HOU-EDU, HOU Public Hearings 03-17-2026

001Good afternoon and welcome to the joint committees on housing and on education. This meeting is being streamed live on YouTube. In the unlikely event that we have to end this hearing due to technical difficulties, the committee will reconvene to discuss any outstanding business on Thursday, March 19th at 10:07 p.m. in this room 225, and a public notice will be posted on the legislaturator's website. We have a 1 minute per testifier time limit. This meeting will begin with a 1:00 joint agenda of the committees on housing and on education and will be followed by the 10:05 p.m. agenda of the committee on housing. If there are temporary technical glitches during our turn to testify via Zoom, we may have to move on to the next person due to time constraints. We appreciate your understanding and remind

002you that the committee has your written testimony. Um, we'd like to welcome the committee on education. We have um senators uh chair Kim and vice chair Kedani. I'd also like to welcome members of the committee on housing, vice chair Hashimoto and um senators roads and the court from >> education. Our first bill today is HB1 1713 HD1 relating to school impact fees which repeals school impact fees, abolishes and transfers unencumbered balances of the school impact fee sub accounts and certain fair share contribution counts to the school facilities special fund. Our first testifier is DOE in opposition. Good afternoon, chairs, um, vice chairs, members of the committees. Uh, the DOE respectfully opposes the measure as drafted and we rest on our testimony. Available for questions. Thank you. >> Thank you. >> Identify yourself, please. >> Well,

003I'm sorry. >> Oh, yeah. If you could identify yourself. >> I always forget. Senator Jesse Suki, Deputy Superintendent of Operations at the Department of Education. >> Thank you. >> Um, we have HHFTC in support. >> Chairs, vice chairs, members testimony support. >> Thank you. The attorney general's office uh department with comments. >> Good afternoon, Chair Chang, Chair Kim, members of committees. Randall Watt, Deputy Attorney General Department. As further described in our uh written testimony, department has comments on this bill. Uh to ensure that the uh bill meets certain uh constitutional limitations based upon Supreme Court case law, uh the department recommends uh amendments that are described in our testimony and I'm available for questions. >> Thank you. Department of Hawaii Homelands in support. >> Hello chairs, vice chairs, members of the committees department. >> Thank

004you. School facilities authority in support. >> Sure. Richard with the school facilities authorities here in support. Thank you. >> Thank you. Grassroot Institute of Hawaii in support. >> Um NAP Hawaii and Avalon Development Company and Mark Development in support. Tax Foundation of Hawaii with comments. >> Aloha. Uh, the Tax Foundation stands on its written comments. Thank you very much. >> Thank you. Maui Chamber of Commerce in support. Housing Hawaii's future in support. Landis Research Foundation in support. BIA Hawaii in support. And Johnny May Alperry in support. Is there anyone else wishing to testify on House Bill 1713? Okay. If not, if do we have any questions? >> Question for DOE. [clears throat] >> Hi, Deputy Superintendent Suki. So, I I know that you're fairly new into this position, but um there was some testimony that

005says, you know, for 19 years the funds haven't been encumbered. Can you explain to these committees perhaps why and um the reasons for some of the funds being not encumbered? >> Yeah. Uh Jesse Suki, deputy superintendent of operations again and I yeah, I started in September, but I've been in land use development for over 20 years. Um and actually worked on some of these impact agreements way back when for projects in both the private and public sector. So, um the fees I my understanding is that some have not been spent because the way these um impact fees work or the fair share we're talking about the fair share specifically is that the proportional share of the impact that the project being proposed is going to have on schools in particular. So the amount of money

006that's contributed or land that is contributed is just a part of the entire need for the district. So the money that are in those accounts may not have been spent because they're not enough money to build like a full school and the money is restricted to being used in the district where it's collected because the impact fee um like the AG had testified um is linked to the constitutional limitations of you know it has to be a proportional share of the impact and can only be used for the purpose that it was um exacted for. So that's another reason why um those fees may not have been spent, but they are um allocated to projects within those regions over time. So it's being used um but some of the funds still are in there, but

007the intent is to use them as the need becomes um um you know to to fruition because this you know because it's dedicated doesn't mean at that time you need to build. You build when the need arises over the life of that project. >> Okay. Are you able to share with the committees what projects that you're using the funding for? Um >> I believe in our testimony we named the um a couple was the uh let's see we talked about the um core ridge and whole projects and the central and west Maui projects. >> Oh I see it here later in the testimony. Okay. Thank you. Thank you chairs. >> Thank you. So, how much of the school impact fees did you folks use on these projects? >> Um, I I don't have that in

008front of me, but we reported and we have the um quarterly I believe it's quarterly reports on the website. >> So, of the $17 million that was in the in the fund, is that what we have? How much is in the fund? >> I'm sorry. I don't have those numbers in front of me. >> How can you not have these numbers? I mean, you're here to to defend this measure. So, wouldn't you didn't you have that information available? Yeah, I can provoke about this last year as well and we had proposed to do away with the with the impact fees last year and the measure got watered down, but um you know this is serious. If you're going to tell tell us that you're using the funds but you don't have the monies, then how

009are we to trust that what you're telling us is as accurate? Did you read the did you read the audit report by the auditor about the impact fees? the impact fees. Yeah. Yeah. That came out a while ago. Yeah. >> Yes. And you know, you know what they stated about the formula about the fact that you folks haven't used the monies uh about how res residents are being are being um um assessed these these amounts and yet those monies don't go back into the schools in that district. >> So the impact fee program has already been transferred to SFA. So what we're really talking about is just the fair share already negotiated uh agreements that were part of entitlements like land use commission or change of zone. So those are already um entered into agreements

010with funds allocated to the district or area where those um agreements were entered into and and finalized. So that's that's the focus of this bill. Um to scoop up that last remaining part of the of the program and our our ask is that um u it not be scooped that we be allowed to use that for the schools that are >> So where's that list of how much how much you're talking about that you don't want us to scoop? >> We can provide that to you. >> Well, you should have it now. >> Yeah, I don't have it in front of me. >> Okay, Jesse. So, if you're going to come in and you're going to be opposed to this and you got to give us every reason why we should agree with you, we

011cannot agree with you unless you have the information unless you can give us the facts. And when you don't give us the facts, which is not the first time because all the hearings that I've held, the DOE come unprepared. So, it leads me to believe that, >> you know, I don't trust what you folks are saying. >> Thank you. Any further questions? >> Thank you, deputy superintendent. Um, did I hear you say that the funds from the school impact fees have already been transferred to SFA >> and you folks are currently using fair share um funding to for these core projects? >> Yeah. Two different buckets, the impact fee and then the fair share. Yeah. >> Yeah. So, we're Okay. So, sorry. My question is so has school impact fees already been transferred over to

012SFA? Um as far as I know the program is under SFA now it was transferred. Yeah. >> Okay. And then um so I think a lot of the also the concern is that uh this fee is not only collected from big developers but also from uh local families owner occupants those kinds of things is that that would be imposed on local families as well. Is that your understanding? the school impact fees that were negotiated as part of like land use commission entitlements. And so it's like a proportionate share of, you know, if you're going to have so many students that households that generate so many students, that's the proportionate share and that's exacted from the project developer and they may pass that cost on to homeowners. >> Okay. So, as far as the school impact

013fees specifically, um has DOE spent or encumbered any of those funds? some of the money for the um the fair share money has been allocated to projects. >> Yeah, but the fair share is different, right? Like this is a different bucket, right? >> Yeah. I'm just talking about fair share. >> Okay. Um [sighs] are you prepared to respond on school impact fees? Cuz that's what my questioning is. So I don't want to belabor it. >> For this particular bill, we we only focused on the fair share because that's what the bill was talking about. >> Yeah. Okay. Um, so as far as the Well, my questions are school impact fees. So, >> it doesn't sound like he's probably ask >> Oh, >> Ricky. Hi. [laughter] Oh, >> they have the program though. >> Yeah. And

