RELATING TO THE RENTAL HOUSING REVOLVING FUND.

SB2060

THE SENATE

S.B. NO.

2060

THIRTY-THIRD LEGISLATURE, 2026

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.
�
Section
201H-201, Hawaii Revised Statutes, is amended by adding a new definition to be
appropriately inserted and to read as follows:

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"
"Mixed-income rental
project" means a rental housing development that provides units for
households at a range of income levels, primarily for households with an income
at or below one hundred forty per cent of the area median income.
"

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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)
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The following may be deposited into the fund[
:
]
or into the
mixed-income subaccount established under subsection (f):

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(1)
�
Appropriations
made by the legislature;

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(2)
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Conveyance
taxes pursuant to section 247-7;

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(3)
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Private
contributions;

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(4)
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Repayment
of loans;

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(5)
�
Interest;

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(6)
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Other
returns; and

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(7)
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Moneys
from other sources.

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(d)
�
Except as provided in subsection (f), 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)
�
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)
�
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; provided further that for projects that were awarded low-income
housing credits pursuant to this paragraph, priority shall be given to projects
with a perpetual affordability commitment.
�

For
the
purposes of this paragraph, "perpetual" means
the useful life of the project; and

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(2)
�
Mixed-income rental projects or units
in a mixed‑income rental project
primarily
for persons and
families with incomes at or below one hundred forty per cent of the median
family income[
.
]
, as provided by this section.

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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 for financing, including but not limited to loans, equity investments,
and credit enhancement for mixed-income rentals for qualified residents as
defined in section 201H-32.
�
The
corporation shall establish an application process for the allocation of funds
in the mixed-income subaccount, separate from the fund allocation process
pursuant to section 201H‑204(c), that gives preference to projects
meeting the following criteria:

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(1)
�
A
diverse range of affordability, prioritizing 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
]
state- or county-
owned land or
developed in partnership with the State or a county;

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(3)
�
Projects
that efficiently use state funding;

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(4)
�
Mixed-income
rental projects or units in a mixed‑income rental project in an area that
satisfy transit-supportive density requirements, as defined in section
206E-246; and

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(5)
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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 or government project
equally ranked with a for-profit project, the corporation shall give preference
to the nonprofit or government 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 fund.

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(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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(h)
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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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(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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(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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(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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(l)
�

Notwithstanding any law to the contrary, the corporation, with the
approval of the director of finance, may transfer moneys between the rental
housing revolving fund and any subaccount established under this section, and
between subaccounts established under this section, without further legislative
authorization, for purposes consistent with this chapter.
�
The corporation may also return unexpended or
uncommitted funds from a subaccount established under this section to the
rental housing revolving fund, to be used for any lawful purpose of the fund.
"

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SECTION 3.
�

Act 159, Session Laws of Hawaii 2025, is amended by amending section 8
to read as follows:

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"SECTION 8.
�
This Act shall take effect upon its approval[
;
provided that sections 2 and 3 of this Act shall be repealed on June 30, 2023,
and sections 201H-202 and 201H-204, Hawaii Revised Statutes, shall be reenacted
in the form in which they read on the day prior to the effective date of this
Act
]."

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SECTION 4.
�

The director of finance may transfer moneys from the rental housing
revolving fund to the mixed-income subaccount in an amount that shall not
exceed $100,000,000 for fiscal year 2026-2027.

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SECTION
5
.
�
There is appropriated out of the
general revenues of the State of Hawaii the sum of $100,000,000 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.

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SECTION
6
.
�
There is appropriated out of the
mixed-income subaccount of the rental housing revolving fund the sum of $100,000,000
or so much thereof as may be necessary for fiscal year 2026-2027 for the
purposes of the subaccount.

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The
sum appropriated shall be expended by the Hawaii housing finance and development
corporation for the purposes of this Act.

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SECTION 7.
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Statutory material to be repealed is bracketed and stricken.
�
New statutory material is underscored.

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SECTION 8.
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This Act shall take effect on July 1, 2050.

INTRODUCED BY:

_____________________________

Report Title:

HHFDC;
Department of Budget and Finance; RHRF; Mixed-Income Subaccount; Appropriations

Description:

Authorizes
the Hawaii Housing Finance and Development Corporation, with the approval of
the Director of Finance, to transfer moneys between the Rental Housing
Revolving Fund and its subaccounts without legislative authorization.
�
Authorizes the Director of Finance to
transfer moneys from the RHRF to its Mixed-Income Subaccount for FY 2026-2027.
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Appropriates funds.
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Effective 7/1/2050.

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