RELATING TO HOUSING.

HB2049

HOUSE OF REPRESENTATIVES

H.B. NO.

2049

THIRTY-THIRD LEGISLATURE, 2026

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 also finds that the
conveyance tax, a one-time tax levied at the time of property conveyances, 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 property values upon which the
conveyance tax is imposed are not tied to inflation, rising home prices will
eventually push moderately priced homes into higher tax brackets, compounding
the issue.

����
The legislature further finds that the
department of Hawaiian home lands requires dedicated, predictable annual
funding to support multi-year planning, procurement, and sequencing of
infrastructure and housing so that homes can be delivered to all beneficiaries.
�
Consistent revenue is not only operationally
necessary, but also fiscally efficient because department dollars leverage
other public and private capital.
�
Deployments
through Act 279, Session Laws of Hawaii 2022, have unlocked billions in
projected vertical development, and recent low-income house tax credit
transactions show more than five times leverage on department investments.
�
Establishing dedicated conveyance tax funding
for the department of Hawaiian home lands, including a maximum of $60,000,000
annually, is therefore warranted and is a core recommendation of the Act 279
Working Group's interim report.

����
Accordingly, the purpose of this Act is to:

����
(1)
�
Restructure the
conveyance tax to a marginal rate system for the sale of properties with residential
use, 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;

����
(3)
�
Tie conveyance tax
rates to a cost-of-living adjustment to maintain equity over time;

����
(4)
�
Allocate a portion of conveyance tax revenues
to the dwelling unit revolving fund to finance off-site and regional
infrastructure in county-designated transit-oriented areas that meet minimum
standards of transit-supportive density; and

����
(5)
�
Establish a dedicated conveyance tax
allocation to the department of Hawaiian home lands to provide predictable
funding for multi-year planning and infrastructure and to leverage additional
public and private capital for beneficiary housing.

����
SECTION
2
.
�
Section
201H-191, Hawaii Revised Statutes, is amended to read as follows:

����
"
�201H-191
�
Dwelling unit
revolving fund.
�
(a)
�
There is created a dwelling unit revolving
fund.
�
The funds appropriated for the
purpose of the dwelling unit revolving fund
, conveyance taxes received
pursuant to section 247-7(4),
and all moneys received or collected by the
corporation for the purpose of the revolving fund shall be deposited in the
revolving fund.
�
The proceeds in the
revolving fund shall be used:

����
(1)
�
To reimburse the
general fund to pay the interest on general obligation bonds issued for the
purposes of the revolving fund;

����
(2)
�
For necessary
expenses in administering housing development programs, regional state
infrastructure programs, and the government employee housing program pursuant
to part V; [
and
]

����
(3)
�
To carry out the
purposes of housing development programs, regional state infrastructure
programs, and the government employee housing program pursuant to part V, including
but not limited to the expansion of community facilities and regional state
infrastructure constructed in conjunction with housing and mixed-use
transit-oriented development projects, permanent primary or secondary
financing, and supplementing building costs, federal guarantees required for
operational losses[
, and all
]
;

����
(4)
�
To fund infrastructure
programs in areas that meet transit-supportive density requirements; provided
that proceeds from the conveyance tax deposited pursuant to section 247-7(4)
shall only be used for the purposes of this paragraph; and

����
(5)
�
All
things
required by any federal agency in the construction and receipt of federal funds
or low
‑
income
housing tax credits for housing projects.

����
(b)
�

Subject to the requirements of subsection (a), proceeds in the revolving
fund may be used to:

����
(1)
�
Establish and
operate regional state infrastructure subaccounts pursuant to section
201H-191.5; and

����
(2)
�
Administer,
implement, and finance the government employee housing program pursuant [
[
]to[
]
]
part V.

