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HB1410
HOUSE OF REPRESENTATIVES
H.B. NO.
1410
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII
A BILL FOR AN ACT
relating
to housing
.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
����
SECTION 1.
�
The legislature finds that the Hawaii transit-oriented development
strategic plan highlights a lack of infrastructure necessary to support
affordable housing and mixed-use development near transit.
�
Furthermore, the transit-oriented development infrastructure
and finance delivery strategy (2023), developed by the office of planning and
sustainable development, identifies the current fragmented infrastructure
funding process as a source of inequitable outcomes.
�
The first recommendation of the report is to
increase the conveyance tax on high-value, non-owner-occupied homes and
allocate a portion of the revenue to finance infrastructure in transit-oriented
development zones.
����
The legislature further finds that there is
a need to provide a dedicated funding source to support housing designed for
individuals with special needs, including those with alcohol or drug
addictions, individuals transitioning from incarceration, youth aging out of
foster care, survivors of domestic violence, veterans, individuals with
disabilities or mental illness, frail elderly, and chronically homeless
individuals.
�
Although significant
resources are allocated annually for supportive housing, reliance on
legislative appropriations creates uncertainty for non-profit providers and the
counties, which face significant risks in developing permanent supportive
housing.
����
The legislature also finds that the
conveyance tax, a one-time tax levied at the time of property sales, is
identified as an appropriate revenue source for affordable housing,
infrastructure, land conservation, and homeless services.
�
Despite dramatic increases in housing prices
over the past thirteen years, the conveyance tax rates have not been updated
since Act 59, Session Laws of Hawaii 2009.
�
In fact, Hawaii's conveyance tax remains significantly lower than
comparable high-cost areas in the nation.
����
The legislature recognizes that without
reform, the current conveyance tax rate structure could disproportionately
affect affordable multifamily housing, as high total property values for these complexes
do not reflect the lower per-unit costs.
�
High conveyance taxes on these properties could be passed on to renters.
�
Moreover, the current rate structure may
create market inequities, where even small increases in property value could
result in disproportionate tax burdens.
�
Because the conveyance tax is not tied to
inflation, rising home prices will eventually push moderately priced homes into
higher tax brackets, compounding the issue.
����
Accordingly, the purpose of this Act is to:
����
(1)
�
Restructure the
conveyance tax to a marginal rate system, applying higher rates only to
property values exceeding specified thresholds;
����
(2)
�
Adjust the
conveyance tax for multifamily properties to reflect value on a per-unit basis;
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(3)
�
Increase
conveyance tax revenue by approximately thirty per cent, generating an
estimated $35,000,000 annually, by:
���������
(A)
�
Raising the tax
rate on non-owner-occupied homes valued at over $2,000,000;
���������
(B)
�
Slightly
increasing the tax rate on owner-occupied homes valued at over $6,000,000; and
���������
(C)
�
Ensuring revenue
neutrality for owner-occupied homes valued at $6,000,000 and under and non-owner-occupied
homes valued at $2,000,000 and under through the adjusted marginal rate
structure;
����
(4)
�
Tie conveyance tax
rates to a cost-of-living adjustment to maintain equity over time; and
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(5)
�
Allocate a portion
of the additional revenue to permanent supportive housing and infrastructure in
transit-oriented development zones.
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SECTION 2.
�
Chapter 201H, Hawaii Revised Statutes, is
amended by adding a new subpart to part III to be appropriately designated and
to read as follows:
" .
�
Supportive Housing Special Fund
����
�201H-A
�
Supportive housing special fund.
�
(a)
�
There is established a supportive housing special fund to be
administered by the corporation for the purpose of developing, operating, and
maintaining affordable, permanent housing and the provision of supportive
services for individuals or families with special needs.
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(b)
�
Moneys in the fund may be used to:
����
(1)
�
Make loans to
finance the development, pre-development, construction, acquisition,
preservation, or substantial rehabilitation of supportive housing projects;
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(2)
�
Make project-based
rental assistance payments;
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(3)
�
Make payments for
supportive services for households residing in the supportive housing projects;
and
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(4)
�
For other housing
services or activities as provided in rules adopted by the corporation without
regard to chapter 91.
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(c)
�
The fund may include sums appropriated by the legislature, private
contributions, proceeds from repayment of loans, interest, fees, other returns,
and moneys from other sources.
����
(d)
�
An amount from the fund, to be set by the corporation and authorized by
the legislature, may be used for administrative expenses incurred by the
corporation in administering the fund; provided that moneys in the fund shall
not be used to finance day-to-day administrative expenses of the projects
allotted moneys from the fund.
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(e)
�
The corporation shall consult with the counties and community-based
organizations to leverage funds and obtain input on selection of projects.
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(f)
�
The corporation may contract with other executive branch departments or
agencies, the counties, or private or nonprofit organizations as necessary for
the provision of supportive housing and services.
�
The corporation shall be exempt from chapter
103D in selecting a qualified private or nonprofit organization to assist with
the development and maintenance of supportive housing and provision of rental
assistance and supportive services.
