HB2328

SECTION 1. The legislature finds that in most cases, landlords in Hawaii are able to increase the rent on rental units without much concern over whether the unit will sit vacant because of the scarcity of affordable housing. Even if a landlord's current tenant cannot afford the increased rent on a rental unit, there is likely another tenant willing to take the current tenant's place.

While turnover in tenants because of increased rents benefits landlords and property owners, it does not always benefit the community. Tenants who know that they could be priced out of their current residence have no incentive to invest in their community. If rents were stable and tenants could be assured that they would face only reasonable rent increases, then tenants may stay in their rental units longer and invest in the community around them.

The legislature further finds that tenants need some semblance of housing security, but landlords and property owners also need the ability to increase their rents by a reasonable amount. The legislature also finds that the policy of rent stabilization, which is distinct from a policy of rent control, could simultaneously respond to those opposing needs. The legislature acknowledges that this is a multi-faceted issue that requires both sides of housing agreements to work in tandem to maintain housing costs.

The purpose of this Act is to:

(1) Establish a rent stabilization law that will apply to all rental units that are designed for rental use or are rented, with certain exceptions;

(2) Establish a rent stabilization advisory committee; and

(3) Require the legislative reference bureau to conduct a study of actions that other states have taken to incentivize landlords to stabilize rents.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

RENT STABILIZATION

§ -1 Definitions. For purposes of this chapter, unless the context otherwise requires:

"Action" shall have the same meaning as in section 521-8.

"Dwelling unit" shall have the same meaning as in section 521-8.

"Landlord" shall have the same meaning as in section 521-8.

"Owner" shall have the same meaning as in section 521-8.

"Rental agreement" shall have the same meaning as in section 521-8.

"Single family residence" shall have the same meaning as in section 521-8.

"Tenant" shall have the same meaning as in section 521-8.

§ -2 Application. (a) Except as otherwise provided in subsection (b), this chapter shall apply to all dwelling units that are designed for rental use or are rented, including dwelling units that are subleased by tenants, at any time on or after July 1, 2022.

(b) This chapter shall not apply to:

(1) A dwelling unit in a single family residence; provided that the single family residence does not rent more than dwelling units to families who are not related to the property owner by blood, marriage, or adoption;

(2) Dwelling units located in a structure that is less than years old, except if:

(A) The structure replaced a structure that provided dwelling units for rent; or

(B) The tenants that rented dwelling units in the previous structure were evicted for the purpose of allowing the property owner to build the current structure;

(3) Accommodations in hotels, motels, and inns that are primarily rented to guests for a period less than thirty days; provided that the same tenant has not occupied one or more of the dwelling units in a single structure for more than thirty consecutive days;

(4) A dwelling unit that is owned, operated, or managed by a government unit, agency, or authority for purposes of providing housing to low-income, very low-income, or extremely low-income households; and

(5) A dwelling unit in an institution that is monitored or licensed by the State and provides medical, geriatric, or educational services.

§ -3 Rent stabilization advisory committee; established. (a) There is established within the department of human services for administrative purposes the rent stabilization advisory committee to advise the legislature, governor, and county agencies on matters relating to the stabilization of rental amounts for dwelling units that are designed for rental use or are rented, including:

(1) Commencing January 1, 2023, recommending, on an annual basis, the percentage or dollar-amount adjustment to the rental amounts for dwelling units;

(2) Limiting or restricting the grounds for evicting a tenant from a dwelling unit;

(3) Preserving and increasing the number of dwelling units;

(4) Encouraging the maintenance of dwelling units;

(5) Recommending a rental amount that could be charged by a landlord and would be a fair return for the dwelling unit, including recommending a fair return amount for specified dwelling units; and

(6) Providing information relating to dwelling units, including relevant laws, rent collection methods, and community services.

(b) The rent stabilization advisory committee shall be jointly headed by the executive director of the Hawaii public housing authority, or the executive director's designee, and the director of commerce and consumer affairs, or the director's designee.

(c) The membership of the rent stabilization advisory committee shall be selected by the executive director of the Hawaii public housing authority and director of commerce and consumer affairs. The membership of the committee shall not exceed individuals.

(d) The members of the rent stabilization advisory committee shall include:

(1) The executive director of the Hawaii public housing authority, or the executive director's designee, who shall serve as co-chair of the rent stabilization advisory committee;

(2) The director of commerce and consumer affairs, or the director's designee, who shall serve as co-chair of the rent stabilization advisory committee;

(3) A designee from the department of the attorney general;

(4) An individual representing renters;

(5) An individual representing landlords; and

(6) Other individuals who have expressed an interest in rent stabilization.

(e) Members of the advisory committee shall serve without compensation but shall be reimbursed for actual expenses, including travel expenses, necessary for the performance of their duties.

§ -4 Monthly rent increases. (a) A landlord of a dwelling unit that is subject to a rental agreement shall be permitted to increase a dwelling unit's monthly rent by a maximum of per cent at the end of the term of the rental agreement, or every twelve months, whichever is longer; provided that any increase in the monthly rent shall not be attributable to the landlord's negative cash flow:

(1) As a result of refinancing the dwelling unit if, at the time the landlord refinanced the dwelling unit, the landlord could reasonably have foreseen a negative cash flow based on the existing rental agreement or the twelve-month limitation period; and

(2) If, at the time the landlord acquired the dwelling unit, the landlord could reasonably have foreseen a negative cash ﬂow based on the existing rental agreement or the twelve-month limitation period.

The recalculated, increased monthly rent shall be in effect for a term established by the new rental agreement or twelve months, whichever is longer, and shall be the monthly rent used to calculate future rent increases.

(b) A landlord shall be permitted to increase the monthly rent for a dwelling unit beyond the restrictions in subsection (a) after the dwelling unit is vacated by all tenants. There shall be no limit to the monthly rental amount that a landlord may charge for a dwelling unit following the vacancy of the dwelling unit by all tenants.

§ -5 Remedies. (a) A tenant, the Hawaii public housing authority, or the department of commerce and consumer affairs may file a civil action to enforce the provisions of this chapter.

(b) A tenant may refuse to pay an increase in rent that is in violation of this chapter, and the violation shall be a defense in any action brought to recover the possession of a dwelling unit or to collect rent.

(c) Whenever it is necessary for a tenant of a dwelling unit to file a court action to recover the payment of rent that was in excess of the maximum lawful rent allowed by this chapter, or whenever it is necessary for the tenant to defend against any wrongful action filed in court against the tenant by the landlord to recover the possession of the tenant's dwelling unit, the landlord shall be liable to the tenant for damages in the amount of $ or not more than three times the amount by which the payment demanded, accepted, received, or retained exceed the lawful amount of rent, whichever is more. The prevailing party in any suit shall be entitled to reasonable attorney's fees and costs as determined by the court."

SECTION 3. (a) The legislative reference bureau shall conduct a study of any actions that other states have taken to incentivize landlords to stabilize rents.

(b) The legislative reference bureau shall submit a report of its findings and recommendations, including any proposed legislation, to the legislature no later than twenty days before the convening of the regular session of 2023.

SECTION 4. This Act shall take effect on July 1, 2022.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2328
THIRTY-FIRST LEGISLATURE, 2022
STATE OF HAWAII