014um when when he does come up then I'll ask my question, but whoever has questions for deputy superintendent. Thank you, Chair. >> Because I have a followup. I think she I have a followup. Okay. So of the of the fair share um how old are these projects that have this fair share? >> Um they they can have been around for some time like um you know we talked around uh core ridge and peely were approved through the land use commission you know quite a while ago. So the phase two of Capo High School, the Kalei Elementary School, those are according to the audit were part of the fair share $8 million. Is that some of the monies you're talking about as well? >> Fair share money. Yes. >> But these projects are old. >> Yeah,

015cuz they don't they don't get built until there's a need for them because the projects are not fully built and so there are is not a demand for school. Yeah. But we are asking for funding in in this uh supplement to budget for three schools. Right. So >> So which three? >> Um so planning um the Camtry school replacement school and um Capo. >> Yeah. >> Okay. So the others that have received fair share contribution the money just sits there >> until we need it. Yes. So, so some of these schools is from 2002, 2010. Portables for schools 20ou 2010. So, what if the money is just sitting there? You're not utilizing it. Why wouldn't we why wouldn't we we take the money >> then? Then we wouldn't have it to build the school when

016we need >> enough to build the school already, right? Some of these monies are not even enough to build a school. What you got? A million dollars. I don't know if this is 6 million or $6,000. So for Kama Kamali East Elementary School, you had a million dollars. In FY205 2005, you got $993,000. And then in FY2010, 6,000 or that's could be I don't think that's 6 million. doesn't tell me. But that's not even enough. >> That's correct. The fair share supplements the the CIP ask that we would come in with. >> So we talking about a million dollars sitting there >> until it's ready to be developed. >> So when do you think come elementary is going to be developed? >> I don't have a prioritization list in front of me, but I can

017get back to you on that. >> Okay. Well, I think you need to make a better case as to where all these monies are sitting and when can we expect to build it because at some point if they're not expected to get built then what if what happens to the funds? >> It's there until we need it. >> Yeah. But if you never need it or you never build it because you do you take it and put it to some other school? >> No, you cannot do that under the fair share program. >> So, it's going to just sit there forever and ever. even though there's a school that might need it, it's just going to sit there >> until we take it. >> Based on the agreement for um the proportionate share of the

018school, based on the impact of the project at the time, there is going to be some forecasted need. And when that need arises because the project has built their development and because they knew that there was a school coming up as part of their fair share agreement and the environmental documents that they're doing and the permitting it's properly infrastructured which is also important part of the fair share program is that people think about the future need for a school. So when that need finally arises because they've built out then we would come in for CIP to pay for part of it and we use the fair share to offset some of that cost. >> Okay. But when this cost is so minimal or the amount is so minimal and the school's not built for years

019at some point doesn't make any sense to keep that dollar there. >> I mean some money is better than no money. I mean it's money that we'll use. How if we can't move it to something else, how are you going to use it if that school doesn't get built? >> Yeah, we so we we cannot move the money. Um I'm I suppose if the developers who contributed the money agreed that the money could move that would because the the constitutional right flows to them, not not to us. Right. >> Yeah. But we can we can move it. We can take it and then possibly move it. >> I check with the AG on that. Well, this bill this bill moves the impact or do away with that impact fee. >> Can we clarify where the

020money comes from? >> The the impact fee? >> Yes, it comes from the construction. >> Yeah. [clears throat] >> Like the homeowners that pay for the homes. >> Yes. >> Correct. So, so I think why the money can't be moved is that those homeowners are um assuming that there will be a school there for their children to attend. Yes, >> but there's no promise as to when the school will be built. And I guess until the development is fully developed and you have enough to fill uh say an elementary school, then that's when the projections are made as to when the school is built. >> That's correct, Senator. But in the case of like Khalihi where you have charged homeowners the impact fees and the money and there's no school to be built. What happens

021to those fees? Those fees goes within that district, right? Which is one of the things that the audit pointed out that the formula that was used to assess the impact fees on these homeowners. You know, it's one thing if it's a homeowner in an area in which up and coming like in Capo where there are schools being built and even then some of the schools are not being built, but then you're you're the fees were being levied on areas in which we did not get new schools. >> That's about the impact fees. So, I'll defer to um the pro impact fee program is with SFA now. >> Yeah. But the the impact fees that was used for some of these what some of these um um other bucket my mind is just came from the

022same thing right for your um shared the shared contribution right it came out of the whole impact fees right >> it may have been combined but I'm just focused on the fair share money which is currently >> currently there I understand but I'm just saying because in in response is that people have paid into it not necess necessarily for their particular area or that particular school. So, it's really not been associated with, you know, we're going to we're going to charge you an impact fee because we're going to build Kamali East school. >> It's not never been like that, right? It's it's a whole area that was that was assessed the fees which was then used and contributed to a particular school. So the the the um the shared the proportionate share fair share fee

023that we're talking about that was before the impact fee statute was developed. >> Um um that that took some effort to develop that statute. I was around when that happened. But that that impact fee schedule was very much more precise and and listed and enumerated the requirements for the impact fee and the district and how it was designated. Um the sharefair program was more focused on you going into the LEC for example to build a 350 um unit mixuse project um as part of your environmental analysis and your project analysis and how you evaluate how much infrastructure you're going to use. You kind of have a forecast about how many families are going to be there and based on that forecast for the this is the fair share I'm talking about. you're gonna kind of

024predict how many students and based on that, you know, there's some discussion with DOE back then and the LUC about what kind of um contribution it would be either um uh money or land or both. So, it's it's a little different the impact fee from the >> Okay, maybe we can hear from the SFA. >> Yeah. Um, I I think it's a little unfair for you to only limit your testimony or the discussion based on the fair share program because in your written testimony, the department started off their first statement by um opposing this bill because repealing the statute from the the statutory school impact program would weaken one of the state's primary tools for ensuring that school facilities keep pace with residential growth. We we we seem to have a conflict with your written

025to testimony and then with your oral testimony because 10 years ago DOE had called for 12 new schools on Leah Wahoo by 2030. And where are we at with that? >> Nine. >> 12 new school. Okay. So, so again, I want to be fair to the discussion and to the committee here that we have that the answers that we need when we're trying to decide on where is the best place for these funds. Um, and so I think it's a little unfair to the committee that you're not able or prepared to discuss the school impact fees only the fair share where in your testimony you had opposed it. So, I'm not sure if the department is in the business of opposing bills that they can't provide the factual data on, but it's a little difficult

026for us to be able to um get behind your uh testimony when in fact you you haven't come prepared. Uh >> so the the bill is about the fair share amount and we talked about the impact fee um because the impact fee and the fair share was sort of the state and legislaturator solution to addressing the um need for schools when developments happen. Um the impact fee um program has already been transferred to SFA. Um that's why the focus here is on the um the um fair share. >> Go ahead. >> Okay. So, so just to be clear, so what do you want to go back to then? Do you want to go back to what we the the land contribution agreement we had last year that we we left in or do you want

027to go back to the land use commission and do more ECs? Like what is your in your mind the ideal compromise here? >> Well, our uh based on our testimony and our position is uh not to let the bill move and just status quo, >> right? But the the you know at some point this is going to sunset. So if we have a bill moving we're going to try and fix as much as we can. So I need to understand what is your position then? So you're okay with the current statue then for land contributions. >> That's it's been working. Yeah. >> Okay. So, did you go back and look at any of the ECs to see if any of the ECs have any type of um requirements for for the construction portion of impact

028fees because this was as you said before it was pre um this this statue right that you signed all these ECs in theory. What I'm really concerned about and I think some of the genesis of this bill is that there's people still paying some of the construction portions that I assume is a part of those old ECs, but I think we need to go clean that up to to follow the intent of the what we passed last year to make sure that nobody is really paying for con construction fees at this point. Are have we embarked on that review of current ECs? Yeah, we can talk more about that, but because I I need clarity on what I mean, I drafted some of these things way back when begrudgingly for developers, >> right? But so

029I I I don't >> So So is it solely on land then based on the ECs? Because you said there was no statute. So So then I don't in ter in terms of extraction, I would assume you're going to get more than what was than just a fair share of land contribution. Mh. No, I think I think we um you know from the developers perspective, we we fought to be sure that we were paying whatever the fair share was as it could be defined through the best data we had at the time working with the department. So I'm thinking I'm thinking from the other side now. Um and it was uh a payment a lump sum payment or it was a land designation. Um I'm not familiar with ongoing >> right because you're saying people

