STAND. COM. REP. NO. 4064

Honolulu, Hawaii

RE: H.C.R. No. 108

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committee on Housing, to which was referred H.C.R. No. 108 entitled:

"HOUSE CONCURRENT RESOLUTION URGING THE HAWAII HOUSING FINANCE AND DEVELOPMENT CORPORATION TO COMBAT HOSTILE AND HARMFUL ACTIONS BY PROFIT-DRIVEN INVESTORS AND AGGREGATORS PARTICIPATING IN THE STATE'S LOW-INCOME HOUSING TAX CREDIT PROGRAM,"

begs leave to report as follows:

The purpose and intent of this measure is to urge the Hawaii Housing Finance and Development Corporation to combat hostile and harmful actions by profit-driven investors and aggregators participating in the State's low-income housing tax credit program.

Your Committee received testimony in support of this measure from the Mutual Housing Association of Hawai‘i and three individuals. Your Committee received testimony in opposition to this measure from Stanford Carr Development, LLC and EAH. Your Committee received comments on this measure from the Hawaii Housing Finance and Development Corporation.

Your Committee finds that Hawaii is facing an unprecedented housing shortage. To address the shortage, the State issues tax credits to nonprofit developers to build low income housing. However, some predatory investors exploit the low-income housing tax credits issued by the State to make a profit. Manipulative investors undermine efforts to provide low-income housing and exploit the State's resources. This measure urges the Hawaii Housing Finance and Development Corporation to combat actions by investors and aggregators that seek to exploit the State's low-income housing tax credit program. Your Committee notes the testimony from the Hawaii Housing Finance and Development Corporation indicating that exploitation by predatory investors has already been mitigated by a 2015 amendment to its Qualified Action Plan. However, your Committee further finds that the low-income tax credit program is complex and that not all concerns regarding exploitation by investors have been fully resolved. Addressing each issue is essential to the effectiveness of the low-income housing tax credit and maintaining confidence in state agencies, including the Hawaii Housing Finance and Development Corporation. Your Committee notes that testimonies reflect the differing opinions on whether the changes made by the Hawaii Housing Finance and Development Corporation to the Qualified Action Plan in 2015 address the problem of unscrupulous aggregators who refuse to honor the purchase option or right of first refusal in their contracts with non-profit organizations. In adopting this measure, your Committee also encourages the Hawaii Housing Finance and Development Corporation to convene a forum to meet with developers that participate in the low-income housing tax credit program to address the aggregator issue, develop appropriate solutions, and, if needed, submit legislation.

As affirmed by the record of votes of the members of your Committee on Housing that is attached to this report, your Committee concurs with the intent and purpose of H.C.R. No. 108, and recommends its adoption.

Respectfully submitted on behalf of the members of the Committee on Housing,

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STANLEY CHANG, Chair