HOUSE OF REPRESENTATIVES

H.B. NO.

2575

TWENTY-NINTH LEGISLATURE, 2018

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO AFFORDABLE HOUSING.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


     SECTION 1.  In most cases, landlords in Hawaii are able to increase the rent on rental units without much concern over whether the unit will sit vacant because of the scarcity of affordable housing.  Even if a landlord's current tenant cannot afford the increased rent on a rental unit, there is likely another tenant willing to take the current tenant's place.

     While turnover in tenants as a result of increased rents benefits the landlords and property owners, it does not always benefit the community.  Tenants who know that they could be priced out of their current residence have no incentive to invest in their community.  If rents were stable and tenants could be assured that they would face only reasonable increases, then tenants may stay in their rental units longer and invest in the community around them.

     The legislature finds that tenants need some semblance of housing security but landlords and property owners also need the ability to increase their rents by a reasonable amount.  The legislature further finds that the policy of rent stabilization, which is distinct from a policy of rent control, could simultaneously respond to those opposing needs.

     The purpose of this Act is to establish a rent stabilization law that will apply to all rental units located in structures that are over ten years old.

     SECTION 2.  The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

RENT STABILIZATION

     §   -1  Definitions.  For purposes of this chapter, unless context requires otherwise:

     "Action" means the same as the term is defined in section 521-8.

     "Basic and essential utility services" include electricity, water, sewer, and natural gas, but not include services such as telephone, internet, or television cable service.

     "Break in occupancy" means a period of time that a tenant does not occupy a dwelling unit due to:

(1)  The end of a tenant's lease; or

(2)  The mutual agreement by the landlord and tenant that a tenant will vacate the dwelling unit;

provided that a break in occupancy does not include the time period where a landlord relocates a tenant to complete repairs or renovation on a dwelling unit.

     "Capital expenditure" means a permanent improvement or renovation, including the painting of the exterior of the structure or common areas of a structure within which a dwelling unit is located, that:

(1)  Is allowable as a capital expenditure under Internal Revenue Service regulations;

(2)  Is not an ordinary repair or maintenance; and

(3)  Will be used for at least five years after the date of completion of such capital expenditure.

     "Continuously occupied" means:

(1)  Occupied by one tenant for a certain period of time; or

(2)  Occupied by different tenants with breaks in occupancy by tenants of no more than three months between each occupancy for a certain period of time.

     "Department" means the department of commerce and consumer affairs.

     "Dwelling unit" means the same as the term defined in section 521-8.

     "Family" includes a family of one.

     "Landlord" means the same as the term defined in section 521-8.

     "Monthly base rent" means the monthly rent paid by a tenant for a dwelling unit, calculated in accordance with this chapter.

     "Notice of termination of tenancy" means any notice, oral or written, given to a tenant for the purpose of having the tenant vacate a dwelling unit.

     "Owner" means the same as the term defined in section 521-8.

     "Periodically occupied" means occupied by different tenants with at least one break in occupancy lasting longer than three months but no longer than twelve months.

     "Rental agreement" means the same as the term defined in section 521-8.

     "Single family residence" means the same as the term defined in section 521-8.

     "Sporadically occupied" means occupied by different tenants with at least one break in occupancy lasting longer than twelve months.

     "Tenant" means the same as the term defined in section 521-8.

     §   -2  Application.  (a)  The provisions of this chapter shall apply to all dwelling units designed for rental use or rented, including dwelling units that are subleased by tenants, at any time on or after July 1, 2018, except for dwelling units listed in subsection (b).

     (b)  The provisions of this chapter shall not apply to:

(1)  A dwelling unit in a single family residence; provided that the single family residence does not rent more than     dwelling units to families who are not related to the property owner by blood, marriage, or adoption;

(2)  Dwelling units located in structures less than ten years old; provided that:

(A)  The structure did not replace a structure that provided dwelling units for rent; and

(B)  The tenants that rented dwelling units in the previous structure were not evicted for the purpose of allowing the property owner to build the current structure;

(3)  Accommodations in hotels, motels, and inns that are primarily rented to guests for a period of thirty days; provided that the same tenant has not occupied one or more of the dwelling units in a single structure for more than thirty consecutive days;

(4)  A dwelling unit that is owned, operated, or managed by a government unit, agency, or authority for purposes of providing housing to low-income, very low-income, or extremely low-income households; and

(5)  A dwelling unit in an institution that is monitored or licensed by the State, and provides medical, geriatric, or educational services. 

     §   -3  Rent stabilization office.  There shall be established within the department a rent stabilization office, which shall set the maximum monthly rent that may be charged for a dwelling unit in each county.

     §   -4  Waiver.  (a)  Except as provided in in subsection (b), an agreement between a tenant and a landlord to waive any provision of this chapter shall be prohibited.

     (b)  A landlord and tenant may agree to:

(1)  Waive an increase in the monthly rent; provided that no consideration, monetary or otherwise, shall be offered or accepted by the landlord or tenant in exchange for the waiver; or

(2)  Waive all or a portion of the monthly rent; provided that no consideration, monetary or otherwise, shall be offered or accepted by the landlord or tenant in exchange for the waiver.