030are still paying the cash contribution. That's what you you said. >> No, I didn't say that. >> Okay. your people aren't still paying then as as things get developed because you can do it in ll cash. >> Mhm. Mhm. >> Right. >> I I think I think maybe my answer to the question wasn't clear for one of the previous senators but the question was are people paying >> uh you know these fees >> for the ECs >> the fees to the developer and the developer might bake that into the cost of the units they're selling. So they may pass the cost on. >> Right. So you're not collecting anything from the ECs right now. We've we've already either been paid and it's in the account or this is the land designation. Yeah. >> Okay. So,

031moving Okay. So, so so that should be fine then. No one should be every everything owed is owed then to the DOE on past EC projects. >> Should be. Yeah. >> Okay. So, then moving forward then. Okay. So, so then you shouldn't be concerned with past ECs then. Are you guys not concerned with past ECs? >> If the if the bill doesn't affect past ECs, that's a good thing. Yeah. Yeah. >> Okay. And then moving forward, what do you want then? You want the current statute to stay in place. >> We would we would like it with the current statute to be in place because when these entitlements occur, you know, part of the impacts that a board would consider like a county council issuing a change of zone or the land use commission. They're

032looking at all impacts of the project. So they would be looking proportionate share of impact for off-site traffic improvements for example and they'd be looking at you know off-site impacts proportionate share to u drainage for example is just one of the things that they're looking at. Yeah. And we want to be considered I think. >> Yeah. >> Okay. So that's that's your basic concern. As long as you you feel like you're going to get something out of the decision then wherever it is whether it's through the statute or the land use commission >> that kids that there's going to be a a school built to meet the needs of the Yeah. and that there's going to be I get so I get your point. I think what what we got to figure out though is

033you know I I think there what the issue is is that you are owed certain things, right? But I think when we we and this is what we brought up last year is that you guys aren't you're not taking possession of the things that you're owed. Developers are holding on to it, >> right? So, at a certain point, if you don't really need it, right, to a certain point, then why why is it owed to you if if it's you're not going to take it, right? And so, I think we got we got to figure all that out. I think this bill is aims to do some of that. And I think we're that the policy decision is essentially, okay, well, none of it is working, so just repeal the whole thing, right? But until

034we know that the review is going on and we have a pretty good handle, I think we're going to, you know, keep chipping away at it because I think it's it's a balance. Is it housing or is it just making sure that we're going to give money to an empty account that never gets used, right? And so I think the department has to show that this is an important tool because if you're not using this important tool and you know then then I think that's why we're kind of like okay maybe we just repeal the whole thing because it's just sitting there um and not being utilized. And I think that's what happened with the construction costs part of it. And now I think we're now coming back and we're like okay is the ECs

035is is is all this land contribution stuff even worth it? Right. And so I think hopefully the DOE can work with us to figure out, okay, show something on your side that you're you're moving with these assets that are just sitting and then we can reconsider, right, what what's the best way forward. So hopefully we can come up with some solution. >> I appreciate that. >> Thank you, Chairs. >> It was a question for somebody other than Mr. Suki is if that's if you guys are ready to move on. >> Okay. Um, >> thank you >> from AG's office if you don't mind. >> So, uh, reading your testimony, there's a couple things I don't understand about of the bill, I guess. So, um, you say that school impact fees are subject to constitutional limitations

036undertakings. So, what how does that play out in this situation? So the de and this is probably like um impact fees 101, so excuse my ignorance, but so when when there's a new development, um the developer pays school impact fees because the DOE is going to have to build a new school in that area because generally they're going have to build a new school in that area because there's more kids around and so they have to build a school. >> So but if we decide, hey, we're not going to do that anymore, wouldn't the money have to go back to the developer as opposed to um as opposed to going to the I'm sorry I forgot the name of the fund the uh >> yeah it says that in the bill. Well, yeah. If it's

037as it stands, uh if it's hasn't been expended for 20 years time, then it's to be refunded to the developer >> to the developer. But you but your suggested testimony was that it was let's see ref okay if >> because the bill also says that it used within the school impact district for which it was collected or refunded to the developer. So there's a >> but there's but there's actually a choice between refunding it to the developer or giving it to somebody else because I I would have thought that if there's an agreement with the developer and and it never gets used the developer would have a claim to take it back. >> But I think >> pretty much regardless >> these are the funds already in the sub accounts. So just in order to

038make sure that basically the the the funds that were collected from a certain area need to benefit that area. Right. So right >> if it's there but if it has not been expended and it's been used high time reflected >> then it [clears throat] does have to go back to the to the developer. >> Okay. All right. Um so one other question. So if the if we did pass this bill then how would we how are we going to pay for school schools and new developments? Is it just a straight CIP request from the Department of Education or is it something in the bill that says >> it goes to SFA? The money, right? Goes to SFA. >> But the but we're still taking impact fees in. We're just putting it in a different account.

039>> All the fees went to SFA already and this remaining balance according to the bill would still go over to SFA who's supposed to build schools. Right. Am I correct? >> Yes. So right now, >> well, let me let me let me let me hear what the legal guy has to say first, if you don't mind. >> Um, >> so my understanding is that the bill would >> stop the collection of school impact fees going forward. So >> without going into policy orever essentially school impact fees can then not be used. >> So the developers don't the developers won't have to pay impact fees and then how do we build schools? We just we just have to build them. >> Question I cannot answer as far as >> Okay. So that's what you wanted to

040ask Ricky. Okay. All right. Thank you. [clears throat] >> What do you want clarified? >> What what happen you what happens then if if we pass this bill, then how do we fund schools in the future? >> Right. You e can go back to the normal process before with the land use commission or zoning or you could just fund it directly. Um that's a philosophical question. My point is that my perspective is that we've created all these rules so it's so hard to develop housing and now you've got to peel everything back off and all this motion we've created has done very little money anyway so it has very little impact so just fund it build and fund it build cheaper faster that's where the action is not in this whole administrative process to get

041an exaction to slow housing >> okay so then that's where the philosophical part comes up because then it's it's whether the the new neighborhood it's where the new housing is has to pay a more a disproportionate share not a disproportionate share but a larger share of building a new school or it's just spread out over society over the old neighborhoods and new neighborhoods that have already paid their impact fees and built schools and then Okay. >> Yeah. Because overall what's the impact the total balance we're talking about right now is $31 million. That's both a combination of if we sweep all the fair share of money and all the impacts fees collected over 20 years is $31 million. The way it's broken out, you can't even afford a portable >> in a lot of these

042sections. It's it's it's 20 years of motion with no impact. >> Okay. >> Honestly, that's what we're trying to deal with right now. >> Okay. Thank you. Next you're up. >> So can I So the the money's now from the fair share goes over to SFA. Is that correct? >> Right now all this is with the DOE. Nothing's been transferred, right? >> So last year's bill that we said that the impact fee supposed to be transferred to SFA. >> Nothing's been transferred. It's all still in DOE accounts. It has to come to our special fund first and then we have to go to the ledge to get a legislative ceiling to actually spend it. So what this bill tries to do is do all of that and in one bill. >> Okay, >> we can

043still spend the money. It doesn't have to be a DOE school. It can be a charter school. It can be a prek. There are other ways to spend educational money for a far more efficient way, but just not for schools. It can be kindergarten. It can be a charter school with have a which has a wider reach and a wider breath. The second bill we're hearing today is specifically for Khali Alam Moana where you could buy a building in Khali Alam Moana in order to house a charter school. So there's different ways to spend it. We've just been stuck in this one way. We have to build this big school. >> But even though we passed the bill last year, none of that money transferred over. Why not? >> Because it has to get transferred

044by again, we're an attached agency to the DOE. They have to transfer the money to our account and then we have to go in from the ledge to get a legislative ceiling to spend that money. >> Understand? But why wasn't it transferred to your account? >> I don't know. It hasn't been transferred. >> Do you know why, Jesse? why the money hasn't been transferred over. >> Who's who's responsible for for that? Is it BNF or is it DOE or who who is responsible? >> It might be might be combined. But let me let me check on that. >> Yeah. Because you know we pass measures and then we don't know that this not it's not implemented. So, >> right. And more importantly, we need legislative approval to then once spend that money once it's transferred

