STAND. COM. REP. NO. 595

Honolulu, Hawaii

, 2005

RE: S.B. No. 1841

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred S.B. No. 1841 entitled:

"A BILL FOR AN ACT RELATING TO AFFORDABLE HOUSING,"

begs leave to report as follows:

The purpose of this measure is to require all state and county agencies to give affordable housing projects priority in permit and approval review and issuing processes.

This measure also exempts county housing projects from statutes, ordinances, charter provisions, and rules.

Testimony in support of this measure was submitted by the Housing and Community Development Corporation of Hawaii, the Department of Planning and Permitting of the City and County of Honolulu, and the Pacific Housing Assistance Corporation. Testimony in opposition to this measure was submitted by the Sierra Club - Hawaii Chapter, and Life of the Land.

Your Committee finds that the current lack of supply of affordable housing throughout the State has created a great division among the residents of our State. Those with limited resources are especially vulnerable during this period as many are desperately in need of affordable housing. In relation to this problem is the myriad and complex land use permit processes faced by real estate development projects. Your Committee determines that giving affordable housing projects priority in the permitting process over other projects, excluding public health and safety projects, will help to alleviate the current affordable housing shortage problem.

Additionally, your Committee finds that additional efforts to increase the supply of affordable housing should also be explored, including the redevelopment and revitalization of residential lands. Although a deterrent to redevelopment is the cost of public facilities, as interest rates on moneys necessary to finance such public facilities add significantly to their costs and more favorable interest rates would be available through the issuance of tax-exempt bonds, the issuance of revenue bonds presents a viable option for such redevelopment. Therefore, your Committee believes that expanding the authority of the Hawaii Community Development Authority to finance projects beyond the boundaries of Kakaako to include projects throughout the entire State will facilitate the redevelopment of affordable residential units.

Finally, your Committee finds that another facet of the affordable housing problem is that there is a shortage of units which may be deemed affordable. Many homes or condominiums are purchased by individuals and entities from outside of the State, which further exacerbates the shortage problem. Residential properties utilized for investment purposes are often luxury vacation properties owned by wealthy individuals. Therefore, your Committee determines that the imposition of a luxury tax on investment properties that are not used as permanent residences will help to subsidize affordable housing projects throughout the State.

Accordingly, your Committee has amended this measure by:

(1) Deleting the exemption for county housing projects from statutes, ordinances, charter provisions, and rules;

(2) Including language from S.B. 1182, which authorizes the Hawaii Community Development Authority to issue revenue bonds to finance infrastructure improvements statewide;

(3) Including language from S.B. 1181, which imposes a luxury tax on real property classified as improved residential but not having a homeowners exemption and not used as a permanent residence or rented, and appropriating these funds to the counties;

(4) Changing the effective date of the Act to July 1, 2050, in order to facilitate further discussion on the matter; and

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

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1841, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1841, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Housing,

____________________________

RON MENOR, Chair