�
The
corporation may, without regard to chapter 91, establish rules and
qualification standards for participants of the supportive housing program.
����
(g)
�
The corporation may establish, revise, charge, and collect a reasonable
service fee, as necessary, in connection with its financing, services, and
approvals under this subpart.
�
The fees
shall be deposited into the supportive housing special fund.
����
(h)
�
The corporation shall submit a report to the legislature no later than
twenty days prior to the convening of each regular session describing the
projects funded using moneys from the supportive housing special fund.
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�201H-B
�
Additional powers.
�
The powers conferred upon the corporation by
this subpart shall be in addition and supplemental to the powers conferred by
any other law, and nothing in this subpart shall be construed as limiting any
powers, rights, privileges, or immunities conferred."
����
SECTION 3.
�
Section 247-2, Hawaii Revised Statutes, is
amended to read as follows:
����
"
�247-2
�
Basis and rate of tax.
�
(a)
�
The tax imposed by section 247-1 shall be based on the actual and full
consideration (whether cash or otherwise, including any promise, act,
forbearance, property interest, value, gain, advantage, benefit, or profit),
paid or to be paid for all transfers or conveyance of realty or any interest
therein, that shall include any liens or encumbrances thereon at the time of
sale, lease, sublease, assignment, transfer, or conveyance, and shall be at the
following rates:
����
(1)
�
Except as provided
in paragraph (2):
���������
(A)
�
[
Ten cents per
$100 for
]
For
properties with a value of less than $600,000[
;
]
:
�
10 cents per $100;
���������
(B)
�
[
Twenty cents
per $100 for
]
For
properties with a value of at least $600,000, but
less than $1,000,000[
;
]
:
�
$600
plus 35 cents per $100 of excess over $600,000;
���������
(C)
�
[
Thirty
cents per $100 for
]
For
properties with a value of at least
$1,000,000, but less than $2,000,000[
;
]
:
�
$2,000 plus 60 cents per $100 of excess over
$1,000,000;
���������
(D)
�
[
Fifty
cents per $100 for
]
For
properties with a value of at least
$2,000,000, but less than $4,000,000[
;
]
:
�
$8,000 plus 85 cents per $100 of excess over
$2,000,000;
���������
(E)
�
[
Seventy
cents per $100 for
]
For
properties with a value of at least
$4,000,000, but less than $6,000,000[
;
]
:
�
$25,000 plus $1.20 per $100 of excess over $4,000,000;
���������
(F)
�
[
Ninety
cents per $100 for
]
For
properties with a value of at least
$6,000,000, but less than $10,000,000[
; and
]
:
�
$49,000 plus $1.75 per $100 of excess over
$6,000,000; and
���������
(G)
�
[
One
dollar per $100 for
]
For
properties with a value of
at least
$10,000,000 [
or greater; and
]
: $119,000 plus $3 per $100 of excess
over $10,000,000; and
����
(2)
�
For the sale of a
condominium or single family residence for which the purchaser is ineligible
for a county homeowner's exemption on property tax:
���������
(A)
�
[
Fifteen cents
per $100 for
]
For
properties with a value of less than $600,000[
;
]
:
�
15 cents per $100;
���������
(B)
�
[
Twenty-five
cents per $100 for
]
For
properties with a value of at least
$600,000, but less than $1,000,000[
;
]
:
�
$900 plus 40 cents per $100 of excess over
$600,000;
���������
(C)
�
[
Forty
cents per $100 for
]
For
properties with a value of at least
$1,000,000, but less than $2,000,000[
;
]
:
�
$2,500 plus 65 cents per $100 of excess over
$1,000,000;
���������
(D)
�
[
Sixty
cents per $100 for
]
For
properties with a value of at least
$2,000,000, but less than $4,000,000[
;
]
:
�
$9,000 plus $2.00 per $100 of excess over
$2,000,000;
���������
(E)
�
[
Eighty-five
cents per $100 for
]
For
properties with a value of at least
$4,000,000, but less than $6,000,000[
;
]
:
�
$49,000 plus $2.50 per $100 of excess over
$4,000,000; and
���������
(F)
�
[
One
dollar and ten cents per $100 for
]
For
properties with a value of at
least $6,000,000, but less than $10,000,000[
; and
]
:
�
$99,000 plus $3.25 per $100 of excess over
$6,000,000; and
���������
(G)
�
[
One
dollar and twenty-five cents per $100 for
]
For
properties with a
value of $10,000,000 or greater[
,
]
:
�
$229,000 plus $4.10 per $100 of excess over
$10,000,000,
of [
such
]
the
actual and full
consideration; provided that in the case of a lease or sublease, this chapter
shall apply only to a lease or sublease whose full unexpired term is for a
period of five years or more[
, and in those cases, including (where
appropriate) those cases where the
]
; provided further that if a
lease has been extended or amended, the tax in this chapter shall be based on
the cash value of the lease rentals discounted to present day value and
capitalized at the rate of six per cent, plus the actual and full consideration
paid or to be paid for any and all improvements, if any, that shall include
on-site as well as off-site improvements, applicable to the leased premises;
and provided further that the tax imposed for each transaction shall be [
not
]
no
less than $1.