045to our house. >> So, then you need to you need to have a bill, right? Or something. >> Well, the bill makes >> this bill does >> forces everything. >> This bill does. Okay. >> Yeah. It sweeps everything. >> Thank you. So, um I'm I'm sure you were paying attention to the conversation where deputy superintendent had um expressed that those funds were already transferred to SFA. So, you're telling us today that it is not been transferred? >> No. >> Okay. So >> it's a process. It's you know what happened last year was >> Has the process started? >> I mean the bill was passed. >> The law was changed. Yes. >> The law was changed. The bill was passed. Has the transfer started? >> No. >> Okay. All right. Uh for the sake of calling

046you back up here, Deputy Superintendent, please make sure that your statements are factual. Uh because it's very frustrating to at least myself when I have questions. you make a statement and it is not true. Uh so let me just move on to my next point. Uh uh out of the $31 million, how many how much do you know how much money is school impact fees and how much is fair share? >> Yeah, 9 million in fair share balances and 22 million in impact fees. So it's a total of 31 million we're talking about. But again because there needs to be a constitutional nexus. It has to be narrowly tailored on where you spend it. Right? It has to be tailored for the Khali Alamada area. It has to be tailored for central Maui. Has to

047be said to pro city. That's the challenges, right? Meaning the constitutional test of Nolan Dolan. So you don't go a follow of the US Supreme Court language and you use it properly for prek, charter or or new schools to increase capacity, not to improve, renovate or retrofit. It has to increase capacity because that's the exaction. >> Are you in favor of repealing the school impact fee? >> Yes. >> Okay. Uh >> my point is 20 years of nothing, no impact. >> Let's clean slate, figure something better. Yeah. spend what we have before we have to return it to the developers. We we figured out a way to to do that. It'll probably use for prek or charters, but we can spend that money, make it put it to some use, right? >> Okay. What about

048the old system, the fair share develop? >> I mean, we have to we could sweep that money and use it for the same use because it's for education, right? >> I have a followup. Chairs, if I may, Mr. Fujitani has a question. Uh >> Mr. Fujitani, if the legislaturator's intent is to repeal these sections, sort of part two from last year, would SFA, if you were given that authority to do all these things, would you be able to execute? >> Again, we need the money to come to us first in our account and then we need approval from the legislature to spend to that ceiling. We need a leg, we need >> this is if you were given that mandate specifically, you would be able to do it. >> Yes. >> Okay. Thank you. Senator,

049>> thank you. Um, so Senator Ricky, for the school impact fees, um, the developer puts it into an account and is it only for certain schools in that district? >> Right. There's four impact districts. Leeward, Central, Khali, Al Moana, and West Hawaii. >> Okay. But it doesn't have to be for a new school. It could be to renovate older schools. >> Can't can't be for renovation. It has to increase capacity. So if you were to add capacity, Yes. >> Adding capacity to a current school, you could do that. >> Yes. >> Has any of that been done? >> No. >> Um, and one of the problems is that the Khali to the downtown or that area. A lot of the condos are coming up, but there's no need for new schools because the schools there,

050the growth isn't there as far as families, right? And so even though that area is getting the impact fees, we don't have new schools. But if if you folks get it and then you can we can do child care um preschools. Um >> yeah or charter capacity. >> Yes. >> Yeah. >> Yep. >> So we need that flexibility. Yes. We need that flexibility. >> Yeah. But first we need the money transferred to us and then a legislative ceiling to spend the money >> to the OA said it's transferred. So >> we're going to follow up on that. >> Yep. >> Any further questions? Okay. Thank you so much. >> Thank you. We move to our next bill on this agenda. House Bill 2397H2 relating to school facilities. Transfer school impact fees from the Khi Alam

051Moana School Impact District to the school impact fees sub account of the school facilities special fund for the acquisition and renovation of one or more buildings in the downtown Honolulu area to develop and expand prek and charter school capacity. Our first testifier is the attorney general with comments. Afternoon again, Chair Chang, Chair Kim, the committee, Randall Watt, Deputy Attorney General Department. As further described in our written testimony, similar to the last bill to address those constitutional limitations, concerns talked about earlier about nexus and direct proportionality. We have recommended amendments to this bill and I'm available for questions. Thank you. Thank you. Um, school facilities authority in support. >> Yes. Rick, would you support this bill? >> Um, Hawaii State Public's Charter School Commission in support. >> Chang Kim committee Edno Executive Director Charter School Commission

052and we stand on our testimony in support >> and Johnny May Al Perry in opposition. Is there anyone else wishing to testify on House Bill 2397? If not, do we have any questions? questions for SFA. >> Okay, >> Ricky. So in the in the um measure, the bill transfers school impact fees from Klehi to Alam Moana School impact District um to the school's impact fees sub account for the school's facility special fund for acquisition and renovation of one or more buildings in downtown Honolulu area to develop and expand kind pre kindergarten and charter schools. Can it also be used for renovation? No. >> No. Can we change a language to say that? No. >> No. Uh that's a exaction because it was taken for new capacity. >> Okay. So, it has to be. So, it

053can't be for any of our existing Khali schools that might need um what about if they needed like a portable or something? >> Uh that might make it because you're adding more capacity. >> Yeah. So, you could do that. >> Yeah. >> Thank you. >> Sorry. Please stay right there. How do you know how much is in the uh account for the Khi Alam Moana area? >> Yes. Um half a million in construction, 3 million in land, but because of the recent condo boom um in Kakako and that whole area, there's going to be probably an additional 8 million more being collected soon as the units get sold. So that's why the bill we anticipate based on all those construction being sold now it's the balance may balloon up to 15 million soon and that's

054why the bill has a $15 million transfer anticipating all those funds. See cuz the as the units get sold that's when the fees get paid for right uh so it it'll be a sizable amount of money by next year. >> Yeah. So it's funds that you can actually do something with, >> right? If we apply it to additional capacity, >> it would be a great for preschools for prek or it would be also great for a charter school. You just have to think of different uses on most of the money. >> So the cut off for charging developers for new development with impact fee is of this past year. Well, that's that's this is just the land component, but they don't pay for it until the units are sold. Right. The agreement kind of says

055when we sell the units because developers don't have that cash, >> but I'm just saying that. So, is the is the law now that they're going forward any new development of of buildings that had no no agreement would not get would not >> Yeah. It'd be all gone with But you have two two bills, right? One bill was just transfer the fee, let us spend it. the other bill um um house went went for it and said let's change it and they modified it on house draft one to a complete repeal. >> Right. So, >> but last year's bill didn't didn't we stop some of the affordable units or some units or >> Right. The problem with last year is this initial bill that now is a repeal was a cleanup bill because the law

056killed the construction component, but it wasn't clear that the exemption applied. So when it came out, it it was a conflict of law. >> Okay. >> The the bill sought to clean that up. The housing committee decided to just repeal the whole thing. >> Okay. >> Just start again. >> Okay. >> So now you have two different bills, right? one just to transfer fees in one specific district. One to just tabularasa. >> So if we pass the one then we don't need the second bill >> probably you would just sweep the fees transfer to us give us the expenditure ceiling and we try our best to spend it before we have to give it back. >> Okay. >> Clarification. So impact fees not necessarily needed to build new schools but additional units to a school

057to allow more students. What about facilities on a current school that would bring more students like a band room, music auditorium? I I don't know. Yeah, I think as long as it meets Well, you'd have to check with our esteemed council Randall Watt, but it's additional as long as it's increasing capacity, right? The risk is that a developer sues us and says, "Wait a minute, this exaction doesn't meet what you what you're looking for. >> Band kids, kids in the school that are taking bad. >> Yeah. Yeah, that would be harder. But additional capacity clearly, right? You're increasing the footprint of the school, too. >> Well, I guess what I'm getting at is that maybe more students from the area would go to that school if they had the facilities [music] that that student was

