SB3028

SECTION 1. Section 171-19, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There is created in the department a special fund to be designated as the "special land and development fund". Subject to the Hawaiian Homes Commission Act of 1920, as amended, and section 5(f) of the Admission Act of 1959, all proceeds of sale of public lands, including interest on deferred payments; all moneys collected under section 171-58 for mineral and water rights; all rents from leases, licenses, and permits derived from public lands; all moneys collected from lessees of public lands within industrial parks; all fees, fines, and other administrative charges collected under this chapter and chapter 183C; a portion of the highway fuel tax collected under chapter 243; a portion of the transient accommodations tax under chapter 237D; a portion of the conveyance tax collected under chapter 247; all moneys collected by the department for the commercial use of public trails and trail accesses under the jurisdiction of the department; and private contributions for the management, maintenance, and development of trails and accesses shall be set apart in the fund and shall be used only as authorized by the legislature for the following purposes:

(1) To reimburse the general fund of the State for advances made that are required to be reimbursed from the proceeds derived from sales, leases, licenses, or permits of public lands;

(2) For the planning, development, management, operations, or maintenance of all lands and improvements under the control and management of the board pursuant to title 12, including but not limited to permanent or temporary staff positions who may be appointed without regard to chapter 76;

(3) To repurchase any land, including improvements, in the exercise by the board of any right of repurchase specifically reserved in any patent, deed, lease, or other documents or as provided by law;

(4) For the payment of all appraisal fees; provided that all fees reimbursed to the board shall be deposited in the fund;

(5) For the payment of publication notices as required under this chapter; provided that all or a portion of the expenditures may be charged to the purchaser or lessee of public lands or any interest therein under rules adopted by the board;

(6) For the management, maintenance, land acquisition, and development of trails and trail accesses under the jurisdiction of the department;

(7) For the payment to private land developers who have contracted with the board for development of public lands under section 171-60;

(8) For the payment of debt service on revenue bonds issued by the department, including revenue bonds issued for the purposes of section 237D-6.5(b)(4), and the establishment of debt service and other reserves deemed necessary by the board;

(9) To reimburse the general fund for debt service on general obligation bonds issued to finance departmental projects, including projects under section 237D-6.5(b)(4), where the bonds are designated to be reimbursed from the special land and development fund;

(10) For the protection, planning, management, and regulation of water resources under chapter 174C;

(11) For the purposes of section 237D-6.5(b)(4); and

(12) For other purposes of this chapter."

SECTION 2. Section 198D-2, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (b) to read:

"(b) The trail and access program shall use funding for the management, maintenance, land acquisition, and development of trails and trail accesses under the jurisdiction of the department from the following sources:

(1) A portion of the highway fuel taxes collected under chapter 243;

(2) Federal government grants;

(3) Private contributions; [~~and~~]

(4) Fees, established pursuant to administrative rules and charged by the department for the commercial and other use of trails and trail accesses under the jurisdiction of the department[.]; and

(5) A portion of the conveyance tax collected under chapter 247."

2. By amending subsection (d) to read:

"(d) The moneys specified in subsection (b)(1), (3), [~~and~~] (4), and (5) shall be deposited in the special land and development fund under section 171-19 for the management, maintenance, land acquisition, and development of trails and trail accesses under the jurisdiction of the department."

SECTION 3. Section 201H-191, Hawaii Revised Statutes, is amended to read as follows:

"§201H-191 Dwelling unit revolving fund. (a) There is created a dwelling unit revolving fund. The funds appropriated for the purpose of the dwelling unit revolving fund [~~and~~], conveyance taxes received pursuant to section 247-7(3), and all moneys received or collected by the corporation for the purpose of the revolving fund shall be deposited in the revolving fund. The proceeds in the revolving fund shall be used:

(1) To reimburse the general fund to pay the interest on general obligation bonds issued for the purposes of the revolving fund;

(2) For necessary expenses in administering housing development programs, regional state infrastructure programs, and the government employee housing program pursuant to part V; and

(3) To carry out the purposes of housing development programs, regional state infrastructure programs, and the government employee housing program pursuant to part V, including but not limited to the expansion of community facilities and regional state infrastructure constructed in conjunction with housing and mixed-use transit-oriented development projects, permanent primary or secondary financing, and supplementing building costs, federal guarantees required for operational losses[~~, and all~~];

(4) To fund infrastructure programs in areas that meet transit-supportive density requirements; provided that proceeds from the conveyance tax deposited pursuant to section 247-7(3) shall only be used for the purposes of this paragraph; and

(5) All things required by any federal agency in the construction and receipt of federal funds or low‑income housing tax credits for housing projects.

