RELATING TO THE DWELLING UNIT REVOLVING FUND.

SB1229

THE SENATE

S.B. NO.

1229

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

relating
to the dwelling unit revolving fund
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION 1.
�
Chapter 201H, Hawaii Revised Statutes, is
amended by adding a new section to part III, subpart I, to be appropriately
designated and to read as follows:

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"
�201H-
��

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Dwelling unit revolving
fund equity program.

�
(a)
�
The
corporation may purchase equity in for-sale housing development projects in the
form of a second mortgage loan; provided that:

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(1)
�
The equity shall be allocated to
specific units within the housing development project; and

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(2)
�
The contribution from each eligible
buyer of a unit shall be reduced by the corporation's equity amount for that
unit.

The
corporation shall give preference to for-sale housing development projects that
are developed under any government assistance program approved by the
corporation under section 201H-36(a)(2).

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(b)
�

Eligible buyers shall be bona fide residents of the State and shall not
hold a majority interest in any residential real property.
�
The corporation may establish additional
qualifications for the eligible buyer, which may include a requirement that the
eligible buyer work in a profession that is facing a labor shortage, as
determined by the corporation, and a requirement that gift funds shall not
exceed thirty-five per cent of the unit purchase price.

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(c)
�

The corporation may establish criteria for the prioritization of
eligible buyers.

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(d)
�

If a buyer sells the unit within thirty years of the date of the buyer's
purchase of the unit, then at the time of the sale, the buyer shall repay to
the corporation the corporation's equity and equity percentage share of the
appreciated unit value, if any; provided that if the buyer does not sell the
unit within thirty years of the date of the buyer's purchase of the unit, then
upon refinance, obtaining additional financing, transfer of title, non-owner
occupancy, or rental of the unit or any part of the unit, the buyer shall repay
to the corporation the corporation's equity and equity percentage share of the
appreciated unit value, if any, prior to the expiration of the thirty-year
period; provided further that this requirement shall be a restriction that runs
with the land until the obligation to repay the equity and equity percentage
share, if any, has been satisfied.

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(e)
�

With the prior approval of the corporation, the eligible developer may
repay, in the form of equity in project units under the program, a part or all
of the interim financing made under this subpart and secured by a mortgage on
the for‑sale housing development project.

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(f)
�

The corporation shall establish rules pursuant to chapter 91 to
implement this section.

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(g)
�

In this section, unless the context otherwise requires:

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"Housing
development project" means a plan, design, or undertaking by the
corporation or an eligible developer for the development of units.
�
"Housing development project"
includes all real and personal property, buildings and improvements, commercial
space, lands for farming and gardening, community facilities acquired or
constructed or to be acquired or constructed, and all tangible or intangible
assets held or used in connection with the housing development project.

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"Unit"
means:

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(1)
�
The structure and the land upon
which the structure is constructed, whether fee simple or leasehold property,
developed for residential purposes pursuant to this chapter; or

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(2)
�
Improved or unimproved real property
that is developed for residential purposes pursuant to this chapter.
�
"Unit" includes dwelling units.
"

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SECTION
2
.
�
Section 201H-191, Hawaii Revised Statutes, is
amended by amending subsection (a) to read as follows:

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"(a)
�

There is created a dwelling unit revolving fund.
�
The funds appropriated for the purpose of the
dwelling unit revolving fund and all moneys received or collected by the corporation
for the purpose of the revolving fund shall be deposited [
in
]
into

the revolving fund.
�
The proceeds in the
revolving fund shall be used to reimburse the general fund to pay the interest
on general obligation bonds issued for the purposes of the revolving fund, for
the necessary expenses in administering housing development programs and
regional state infrastructure programs, and for carrying out the purposes of
housing development programs and regional state infrastructure programs,
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,
purchasing equity in for‑sale
housing development projects, interim primary or secondary financing,
permanent
primary or secondary financing, and supplementing building costs, federal
guarantees required for operational losses, and all things required by any
federal agency in the construction and receipt of federal funds or low
‑
income housing tax credits for
housing projects."

