HOUSE OF REPRESENTATIVES
H.B. NO.
417
THIRTY-THIRD LEGISLATURE, 2025
H.D. 1
STATE OF HAWAII
S.D. 1
A BILL FOR AN ACT
RELATING TO THE RENTAL HOUSING REVOLVING FUND.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 201H-202, Hawaii Revised Statutes, is amended to read as follows:
"§201H-202 Rental housing revolving fund. (a) There is established the rental housing revolving fund to be administered by the corporation.
(b) An amount from the fund, to be set by the corporation and authorized by the legislature, may be used for administrative expenses incurred by the corporation in administering the corporation's housing finance programs; provided that fund moneys shall not be used to finance day‑to‑day administrative expenses of projects allotted fund moneys.
(c) The following may be deposited into the fund: appropriations made by the legislature, conveyance taxes pursuant to section 247-7, private contributions, repayment of loans, interest, other returns, and moneys from other sources.
(d) [[Struck through: The]] [Underlined: Except as provided in subsection (f), the] fund shall be used to provide [[Struck through: loans]] [Underlined: financing including but not limited to loans, equity investments, and credit enhancement, ]for the development, pre-development, construction, acquisition, preservation, and substantial rehabilitation of rental housing units. The corporation shall not forgive any loan made from the fund unless the corporation forecloses on the project. Permitted uses of the fund may include but are not limited to planning, design, land acquisition, costs of options, agreements of sale, downpayments, equity financing, capacity building of nonprofit housing developers, credit enhancement, gap financing, or other housing development services or activities as provided in rules adopted by the corporation pursuant to chapter 91. The rules may provide for a means of recapturing loans or grants made from the fund if a rental housing project financed under the fund is refinanced or sold at a later date. The rules may also provide that moneys from the fund shall be leveraged with other financial resources to the extent possible.
(e) [[Struck through: Moneys]] [Underlined: Except as provided in subsection (f), moneys] available in the fund shall be used for the purpose of providing, in whole or in part, loans for rental housing projects demonstrating project readiness, efficiency, and feasibility acceptable to the corporation in the following order of priority:
[[Struck through: (1)] [Struck through: For projects that were awarded low-income housing credits pursuant to paragraph (2), priority shall be given to p][Struck through: rojects with a perpetual affordability commitment;]
[Struck through: (2)]] [Underlined: (1)] Projects or units in projects that are allocated low-income housing credits pursuant to the state housing credit ceiling under section 42(h) of the Internal Revenue Code of 1986, as amended, or projects or units in projects that are funded by programs of the United States Department of Housing and Urban Development and United States Department of Agriculture Rural Development wherein:
(A) At least fifty per cent of the available units are for persons and families with incomes at or below eighty per cent of the median family income of which at least five per cent of the available units are for persons and families with incomes at or below thirty per cent of the median family income; [[Struck through: and]]
(B) The remaining units are for persons and families with incomes at or below one hundred per cent of the median family income; [Underlined: and]
[Underlined: (C)] [Underlined: For projects that were awarded low-income housing credits, priority shall be given to projects with a perpetual affordability commitment;][Underlined: ]
provided that the corporation may establish rules to ensure full occupancy of fund projects; and
[[Struck through: (3)]] [Underlined: (2)] Mixed-income rental projects or units in a mixed‑income rental project wherein all of the available units are for persons and families with incomes at or below one hundred forty per cent of the median family income.
[Underlined: (f) There is established within the fund a housing efficiency and innovation subaccount that shall consist of appropriations from the legislature. ][Underlined: The corporation may transfer funds between the housing efficiency and innovation subaccount and the rental housing revolving fund without legislative approval. ]
[Underlined: Notwithstanding the order of priority established in subsection (e), funds in the subaccount shall be used for financing, including but not limited to loans, equity investments, and credit enhancement, for rental, rent-to‑own, or for-sale housing projects exclusively for qualified residents as defined in section 201H-32; provided that priority shall be given to:]
[Underlined: (1)] [Underlined: Projects on land owned or developed by the State or a county;]
[Underlined: (2)] [Underlined: Projects that efficiently use state funding; ]
[Underlined: (3)] [Underlined: Projects with a mix of units affordable to a diverse income range, as defined by the corporation; and]
[Underlined: (4)] [Underlined: Projects prioritizing government employees.]
