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HB432
HOUSE OF REPRESENTATIVES
H.B. NO.
432
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII
A BILL FOR AN ACT
relating
to the rental housing revolving fund
.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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SECTION
1.
�
The legislature finds that the State
has a housing crisis and that although general excise tax exemptions and county
subsidies help to reduce development costs, private development of rental
housing for households earning from sixty up to one hundred forty per cent of
the area median income is not financially feasible without additional public
subsidy.
����
The
legislature further finds that although funding is appropriated annually to the
rental housing revolving fund to finance projects serving households earning up
to one hundred forty per cent of area median income, the funds are prioritized
for federal and state low-income housing tax credit financed projects, which
generally only serve households earning up to sixty per cent of the area median
income.
�
Because the demand for revolving
fund financing from first-priority tax credit projects far exceeds funding
availability, mixed-income projects, including those with units serving
households earning up to one hundred forty per cent of the area median income,
are not able to utilize the rental housing revolving fund.
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The
legislature also finds that strategies are needed to help keep local residents
in the State.
�
Having affordable rental
housing opportunities for working families reduces net domestic outmigration
and preserves critical segments of the State's labor force.
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Accordingly,
the purpose of this Act is to provide a dedicated source of funds to finance
mixed-income rental housing projects.
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SECTION
2
.
�
Section 201H-202, Hawaii Revised Statutes, is
amended to read as follows:
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"
�201H-202
�
Rental housing revolving fund.
�
(a)
�
There is established the rental housing revolving fund to be
administered by the corporation.
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(b)
�
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 corporation's housing
finance programs; provided that fund moneys shall not be used to finance
day-to-day administrative expenses of projects allotted fund moneys.
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(c)
�
The following may be deposited into the fund[
:
]
or into the mixed-income subaccount established under subsection (f):
�
appropriations made by the legislature,
conveyance taxes pursuant to section 247-7, private contributions, repayment of
loans, interest, other returns, and moneys from other sources.
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(d)
�
The fund shall be used to provide loans for
the development, pre-development, construction, acquisition, preservation, and
substantial rehabilitation of rental housing units.
�
The corporation shall not forgive any loan
made from the fund unless the corporation forecloses on the project.
�
Permitted uses of the fund may include but
are not limited to planning, design, land acquisition, costs of options,
agreements of sale, downpayments, equity financing, capacity building of
nonprofit housing developers, credit enhancement, gap financing, or other
housing development services or activities as provided in rules adopted by the
corporation pursuant to chapter 91.
�
The
rules may provide for a means of recapturing loans or grants made from the fund
if a rental housing project financed under the fund is refinanced or sold at a
later date.
�
The rules may also provide
that moneys from the fund shall be leveraged with other financial resources to
the extent possible.
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(e)
�
[
Moneys
]
Except as provided in
subsection (f), moneys
available in the fund shall be used for the purpose
of providing, in whole or in part, loans for rental housing projects
demonstrating project readiness, efficiency, and feasibility acceptable to the
corporation in the following order of priority:
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[
(1)
�
For projects that were awarded low-income
housing credits pursuant to paragraph (2), priority shall be given to p
rojects
with a perpetual affordability commitment;
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(2)
]
(1)
�
Projects or units in projects that are
allocated low-income housing credits pursuant to the state housing credit
ceiling under section 42(h) of the Internal Revenue Code of 1986, as amended,
or projects or units in projects that are funded by programs of the United
States Department of Housing and Urban Development and United States Department
of Agriculture Rural Development wherein:
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(A)
�
At least fifty per cent of the
available units are for persons and families with incomes at or below eighty
per cent of the median family income of which at least five per cent of the
available units are for persons and families with incomes at or below thirty
per cent of the median family income; and
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(B)
�
The remaining units are for persons and
families with incomes at or below one hundred per cent of the median family
income;
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provided
that the corporation may establish rules to ensure full occupancy of fund
projects; [
and
]
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(2)
�
For projects that were awarded low-income
housing credits pursuant to paragraph (1), priority shall be given to p
rojects
with a perpetual affordability commitment; and
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(3)
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Mixed-income rental projects or units
in a mixed-income rental project [
wherein all of the available units are
]
for persons and families with incomes at or below one hundred forty per cent of
the median family income.
