STAND. COM. REP. NO. 3276

Honolulu, Hawaii

RE: H.B. No. 1920

H.D. 1

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir:

Your Committee on Housing, to which was referred H.B. No. 1920, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE LOW-INCOME HOUSING TAX CREDIT,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Clarify that a partner or member that is a partnership or limited liability company that has been allocated a low-income housing tax credit may either further allocate the credit or transfer, sell, or assign all or a portion of the credit to any taxpayer; and

(2) Extend the sunset date of Act 129, Session Laws of Hawaii 2016, relating to the low-income housing tax credit, until December 31, 2032.

Your Committee received testimony in support of this measure from the Hawaii Housing Finance and Development Corporation; AARP Hawaii; Aloha Independent Living Hawaii; American Council of Life Insurers; Hunt Capital Partners; Sugar Creek Capital; NAIOP Hawaii; Avalon Development Company LLC; Maui Chamber of Commerce; and Mark Development, Inc.

Your Committee received comments on this measure from the Department of Taxation, Tax Foundation of Hawaii, and one individual.

Your Committee finds that the Low-Income Housing Tax Credit (LIHTC) is a significant component in the State's housing financing approach. However, the LIHTC program would benefit from added flexibility and broader participation. Because nonprofit entities are unable to use LIHTC credits, the sale of the credits to an investor can make available new funds to be invested in providing additional low-income housing for the State's residents.

However, your Committee notes the inefficiency of financing housing projects with a state tax credit that sells for sixty cents on the dollar. Accordingly, it would be more fiscally efficient to collect the full value of the tax and make a direct appropriation to projects the Legislature deems to be in the best interests of the State. Your Committee therefore requests that subsequent Committees to which this measure is referred consider these concerns as it moves through the legislative process.

Your Committee further finds that amendments to this measure are needed to prevent a windfall of profits to holders of existing credits.

Accordingly, your Committee has amended this measure by:

(1) Clarifying that a partner or member may only further allocate or transfer, sell, or assign a low-income housing tax credit issued after July 1, 2026; and

(2) Making a technical, nonsubstantive amendment 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 is in accord with the intent and purpose of H.B. No. 1920, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1920, H.D. 1, S.D. 1, and be referred to your Committee on Ways and Means.

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

________________________________

STANLEY CHANG, Chair