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HB2385
HOUSE OF REPRESENTATIVES
H.B. NO.
2385
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:
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SECTION 1.
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The legislature finds that, in 2023,
affordable housing was declared an emergency in the State, and Hawaii's housing
supply was cited as the most expensive in the nation.
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It has been estimated that fifty thousand
homes will be needed in the next five years to address the State's housing
crisis.
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The
legislature also finds that the general excise tax exemption for low-income
housing projects that are approved and certified pursuant to sections 237-29
and 201H-36, Hawaii Revised Statues, is a valuable incentive for the
development and operation of affordable rental housing in the State.
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However, it has proven increasingly difficult
to offset rising construction costs and interest rates using these exemptions
alone, creating the need for additional incentives to achieve project
development and completion.
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The
legislature further finds that county assistance programs that encourage the
development of affordable housing, when leveraged in addition to
state-administered incentives, would help to achieve comprehensive project
financing and maximize support for affordable housing development.
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Accordingly,
the purpose of this Act is to address the ongoing shortage of affordable
housing in the State by authorizing the Hawaii housing finance and development
corporation to approve and certify general excise tax exemptions for certain
housing development projects developed under county housing incentive programs.
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SECTION
2
.
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Section 46-15.1, Hawaii Revised Statutes, is
amended by amending subsection (a) to read as follows:
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"(a)
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Notwithstanding any law to the contrary, any county shall have and may
exercise the same powers, subject to applicable limitations, as those granted
the Hawaii housing finance and development corporation pursuant to chapter 201H
insofar as those powers may be reasonably construed to be exercisable by a
county for the purpose of developing, constructing, financing, refinancing, or
otherwise providing low- and moderate-income housing projects and mixed-use
developments; provided that no county shall be empowered to cause the State to
issue general obligation bonds to finance a project pursuant to this section;
provided further that county projects
initially approved and certified prior
to July 1, 2026,
shall be granted an exemption from general excise or
receipts taxes in the same manner as projects of the Hawaii housing finance and
development corporation pursuant to section 201H-36; provided further that
county projects shall prioritize walkability to the extent practicable;
provided further that section 201H-16 shall not apply to this section unless
federal guidelines specifically provide local governments with that
authorization and the authorization does not conflict with any state laws.
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The powers shall include the power, subject
to applicable limitations, to:
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(1)
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Develop
and construct dwelling units, alone or in partnership with developers;
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(2)
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Acquire
necessary land by lease, purchase, exchange, or eminent domain;
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(3)
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Provide
assistance and aid to a public agency or other person in developing and
constructing new housing and rehabilitating existing housing for elders of low-
and moderate-income, other persons of low- and moderate‑income, and
persons displaced by any governmental action, by making long-term mortgage or
interim construction loans available;
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(4)
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Contract
with any eligible bidders to provide for construction of urgently needed
housing for persons of low- and moderate-income;
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(5)
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Guarantee
the top twenty-five per cent of the principal balance of real property mortgage
loans, plus interest thereon, made to qualified borrowers by qualified lenders;
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(6)
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Enter
into mortgage guarantee agreements with appropriate officials of any agency or
instrumentality of the United States to induce those officials to commit to
insure or to insure mortgages under the National Housing Act, as amended;
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(7)
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Make
a direct loan to any qualified buyer for the downpayment required by a private
lender to be made by the borrower as a condition of obtaining a loan from the
private lender in the purchase of residential property;
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(8)
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Provide
funds for a share, not to exceed fifty per cent, of the principal amount of a
loan made to a qualified borrower by a private lender who is unable otherwise
to lend the borrower sufficient funds at reasonable rates in the purchase of
residential property; and
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(9)
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Sell
or lease completed dwelling units.
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For purposes of this section, a limitation
is applicable to the extent that it may reasonably be construed to apply to a
county."
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SECTION
3
.
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Section 104-2, Hawaii Revised Statutes, is
amended by amending subsection (i) to read as follows:
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"(i)
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The terms of section [
201H-36(a)(5)
]
201H-36(a)(6)
prevailing wages shall be deemed the prevailing wages serving as the basis of
compliance with this chapter for work on the project when:
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(1)
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The
Hawaii housing finance and development corporation has approved and certified a
qualified person or firm involved with a newly constructed, or moderately or
substantially rehabilitated project under section [
201H-36(a)(5)
]
201H-36(a)(6)
for exemption from general excise taxes;
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(2)
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The
qualified person or firm has entered into a contract with a general contractor
or subcontractors whose workforce is subject to either:
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(A)
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A
collective bargaining agreement with a bona fide labor union for which a
section [
201H‑36(a)(5)
]
201H-36(a)(6)
prevailing wage for
the laborers and mechanics employed for the construction project has been
approved by the director; or
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(B)
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A
project labor agreement with the group whose wages are reflected in the Hawaii
prevailing wage schedule for which section [
201H-36(a)(5)
]
201H‑36(a)(6)
prevailing wages for the laborers and mechanics employed for the construction
project have been approved by the director; and
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(3)
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The
qualified person or firm has received no other direct or indirect financing for
the construction project from any other governmental contracting agency,
including the Hawaii housing finance and development corporation."
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SECTION
4
.