����
The rates in this section shall
apply to the transfer or conveyance of a multifamily residential property;
provided that "value", for purposes of determining the applicable
rate, shall be an amount calculated by dividing the actual and full
consideration by the number of residential dwelling units in the property;
provided further that the tax shall be calculated by applying the applicable
rate to the actual and full consideration for the transfer or conveyance of
realty or any interest therein.
�
As used
in this subsection, "multifamily residential property" means a
structure that is located within the state urban land use district and divided
into five or more dwelling units.
����
(b)
�
For each taxable year beginning after
December 31, 2025, the director of taxation, no later than December 15 of the
preceding calendar year, shall recompute the rates in subsection (a) by
multiplying the dollar amount for the preceding taxable year by the
cost-of-living adjustment factor, if the cost-of-living adjustment factor is
greater than zero, and rounding off the resulting product to the nearest $1.
�
If the cost-of-living adjustment factor is
less than or equal to zero in a given year, then no adjustment shall occur in
the following year.
����
As used in this subsection,
"cost-of-living adjustment factor" means a factor calculated by
adding 1.0 to the percentage change in the Consumer Price Index for All Urban
Consumers, as published by the United States Department of Labor, from July of
the preceding calendar year to July of the current calendar year; provided that
if the Consumer Price Index is discontinued, the Chained Consumer Price Index
for All Urban Consumers, as published by the United States Department of Labor,
shall be used to calculate the cost-of-living adjustment factor.
"
����
SECTION 4.
�
Section 247-7, Hawaii Revised Statutes, is
amended to read as follows:
����
"
�247-7
�
Disposition of taxes.
�
All taxes collected under this chapter shall be paid into the state
treasury to the credit of the general fund of the State, to be used and
expended for the purposes for which the general fund was created and exists by
law; provided that of the taxes collected each fiscal year:
����
(1)
�
[
Ten
]
Eight
per cent or [
$5,100,000,
]
$10,000,000,
whichever
is less, shall be paid into the land conservation fund established pursuant to
section 173A-5; [
and
]
����
(2)
�
[
Fifty
]
Thirty-eight
per cent or [
$38,000,000,
]
$50,000,000,
whichever is less, shall be paid into the rental housing revolving fund
established by section 201H-202[
.
]
;
����
(3)
�
Eight
per cent or $10,000,000, whichever is less, shall be paid into the supportive
housing special fund established pursuant to section 201H-A; and
����
(4)
�
Ten
per cent shall be paid into the dwelling unit revolving fund established
pursuant to section 201H-191 to fund infrastructure programs in county-designated
transit-oriented development zones or districts that meet minimum standards of
transit-supportive density; provided that
these
standards shall be met
in
order
for any
state or county agency or any private entity
to
receive funding from the dwelling unit revolving fund pursuant to this
paragraph.
����
As used in this section, "transit-supportive
density" means a floor area ratio of at least:
����
(1)
�
4.0 for all
uses that are permitted in a county-designated transit-oriented development
area or by the underlying county zoning;
����
(2)
�
6.0 for all
uses that are permitted in a county-designated transit-oriented development
area within one-half mile of a station of a locally preferred alternative for a
mass transit project; and
����
(3)
�
For all uses that are
permitted within one-quarter mile of a station of a locally preferred
alternative for a mass transit project, whichever is greater:
���������
(A)
�
7.0;
���������
(B)
�
The
maximum floor area ratio allowed by the adopted transit-oriented development
special district; or
���������
(C)
�
The
maximum floor area ratio allowed by the applicable transit-oriented development
plan.
"
����
SECTION 5.
�
This Act does not affect rights and duties
that matured, penalties that were incurred, and proceedings that were begun
before its effective date.
����
SECTION 6.
�
In codifying the new sections added by
section 2 of this Act, the revisor of statutes shall substitute appropriate
section numbers for the letters used in designating the new sections in this
Act.
����
SECTION 7.
�
Statutory material to be repealed is
bracketed and stricken.
�
New statutory
material is underscored.
����
SECTION 8.
�
This Act shall take effect on July 1, 2025.
INTRODUCED BY:
_____________________________
Report Title:
Conveyance
Tax; Supportive Housing Special Fund; Dwelling Unit Revolving Fund;
Infrastructure Funding; County-designated Transit-oriented Development
Description:
Establishes the
Supportive
Housing Special Fund
.
�
Restructures
the conveyance tax to a marginal rate system and adjusts the tax for
multifamily properties to reflect value on a per-unit basis.
�
Allocates revenues from conveyance tax
collections to the
Supportive
Housing Special Fund
.
�
Allocates a
portion of conveyance tax collections to the Dwelling Unit Revolving Fund to
fund infrastructure programs in county-designated transit-oriented development
areas
that meet minimum
standards of transit-supportive density
.
The summary description
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not legislation or evidence of legislative intent.