(b) Subject to the requirements of subsection (a), proceeds in the revolving fund may be used to:

(1) Establish and operate regional state infrastructure subaccounts pursuant to section 201H-191.5; and

(2) Administer, implement, and finance the government employee housing program pursuant [[]to[]] part V.

"County-designated transit-oriented development area" means a geographic area designated by a county for transit-oriented development by an adopted ordinance, plan, or resolution. These areas shall generally consist of lands within a one-half-mile radius of a transit hub or transit station but may extend further when there is state and county agreement about the extent of the transit-oriented development area.

"Floor area ratio" means the quotient, expressed as a decimal number, that results from dividing a structure's total floor area by the total area of the lot or parcel on which the structure is located.

"Ministerial permit" means a permit processed based upon standards established through county ordinance or rule and issued by the director of the county agency responsible for land use or a single county officer designated by ordinance.

"Transit-supportive density requirements" means a county‑designated transit-oriented development area:

(1) With development standards that allow a floor area ratio of at least:

(A) 4.0 for all uses that are permitted in a county‑designated transit-oriented development area or by the underlying county zoning;

(B) 6.0 for all uses that are permitted in a county‑designated transit-oriented development area within one-half mile of a station of a locally preferred alternative for a mass transit project; and

(C) For all uses that are permitted within one‑quarter mile of a station of a locally preferred alternative for a mass transit project, whichever is greater:

(i) 7.0;

(ii) The maximum floor area ratio allowed by the adopted transit-oriented development special district; or

(iii) The maximum floor area ratio allowed by the applicable transit-oriented development plan;

(2) For which permits for development are processed as a ministerial permit subject to applicable objective design standards;

(3) Where there is no imposition of a development standard that renders it impracticable to build a usable structure for the permitted uses at the applicable transit-supportive density; and

(4) Where funds collected pursuant to section 46-16.8 have been expended in the county-designated transit‑oriented development area in which the development is located."

SECTION 4. Section 247-2, Hawaii Revised Statutes, is amended to read as follows:

"§247-2 Basis and rate of tax. (a) The tax imposed by section 247-1 shall be based on the actual and full consideration (whether cash or otherwise, including any promise, act, forbearance, property interest, value, gain, advantage, benefit, or profit), paid or to be paid for all transfers or conveyance of realty or any interest therein, that shall include any liens or encumbrances thereon at the time of sale, lease, sublease, assignment, transfer, or conveyance, and shall be at the following rates:

(1) Except as provided in paragraph (2):

(A) [~~Ten cents per $100 for~~] For properties with a value of less than $600,000[;]: 10 cents per $100;

(B) [~~Twenty cents per $100 for~~] For properties with a value of at least $600,000, but less than $1,000,000[;]: $600 plus 35 cents per $100 of excess over $600,000;

(C) [~~Thirty cents per $100 for~~] For properties with a value of at least $1,000,000, but less than $2,000,000[;]: $2,000 plus 60 cents per $100 of excess over $1,000,000;

(D) [~~Fifty cents per $100 for~~] For properties with a value of at least $2,000,000, but less than $4,000,000[;]: $8,000 plus 85 cents per $100 of excess over $2,000,000;

(E) [~~Seventy cents per $100 for~~] For properties with a value of at least $4,000,000, but less than $6,000,000[;]: $25,000 plus $1.20 per $100 of excess over $4,000,000;

(F) [~~Ninety cents per $100 for~~] For properties with a value of at least $6,000,000, but less than $10,000,000[~~; and~~]: $49,000 plus $1.75 per $100 of excess over $6,000,000; and

(G) [~~One dollar per $100 for~~] For properties with a value of at least $10,000,000 [~~or greater; and~~]: $119,000 plus $3 per $100 of excess over $10,000,000; and

(2) For the sale of a condominium [or], single family residence, or land zoned agricultural with a residential dwelling unit, for which the purchaser is ineligible for a county homeowner's exemption on property tax:

