comments, Aloha Independent Living Hawaii, in support, Housing Hawaii's Future, in support, Holomua Collaborative, in support, Mortgage Bankers Association of Hawaii, with comments, Aloha United Way, in support, Johnnie-Mae L. Perry, with comments, and four individuals in support: Veronica Moore, Kaili Swan, Leilani Kailiawa, and Christine L. Andrews.

Good morning, Chair, Vice Chair, and committee members. Aloha. My name is Kai Esson. I'm a self-advocate with developmental disability. I support HB 715 because affordable housing is very important for people with disability.

Owning a home with people make accessibility changes like grab bars, wider doors, or accessible bathrooms. Those changes help people live safely and stay in their homes as they age. This bill helps keep some home affordable for a long time so people with disabilities have more housing opportunities. Please support HB 1715. Mahalo. I'm available if you have any question you may have.

Thank you very much. Any further testimony on HB 1715? Okay, members, any questions? Chair has a question for HHFDC. You saw the Mortgage Bankers Association of Hawaii testimony and you suggested some amendments, and you also saw the Attorney General's testimony on this question of cloud on title as well. Could you address these concerns?

I did not see the Attorney General's question, but I did see the Mortgage Bankers Association's question. The restriction that we would use to implement this program would be very similar to our buyback and shared appreciation restriction, whereby it is a-- it's in second position to the primary lender. So the first-- the mortgagee's or the first lender's interest for closing the property would be protected. And we did provide some language that could be incorporated into the bill to explicitly protect the position of the lender.

Okay. Thank you. Is there anyone in from the Attorney General's department here? Okay. If not, thank you.

Thank you.

Any further questions? Alright. We'll move on to our next bill, House bill 1727 relating to the rental housing revolving fund, which specifies the conditions upon which HHFDC may transfer monies from within the rental housing revolving fund 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 subaccount, and authorizes the director of finance to deposit rental housing revolving funds into and appropriates funds into and out of the mixed income subaccount. Our first testifier is HHFDC in support.

The HHFDC is in support.

DBEDD in support. Hawaii YIMBY in support. Housing Hawaii's future in support. Catholic Charities Hawaii with comments and Johnnie-Mae L. Perry with comments. Is there anyone else anyone else wishing to testify on House Bill 1727? K. If not, we'll move to our next, or members, any questions? K. If not, we'll move to our next bill. House bill 1733 relating to the housing, loan, and mortgage program.

It increases the Hula Mae multifamily revenue bond authorization ceiling amount to continue financing affordable rental housing statewide, clarifies that revenue bonds treated as refunding bonds do not count against the authorized aggregate principal amount of the bond. Our first testifier is HHFDC in support.

The HHFDC stands on written testimony in support.

Thank you. OPSD in support.

OPSD stands letter written testimony in support.

Thank you. Hawaii Realtors in support, AARP Hawaii in support, Maui Chamber of Commerce in support, Aloha United Way in support, Housing Hawaii's future in support, and Johnnie-Mae L. Perry with comments. Is there anyone else wishing to testify on HB 1733? If not, members, any questions?

Questions, chair, for HH and FDC? Hi, mister Minakami. So currently, right now, it strikes out language on the cap at $3,000,000. Is that correct?

That's correct.

And it leaves it as a blank appropriation. So meaning, do does HHFDC have a position, or would you just prefer not to have a cap?

It could be be a cap. I believe the the the Senate version that crossed over earlier was for 4,000,000, no $4,000,000,000, which will be fine. Okay. That'll be sufficient for several more years. Okay. Thank you.

Thank you, Chair.

Thank you very much. Any further questions? If not, we'll move to our next bill. HB 1740, HD 2, relating to HHFDC. Removes the prohibition against qualified residents for HHFDC approved projects holding a majority interest in land and removes the requirement that qualified residents demonstrate financial viability or ability to pay rent.

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

Our first testifier is HHFDC in support. Did you already, did you testify to that in your written testimony? Okay. Thank you. Followed by AARP in support. Aloha Independent Living Hawaii in support. Church of the Crossroads in support. Church of the Crossroads in support.

Hi. Galen Fox for Church of the Crossroads. This bill is about the range of qualification to benefit from HHFDC funding. It's enlarging the number of people who are eligible for such funding. We are concerned about dropping from the qualifications that the person be, the owner be with no other property, be with a family with no other property.