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(f)
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There is established within the fund a
mixed-income subaccount.
�
Moneys in the
mixed-income subaccount shall be used to make loans to mixed-income rental
projects or units in a mixed-income rental project for persons and families
with incomes at or below one hundred forty per cent of the area median
income.
�
The corporation shall establish
an application process for the allocation of funds in the mixed-income
subaccount that gives preference to projects meeting the following criteria
that are listed in descending order of priority:
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(1)
�
A diverse range of affordability,
targeting persons and families with incomes up to one hundred forty per cent of
the median family income;
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(2)
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Projects located on state or county
owned land;
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(3)
�
Projects for which a loan from the
subaccount is reasonably projected to be fully repaid within forty years from
funding; and
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(4)
�
Any other criteria as the
corporation deems necessary to carry out the purposes of this subsection.
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If
the corporation, after applying the process described in this subsection, finds
a nonprofit project equally ranked with a for-profit or government project, the
corporation shall give preference to the nonprofit project in allotting funds
from the mixed-income subaccount.
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Moneys
derived from the repayment of loans funded by the mixed-income subaccount,
interest thereon, and related fees and returns shall be deposited into the
mixed-income subaccount.
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[
(f)
]
(g)
�
There is established within
the fund a bond volume cap recycling program subaccount.
�
The bond volume cap recycling program
subaccount shall be maintained as a reserve for the bond volume cap recycling
program established pursuant to section 39B-2(f).
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[
(g)
]
(h)
�
The corporation shall submit
an annual report to the legislature no later than twenty days prior to the
convening of each regular session describing the projects funded and, with
respect to rental housing projects targeted for persons and families with
incomes at or below thirty per cent of the median family income, its efforts to
develop those rental housing projects, a description of proposals submitted for
this target group and action taken on the proposals, and any barriers to
developing housing units for this target group.
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[
(h)
]
(i)
�
For the purposes of this
subpart, the applicable median family income shall be the median family income
for the county or standard metropolitan statistical area in which the project
is located as determined by the United States Department of Housing and Urban
Development, as adjusted from time to time.
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[
(i)
]
(j)
�
The corporation may provide
loans under this section; provided that the corporation shall establish
loan-to-value ratios to protect the fund from inordinate risk and that under no
circumstances shall the rules permit the loan-to-value ratio to exceed one
hundred per cent; provided further that the underwriting guidelines include a
debt-coverage ratio of no less than 1.0 to 1.
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[
(j)
]
(k)
�
For the period commencing
July 1, 2005, through June 30, 2009, the fund may be used to provide grants for
rental units set aside for persons and families with incomes at or below thirty
per cent of the median family income in any project financed in whole or in
part by the fund in proportion of those units to the total number of units in
the project.
�
At the conclusion of the
period described in this subsection, the corporation shall report to the
legislature on the number and use of grants provided and whether the grants
were an effective use of the funds for purposes of developing rental housing
for families at or below thirty per cent of the median family income."
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SECTION
3
.
�
Section 201H-204, Hawaii Revised Statutes, is
amended to read as follows:
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"
[
[
]�201H-204[
]
]
�
Eligible projects.
�
(a)
�
Activities eligible for assistance from the fund shall include but not
be limited to:
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(1)
�
New
construction, rehabilitation, or preservation of low-income
or mixed-income
rental housing units that meet the criteria for eligibility described in
subsection (c)[
;
]
or section 201H-202(f);
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(2)
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The
leveraging of moneys with the use of fund assets;
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(3)
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Pre-development
activity grants or loans to nonprofit organizations; and
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(4)
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Acquisition
of housing units for the purpose of preservation as low-income or very
low-income housing.
