LEGISLATURE PROVIDES HISTORIC FUNDING PACKAGE OF $570 MILLION TO BUILD 25,000 AFFORDABLE RENTAL HOUS
Units will be developed for struggling working families
Today, Senate and House conferees agreed and voted on a comprehensive housing measure that takes a momentous step forward in addressing Hawai‘i's affordable rental housing crisis on all islands. House Bill 2748 HD2 SD2 CD1 provides a total of $570 million which will generate more than 25,000 affordable units by the year 2030. This will fulfill the goal of 22,500 affordable rental housing units set by the Legislature in 2016 via Act 127, Session Laws of Hawaiʻi 2016.
"This is the largest appropriation made by the Legislature and demonstrates our relentless commitment to providing innovative solutions to meet the State's long-term housing demands" said House Housing Chair Representative Tom Brower (Waikīkī, Ala Moana).
This measure supports development of affordable rental housing for a wide range of households spanning low income families to those making up to 140 percent of the area median income (AMI).
"In addition to low income households, this measure targets Hawaiʻi's middle-class families," said Senate Housing Committee Chair Senator Will Espero (‘Ewa Beach, Ocean Pointe, ‘Ewa by Gentry, Iroquois Point, portion of ‘Ewa Villages). "These are working families who are not wealthy enough to afford a home in our expensive housing market, but do not qualify for public housing assistance. We must support them by providing an affordable option for housing while they save for a home of their own."
House Bill 2748 HD2 SD2 CD1 contains four parts:
1. Appropriates $200 million into the Rental Housing Trust Fund to generate approximately 1,600 affordable rental housing units for families at or below 80 percent AMI.
The Rental Housing Revolving Fund (RHRF) provides equity gap low-interest loans or grants to qualified owners and developers for the development, pre-development, construction, acquisition or preservation of affordable rental housing. Preference is given to projects that meet certain statutory criteria. Included is a preference for projects that provide at least 5 percent of the total number of units for persons and families with incomes at or below 30 percent of the median family income. Another preference is for projects that provide the maximum number of units for persons or families with incomes at or below 80 percent of the median family income.
At the end of Fiscal Year 2017, the RHRF had a balance of $156 million. This appropriation will more than double its corpus to assist low income families and individuals, including the homeless and special needs groups, in obtaining affordable rental housing.
2. Expands the general excise tax exemption for construction of approximately 24,000 affordable rental units for families at or below 140 percent AMI.
The measure increases the general excise tax exemption for the construction of affordable rental units for households at or below 140 percent AMI, with at least 20 percent of those units available for households at or below 80 percent of the AMI. The exemption will increase from $7 million (the exemption amount enacted in 2017) to $30 million per year and will be extended from the year 2022 to 2030. The total value of this expanded general excise tax exemption amounts to $360 million over 12 years.
This exemption is expected to result in the construction of approximately 24,000 affordable rental units.
3. Appropriates $10 million into the Dwelling Unit Revolving Fund (DURF)
DURF was established pursuant to Act 105, Session Laws of Hawaii 1970, which authorized the issuance of $125 million in general obligation bonds to carry out the purposes of the Housing Development Program. Funds may be used for the acquisition of real property; development and construction of residential, commercial and industrial properties; interim and permanent loans to developers; and any and all things necessary to carry out the purposes of the Housing Development Program, including administrative expenses.
DURF provides interim construction financing of affordable housing projects. This appropriation will increase its corpus by 10 percent.
4. Appropriates $50,000 to prepare an assessment of housing needs for persons with low or no income, such as the disabled and functionally challenged populations.
This appropriation commissions the Hawaii Housing Finance and Development Corporation to determine the number of persons with special needs in Hawaii, identify the supportive services they may require and inventory the providers of supportive services statewide.
"Former State Senator the Rev. Bob Nakata deserves the credit for today's bill," said House Finance Chair Rep. Sylvia Luke, (Makiki, Punchbowl, Nu‘uanu, Dowset Highlands, Pacific Heights, Pauoa). "He has said that the Legislature needs to provide funding to create 22,000 units. This bill goes beyond that."
“Our affordable housing crisis demands we take tangible, meaningful action. With this measure, we are responding to the needs of our community – our families, children and low-income individuals – and providing long-term solutions that are feasible within the context of our state financial plan,” said Senate Ways and Means Chair Senator Donovan Dela Cruz (Mililani Mauka, Waipi‘o Acres, Wheeler, Wahiawa, Whitmore Village, portion of Poamoho).
The bill now moves to the full House and Senate for a final reading vote.