058looking for. >> Oh, for that programming. Yeah. >> Yes. >> Yeah. That would be a little more difficult to to justify. But again, it's just a risk, right, we want to take in terms of litigation. Okay. >> Further questions? >> Okay. If not, that brings us to the end of this. Okay. >> Hello again, Jesse Suki, Deputy Superintendent of Operations. I I believe the question on the past bill is germanine to this bill and it was raised. So, I just like to say that the impact fee money was transferred to SFA. It's a an account that is in DOE because they're an attached agency. Um SFA doesn't have its own. It's managed by DOE. So, I just wanted to make that clear. the school impact fee money, which is the subject of the other bill,

059was not transferred. Uh, and we we're asking you not to transfer. >> So, you're saying last year's bill to transfer the funds that the funds were in fact transferred? >> Yes, I confirmed. Yes. >> Transferred into what account? >> Um, they have an account in our fiscal office for SFA. >> Okay. So, Ricky, is that correct? >> Not my laws, but I'll try to confirm that. Can you get back to us in that? >> Unless there's other questions. Thank you. >> Okay. Thank you. That brings us to the end of this agenda. Um we're now in recess. Good afternoon. Welcome back to the joint hearing of the committees on housing and education. We're back for decision-making on the two bills on the agenda today. First bill is House Bill 1713 HD1 relating to school impact

060fees. Um, thanks for a robust discussion on this bill. Um, having conferred the chair's recommendation will be to pass this measure with amendments. We'll take the attorney general's suggested amendments to ensure the constitutionality of this bill. Section five, paragraph 1, will read, used within the school impact district for which the funds were collected to provide new or expanded school facilities serving students residing within that school impact district or two refunded to the developer if collected as a fee in lie or construction cost component impact fee and remain unexpended 20 years after the date of collection. The school facilities authority shall administer these funds in accordance with applicable law and ensure that expenditures remain reasonably proportionate to the impacts generated within the district. Further, we'll take the school facilities authorities amendments. First, to add a new

061subsection to HRS 205-4 to prevent return to the fair share exaction process K. Notwithstanding any law to the contrary, no petition or condition imposed by the commission pursuant to this chapter shall require exactions from a residential development for educational purposes. Next, to ensure existing educational contribution agreements remain in effect. Um, inserting the language, notwithstanding any law to the contrary, any existing educational agree contribution agreements or written agreements educated with executed with the Department of Education or the School Facilities Authority pursuant to chapter 302A part six subpart BRS prior to its repeal by this act shall remain in effect unless the parties to such an agreement mutually agree to terminate the agreement. Transfer. Next, we'll transfer the school impact fees into SFA's special fund. Next, we'll establish an expenditure ceiling to allow for the disposition of

062existing balances for priority education facilities projects, including the expansion of pre kindergarten facilities. We'll transfer the executed fair share ECAS to SFA uh and insert the language to do so and eliminate the legislative report requirement that would be moot with the repeal of school impact fees. And that's it. Uh and also in the committee report, we'll [music] note the amounts of money in unused fair share contributions and school impact fees and the duration of their existence. >> Members, do we have any discussion? >> Questions? Okay. So for the committee on housing, chair's recommendation for HB1 1713 will be to pass this measure with amendments. Chair votes eye. >> Members, HB1 1713 HD1. Chair's recommendations pass with amendment. Chair votes eye.ai. Vice chair votes. Senator Elephante. Hi. >> Senator Rhodess. >> Hi. >> Senator Favlla is

063excused. Chair recommendations adopted. Thank you >> for the uh committee on education. Same recommendation HB1713 HD1 to an SD1 as articulated by the housing chair. Any questions, discussion? If not, chair votai. >> Chair vzai, vice chair vzai, senator Fukumoto excuse. >> Senator Hashimoto, >> hi. >> Senator Deort, >> I >> measures adopted madam chair. >> Thank you. Our second bill is HP 2397 relating to school facilities. Having conferred the chair's recommendation will be to pass this measure with amendments to adopt the attorney general's amendment. Um again to ensure the constitutionality of this measure by inserting section a section the funds appropriated and expended under this act shall be used to serve students residing within the Klehi Alam Moana School Impact um district. Students residing outside the district may be enrolled only to the extent that

064space is available and in a manner consistent with the purpose of the fees under section 302A-1601 HRS. The expending agency shall administer these funds in accordance with applicable law ensuring that in district students are prioritized and that expenditures remain aligned with the impacts generated within the district. We'll also adopt the school facilities authorities amendment. There is appropriated out of the school impact fee sub account of the school facilities special fund the sum of 15,237,19 or so much thereof as may be necessary for fiscal year 2026 to 27 to acquire and renovate one or more buildings or acquire land and construct a new building in the 96813 zip code to develop and expand pre kindergarten and charter school capacity on page two lines 15 to 20. All right, any discussion members? Okay, seeing none for HB

0652397, chair's recommendation for the housing committee will be to pass this measure with amendments. Chair votes I. >> Members, chair votes I. Any members voting with reservations? Any members >> Reservations with Senator Rhodess. Any members voting no. With all others voting I, noting excuses of Senator Fell. Recommendations adopted. >> Thank you. >> And for the committee on education, same recommendation HB2397HD22 and SD1 as articulated by the housing chair. Any discussion? Any questions? If not, chair votes I. >> Senate Education Committee House Bill pass with amendments. Chair votes I. Vice Chair votes I. Senator Fukunaga excuse. Senator Hashimoto. >> I. >> Senator Decort. >> I wish adopted. Madam Chair. >> Thank you. There being no further business on the 1:00 agenda. Um this hearing will be adjourned and we'll be back in a few minutes or

066in a few moments for the 105 agenda of the housing committee. Thank you. Good afternoon and welcome back to the Committee on Housing. We are now u moving to our 10:05 p.m. hearing. Um, thank you all for your patience. We had a robust discussion in the 1:00 agenda. Our first measure today is House Bill 1711 relating to housing. Amends for the purposes of the HHFDC's rent to own program, the period during which the sales price of a dwelling unit is required to remain fixed from 5 years to an option period to be determined by the corporation. Our first testifier is HHFDC with support. >> Chair, vice chair, members. >> Thank you. followed by Hawaii Realtors in support, Hawaii's future in support, and Johnny May Al Perry with comments. Anyone else wishing to testify on House

067Bill 1711? If not, members, any questions or discussion? Okay, we'll move on next to HB 1715 relating to affordable housing, which authorizes HHFDC to designate certain forale units as permanently affordable housing subject to certain restrictions. clarifies that certain resale and occupancy restrictions apply only to projects developed prior to a certain date. Amends the definition of qualified resident for the purposes of HHFDC housing programs. Our first testifier is HHFDC in support. >> Support. >> Thank you. Followed by the office of Hawaiian Affairs in support. OSD in support. >> Aloha chair, vice chair, members of the committee. Dennis with the office of planning sustainable development. OPSD stands on written testimony support. questions. >> Thank you. Hawaii State Council on Developmental Disabilities in support. >> Let's stand our testimony in support. Thank you. >> Thank you. Um Hawaii

068Realtors with comments. Aloha Independent Living Hawaii in support. Housing Hawaii's Future in support. MUA Collaborative in support. Mortgage Bankers Association of Hawaii with comments. Aloha United Way in support. Johnny May El Perry with comments. And four individuals in support. Veronica Moore, Kai Swan, Leilani Kili Aba, and Christine El Andrews. >> Good morning, chair, vice chair, and committee members. Aloha. My name is Kaison. I'm a self- advocate with developmental disability. I supporting HB715 because affordable by housing is very important for people disability. owning a home with people make accessibility changes like grab bars, wider doors, or accessible bathrooms. Those changes help people live safely and stay their homes as they age. This bill helps keep some home affordable for a long time so people with disabilities have more housing opportunities. Please support HB715. Mahalo. I'm have