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(b)
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Preference shall be given to projects producing units in at least one of
the following categories:
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(1)
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Multifamily
units;
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(2)
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Attached
single-family units;
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(3)
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Apartments;
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(4)
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Townhouses;
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(5)
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Housing
units above commercial or industrial space;
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(6)
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Single
room occupancy units;
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(7)
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Accessory
apartment units;
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(8)
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Employee
housing;
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(9)
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United
States Department of Housing and Urban Development mixed finance development of
public housing units; and
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(10)
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Other
types of units meeting the criteria for eligibility set forth in subsection
(c)[
.
]
or section 201H-202(f).
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(c)
�
[
The
]
Except as provided in section 201H-202(f), the
corporation shall establish an application process for fund allocation that
gives preference to projects meeting the following criteria that are listed in
descending order of priority:
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(1)
�
Serve
the original target group;
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(2)
�
Provide
at least five per cent of the total number of units for persons and families
with incomes at or below thirty per cent of the median family income;
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(3)
�
Provide
the maximum number of units for persons or families with incomes at or below
eighty per cent of the median family income;
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(4)
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Are
committed to serving the target group over a longer period of time;
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(5)
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Increase
the integration of income levels of the immediate community area;
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(6)
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Meet
the geographic needs of the target group of the proposed rental housing
project, such as proximity to employment centers and services; and
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(7)
�
Have
favorable past performance in developing, owning, managing, or maintaining
affordable rental housing.
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The corporation may include other criteria
as it deems necessary to carry out the purposes of this subpart.
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If the corporation, after applying the
process described in this subsection, finds a nonprofit project equally ranked
with a for-profit or government project, the corporation shall give preference
to the nonprofit project in allotting fund moneys."
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SECTION
4
.
�
Section 247-7, Hawaii Revised Statutes, is
amended to read as follows:
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"
�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 per cent or $5,100,000, whichever is less,
shall be paid into the land conservation fund established pursuant to section
173A-5; and
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(2)
�
Fifty per cent or $38,000,000, whichever is
less, shall be paid into the rental housing revolving fund established by
section 201H-202[
.
]
; provided that funds allocated under this
paragraph may be transferred into the
mixed-income subaccount
established pursuant to section 201H-202(f).
"
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SECTION 5.
�
The director of finance
may transfer moneys from the rental housing revolving fund to the rental
housing revolving fund mixed-income subaccount in an amount not to exceed $75,000,000
for fiscal year 2025-2026
and the same sum or so much thereof as may be
necessary for fiscal year 2026-2027
.
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SECTION
6.
�
There is appropriated out of the
general revenues of the State of Hawaii the sum of $75,000,000 or so much
thereof as may be necessary for fiscal year 2025-2026 and the same sum or so
much thereof as may be necessary for fiscal year 2026-2027 to be deposited into
the mixed-income subaccount of the rental housing revolving fund established
pursuant to section 201H-202(f), Hawaii Revised Statutes.
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SECTION
7
.
�
There
is appropriated out of the mixed-income subaccount of the rental housing
revolving fund established pursuant to section 201H-202(f), Hawaii Revised
Statutes, the sum of $75,000,000 or so much thereof as may be necessary for
fiscal year
2025-2026 and the same sum or so much thereof as may be
necessary for fiscal year 2026-2027 for the purposes of the subaccount
.
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The sums appropriated shall be expended by
the Hawaii housing finance and development corporation for the purposes of this
Act.
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SECTION 8.
�
Statutory material to be repealed is
bracketed and stricken.
�
New statutory
material is underscored.
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SECTION 9.
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This Act shall take effect on July 1, 2025.
INTRODUCED BY:
_____________________________
Report Title:
Rental Housing Revolving Fund; Mixed-Income Subaccount;
Workforce Rental Housing; Director of Finance; Appropriation
Description:
Establishes
the mixed-income subaccount within the Rental Housing Revolving Fund that
targets workforce rental housing projects for persons and families with incomes
at or below one hundred forty per cent of the area median income.
�
Authorizes the Director of Finance to
transfer funds from the Rental Housing Revolving Fund into the mixed-income
subaccount.
�
Appropriates funds into and
out of the mixed-income subaccount of the Rental Housing Revolving Fund.
The summary description
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not legislation or evidence of legislative intent.