Top 10 Bills to be Aware of During the 2020 Legislative Session

Top 10 Bills to be Aware of During the 2020 Legislative Session

The 2020 Legislative Session officially opened on January 15, 2020. Since the legislative session began, thousands of bills have been introduced with multiple measures impacting affordable housing, real estate, taxation, and the cost of living. Among the measures introduced, the following represent the top 10 bills to be aware of as the Session continues.

Top 10 Bills

1. School Facilities and Highways Supplemental Funding (HB 1990 HD2): This measure reallocates a portion of the general excise tax revenues to a special fund to provide additional money to the department of education for school facilities and to the department of transportation to protect the state highway system from the threat of inundation and damage caused by climate change. The intent of the measure may be beneficial to support public schools, however, additional funding allocated through a special fund may reduce the amount of general funds available for other priorities, such as affordable housing.
2. State Historic Preservation Division ("SHPD") Review Process (HB 2446 HD1): This measure requires the SHPD 60 days to complete their review of proposed state projects, projects on privately owned historic property, and projects affecting historic properties that involve affordable housing. If the SHPD is unable to do so in that time, the agency would be required to procure third-party consultants to conduct the review. Currently, the review process takes several months to a year, which increases costs and slows momentum on projects. This measure would mandate an acceleration of the SHPD review process.
3. Restriction on Dividends Paid Deduction for Real Estate Investment Trusts ("REIT") (HB 2605 HD1): This measure disallows the dividends paid deduction for REITs. HB 2605 HHD1 would make Hawaii one of only two states to disallow the dividends paid deduction. REIT investments have resulted in billions of dollars in construction activity, the creation of local jobs, and a strong local economy. This measure may increase the cost of doing business and negatively impact the level of interest in future investment in Hawaii.
4. Fast-Tracking of Discretionary Permit Approval Process (SB 2053 SD1): This measure requires a county to approve, approve with modification, or disapprove an application for a discretionary permit necessary for a housing development project that uses moneys from the rental housing revolving fund. SB2053 SD1 provides for automatic permit approval if a county does not make a timely decision on an application. This bill exempts affordable housing projects from the environmental impact statement ("EIS") requirements. SB 2053 SD1 mitigates risk and delays for affordable housing projects associated with EIS requirements by expediting the permitting process.
5. Inclusionary Zoning Prohibition (SB2212 SD1): This measure prohibits any law, ordinance, or rule from imposing an inclusionary zoning requirement on housing offered exclusively for sale in perpetuity to buyers who are (1) residents of Hawaii; (2) will be owner-occupants; and (3) do not own any other real property. This measure would allow 100% of projects to be sold to Hawaii residents at market rates, so long as the properties are restricted under the above criteria in perpetuity. This measure could make housing affordable for homebuyers who do not qualify for subsidies yet cannot afford market rate homes.
6. Constitutional Amendment Granting Power to Establish Real Property Tax Surcharge (SB 2074 SD1): This measure proposes an amendment to the Constitution of the State of Hawaii to authorize the Legislature to establish a tax surcharge on real property within one mile of any rapid transit station to fund infrastructure improvements to support the transit station or new residential or commercial development in those areas. The purpose, intent, structure and language of this bill is very similar to SB 2922, SD1, HD1 (2018) which was invalidated by the Hawaii Supreme Court in 2018. This measure will likely result in an increase in property tax on homeowners.
7. Time Share Owner Personal Information Disclosure (SB 2011): This measure requires that a plan manager or board of directors keep an accurate and current list of the names, mailing addresses, and electronic mail addresses of board members and time share owners association members. It requires that the list of board members and association members be made available to owners under certain terms. This measure compromises the time share unit owner's high expectation that his or her personal information will be kept private. The potential dissemination of a time share unit owner's personal information will leave them vulnerable to solicitation by "timeshare exit firms" and fraudulent activity.
8. Seller Disclosures for Properties Vulnerable to Sea Level Rise (SB 2671 SD1): This measure requires that mandatory seller disclosures in real estate transactions include identification of residential real properties lying within the sea level rise exposure area designated by the Hawaii climate change mitigation and adaptation commission. This measure protects prospective purchasers by requiring disclosure that a property is susceptible to sea level rise.
9. Identification of Land for Affordable Housing (SB 3104 SD1): This measure exempts from the definition of public lands, lands set aside by the governor or leased by any state department or agency to the Hawai‘i Housing Finance and Development Corporation ("HHFDC") for a period not to exceed ninety-nine (99) years, for the primary purpose of developing affordable housing. It requires the HHFDC to identify state lands that can be developed for 99-year leasehold units. It also appropriates $75 million in general obligation bonds to develop affordable housing infrastructure on the neighbor islands. This measure mandates the identification of lands to support the expeditious and efficient development of affordable housing in Hawaii.
10. Proposed ALOHA Homes Affordable Housing Program (SB 2946 SD1): This measure establishes the ALOHA homes program to develop low-cost homes on state-owned and county-owned land in urban redevelopment sites to be sold in leasehold by the HHFDC to qualified residents. SB 2946 SD1 requires HHFDC to gain legislative approval before disposing of certain lands, and transfer a number of ALOHA homes units to the Department of Hawaiian Home Lands or Office of Hawaiian Affairs. This measure develops a program that would increase the number of available affordable housing units and aid in providing housing for native Hawaiians.

As the legislative session continues these bills will need to be passed via a final floor vote on third reading in their respective originating house in order for the bill to cross over prior to the deadline on March 5, 2020.