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SECTION 3.
�

Act 92, Session Laws of Hawaii 2023, is amended as follows:

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1.
�

By amending section 2 to read:

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"SECTION 2.
�
[
(a)
�

The Hawaii housing finance and development corporation may establish a
five-year dwelling unit revolving fund equity pilot program, which shall be
funded by the dwelling unit revolving fund, to address the high, unmet demand
of for-sale units by Hawaii residents, specifically residents who:

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(1)
�
Own
no other real property;

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(2)
�
Receive
no gift funds; and

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(3)
�
Work
in a profession that is facing a shortage as defined by the corporation,
including health care workers, educators, law enforcement officers, including
staff at correctional facilities, or agricultural field workers.

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(b)
�

The Hawaii housing finance and development corporation may purchase
equity in for-sale housing development projects; provided that this equity
shall be allocated to specific units within the housing development projects
and the price to be paid by each eligible buyer of a unit shall be reduced by
the Hawaii housing finance and development corporation's equity amount for that
unit.

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(c)
�

If a buyer sells the buyer's unit within thirty years of the date of the
buyer's purchase of the unit, then at the time of the sale, the buyer shall
repay to the Hawaii housing finance and development corporation the
corporation's appreciated equity value; provided that if the buyer does not
sell the unit within thirty years of the date of the buyer's purchase of the
unit, then the buyer shall repay to the Hawaii housing finance and development
corporation the corporation's appreciated equity value prior to the expiration
of the thirty-year period; provided further that this requirement shall run
with the deed for each unit until the obligation to repay the appreciated
equity value has been satisfied.

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(d)
�

The Hawaii housing finance and development corporation may establish
rules pursuant to chapter 91, Hawaii Revised Statutes, to implement this
section, including rules that establish the methods by which appreciated equity
values shall be calculated, assessed, and satisfied.

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(e)
�

The Hawaii housing finance and development corporation may establish
criteria for the prioritization of eligible buyers based on state goals and
policies and submit a report on this criteria to the legislature no later than
twenty days prior to the convening of the regular session of 2024.

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(f)
�

The Hawaii housing finance and development corporation shall submit
interim reports on the dwelling unit revolving fund equity pilot program to the
legislature no later than twenty days prior to the convening of the regular
sessions of 2024, 2025, 2026, and 2027.
�

The Hawaii housing finance and development corporation shall submit a
final report on the dwelling unit revolving fund equity pilot program to the
legislature no later than twenty days prior to the convening of the regular
session of 2028.

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(g)
�

As used in this section:

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"Housing development project"
means a plan, design, or undertaking by the Hawaii housing finance and
development corporation or an eligible developer for the development of
units.
�
"Housing development
project" includes all real and personal property, buildings and
improvements, commercial space, lands for farming and gardening, community
facilities acquired or constructed or to be acquired or constructed, and all
tangible or intangible assets held or used in connection with the housing
development project.

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"Unit" means:

����
(1)
�
The
structure and land upon which the structure is constructed, whether on fee
simple or leasehold property, developed for residential purposes pursuant to
chapter 201H, Hawaii Revised Statutes; or

����
(2)
�
Improved
or unimproved real property that is developed for residential purposes pursuant
to chapter 201H, Hawaii Revised Statutes.

"Unit"
includes dwelling units.
]
�
Repealed.
"

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2.
�
By
amending section 5 to read:

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"SECTION 5.
�
This Act shall take effect on July 1, 2023[
,
and shall be repealed on June 30, 2028; provided that:

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(1)
�
Section
201H-47, Hawaii Revised Statutes, shall be reenacted in the form in which it
read on the day prior to the effective date of this Act; and

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(2)
�
The
requirements imposed pursuant to section 2(c) of this Act shall remain in
effect and run with the deed after June 30, 2028
]."

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SECTION 4.
�

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

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SECTION 5.
�

This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

Hawaii Housing Finance and Development Corporation;
Dwelling Unit Revolving Fund; Dwelling Unit Revolving Fund Equity Program;
Interim Financing

Description:

Makes the
Dwelling Unit Revolving Fund Equity Pilot Program permanent.
�
Allows partial or full repayment of Dwelling
Unit Revolving Fund interim loans in the form of unit equity through the
Dwelling Unit Revolving Fund Equity Program. Gives preference to projects
developed under governmental assistance programs pursuant to section
201H-36(a)(2).

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