069any question you may have. >> Thank you very much. Any further uh testimony on HB1 1715? Okay, members, any questions? Okay, chair has a question for HHFDC. Um you saw the Mortgage Bankers Association of Hawaii testimony and you suggested some amendments and you also saw um the attorney general's testimony on this question of cloud on title as well. Um could you address these concerns? I did not see the attorney general's question, but I did see the mortgage mortgage bankers association's question. Um, the restriction that would be we would use to implement this program would be very similar to our buyback and short appreciation restriction uh whereby it is a it's in second position to the primary lender. So the first the mortgagees or the first lenders interest for closing the property would be protected. And

070we did provide some language that could be incorporated into the bill to explicitly protect the position of the lender. >> Okay. Um, thank you. Is there anyone from the attorney general's department here? Okay. If not, thank you. Any further questions? >> All right. All right, we'll move on to our next bill, House Bill 1727 relating to the rental housing revolving fund, which specifies the conditions upon which HHFDC may transfer monies from within the rental housing revolving fund to a sub account and between sub accounts of the fund, clarifies what constitutes a mixed income rental project for purposes of loans funded through the mixed income sub account, repeals the sunset date for the mixed income sub account, and authorizes the director of finance to deposit rental housing revolving funds into and appropriates funds into and out

071of the mixed income sub account. Our first testifier is HHFTC in support. >> Thank you. DBED in support, Hawaii Yimi in support, Housing Hawaii's future in support, Catholic Charities Hawaii with comments, and Johnny May Perry with comments. Is there anyone else? Anyone else wishing to testify on House Bill 1727? Okay. If not, we'll move to our next uh or members, any questions? Okay. If not, we'll move to our next bill. House bill 1733 relating to the housing loan and mortgage program. It increases the hoola multif family revenue bond authorization ceiling amount to continue financing affordable [music] rental housing statewide. Clarifies that revenue bonds treated as refunding bonds do not count against the authorized aggregate principal amount of the bond. Our first testifier is HHFTC in support. >> Testimony support. >> Thank you. OPSD in support.

072OPSD stands under written testimony in support. >> Thank you. Hawaii Realtors in support. AP Hawaii in support. Maui Chamber of Commerce in support. Aloha United Way in support. Housing Hawaii's future in support. And Johnny May El Perry with comments. Is there anyone else wishing to testify on HP 1733? Okay. If not, members, any questions? >> Questions? Chair for HH FDC. Hi, Mr. Minoami. So, currently, right now, it strikes out language on the cap at 3 million. Is that correct? >> That's correct. >> Um, and it leaves it as a blank appropriation. So, meaning do does HHFDC have a position or would you just prefer not to have a cap? >> Um, it could be a cap. I believe the the Senate version that crossed over earlier was for 4 million $4 billion, which would be

073fine. Okay, that'll be sufficient for several more years. Okay, thank you. Thank you, chair. >> Thank you very much. Any further questions? If not, we'll move to our next bill. HB um 1740 HD2 relating to HHFDC. Removes a prohibition against qualified residents for HHFDC approved projects holding a majority interest in land and removes the requirement that qualified residents demonstrate financial viability or ability to pay rent. amends exemptions from statutes, ordinances, charter provisions, and rules for certain housing projects developed by the corporation that satisfy certain conditions, including requirements related to employment, owner occupancy, and deed restrictions. Our first testifier is HHFTC in support. Um, did you already did you testify to that in your written testimony? Okay, thank you. >> Um, followed by ARP in support. Aloha Independent Living Hawaii in support. Church of the Crossroads

074in support. Hi, Gayen Fox for Church of the Crossroads. Uh, this bill is about the range of qualification uh to uh benefit from uh HHFDC uh funding. It's enlarging the number of uh people who are eligible for such funding. We are concerned about uh dropping from the qualifications that the person be uh the owner be uh with no other property be with a family with no other property. We're also concerned about the fact that the uh coming owner doesn't have to live in the unit. If we keep those conditions which are currently in the picture, we're more likely to help the local people who most need housing. If you already have other property, if you're not going to live in the unit, you're in a different bracket than the people that we're losing to the

075continent because we don't. >> Thank you very much. Next we have Holo Collaborative in support. >> Chair, vice chair, committee members. Um we are in support of this bill. Um as a survey came out last year underscored the fact uh that about 75% of people said that they might have to uh move to a less expensive state, many of whom within the next 5 years. And most of those site the high cost of housing as one of the reasons. All the more reason why it's great to have a bill like this, which is actually incentivizing the construction of housing that is dedicated for a local workforce and also does it in a way that does things like makes it easier for those folks to be able to go through the administrative process as well as

076to be able to move up the housing ladder um and stay in that housing. So, thanks very much for considering this and we hope you'll support the bill and we do also support HHFDC's movement. Thanks so much. >> Thank you. Next we have Title Guarantee of Hawaii HPM Building Supply Mana Up, Tory Richard and IO in support, followed by Hawaii Community Foundation in support, housing Hawaii's future in support, Hawaii Yimi in support, and several individuals Johnny May El Perry with comments. Um, Chavevel Davis in support, Veronica Moore in support, Ross Esokani in support, and council members Felicia Cen and Kipukai Kui of Kawaii in support. Is there anyone else wishing to testify on Senate bill on House Bill 1740? If not, members, do we have any questions? Um, chair does have a question for HHFDC.

077So, you heard the testimony from the Church of the Crossroads. Can you explain to the committee why it's important to remove these requirements from the existing statute? >> Yes, we understand the concerns and and for many years, HHFDC's rules did require that um qualified residents who purchase a home could not own any of the property. So, this is this is a very different program and this is a a change in um I guess our our mindset in trying to facilitate housing development. We're trying the intent is to help households move up the housing ladder. Right now, if a home buyer purchases a a unit, it could be a studio unit, they they can live there for 10 years, sell it at market rate, and then have to find something else, and they have to buy

078another unit on the open market. They could never benefit from another HFDC unit again after that. So, the intent here is that a home buyer could own property and move within the housing housing ladder. they could buy an affordable unit and at some point they could sell it and buy another affordable unit to move up the ladder. So to help them to stay uh help residents to move the housing ladder and not set more barriers than are needed. Essentially, are you saying that the agency is now trying to target maybe a higher income bracket of home buyer that may already exist, own existing real property, may even be collecting rent as a landlord um to your developments. Um, it's really to allow home buyers who have purchased an affordable unit to continue to benefit from

079units that are produced under our programs so that they don't feel like they're they're that they don't have an opportunity to move up within HHFDC's programs. Is there any restriction on the amount of real property that one of these home buyers could own? >> Um, currently I don't believe there is a restriction in this bill. >> Okay. So philosophically, you'd be saying that, you know, an extremely wealthy person who owns a lot of land would be able, you know, and may even be collecting significant rental income would be able to benefit from your developments by living in them, by buying them, even though they may be a wealthy landlord. >> Hypothetically, that could occur. Could you describe some of your projects that or could you describe why this is necessary to you know to expand

080the scope of your projects and your housing development statewide? >> Well, this bill really does facilitate the development of projects. Um many times projects are not feasible because developers are concerned that they cannot meet sales targets. Um they're concerned about the affordability restrictions being too steep. So under um under this bill there basically would could be no affordability restrictions. It would be very minimal if any. >> Are there social benefits to allowing? >> Oh certainly I mean one of the downsides I would say of affordable housing projects is that uh you know they segregate the segments of the community by income. Um so um it's it's it's a double-edged sword where you give preference or you require income have income requirements but the other hand um strictly enforcing strictly mandating occupancy by income requirements also

081creates segregation by income. So by removing that requirement, you're allowing ba basically um households from any income to buy into the project. >> Okay. Um well I think you you see that this is a weighty policy decision that we're >> it is not um this is a very different approach to providing housing and it's really the intent is to remove barriers uh that h that inhibit the development of housing. >> Thank you. Any further questions members? Okay. If not, thank you. Um we do have a limited amount of time left. I believe we're able to go to 2:45 p.m., but any bills that we won't be able to get to by then, um, we'll have to defer to Thursday. Um, our next bill on this agenda is going to be House Bill 1920 HD1 relating