(A) [~~Fifteen cents per $100 for~~] For properties with a value of less than $600,000[;]: 15 cents per $100;

(B) [~~Twenty-five cents per $100 for~~] For properties with a value of at least $600,000, but less than $1,000,000[;]: $900 plus 40 cents per $100 of excess over $600,000;

(C) [~~Forty cents per $100 for~~] For properties with a value of at least $1,000,000, but less than $2,000,000[;]: $2,500 plus 65 cents per $100 of excess over $1,000,000;

(D) [~~Sixty cents per $100 for~~] For properties with a value of at least $2,000,000, but less than $4,000,000[;]: $9,000 plus $2.00 per $100 of excess over $2,000,000;

(E) [~~Eighty-five cents per $100 for~~] For properties with a value of at least $4,000,000, but less than $6,000,000[;]: $49,000 plus $2.50 per $100 of excess over $4,000,000;

(F) [~~One dollar and ten cents per $100 for~~] For properties with a value of at least $6,000,000, but less than $10,000,000[~~; and~~]: $99,000 plus $3.25 per $100 of excess over $6,000,000; and

(G) [~~One dollar and twenty-five cents per $100 for~~] For properties with a value of $10,000,000 or greater[,]: $229,000 plus $4.10 per $100 of excess over $10,000,000,

of [~~such~~] the actual and full consideration; provided that in the case of a lease or sublease, this chapter shall apply only to a lease or sublease whose full unexpired term is for a period of five years or more[~~, and in those cases, including (where appropriate) those cases where the~~]; provided further that if a lease has been extended or amended, the tax in this chapter shall be based on the cash value of the lease rentals discounted to present day value and capitalized at the rate of six per cent, plus the actual and full consideration paid or to be paid for any and all improvements, if any, that shall include on-site as well as off-site improvements, applicable to the leased premises; [~~and~~] provided further that the tax imposed for each transaction shall be [~~not~~] no less than $1.

The rates in this section shall apply to the transfer or conveyance of a multifamily residential property; provided that "value", for purposes of determining the applicable rate, shall be an amount calculated by dividing the actual and full consideration for the transfer or conveyance of realty or any interest therein by the number of residential dwelling units in the property. For the purposes of this subsection, "multifamily residential property" means a structure that is located within the state urban land use district and divided into five or more dwelling units.

(b) For each taxable year beginning after December 31, 2026, the director of taxation, no later than December 15 of the preceding calendar year, shall recompute the rates in subsection (a) by multiplying the dollar amount for the preceding taxable year by the cost-of-living adjustment factor, if the cost‑of‑living adjustment factor is greater than 1.0, and rounding off the resulting product to the nearest $1; provided that if the cost-of-living adjustment factor is less than or equal to 1.0 in a given year, then no adjustment shall occur in the following year.

As used in this subsection, "cost-of-living adjustment factor" means a factor calculated by adding 1.0 to the quotient of the percentage change in the Urban Hawaii Consumer Price Index for all items divided by one hundred, as published by the United States Department of Labor, from July of the preceding calendar year to July of the current calendar year; provided that if the Urban Hawaii Consumer Price Index is discontinued, the Chained Consumer Price Index for All Urban Consumers, as published by the United States Department of Labor, shall be used to calculate the cost-of-living adjustment factor."

SECTION 5. Section 247-7, Hawaii Revised Statutes, is amended to read as follows:

"§247-7 Disposition of taxes. All taxes collected under this chapter shall be paid into the state treasury to the credit of the general fund of the State, to be used and expended for the purposes for which the general fund was created and exists by law; provided that of the taxes collected each fiscal year:

(1) [~~Ten~~] per cent or [~~$5,100,000,~~] $ , whichever is less, shall be paid into the land conservation fund established pursuant to section 173A-5; [~~and~~]

(2) [~~Fifty~~] per cent or [~~$38,000,000,~~] $ , whichever is less, shall be paid into the rental housing revolving fund established by section 201H-202[.];

(3) per cent or $ , whichever is less, shall be paid into the special land and development fund established pursuant to section 171-19, for land acquisition for trails pursuant to section 198D-2; and

(4) per cent shall be paid into the dwelling unit revolving fund established pursuant to section 201H‑191."

SECTION 6. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect on January 1, 2027.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	3028
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII