SB936

SECTION 1. The legislature finds that the State continues to struggle with an enormous supply gap of affordable housing stock. Dwelling units owned by the State have a capital improvement backlog upwards of $800,000,000. Undertaking the redevelopment of these state property assets would allow the State to:

(1) Rehabilitate functionally obsolete units;

(2) Eliminate the expensive repair and maintenance expenses required to maintain these units;

(3) Contribute to the legislature's priority to grow a sustainable economy by engendering improvements on public lands;

(4) Foster an improved living environment, particularly for elderly and disabled populations;

(5) Provide access to permanent housing for the homeless population; and

(6) Expand the existing supply of affordable and low-income housing in the State to urgently address the affordable housing crisis.

According to the Hawaii public housing authority, these proposed housing units will be integrated into mixed-income, mixed-use communities. Not only does this integration provide greater housing stability to local families struggling to get by, but it also benefits the overall social fabric of neighborhoods. By reducing poverty-concentration statewide, low-income households are empowered through easier access to better schools, healthcare, and job opportunities.

The legislature further finds that the United States Department of Housing and Urban Development encourages the development of affordable housing through multiple programs, making state-owned development projects more user-friendly to the private sector. Because state-owned development projects are located on parcels already owned by the state, it excludes the cost of land from the development cost equation, creating an attractive incentive for private developers to partner with the state to develop and redevelop state-owned projects. This incentive better positions public housing agencies to access the private capital and financing necessary to revitalize state-owned development projects, deliver more affordable housing to satisfy current demand, and benefit the most disadvantaged residents of the state. More importantly, this also allows the state to ensure that every new affordable housing unit that is built will remain affordable in perpetuity.

The legislature additionally finds that there is a nationwide precedence for states to prioritize the allocation of federal housing incentives to government agencies. Many housing finance agencies give priority, provide set-asides, and award nine and four per cent low-income housing tax credits to state-owned development projects. For example, the Alaska housing finance agency has allocated all the state's nine per cent low-income housing tax credits to its public housing agency for a prioritized redevelopment project in Anchorage.

Leveraging capital resources through public-private partnerships, transit-oriented development incentives, and underutilized state assets creates an exceptional opportunity to deliver desperately needed affordable housing to the State and to create more livable, vibrant, and integrated communities for the health and well-being of residents and taxpayers that can be enjoyed for generations to come.

Accordingly, the purpose of this Act is to require the Hawaii housing finance and development corporation to prioritize the allocation of low-income housing tax credits to state-owned development projects.

SECTION 2. Section 201H-15, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The corporation is designated as a state housing credit agency to carry out section 42(h) (with respect to limitation on aggregate credit allowable with respect to a project located in a state) of the Internal Revenue Code of 1986, as amended. As a state housing credit agency, the corporation shall [~~determine~~]:

(1) Determine the eligibility basis for a qualified low-income building[~~, make~~];

(2) Make the allocation of housing credit dollar amounts within the State[~~, and determine~~]; provided that priority be given to development projects that will be owned by the State, whether outright or through a right of first refusal and purchase option; and

(3) Determine the portion of the State's housing credit ceiling set aside for projects involving qualified nonprofit organizations. The corporation shall file any certifications and annual reports required by section 42 (with respect to low-income housing credit) of the Internal Revenue Code of 1986, as amended."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	936
THIRTY-SECOND LEGISLATURE, 2023
STATE OF HAWAII