Bills of Concern from the 2021 Legislative Session

Bills of Concern from the 2021 Legislative Session

As the dust begins to settle after an eventful 2021 Legislative Session there are several bills on Governor Ige's desk that are of concern to developers, hotel owners, and landowners in Hawaii. The 2021 session was adjourned on April 29. By the end of the session, only 73 bills passed both chambers and were transmitted to Governor Ige for signature. Among the measures passed by the Legislature are the following:

  1. HB 58 CD1- Relating to State Funds – This measure will significantly raise conveyance taxes for properties valued at $4 million and up.Throughout the legislative session, the bill was promoted as a "tax the rich" measure intended to increase the tax contributions of wealthy landowners. Developers and commercial landowners collaborated during session to carve out an exception for "commercial properties" as defined by the City and County of Honolulu. The exception does not, however, cover several types of properties including hotel, industrial, and agricultural properties, even if utilized for commercial purposes. The significant increases to conveyance taxes will significantly increase costs for developers and commercial landlords, burdening the sale of units and commercial leases on nonexempted properties. Affordable housing developers are concerned as well, as the impact of the proposed conveyances tax increases may impair a project's financial viability. Concerns surrounding the language of HB 58 are growing given the broader impacts of the bill. As the Governor understands the concerns of property owners, the bill may be included on the Governor's intent to veto list which will be released on Monday, June 21st. 
  1. HB 862 CD1- Relating to State Government – HB 862 enables each of the counties to establish their own transient accommodations tax ("TAT") not to exceed 3% and significantly reduces HTA funding by repealing the allocation of TAT to HTA. The increase in TAT at the county levels will significantly increase costs for the tourism industry. Stripping away HTA's funding poses a major risk to the branding and marketing of Hawaii as a top-tier destination. It appears that HB 862 may also be included on the Governor's intent to veto list. Since HTA's funding is interlaced within HB 862, if vetoed, the Legislature may need to convene a special session to address the budget shortfall or the administration will need to find other sources of funding to balance the budget. 

  2. SB 474 – Relating to Real Property Transactions - This bill requires a new mandatory seller disclosure for real estate transactions to include identification of residential properties lying within the sea level rise exposure area. Developers and property owners selling property in sea level exposure areas need to be aware of this disclosure requirement and insure it is included in sales documents. This measure garnered resounding support from community members, State agencies and realtors. HB 474 represents Hawaii's proactive approach to addressing issues raised by climate change, and will likely be signed into law.

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