STAND. COM. REP. NO. 219

Honolulu, Hawaii

RE: S.B. No. 1353

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2023

State of Hawaii

Sir:

Your Committees on Hawaiian Affairs and Housing, to which was referred S.B. No. 1353 entitled:

"A BILL FOR AN ACT RELATING TO HOUSING,"

beg leave to report as follows:

The purpose and intent of this measure is to exempt any development of homestead lots or housing for the Department of Hawaiian Home Lands from general excise and use taxes.

Your Committees received testimony in support of this measure from the Office of the Governor, Department of Hawaiian Home Lands, and one member of the Kaua‘i County Council. Your Committees received comments on this measure from the Department of Budget and Finance and Department of Taxation.

Your Committees find that the Department of Hawaiian Home Lands was established by the Hawaiian Homes Commission Act of 1920, as amended, to protect and improve the lives of native Hawaiians. The Department of Hawaiian Home Lands serves to develop and administer public lands for homesteads and offers them for lease to native Hawaiian beneficiaries at rates considerably below market value. As such, the Department of Hawaiian Home Lands currently pays general excise taxes when developing affordable housing projects despite having no ability to recover these costs due to their below market leases. Your Committees find that this discrepancy has hampered the rate of affordable housing development for beneficiaries. Therefore, this measure exempts any developments of homestead lots or housing for the Department of Hawaiian Home Lands from general excise and use taxes.

Your Committees have heard the testimony of the Department of Budget and Finance, noting that rulemaking authority for the joint promulgation of administrative rules by the Department of Hawaiian Home Lands and the Department of Taxation to implement the exemption should be added to this measure.

Therefore, your Committees have amended this measure by:

(1) Providing that the Director of Taxation and the Department of Hawaiian Home Lands shall adopt rules pursuant to chapter 91, Hawaii Revised Statutes, relating to the general excise tax exemptions; and

(2) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

As affirmed by the records of votes of the members of your Committees on Hawaiian Affairs and Housing that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1353, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1353, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Hawaiian Affairs and Housing,

________________________________ STANLEY CHANG, Chair

________________________________ MAILE S.L. SHIMABUKURO, Chair