����
(c)
�
For purposes of this section, "t
ransit-supportive density" has the same
meaning as in section 206E-246.
"

����
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):
]
For the sale of a property with a residential
dwelling unit for which the purchaser is eligible for a county homeowner's
exemption from property tax:

���������
(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 $1 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[
;
]
:
�
$28,000 plus $1.50 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
]
:
�
$58,000 plus $2 per $100 of excess over
$6,000,000;

���������
(G)
�
[
One
dollar per $100 for
]
For
properties with a value of
at least

$10,000,000 [
or greater; and
]
, but less than $20,000,000:
�
$138,000 plus $3.50 per $100 of excess over
$10,000,000; and

���������
(H)
�
For properties with a value of at least $20,000,000:
�
$488,000 plus $4.50 per $100 of excess over
$20,000,000;

����
(2)
�
For the sale of a [
condominium
or single family residence
]
property with a residential dwelling unit

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 $2.10 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[
;
]
:
�
$51,000 plus $3 per $100 of excess over
$4,000,000;

���������
(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
]
:
�
$111,000 plus $4 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
at least
$10,000,000 [
or greater
],
but less than
$20,000,000:
�
$271,000 plus $5 per $100
of excess over $10,000,000;

���������
(H)
�
For properties with a value of at least $20,000,000:
�
$771,000 plus $6 per $100 of excess over
$20,000,000; and

����
(3)
�
For
the sale, lease, sublease, or assignment of any property with no residential dwelling
unit:

���������
(A)
�
For
properties with a value of less than $600,000:
�

15 cents per $100;

���������
(B)
�
For
properties with a value of at least $600,000, but less than $1,000,000:
�
25 cents per $100;

���������
(C)
�
For
properties
with a value of at least $1,000,000, but less than $2,000,000:
�
40 cents per $100;

���������
(D)
�
For
properties
with a value of at least $2,000,000, but less than $4,000,000:
�
60 cents per $100;

���������
(E)
�
For
properties
with a value of at least $4,000,000, but less than $6,000,000:
�
85 cents per $100;

���������
(F)
�
For
properties
with a value of at least $6,000,000, but less than $10,000,000:
�
$1.10 per $100; and

���������
(G)
�
For
properties
with a value of at least $10,000,000:
�

$1.25 per $100,

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.
�

For the purposes of this section, any conveyance of property that is
used for transient accommodations, as defined in section 237D-1, for any period
during the two years prior to the date of conveyance shall be taxed at the
rates under paragraph (2), regardless of whether the purchaser is eligible for
a county homeowner's exemption on property tax.

����
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
for the transfer or conveyance of realty or any interest therein by the number
of residential dwelling units in the property.
�

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, 2026, the director of taxation, no later than December 15 of the
preceding calendar year, shall recompute the actual and full consideration paid
or to be paid in subsection (a) by multiplying the dollar amount for the
preceding taxable year by a cost-of-living adjustment factor, if the
cost-of-living adjustment factor is greater than 1.0, and rounding off the
resulting product to the nearest $1; provided that if the cost-of-living
adjustment factor is less than or equal to 1.0 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 quotient of the percentage change in the Urban Hawaii
Consumer Price Index for all items divided by one hundred, 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 Urban Hawaii 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
]

Five
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
]

Twenty
per cent or [
$38,000,000,
]
$40,000,000,
whichever
is less, shall be paid into the rental housing revolving fund established by
section 201H-202[
.
]
;

����
(3)
�
Thirty
per cent or $60,000,000, whichever is less, shall be paid into the Hawaiian
home lands trust fund; and

����
(4)
�
Twenty
per cent or $40,000,000, whichever is less, shall be paid into the dwelling
unit revolving fund established pursuant to section 201H-191.
"

����
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.
�
Statutory material to be repealed is
bracketed and stricken.
�
New statutory
material is underscored.

����
SECTION 7.
�
This Act shall take effect on July 1, 2026.

INTRODUCED BY:

_____________________________

Report Title:

Conveyance
Tax; Dwelling Unit Revolving Fund; Infrastructure Funding; County-designated Transit-oriented
Development; Hawaiian Home Lands Trust Fund; DHHL

Description:

Restructures the conveyance tax to a marginal rate system
for the sale of properties with residential use, adjusts the tax for
multifamily properties to reflect value on a per-unit basis, and applies a
cost-of-living adjustment to conveyance tax rates.
�
Allocates revenues from conveyance tax
collections.
�
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
.
�

Allocates a portion of conveyance tax revenues to the Hawaiian Home
Lands Trust Fund.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.