We're also concerned about the fact that the coming owner doesn't have to live in the unit. If we keep those conditions, which are currently in the picture, we're more likely to help the local people who most need housing. If you already have other property, if you're not gonna live in the unit, you're in a different bracket than the people that we're losing to the continent because we don't.

Thank you very much. Next, we have Holomua Collaborative in support.

Chair, Vice Chair, Committee Members. We are in support of this bill. As a survey came out last year underscored the fact that about 75% of people said that they might have to move to a less expensive state, many of them within the next five years. And most of those cite the high cost of housing as one of the reasons. All the more reason why it's great to have a bill like this.

Which is actually incentivizing the construction of housing that is dedicated for a local workforce and also does it in a way that does things like makes it easier for those folks to be able to go through the administrative process as well as to be able to move up the housing ladder and stay in that housing. So thanks very much for considering this, and we hope you'll support the bill. And we do also support HHFDC's amendment. Thanks so much.

Thank you. Next, we have Title Guaranty of Hawaii, HPM Building Supply, Mana Up, Tori Richard, and aio in support. Followed by Hawaii Community Foundation in support, Housing Hawaii's Future in support, Hawaii YIMBY in support, and several individuals.

Johnnie-Mae L. Perry with comments. Chevelle Davis in support, Veronica Moore in support, Ross Isokane in support, and Council Members Felicia Cowden and KipuKai Kuali‘i of Kauai in support. Is there anyone else wishing to testify in Senate Bill, on House Bill 1740?

If not, Members, do we have any questions? Chair does have a question for HHFDC. So you heard the testimony from the Church of the Crossroads. Can you explain to the committee why it's important to remove these requirements from the existing statute?

Yes. We understand the concerns. And for many years, HHFDC's rules did require that qualified residents who purchased a home could not own any of the property. So this is, this is a very different program. And this is a change in, I guess, our mindset in trying to facilitate housing development.

We're trying, the intent is to help households move up the housing ladder. Right now, if a home buyer purchases a unit, it could be a studio unit, they can live there for ten years, sell it at market rate, and then have to find something else. And they have to buy another unit on the open market. They could never benefit from another HHFDC unit again after that.

So the intent here is that a home buyer could own property and move within the housing ladder. They could buy an affordable unit, and at some point, they could sell it and buy another affordable unit to move up the ladder. So it should help them to stay, help residents to move the housing ladder and not set more barriers than are needed.

Essentially, are you saying that the agency is now trying to target maybe a higher income bracket of home buyer that may already exist, own existing real property, may even be collecting rent as a landlord to your developments?

It's really to allow homebuyers who are purchasing affordable unit to continue to benefit from units that are produced under our programs so that they don't feel like they're, that they don't have an opportunity to move up within HHFDC's programs.

Is there any restriction on the amount of real property that one of these homebuyers could own?

Currently, I don't believe there is a restriction in this bill.

Okay. So philosophically, you'd be saying that, you know, an extremely wealthy person who owns a lot of land would be able, you know, and maybe even be collecting significant rental income would be able to benefit from your developments by living in them, by buying them, even though they may be a wealthy landlord.

Hypothetically, that could occur.

Could you describe some of your projects that, or could you describe why this is necessary to, you know, to expand the scope of your projects and your housing development statewide?

Well, this bill really does facilitate the development of projects. Many times, projects are not feasible because developers are concerned that they cannot meet sales targets. They're concerned about the affordability restrictions being too steep. So under under this bill, there basically would, could be no affordability restrictions. It would be very minimal, if any.

Are there social benefits to allowing...

Certainly. I mean, one of the downsides, I would say, of affordable housing projects is that, you know, they segregate by segments of the community by income. So it's a double edged sword where you give preference or you require income, have income requirements.

But the other hand, strictly enforcing, strictly mandating occupancy by income requirements also creates segregation by income. So by removing that requirement, you're allowing, basically, households from any income to buy into the project.

Okay. Well, I think you see that this is a weighty policy decision that we're asking.

It is. It is not... This is a very different approach to providing housing, and it's really the intent is to remove barriers that inhibit the development of housing.

Thank you. Any further questions, Members? Okay. If not, thank you. We do have a limited amount of time left.

Okay. But The language is slightly different from what we passed what this committee passed in the SD 1 version of SB 2675 the the Senate bill, which says for credits issued after 07/01/2026, This new proposed language says for credits claimed on tax returns filed for taxable years beginning after 12/31/2026. Is that the same thing?