082to the low-inccome housing tax credit. It clarifies that a partner or member that is a partnership or limited liability company that has been allocated a low-income housing tax credit may f may either further allocate the credit or transfer, sell, or assign all or a portion of the credit to any taxpayer. and it extends the sunset date of act 129 SLH 2016 relating to the low-inccome housing tax credit until 1231 2032 applies to taxable years beginning after 1231 2026. Our first testifier is HHFTC in support. >> Hawaii Department of Taxation with comments. department stands on our testimony comments. >> Thank you. Um, AP Hawaii in support. Aloha Independent Living Hawaii in support. American Council of Life Insurance in support. Hunt Capital Partners in support. Sugar Creek Capital in support. >> Chairman, Vice Chair, members of the

083committee, thank you for the opportunity to express our strong support for House Bill 1920 HD1. I'm Philip Gellman. I work with Sugar Creek Capital and affordable housing investor. We stand by our testimony and I'll briefly note that we have also suggested an amendment in response to and in support of DOAX's amendment. We believe the pushing the effective date back makes sense, gives them time to make sure that they've got their processes in place and the amendment that we've included just clarifies what is eligible starting in 2027 and trying to keep it simple for DOTAC so that they're not having to trace and track the original year of award and they're able to just process in an efficient manner the returns that are coming through to them from this program. Thank you for the opportunity to

084express our support. >> Thank you. We have NYOP Hawaii in support. >> Thank you. Avalon Development Company in support. Maui Chamber of Commerce in support. Mark Development Inc. in support. Tax Foundation of Hawaii with comments. And Johnny May El Perry with comments. Is that Tax Foundation of Hawaii? >> Yes. Char present. >> [snorts] >> Oh. Um, sorry. Wait. >> Can you hear me? Sorry. >> Yes, we can. >> Sorry. I'm in my car right now. Um, T Foundation of Hawaii stands on its comments. Thank you very much. >> Thank you. Anyone else wishing to testify on House Bill 1920? Okay. If not, members, any questions? question for HHFTDC or DOTAX. >> I don't know who might be able to best answer this. We'll start with you Mr. Minami. Um, who current how do you monitor

085the credits and transfers? Is that you or is that Dota tax? >> Currently, we do not monitor the credits or transfers. >> Okay, >> that would be Dota Tax. >> Do does D do have a >> response to this? >> I think I may have asked this question when the companion bill was here. Right now, this proposes an unrelated transfer. So, currently you have to um we don't manage the transfers, but if you're a partner or you you you belong your shareholder in this company that invests, then um you know there's like a K1 or um a certain document that will show who that shareholder partner is and that'll be tied to the um initial investment. >> So, DOAX would see that and track that. Yeah. >> Okay. Thank you. >> Um, thank you. Any

086further questions? Um, actually for Department of Taxation. So, did you get a chance to take a look at the proposed language from Sugar Creek Capital? >> Um, yes. So, the um it looks like that first sentence of that paragraph. Um, right. But you so the the credit must be filed within 12 months um that it can be claimed. So um yeah that that still will stand. So I'm not I'm not sure what that recommendation. >> So my question is th this transferability would apply only to future tax credits. >> Oh correct. Right. Right. not tax credits issued say last year, >> right? >> That's the intent. Does that language >> address that intent? >> Um, yes. So, anything any credits that can be claimed in 2026 will have to be filed in 2027. So, you

087know, correct. You cannot do you cannot file this tax credit for a credit that incurred in say 2025. You have to file it within 12 months. So that is correct. That will that will satisfy that request. I mean the project may have been going on for many years but by the time they get the form from the federal government and then the approval from HHFTC that would happen in say 2026 and then they include that with their tax return in 2027. >> Okay. But uh the language is slightly different from what we passed what this committee passed on SD1 version of SP 2675 the the Senate bill um which says for credits issued after July 1, 2026. This new proposed language says for credits claimed on tax returns filed for taxable years beginning after December

08831, 2026. Is that the same thing? Um so the fir uh well if you're going to file your return after um what is it? January 1, sorry. or that the one in this language is is it >> December 31st, 2026. >> Okay. So, if you're going to file it after December 31st, 2026, that credit may have happened in any time of 20 of 2026. But the first one, it sounds like the credit had to happen after July 1st, >> right? So, is that >> So, it's a little bit different. It's a little bit different, >> but in both cases, they would prevent somebody who got a tax credit issued in 2024. >> 2024 >> or 2025. >> Okay. Thank you. >> Any further questions, members? Okay. Okay, we'll move to our next bill, which is

089House Bill 2270 relating to the down payment loan assistance program, which amends the down payment loan assistance program by removing the prohibition on combined loan to value ratios, clarifying HHFDC's authority to allow payment waiverss, and interest forgiveness, authorizing financial institutions, mortgage lenders, and other loan originators to originate down payment loans, and reducing the borrower's required personal contribution toward the down payment. Our first testifier is HHFDC in support in support. >> Thank you. Um and several others. OHA in support, [music] DBED in support, OPSD in support, Hawaii Realtors in support, ARP Hawaii in support, Mortgage Bankers Association of Hawaii in support, Hawaii Credit Union League in support, and Johnny May El Perry with comments. Is there anyone else wishing to testify on House Bill 2270? Okay, members, do we have any questions? Okay, if not, we'll

090move to House Bill 2385 relating to housing, which authorizes HHFDC to approve and certify get exemptions for certain housing development projects developed under county housing incentive programs. Our first testifier is Hawaii Department of Taxation with comments. >> Thank you. HHFDC in support. in support. >> AP in support. Grassroot Institute of Hawaii in support. Maui Chamber of Commerce in support. Avalon Development Company LLC in support. Center Urban Real Estate in support. Tax Foundation of Hawaii with comments. >> Tax Foundation stands on its written comments. Mahalo. >> Thank you. and comments from Johnny May El Perry and support from William Coron. Is there anyone else wishing to testify in House Bill 2385? Okay, if not, um members, do we have any questions? Okay, seeing none, we'll move to our next bill, which is HP 2515 relating to

091workforce housing, which establishes the workforce housing regulatory sandbox program, establishes an advisory council within the workforce housing regulatory sandbox program to advise on environmental and cultural practices within specific developments, requires a report to the legislature, and appropriates funds. Our first testifier is HHFTC in support. >> HFC stands by his testimony in support. >> Followed by HPHA in support. >> HPHA stands on his testimony. >> Thank you. HCDA in support. OPSD in support. >> OPSD stands on it. >> Thank you. Office of Hawaiian Affairs with comments. >> Chamber of Commerce Hawaii in support. >> Thank you. Maui Chamber of Commerce in support, Housing Hawaii's Future in support, Hawaii Island Chamber of Commerce in support, and Joy Barua in support. Is there anyone else wishing to testify on House Bill 2515? If not, members, do we have

092any questions? Okay. Um, seeing none, our last bill today is HB1 1724 relating to HHFDC. makes a dwelling unit revolving fund equity pilot program permanent with modifications that include changing the method of computation of interest for purchasers of certain real property. Expands the use of proceeds in the de in the derf to include purchasing equity and for sale housing development projects and interim primary or secondary financing. Exempts dispersements from the affordable housing revolving fund from appropriation and aotment requirements. Our first testifier is HHFTC in support. >> Thank you. OPSD in support. >> Thank you. DBED in support. Halu Collaborative in support. Housing Hawaii's Future in support. Hawaii Community Foundation in support. Is there anyone else wishing to testify on House Bill 1724? Not members. Do we have any questions? Okay. Um if not members, are

093we ready to go into some decision-m? Okay. We don't have a lot of time, so we're going to try to get through as much as we can. Our first bill is House Bill 1711 relating to housing. Um chair's recommendation will be to pass this measure with amendments. The amendment will be to further defect the date. Any questions or discussion? If not for HB1 1711, chair's recommendation is to pass with amendments. Chair votes I. Members, chair votes I. Vice chair votes I. Senator Elephante >> I. >> Senator Rhodess. >> Senator Fella is excused for this measure and all others. Chair recommendations adopted. >> Thank you. Um HP1 1715 relating to affordable housing. Um sounds like HHFDC didn't get a chance to fully vet the concerns of the attorney general and the mortgage bankers association. So we'll

