SR38

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THE SENATE

S.R. NO.

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

SENATE RESOLUTION

requesting the department of business, economic development, and tourism to conduct a study on the feasibility of UTILIZING mezzanine loans to increase the rate of housing production in the State.

WHEREAS, Hawaii is experiencing one of the worst housing shortages in the State's history; and

WHEREAS, with the most expensive housing costs in the nation, the State primarily struggles with insufficient housing production and affordable housing inventory; and

WHEREAS, the State's housing market is stuck in a problematic cycle that decreases affordability caused by high consumer demand relative to housing stock; and

WHEREAS, housing developers today face a predicament where, in addition to higher development costs, the total availability of construction mortgages for housing development projects is falling, requiring them to utilize higher-cost equity financing, such as private equity and other non-traditional lenders that typically ask for significant equity (ownership stake) in the project, higher returns, and more; and

WHEREAS, additionally, as the State's key housing agency, the Hawaii housing finance and development corporation determined via a cash flow analysis of their various housing programs that many programs held significant revolving periods, or the time it takes for the State to recoup the funding spent for each program; and

WHEREAS, a mezzanine loan is a debt-equity instrument that is backed by the value of the project based on its historic and projected cash flows; and

WHEREAS, mezzanine loans provide more flexibility in repayment terms and enables the financing of unsecured intangible assets, making it a much more attainable form of funding for smaller-sized companies; and

WHEREAS, for housing developers, mezzanine loans could potentially help in financing a housing project by decreasing the amount of equity the developer will need to provide lenders to finance the construction; and

WHEREAS, a state housing project using mezzanine loans tailored specifically for Hawaii's housing challenges could generate both more housing units and accelerate the recycling of revolving funds, utilizing taxpayer dollars in a more efficient manner than traditional state-funded housing programs; and

WHEREAS, by conducting further research into mezzanine financing, the State can make informed decisions on the utilization of the debt equity financing mechanism to ease the housing shortage and address the needs of Hawaii's residents;

now, therefore,

BE IT RESOLVED by the Senate of the Thirty-third Legislature of the State of Hawaii, Regular Session of 2026, that the Department of Business, Economic Development, and Tourism is requested to conduct a study on the feasibility of utilizing mezzanine loans to increase the rate of housing production in the State; and

BE IT FURTHER RESOLVED that the Department of Business, Economic Development, and Tourism is requested to submit a report of its findings and recommendations, including any proposed legislation, to the Legislature no later than twenty days prior to the convening of the Regular Session of 2027; and

BE IT FURTHER RESOLVED that a certified copy of this Resolution be transmitted to the Director of Business, Economic Development, and Tourism.

OFFERED BY:

_____________________________

Report Title:

DBEDT; Mezzanine Loans; Housing Development; Study; Report

Source: Hawaiʻi State Legislature · Retrieved Nov 8, 2026 · Source document ↗

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