STAND. COM. REP. NO. 332-24

Honolulu, Hawaii

, 2024

RE: H.B. No. 2364

H.D. 1

Honorable Scott K. Saiki

Speaker, House of Representatives

Thirty-Second State Legislature

Regular Session of 2024

State of Hawaii

Sir:

Your Committees on Housing and Water & Land, to which was referred H.B. No. 2364 entitled:

"A BILL FOR AN ACT RELATING TO THE CONVEYANCE TAX,"

beg leave to report as follows:

The purpose of this measure is to:

(1) Increase the conveyance tax rate for certain properties;

(2) Exempt conveyances of certain real property from the conveyance tax; and

(3) Allocate ten percent of the conveyance tax collections to the Dwelling Unit Revolving Fund for purposes of funding infrastructure programs in transit-oriented development areas.

Your Committees received testimony in support of this measure from the Department of Business, Economic Development, and Tourism; Department of Land and Natural Resources; Department of Corrections and Rehabilitation; Department of Hawaiian Home Lands; Office of Planning and Sustainable Development; Hawaii Housing Finance and Development Corporation; Hawaii Community Development Authority; County of Hawai‘i Planning Department; Hawaii Appleseed Center for Law & Economic Justice; Catholic Charities Hawai‘i; Democratic Party of Hawai‘i; Stanford Carr Development, LLC; Hawai‘i State Coalition Against Domestic Violence; Land Use Research Foundation of Hawaii; Hawai‘i Housing Affordability Coalition; and seven individuals. Your Committees received testimony in opposition to this measure from NAIOP; Hawai‘i Association of REALTORS; and Grassroot Institute of Hawaii. Your Committees received comments on this measure from the Department of Taxation; Disability and Communication Access Board; Tax Foundation of Hawaii; and The Nature Conservancy, Hawaiʻi and Palmyra.

Your Committees find that Act 88, Session Laws of Hawaii 2021, among other things, required a study to identify and assess alternative financing, project delivery, and cost recovery mechanisms to recapture the State's upfront investment in transit-oriented development infrastructure. The study identified the need for regular and predictable revenue sources to help finance regional public infrastructure to facilitate transit-oriented development. This measure is a result of the study, which recommended increasing the conveyance tax for certain properties with the revenues to be allocated to the Dwelling Unit Revolving Fund to help build infrastructure intended for the State's housing inventory.

Your Committees have amended this measure by:

(1) Establishing new conveyance tax rates for multifamily residential property and inserting a definition for "multifamily residential property";

(2) Repealing the dollar cap amounts of conveyance taxes paid into the Land Conservation Fund and Rental Housing Revolving Fund;

(3) Changing the effective date to July 1, 3000, to encourage further discussion; and

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

Your Committees respectfully request your Committee on Finance, should it deliberate on this measure, to consider the possibility of changing the current conveyance tax to a marginal tax, as this matter is outside the purview of your Committees.

As affirmed by the records of votes of the members of your Committees on Housing and Water & Land that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 2364, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 2364, H.D. 1, and be referred to your Committee on Finance.

Respectfully submitted on behalf of the members of the Committees on Housing and Water & Land,

____________________________ LINDA ICHIYAMA, Chair

____________________________ LUKE A. EVSLIN, Chair