So the first well, if you're going to file your return after what is it? January 1? Sorry. Or the the one in this language is is it

12/31/2026.

Okay. So if you're gonna file it after 12/31/2026, that credit may have happened in any time of 2026. But the first one, it sounds like the credit had to happen after July 1.

Right. So is that

So it's a little bit different. It's a little bit different.

But in both cases, they would prevent somebody who got a tax credit issued in 2024.

Yes. 2024. Or 2025.

Okay.

Thank you. Any further questions, members? Okay, we'll move to our next bill, which is House Bill 2270, relating to the Down Payment Loan Assistance Program, which amends the Down Payment Loan Assistance Program by removing the prohibition on combined loan-to-value ratios, clarifying HHFDC's authority to allow payment waivers and interest forgiveness, authorizing financial institutions, mortgage lenders, and other loan originators to originate down payment loans, and reducing the borrower's required personal contribution toward the down payment. Our first testifier is HHFDC, in support.

HHFDC stands on its testimony in support with comments.

Thank you. And several others: OHA, in support, DBEDT, in support, OPSD, in support, Hawaii Realtors, in support, ARP Hawaii, in support, Mortgage Bankers Association of Hawaii, in support, Hawaii Credit Union League, in support, and Johnnie-Mae L. Perry, with comments. Is there anyone else wishing to testify on House Bill 2270? Okay, members. Do we have any questions?

Okay. If not, we'll move to House bill 2,385 relating to housing, which authorizes HHFDC to approve and certify GET exemptions for certain housing development projects developed under county housing incentive programs. Our first testifier is Hawaii Department of Taxation with comments.

Tax department stands on its testimony.

Thank you. HHFDC in support.

HHFDC stands on its testimony in support.

AARP in support. Grassroot Institute of Hawaii in support. Maui Chamber of Commerce in support. Avalon Development Company LLC in support. Center Urban Real Estate in support. Tax Foundation of Hawaii with comments.

Tax Foundation stands on its written comments. Mahalo.

Thank you. And comments from Johnnie-Mae L. Perry and support from William Corona. Is there anyone else wishing to testify in House Bill 2385? Okay. If not, members, do we have any questions?

Okay. Seeing none, we'll move to our next bill, which is HB 2515, relating to workforce housing, which establishes the Workforce Housing Regulatory Sandbox Program, establishes an advisory council within the Workforce Housing Regulatory Sandbox Program to advise on environmental and cultural practices within specific developments, requires a report to the Legislature, and appropriates funds. Our first testifier is HHFDC, in support.

HHFDC stands on its testimony in support.

Followed by HPHA, in support.

HPHA stands on its testimony in support.

Thank you. HCDA, in support. OPSD, in support.

OPSD stands on its testimony in support.

Thank you. Office of Hawaiian Affairs, with comments. Chamber of Commerce Hawaii, in support.

Chamber of Commerce stands on its written testimony in support.

Thank you. Maui Chamber of Commerce, in support, Housing Hawaii's Future, in support, Hawaii Island Chamber of Commerce, in support, and Joy Barua, in support. Is there anyone else wishing to testify on House Bill 2515?

If not, members, do have any questions? Okay. Seeing none, our last bill today is HB 1724, relating to HHFDC; makes a Dwelling Unit Revolving Fund equity pilot program permanent with modifications that include changing the method of computation of interest for purchasers of certain real property, expands the use of proceeds in the DURF to include purchasing equity and for-sale housing development projects and interim primary or secondary financing, exempts disbursements from the Affordable Housing Revolving Fund from appropriation and allotment requirements. Our first testifier is HHFDC, in support.

HHFDC stands on its testimony in support.

Thank you. OPSD, in support.

OPSD will stand on its written testimony in support.

Thank you. DBEDT, in support, Holomua Collaborative, in support, Housing Hawaii's Future, in support, Hawaii Community Foundation, in support. Is there anyone else wishing to testify on House Bill 1724? If not, members, do you have any questions? Okay. If not, members, are we ready to go into some decision-making?

Okay. We don't have a lot of time, so we're going to try to get through as much as we can. Our first bill is House Bill 1711, relating to housing. Chair's recommendation will be to pass this measure with amendments. The amendment will be to further defect the date. Any questions or discussion? If not, for HB 1711, Chair's recommendation is to pass with amendments. Chair votes aye.

Members, Chair votes aye. Vice Chair votes aye. [Roll call]. Chair, recommendation's adopted.