     §   -5  Unlawful actions.  (a)  It shall be unlawful for an landlord to demand, accept, receive, or retain any payment of rent in excess of the maximum lawful rent allowed by the provisions of this chapter.

     The failure of the landlord to reduce the monthly rent to the allowable monthly rent and reimburse or credit the excess rent collected to the tenant within      days after the landlord has been given written notice from the department that the amount of rent charged is or will exceed the maximum allowable rent shall constitute prima facie evidence of the intent of the landlord to circumvent the application of this chapter.

     (b)  It shall be unlawful for a landlord to reduce housing services with the intent or for the purpose of circumventing the provisions of this chapter.  Such reduction of housing services shall be deemed an increase in rent equal to the amount of the monetary advantage achieved by the landlord or the amount of the cost incurred by the tenant to obtain equivalent housing services by other means, whichever is greater.

     The failure of the landlord to reinstate the reduced housing services within      days after the landlord has been given written notice by the department that the reduction in housing services is a violation of the provisions of this chapter shall constitute prima facie evidence of the intent of the landlord to circumvent the application of this chapter.

     (c)  A landlord shall not issue or cause to be issued a notice of termination of tenancy in order to circumvent the application of this chapter.

     The failure of a landlord to withdraw any such notice of termination within      days after the landlord has been given written notice by the department that such notice of termination of tenancy is in violation of the provisions of this chapter shall constitute prima facie evidence of the intent of the landlord to circumvent the application of this chapter. 

     (d)  A landlord shall not evict or attempt to evict a tenant, or regain or attempt to regain the possession of a dwelling unit from a tenant, upon a pretext that the landlord desires occupancy for the landlord or a relative in order to circumvent the provisions of this chapter.  A tenant in such circumstances may refuse to deliver possession of the dwelling unit and may establish the landlord's pretext as a defense in any action brought by the landlord to recover the possession of the dwelling unit. 

     §   -6  Base monthly rents.  (a)  For all dwelling units rented or offered to be rented that are under the jurisdiction of this chapter, a landlord may charge a tenant a base monthly rent, as calculated in this chapter.

     (b)  Base monthly rent for dwelling units occupied by a tenant or advertised for rent on July 1, 2018.  Effective July 1, 2018, a landlord may charge a base rent for a dwelling unit equal to:

(1)  The maximum monthly rent set by the rent stabilization office pursuant to section    -3; and

(2)  The average monthly rent charged for the dwelling unit for the past     months prior to July 1, 2018.

     (c)  Base monthly rent for dwelling units that come under the jurisdiction of this chapter after July 1, 2018.  Effective on the date a dwelling unit comes under the jurisdiction of this chapter, a landlord may charge a base rent for a dwelling unit equal to:

(1)  The maximum monthly rent set by the rent stabilization office pursuant to section    -3; and

(2)  The average monthly rent charged for the dwelling unit for     months prior to the dwelling unit coming under the jurisdiction of this chapter.

     §   -7  Monthly rent increases.  (a)  A landlord shall be permitted to recalculate a tenant's base monthly rent once every twelve months, or sooner if permitted under a rental agreement, and shall increase the base monthly rent by no more than allowed by the provisions of this chapter. 

     (b)  A landlord of a dwelling unit subject to a rental agreement shall be permitted to increase a dwelling unit's base monthly rate by a maximum of       per cent at the end of the term of the rental agreement.  The recalculated, increased monthly base rate shall be in effect for a term established by the new rental agreement and shall be the base monthly rate used to calculate the next monthly base rate increase.

     (c)  A landlord of a dwelling unit rented on a month-to-month basis shall be permitted to increase a dwelling unit's base monthly rate by a maximum of       per cent of the base monthly rate.  The recalculated, increased monthly base rate shall be in effect for a term of twelve months and shall be the base monthly rate used to calculate the next monthly base rate increase.

     (d)  Surcharges permitted under this chapter shall not be considered to be part of the base monthly rent for a dwelling unit.

     §   -8  Security deposits.  Any security deposit lawfully imposed by the landlord on a tenant may be increased by the same percentage as the base rent at the time the base rent is recomputed.

     §   -9  Registration of dwelling unit required.  (a)  A dwelling unit shall be registered with the department no less than     months prior to increasing the monthly rent on any dwelling unit.

     (b)  A property owner or landlord that fails to register a dwelling unit with the department pursuant to subsection (a) shall not increase the monthly rent of the dwelling unit.

     (c)  An action may be brought against a landlord that increases the monthly rent of the dwelling unit without registering the dwelling unit with the department pursuant to this chapter.

     §   -10  Capital expenditure surcharge.  (a)  A landlord shall be permitted to temporarily increase monthly rent to include a surcharge for a capital expenditure.  The surcharge shall be based on the actual cost of the capital expenditure plus any interest on a loan that a landlord may have secured for the capital expenditure.  A landlord shall not add a capital expenditure surcharge to a tenant's monthly rent after the landlord has recovered the cost of the capital expenditure plus a reasonable interest rate on a loan obtained by the landlord to pay for the capital expenditure.