094be deferring decision-m on this measure to Thursday, March 19th, 107 p.m. in this room 225. Our next bill is House Bill 1727 relating to the rental housing revolving fund. Chair's recommendation will be to pass this measure with amendments. We'll be um removing section one of HB1 1727 and adding section 1's language directly in HRS 2011H-202. We'll expressly include any and all forms of financing, including but not limited to equity, credit enhancement, and collateral. We'll prioritize perpetual affordability. We'll prioritize applicants that have a demonstrated history of early repayment to the RHRF. will require RHF loans applied for or awarded after December 31, 2026 to be subject to review and renegotiation when any mortgage debt to which the loan is subordinate is refinanced or retired. Authorize HHFTC to use monies in the fund that have been reserved

095or awarded by the corporation for specific projects but have not yet been encumbered to fund other rental housing projects or for other authorized purposes. of the fund subject to several restrictions. We'll authorize HHFTC to secure a line of credit, standby bond purchase agreement or other credit enhancement facility to provide liquidity to the fund. Insert a definition for mixed income rental project. Authorize certain monies to be deposited into the mixed income sub account of the rental housing revolving fund. Authorize monies in the mixed income sub account to be used for any and all forms of financing. Insert an appropriation amount of $100 million to be deposited into the mixed income sub account. Insert an appropriation amount of $100 million out of the mixed income sub account. inserting an effective date of 20 of July 1, 2050

096and also technical and non-substantive amendments. Members, any questions or discussion? Okay. If not for chair uh for house bill 1727, chair's recommendation is to pass with amendments. Chair votes I. >> Members, chair's recommendation is to pass with amendment. Chair votes I. Any members voting with reservations? Any members voting no without others voting I. Recommendations adopted. >> Thank you. Our next bill is House Bill 1733 relating to the housing loan and mortgage program. Chair's recommendation will be to pass this measure with amendments. We'll change the authorization ceiling to 4 billion. We'll require HHFTC to produce a report documenting how it will produce enough housing at the 60 to 140% AMI levels to meet demand statewide in the most financially and land efficient manner possible, including the selection of specific parcels where the housing will be built.

097And um we'll also note in the committee report that the unprecedented state funding over the last decade for LITC housing development has not ameliated the housing shortage for the great majority of Hawaii residents and that we need to maximize the efficiency of the usage of the enormous taxpayer resources that are currently being dedicated to housing. Members, do we have any discussion or questions? If not for House Bill 1733, chair's recommendation we to pass this measure with amendments. Chair votes eye. >> Members chair votes I. Any member voting with reservations? Any members voting no. With all others voting, I recommendations adopted. >> Thank you. For House Bill 1740 relating to the housing loan and mortgage program, chair's recommendation, we'd pass this measure with amendments. We'll take HHFDC's amendment to clarify section 2011H-38A2B as follows. Notwithstanding the

09810-year occupancy requirement in sections 2011H-47 and 21H-49. and will further note in the committee report that 21H-49 already expressly includes serious illness of the person as a hardship circumstance exception to the occupancy requirement. Any discussion or questions members? If not for Senate for House Bill 1740, chair's recommendation is to pass with amendments. Chair votes I. >> Members, chair votes I. Any members voting with reservations? Any members voting no without others voting I. Recommendations adopted. >> Thank you for House Bill 1920 HD1 relating to the low-inccome housing tax credit. Chair's recommendation will be to pass this measure with amendments. Um we'll adopt Sugar Creek Capital's amendment for section two uh in section one section 235-110.8 HRS to be amended by amending subsection B to read for credits claimed on tax returns filed for taxable years beginning

099after December 31, 2026. And we'll also note in the committee report [music] that the the inefficiency of financing housing projects with a state tax credit that sells for 60 cents on the dollar. It'd be more fiscally efficient to collect the full value of the tax and make a direct appropriation to projects the legislature deems to be in the state interest. Members, any discussion or questions? Seeing none for HB1 1920 HD1. Chair's recommendation is to pass this measure with amendments. Chair votes I. >> Members, chair um recommendations um pass with amendments. Chair votes I. Any members voting with reservations? Any members voting no without others voting I recommendations adopted. >> Thank you. Our next measure is House Bill 2270 relating to the low-inccome housing tax credit. Um the chair's recommendation will be to pass this measure

100with amendments. We'll take HHFTC's recommended amendments to amend section 20H-161A as follows. Um, the corporation may make down payment loans either directly or through a nonprofit organization as defined in section 454F-1 to eligible borrowers who qualify for loans under section 21H-162. The down payment loan to any one borrower shall not exceed 15% of the purchase price or appraised value of the residential property or $60,000 whichever is less. The interest rate on the loan shall be established by the corporation based on federal program requirements and market conditions. will further add a new section 3 amending 21H-1631HRS. Section 3 is amended 21H section 3 section 201H-163 HRS is amended by amending subsection 1 to read as follows. The borrower shall expend no portion of the borrower's down payment loan for purposes other than to make a down

101payment for the purchase of a residential property or to pay closing costs, prepaids, and reserves pursuant to the purchase of the residential property for which the down payment loan is provided. Members, any questions or discussion? Seeing none, the recommendation for HB 2270 HD1 is to pass with amendments. Chair votes eye. >> Members chair recommendations pass with amendment. Chair votes I and members voting with reservations. Any members voting no without others voting I recommendations adopted. >> Thank you for HB2385 relating to housing. Chair's recommendation will be to pass this measure with amendments. Um we'll adopt DOAX's amendment to amend the effective date to January 1, 2027 to provide sufficient time to make necessary form and instruction changes. We'll in insert a sunset after 5 years. We'll adopt SMA's technical non-s substantive amendments for the purposes of

102clarity and consistency. will uh adopt center urban real estate's amendments to allow 20 HRS 21H-36A5 to include get ravers for rental income by deleting shall apply to contracting only and um and further will reumber uh paragraph six developed under a county assistance program de approved by the corporation where at least 50% of the available units are for households with incomes at or below 100% of the area median family income is determined by the United States Department of Housing and Urban Development. Further, we'll also amend by requiring that housing project requiring that a housing project subject to a regulatory agreement with an affordability requirement qualify for both get and RPC RPT exemptions for the duration that the housing project remains affordable. Members, any questions or discussion? >> That's right. And then thank you. And the committee

103report will also note the committee's reluctance to rely on giving away free money to developers to stimulate housing construction and the need to focus on more fiscally sustainable programs that compensate the state and its taxpayers appropriately for their investment. All right. Any further discussion or questions? >> Um question or clarification. So you're are you cleaning the date or is still defective date? >> There will still be a defective date. We'll just adopt DOTA tax's um suggestion of an effective date to provide s sufficient time to make necessary form and instructional changes. >> Understood. Thank you, chair. >> Thank you. >> Further questions? Okay. If not for HB2385, chair's recommendation is to pass with amendments. Chair votes eye. >> Members, chair recommendations to pass with amendments. Chair votes. Any members voting with reservations? Any members voting

104no without others voting? I recommendations adopted. Thank you for HB2515 HD2 relating to workforce housing. Chair's recommendation will be to pass this measure with amendments. We'll adopt OHA's amendment to include the chairperson of the board of trustees of the office of Hawaiian affairs as a member of the advisory council in section 4 subsection B. We'll also adopt HHFTC's suggestion to expand the waiver authority to include certain state approval processes including um the state historic preservation division and department of health to maximize program impact and um in the committee report we'll further note the appropriation request of $1 million. Do we have any other questions or discussion members? If not for HB2515 chair's recommendation will be to pass with amendments. Chair votes eye. Members, sharers, recommendations is passed with amendment. Share votes I any members voting

105with reservations. Any members voting no without others voting I. Recommendations adopted. >> Thank you for house bill 1724 HD2 relating to HHFDC. Chair's recommendation will be to pass this measure with amendments to further defect the date. We'll also take SMAS's technical non-substantive amendments for the purposes of clarity and consistency. Are there any questions or discussion members? Okay. If not for HB 1724 HT2 chair's recommendation is to pass with amendments chair votes I >> members chair recommendations pass with amendment chair votes I any voting with reservations any members voting no without others voting I recommendations adopted >> thank you very much thank you all for your stamina and for your patience this hearing is ajourned