Thank you. HB 1715, relating to affordable housing. Sounds like HHFDC didn't get a chance to fully vet the concerns of the Attorney General and the Mortgage Bankers Association, so we'll be deferring decision-making on this measure to Thursday, March 19th, 1:07 p.m in this room, 225. Our next bill is House Bill 1727, relating to the Rental Housing Revolving Fund. Chair's recommendation will be to pass this measure with amendments.

We'll be removing Section One of HB 1727 and adding Section One's language directly in HRS 201H-202. We'll expressly include any and all forms of financing, including but not limited to equity, credit enhancement, and collateral, we'll prioritize perpetual affordability, we'll prioritize applicants that have a demonstrated history of early repayment to the RHRF.

We'll require RHRF loans applied for or awarded after December 31, 2026 to be subject to review and renegotiation when any mortgage debt, to which the loan is subordinate, is refinanced or retired, authorize HHFDC to use monies in the fund that have been reserved or awarded by the corporation for specific projects but have not yet been encumbered to fund other rental housing projects or for other authorized purposes of the funds, subject to several restrictions.

We'll authorize HHFDC to secure a line of credit, standby bond purchase agreement, or other credit enhancement facility to provide liquidity to the fund. We'll insert a definition for Mixed-Income Rental Project, authorize certain monies to be deposited into the Mixed-Income Subaccount of the Rental Housing Revolving Fund, authorize monies in the Mixed-Income Subaccount to be used for any and all forms of financing in certain appropriation amount of $100 million to be deposited into the Mixed-Income Subaccount, in certain appropriation amount of $100 million out of the Mixed-Income Subaccount, inserting an effective date of July 1, 2050, and also technical and non-substantive amendments.

Members, any questions or discussion? If not, for Chair-- for House Bill 1727, the Chair's recommendation is to pass with amendments. Chair votes aye.

Members, Chair's recommendation is to pass with amendments. Chair votes aye. Any members voting with reservations? Any members voting no? With all others voting aye, recommendation's adopted.

Thank you. Our next bill is House bill 1733, relating to the Housing Loan and Mortgage Program. Chair's recommendation will be to pass this measure with amendments. We'll change the authorization ceiling to $4 billion. We'll require HHFDC to produce a report documenting how it will produce enough housing at the 60 to 140% AMI levels to meet demand statewide in the most financially and land efficient manner possible, including the selection of specific parcels where the housing will be built.

And we'll also note in the committee report that the unprecedented state funding over the last decade for LIHTC housing development has not ameliorated the housing shortage for the great majority of Hawaii residents, and that we need to maximize the efficiency of the usage of the enormous taxpayer resources are currently being dedicated to housing. Members, do we have any discussion or questions? If not, for House Bill 1733, Chair's recommendation will be to pass this measure with amendments. Chair votes aye.

Members, Chair votes aye. Any Member voting with reservations? Any Members voting no? With all others voting aye, recommendation is adopted.

Thank you. For House Bill 1740, relating to the Housing Loan and Mortgage Program. Chair's recommendation will be to pass this measure with amendments. We'll take HHFDC's amendment to clarify Section 201H-38A to be as follows. Notwithstanding the ten year occupancy requirement in sections 201H-47 and 201H-49.

And we'll further note in the committee report that 201H-49 already expressly includes serious illness of the person as a hardship circumstance exception to the occupancy requirement. Any discussion or questions, Members? If not, for Senate, for House Bill 1740, Chair's recommendation is to pass with amendments. Chair votes aye.

Members, Chair votes aye. Any Members voting with reservations? Any Members voting no? With all others voting aye, recommendation is adopted.

Thank you. For House Bill 1920 HD 1, relating to the Low-Income Housing Tax Credit, Chair's recommendation will be to pass this measure with amendments. We'll adopt Sugar Creek Capital's amendment for Section 2-- in Section 1, Section 235-110.8 HRS to be amended by amending Subsection B to read, for credits claimed on tax returns filed for taxable years beginning after December 31, 2026.

And we'll also note in the committee report that the inefficiency of financing housing projects with a state tax credit that sells for 0.60 cents on the dollar, it'd be more fiscally efficient to collect the full value of the tax and make a direct appropriation to projects the Legislature deems to be in the state interest. Members, any discussion or questions? Seeing none. For HB 1920 HD 1, Chair's recommendation is to pass this measure with amendments. Chair votes aye.

Members, Chair-- recommendation's pass with amendments. Chair votes aye. Any members voting with reservations? Any members voting no? With all others voting aye, recommendation's adopted.