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Section
201H-36, Hawaii Revised Statutes, is amended by amending subsections (a) and
(b) to read as follows:
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"(a)
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In accordance with section 237-29, the
corporation may approve and certify for exemption from general excise taxes any
qualified person or firm involved with a newly constructed, or a moderately or
substantially rehabilitated, project that is:
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(1)
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Developed under this part;
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(2)
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Developed under a government assistance
program approved by the corporation, including but not limited to the United
States Department of Agriculture's section 502 direct loan program and Federal
Housing Administration's section 235 program;
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(3)
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Developed under the sponsorship of a
private nonprofit organization providing home rehabilitation or new homes for
qualified families in need of decent, low‑cost housing;
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(4)
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Developed by a qualified person or firm
to provide affordable rental housing where at least fifty per cent of the
available units are for households with incomes at or below eighty per cent of
the area median family income as determined by the United States Department of
Housing and Urban Development, of which at least twenty per cent of the
available units are for households with incomes at or below sixty per cent of
the area median family income as determined by the United States Department of
Housing and Urban Development; [
or
]
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(5)
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Developed under a county assistance
program approved by the corporation, where at least fifty per cent of the
available units are for households with incomes at or below one hundred per
cent of the area median family income as determined by the United States
Department of Housing and Urban Development; or
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[
(5)
]
(6)
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Approved
or certified from July 1, 2018, to June 30, 2030, and developed under a
contract described in section 104
‑
2(i)(2)
by a qualified person or firm to provide affordable rental housing through new
construction or substantial rehabilitation; provided that:
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(A)
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The allowable general excise tax and
use tax costs shall apply to contracting only and shall not exceed $30,000,000
per year in the aggregate for all projects approved and certified by the
corporation; and
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(B)
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All available units are for households
with incomes at or below one hundred forty per cent of the area median family
income as determined by the United States Department of Housing and Urban
Development, of which at least twenty per cent of the available units are for
households with incomes at or below eighty per cent of the area median family
income as determined by the United States Department of Housing and Urban Development;
provided that an owner shall not refuse to lease a unit solely because the applicant
holds a voucher or certificate of eligibility under section 8 of the United
States Housing Act of 1937, as amended.
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(b)
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To obtain certification for exemption under
this section, rental housing projects shall, unless exempted by the
corporation, enter into a regulatory agreement with the corporation to ensure
the project's continued compliance with the applicable eligibility requirements
set forth in subsection (a), as follows:
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(1)
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For moderate rehabilitation projects, a
minimum term of five years as specified in a regulatory agreement;
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(2)
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For substantial rehabilitation
projects, a minimum term of ten years as specified in a regulatory agreement;
or
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(3)
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For new construction projects, a
minimum term of thirty years from the date of issuance of the certificate of
occupancy[
.
]
; provided that for new construction projects developed
under a county assistance program, the minimum term shall be fifteen years from
the date of issuance of the certificate of occupancy.
"
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SECTION
5.
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The Hawaii housing finance and
development corporation shall amend its administrative rules, pursuant to
chapter 91, Hawaii Revised Statutes, to conform to this Act.
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SECTION
6.
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This Act does not affect rights and
duties that matured, penalties that were incurred, and proceedings that were
begun before its effective date.
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SECTION
7.
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Statutory material to be repealed is
bracketed and stricken.
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New statutory
material is underscored.
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SECTION
8.
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This Act shall take effect on July 1,
2026; provided that:
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(1)
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The
amendments made to section 46-15.1, Hawaii Revised Statutes, by section 2 of
this Act shall not be repealed when that section is repealed and reenacted:
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(A)
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On
June 30, 2028, pursuant to section 4 of Act 45, Session Laws of Hawaii
2024;
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(B)
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On
July 1, 2030, pursuant to:
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���������
(i)
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Section 3 of Act 141, Session Laws of Hawaii
2009, as amended by section 3 of Act 102, Session Laws of Hawaii 2015, as
amended by section 1 of Act 80, Session Laws of Hawaii 2019, as amended by
section 2 of Act 90, Session Laws of Hawaii 2023; and
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(ii)
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Section 3 of Act 98, Session Laws of Hawaii
2012, as amended by section 4 of Act 102, Session Laws of Hawaii 2015, as
amended by section 50 of Act 55, Session Laws of Hawaii 2016, as amended by
section 2 of Act 80, Session Laws of Hawaii 2019, as amended by section 3 of
Act 90, Session Laws of Hawaii 2023; and
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(C)
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On
July 1, 2031, pursuant to section 4 of Act 31, Session Laws of Hawaii 2024;
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(2)
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The
amendments made to section 104-2, Hawaii Revised Statutes, by section 3 of this
Act shall not be repealed when that section is repealed and reenacted on June
30, 2030, pursuant to section 5 of Act 54, Session Laws of Hawaii 2017, as
amended by section 4 of Act 39, Session Laws of Hawaii 2018; and
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(3)
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The
amendments made to section 201H-36, Hawaii Revised Statutes, by section 4 of
this Act shall not be repealed when that section is repealed and reenacted on
June 30, 2030, pursuant to section 5 of Act 54, Session Laws of Hawaii 2017, as
amended by section 4 of Act 39, Session Laws of Hawaii 2018.
INTRODUCED BY:
_____________________________
Report Title:
HHFDC;
Housing Development Projects; General Excise Tax Exemptions; County Housing
Incentive Programs
Description:
Authorizes
the
Hawaii Housing Finance and Development Corporation to approve and
certify general excise tax exemptions for certain housing development projects
developed under
county
housing incentive programs.
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Makes
conforming amendments.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.