     (b)  A capital expenditure surcharge shall be calculated as follows:

(1)  If a capital expenditure benefited all the dwelling units in the structure, the capital expenditure surcharge shall be prorated among all the tenants' rents on a square footage basis of the dwelling units; and

(2)  If the capital expenditure solely benefits one or more of the dwelling units but less than to all the dwelling units, the capital expenditure shall be prorated only with respect to the dwelling units which benefitted from the capital expenditure.

     (c)  Unless a state or county law, regulation, or rule, provides for a longer notice period or a longer notice period is provided by a contract or rental agreement, a landlord shall provide a tenant with a minimum of three months of notice that a capital expenditure surcharge will be added to the monthly rent, the proration calculation, the amount of the monthly capital expenditure surcharge, and the approximate date that the monthly capital expenditure surcharge will begin and end.

     (d)  Except where capital expenditures are required by law, any capital expenditure to the interior of any dwelling unit shall only be performed with the written consent of the tenant, or the landlord shall not be entitled to add a capital expenditure surcharge to the monthly base rent.  The tenant of the dwelling unit shall not unreasonably withhold such consent.

     (e)  Upon a request by a tenant, the landlord shall provide the tenant with copies of documents used by the landlord in determining the amount of the capital expenditure surcharge and the proration calculation.  The surcharge shall be abated until such time as the landlord mails such documentation addressed to the tenant with adequate postage.

     (f)  No landlord shall be entitled to any surcharge based upon any capital expenditure, the computation or representation of which has been arrived at collusively between the landlord and a contractor or other person.

     §   -11  Utility expense surcharge.  (a)  When the base rent of a dwelling unit includes one or more of the basic and essential utility services at the time of the recalculation of the base monthly rent, the landlord shall be permitted to add a surcharge for the increased cost of any such utility service.

     (b)  Utility surcharge calculation.  The utility surcharge shall be calculated at the same time that the monthly rent is recalculated.  The increase in utility costs is calculated by comparing the utility costs of the twelve-month period immediately preceding the date of the monthly rent recalculation with the utility costs for the twelve-month period starting twenty-four months preceding the date of the monthly rent recalculation.

     If there was an increase in the utility costs for the twelve-month period immediately preceding the date of the monthly rent calculation, the landlord shall be permitted to pass through the utility costs, prorated among all the tenants whose base monthly rent includes such utility service on a square footage basis, and payable one-twelfth of the total increase per month.

     (c)  Upon a request by a tenant, the landlord shall provide the tenant with copies of documents used by the landlord in determining the amount of the utility surcharge and the proration calculation.  The surcharge shall be abated until such time as the landlord mails such documentation addressed to the tenant with adequate postage.

     §   -12  Surcharge for expenses mandated by law.  (a)  The landlord may pass through to the tenant of a dwelling unit the cost of any improvement to the structure mandated by any government statute, rule, or regulation after July 1, 2018, as a surcharge prorated among all the tenants' rents on a square footage basis of the dwelling units.

     (b)  Upon a request by a tenant, the landlord shall provide the tenant with copies of documents used by the landlord in determining the amount of the surcharge and the proration calculation.  The surcharge shall be abated until such time as the landlord mails such documentation addressed to the tenant with adequate postage.

     §   -13  Suspension of application; re-renting a dwelling unit after a voluntary vacancy.  The application of this chapter to a dwelling unit shall be suspended for the period of time after which the dwelling unit is voluntarily vacated by all tenants and the dwelling unit remains vacant for a period of longer than twelve months.  Upon the re-renting of the dwelling unit, the dwelling unit shall be immediately subject to the provisions of this chapter.

     §   -14  Remedies.  (a)  A tenant or the department may file for a civil action to enforce the provisions of this chapter.

     (b)  A tenant may refuse to pay an increase in rent that is in violation of the provisions of this chapter, and such violation shall be a defense in any action brought to recover the possession of a dwelling unit or to collect rent.

     (c)  Whenever it is necessary for a tenant of a dwelling unit to file a court action to recover the payment of rent which was in excess of the maximum lawful rent allowed by the provisions of this chapter, or whenever it is necessary for the tenant to defend against any wrongful action filed in court against the tenant by the landlord to recover the possession of the tenant's dwelling unit, the landlord shall be liable to the tenant for damages in the amount of $         or not more than three times the amount by which the payment demanded, accepted, received, or retained exceed the lawful amount of rent, whichever is more.  The prevailing party in any such suit shall be entitled to reasonable attorney's fees and costs as determined by the court.

     SECTION 3.  If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

     SECTION 4.  This Act shall take effect on July 1, 2018.

 

INTRODUCED BY:

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Report Title:

Rent Stabilization; Affordable Housing; Maximum Monthly Rent

 

Description:

Establishes a new chapter for rent stabilization.  Enumerates unlawful actions, details the process for calculating the maximum monthly rent and yearly increases and surcharges for dwelling units under the jurisdiction of the chapter, and provides for remedies for violations of this chapter.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.