Thank you. Our next measure is House Bill 2270, relating to the Low Income Housing Tax Credit. The Chair's recommendation will be to pass this measure with amendments. We'll take HHFDC's recommended amendments to amend Section 201H-161A as follows.

The corporation may make down payment loans either directly or through a nonprofit organization as defined in Section 454F-1 to eligible borrowers who qualify for loans under Section 201H-162. The down payment loan to any one borrower shall not exceed 15% of the purchase price or appraised value of the residential property or $60,000, whichever is less.

The interest rate on the loans shall be established by the corporation based on federal program requirements and market conditions. We'll further add a new section three amending 201H-1631 HRS. Section three is amended 201H section three. Section 201H-163 HRS is amended by amending subsection one to read as follows.

The borrower shall expend no portion of the borrower's down payment loan for purposes other than to make a down payment for the purchase of a residential property or to pay closing costs, pre-paids, and reserves pursuant to the purchase of the residential property for which the down payment loan is provided. Members, any questions or discussion? Seeing none. The recommendation for HB 2270, HD 1 is to pass with amendments. Chair votes aye.

Members, Chair's recommendation is pass with amendments. Chair votes aye. Any Members voting with reservations? Any Members voting no? With all others voting aye, recommendation is adopted.

Thank you. For HB 2385, relating to housing, Chair's recommendation will be to pass this measure with amendments. We'll adopt DOTAX's amendment to amend the effective date to January 1, 2027 to provide sufficient time to make necessary form and instruction changes.

We'll insert a sunset after five years. We'll adopt SMA's technical, non-substantive amendments for the purposes of clarity and consistency. We'll adopt Centre Urban Real Estate's amendments to allow HRS 201H-36A5 to include GET waivers for rental income by deleting shall apply to contracting only.

And further, we'll renumber paragraph six, developed under a county assistance program approved by the corporation where at least 50% of the available units are for households with incomes at or below 100% of the area median family income as determined by the United States Department of Housing and Urban Development.

Further, we'll also amend by requiring that a housing project, requiring that a housing project subject to a regulatory agreement with an affordability requirement qualify for both GET and RPC RPT exemptions for the duration of the housing project remains affordable. Members, any questions or discussion?

That's right. And thank you. And the committee report will also note the committee's reluctance to rely on giving away free money to developers to stimulate housing construction and the need to focus on more fiscally sustainable programs that compensate the state and its taxpayers appropriately for their investment. Alright. Any further discussion or questions?

Question, clarification. So you're, are you cleaning the date or it's still defective date?

There will still be a defective date. We'll just adopt DOTAX's suggestion of an effective date to provide sufficient time to make necessary form and instructional change.

Understood. Thank you, Chair.

Further questions? Okay. If not, for HB 2385, Chair's recommendation is to pass with amendments. Chair votes aye.

Members, Chair's recommendation pass with amendments. Chair votes aye. Any Members voting with reservations? Any Members voting no? With all others voting aye, recommendation is adopted.

Thank you. For HB 2515 HD 2, relating to workforce housing, Chair's recommendation will be to pass this measure with amendments. We'll adopt OHA's amendment to include the chairperson of the Board of Trustees of the Office of Hawaiian Affairs as a member of the advisory council in Section 4, Subsection B. We'll also adopt HHFDC's suggestion to expand the waiver authority to include certain state approval processes, including the State Historic Preservation Division and Department of Health to maximize program impact.

And in the committee report, we'll further note the appropriation request of $1 million. Do we have any other questions or discussion, members? If not, for HB 2515, Chair's recommendation will be to pass with amendments. Chair votes aye.

Members, Chair's recommendation is to pass with amendments. Chair votes aye. Any members voting with reservations? Any members voting no? With all others voting aye, recommendation's adopted.

Thank you. For House Bill 1724 HD 2, relating to HHFDC, Chair's recommendation will be to pass this measure with amendments to further defect the date. We'll also take SMA's technical, non-substantive amendments for the purposes of clarity and consistency. Are there any questions or discussion, members? Okay. If not, for HB 1724 HD 2, Chair's recommendation is to pass with amendments. Chair votes aye.

Members, Chair's recommendation's to pass with amendments. Chair votes aye. Any members voting with reservations? Any members voting no? With all others voting aye, recommendation's adopted.

Thank you very much. Thank you all for your stamina and for your patience. This hearing is adjourned.