STAND. COM. REP. NO. 3366

Honolulu, Hawaii

RE: S.R. No. 45

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2024

State of Hawaii

Sir:

Your Committee on Housing, to which was referred S.R. No. 45 entitled:

"SENATE RESOLUTION URGING THE HAWAII HOUSING FINANCE AND DEVELOPMENT CORPORATION TO ADOPT ADMINISTRATIVE RULES TO PROHIBIT RENTAL HOUSING REVOLVING FUND LOAN FORGIVENESS,"

begs leave to report as follows:

The purpose and intent of this measure is to urge the Hawaii Housing Finance and Development Corporation to adopt administrative rules to prohibit Rental Housing Revolving Fund loan forgiveness.

Your Committee received comments on this measure from the Hawaii Housing Finance and Development Corporation.

Your Committee finds that the State's Rental Housing Revolving Fund (RHRF) provides equity gap low-interest loans to qualified developers constructing affordable housing units, which is funded by state taxpayers, namely revenues from the conveyance tax and from general appropriations made by the Legislature. Your Committee also finds that repayment does not begin until after senior debt has been fully repaid, often in year thirty-one, with developers able to refinance RHRF debt from private sector banks to repay the RHRF early, but developers rarely do so because they have no incentive to do so. Your Committee also finds that forgiving RHRF loans to private developers amounts to a free gift of taxpayer funds to private entities. Further, developers continue to own the property and realize all future equity. Therefore, this measure requests the Hawaii Housing Finance and Development Corporation to prohibit the forgiveness of Rental Housing Revolving Fund loans to ensure the availability of future funds to create more housing.

Your Committee has amended this measure by:

(1) Clarifying the Hawaii Housing Finance and Development Corporation is urged to adopt administrative rules that prohibit Rental Housing Revolving Fund loan forgiveness unless the Corporation repossesses the project;

(2) Inserting language urging the Hawaii Housing Finance and Development Corporation to prohibit the issuance of grants from the Rental Housing Revolving Fund;

(3) Amending its title to reflect its amended purpose; and

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

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 S.R. No. 45, as amended herein, and recommends that it be referred to your Committee on Judiciary, in the form attached hereto as S.R. No. 45, S.D. 1.

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

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STANLEY CHANG, Chair