Hawaii targets housing reform as Legislature returns

by Carolyn Grindrod, The Center Square, Jan 17, 2023 

(The Center Square) – Hawaii’s Legislature returns Wednesday for its 32nd legislative session. 

With a total of 156 bills on the current docket to be introduced in the House of Representatives and Senate collectively, lawmakers in both Chambers have set their sights on addressing a key concern for many Hawaii residents – Aloha State’s housing crisis – as a top priority in this year’s legislative go-round. 

According to previous reports from the state’s Department of Business, Economic Development and Tourism, Hawaii’s affordable housing market needs an extra 64,700 units to meet the expected demand projections by 2025, with 21,000 homes projected to be needed in Oahu. 

At least three Senate-proposed bills seek to help current and potential homeowners and local renters.

Senate Bill 31 would increase the property exemption amount for attachment and execution from $30,000 to $90,000 for property owned by the head of a family or for individuals 65 or older. An additional increase from $20,000 to $60,000 is proposed for other persons who hold at least one parcel of real estate property in Hawaii. 

According to SB31, sponsored by Senator Carl Rhoads of District 13, this property exemption was last increased in 1978, and since that time, inflation has risen. The bill by Rhoads was previously introduced and passed in the Senate in 2021 but did not make it off the House floor. 

Another Senate bill seeks to make it more attractive for property owners to sell real estate to locals. SB34, sponsored by Senator Brenton Awa of District 23, is seeking to amend Hawaii’s current tax withholdings for real estate sales to non-Hawaiian residents to as much as 75%. 

Currently, taxes withheld on amounts realized by nonresidents from dispositions of Hawaii residential properties are 7.25% and the proposes this would remain the same amount if sold to a state resident.  

Another bill drafted by Rhoads, SB55, looks at increasing tax credits for low-income renters. If passed, the bill will increase this tax credit amount every three years based on the consumer price index.

“The legislature finds that homelessness is a serious problem in Hawaii, due in part to the high cost of housing in the State,” says Rhoads in SB55. “Since 1977, the state has made tax credits available to assist eligible renters. The legislature finds that this tax credit is the third most commonly used among Hawaii residents … Since 1989, the cost of housing has increased by 390%. Therefore, it is appropriate to adjust the eligibility requirements for the income tax credit for low‑income household renters.”

Currently, the House of Representatives has no proposed bills addressing the housing crisis, but that is likely to change, as both legislative bodies have voiced support for addressing the state’s housing situation. 

In a recent release, the Senate shared it support of finding solutions for affordable rent and purchasing options for Hawaiian residents by “increasing transit-oriented development around major infrastructure projects across the state, developing workforce housing solutions to support residents employed in high demand sectors; [and] seeking opportunities for residents in middle-income brackets to purchase homes.” 

Meanwhile, the House majority took to Facebook to announce its support of finding solutions for affordable housing. “Hawaii’s cost of living is a barrier to financial security for many of our residents. The House Majority will continue to support working families by providing financial relief to those who are struggling to make ends meet in our state,” the caucus Facebook page states.