[Underlined: The corporation shall establish an application process for subaccount fund allocation, separate from the fund allocation process pursuant to section 201H-204(c), that gives preference to projects meeting the criteria established in this subsection. The corporation may include other criteria as it deems necessary to effectuate the purposes of this subsection. Moneys derived from the repayment of loans funded by the subaccount, interest thereon, and related fees and returns, shall be deposited into the subaccount.]
[[Struck through: (f)]] [Underlined: (g)] There is established within the fund a bond volume cap recycling program subaccount. The bond volume cap recycling program subaccount shall be maintained as a reserve for the bond volume cap recycling program established pursuant to section 39B-2(f).
[[Struck through: (g)]] [Underlined: (h)] The corporation shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session describing the projects funded and, with respect to rental housing projects targeted for persons and families with incomes at or below thirty per cent of the median family income, its efforts to develop those rental housing projects, a description of proposals submitted for this target group and action taken on the proposals, and any barriers to developing housing units for this target group.
[[Struck through: (h)]] [Underlined: (i)] For the purposes of this subpart, the applicable median family income shall be the median family income for the county or standard metropolitan statistical area in which the project is located as determined by the United States Department of Housing and Urban Development, as adjusted from time to time.
[[Struck through: (i)]] [Underlined: (j)] The corporation may provide loans under this section; provided that the corporation shall establish loan‑to‑value ratios to protect the fund from inordinate risk and that under no circumstances shall the rules permit the loan‑to-value ratio to exceed one hundred per cent; provided further that the underwriting guidelines include a debt-coverage ratio of no less than 1.0 to 1.
[[Struck through: (j)]] [Underlined: (k)] For the period commencing July 1, 2005, through June 30, 2009, the fund may be used to provide grants for rental units set aside for persons and families with incomes at or below thirty per cent of the median family income in any project financed in whole or in part by the fund in proportion of those units to the total number of units in the project. At the conclusion of the period described in this subsection, the corporation shall report to the legislature on the number and use of grants provided and whether the grants were an effective use of the funds for purposes of developing rental housing for families at or below thirty per cent of the median family income."
SECTION 2. Section 201H-204, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) [[Struck through: The]] [Underlined: Except as provided in section 201H-202(f), the] corporation shall establish an application process for fund allocation that gives preference to projects meeting the following criteria that are listed in descending order of priority:
(1) Serve the original target group;
(2) Provide at least five per cent of the total number of units for persons and families with incomes at or below thirty per cent of the median family income;
(3) Provide the maximum number of units for persons or families with incomes at or below eighty per cent of the median family income;
(4) Are committed to serving the target group over a longer period of time;
(5) Increase the integration of income levels of the immediate community area;
(6) Meet the geographic needs of the target group of the proposed rental housing project, such as proximity to employment centers and services; and
(7) Have favorable past performance in developing, owning, managing, or maintaining affordable rental housing.
The corporation may include other criteria as it deems necessary to carry out the purposes of this subpart.
If the corporation, after applying the process described in this subsection, finds a nonprofit [Underlined: or government] project equally ranked with a for-profit [[Struck through: or government]] project, the corporation shall give preference to the nonprofit [Underlined: or government] project in allotting fund moneys."
SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to be deposited into the rental housing revolving fund.
SECTION 4. There is appropriated out of the housing efficiency and innovation subaccount of the rental housing revolving fund established pursuant to section 201H-202(f), Hawaii Revised Statutes, the sum of $ or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 for the Hawaii community development authority's ninety‑nine-year leasehold project.
The sums appropriated shall be expended by the Hawaii housing finance and development corporation for the purposes of this Act.
SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 6. This Act shall take effect on July 1, 2050.
Report Title:
HHFDC; RHRF; Housing Efficiency and Innovation Subaccount; Housing; Priorities; Appropriations
Description:
Establishes the Housing Efficiency and Innovation Subaccount within the Rental Housing Revolving Fund. Specifies permissible uses of funding and priorities. Authorizes the Hawaii Housing Finance and Development Corporation to transfer funds between the Housing Efficiency and Innovation Subaccount and the Rental Housing Revolving Fund without legislative approval. Appropriates funds. Takes effect 7/1/2050. (SD1)
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