SB24 creates a new legal framework in Hawaii for “limited-profit housing associations,” which are domestic corporations approved by a newly established Limited-Profit Housing Council. The bill’s stated purpose is to create long-term housing exclusively for qualified residents. To do that, it sets up a council within the Department of Business, Economic Development, and Tourism to oversee approvals, governance, rulemaking, and compliance, with representation from state housing agencies, the attorney general, taxation, and county housing offices.
The bill imposes operating rules on these associations. Directors and officers must be independent of contractors and free from financial relationships with them, and associations must maintain their primary purpose as housing for qualified residents. The bill limits profits, requires revenues to be held in a revolving fund for authorized activities, restricts dividends, and allows only limited business activities unless the council approves additional housing-related services. It also authorizes council review of mergers, consolidations, divisions, share exchanges, and termination of association status, and it allows courts to review disputed fixed prices charged to tenants or buyers.
SB24 also makes several changes to state tax and property-transfer law. It excludes income earned by a limited-profit housing association from taxation under chapter 235, subject to later taxation if income is not used for primary business activities within five years and cannot be verified. It adds the new council-administered association income exclusion to the list of items reviewed under section 23-94, and it exempts deeds and other real-property instruments involving these associations from the conveyance tax under section 247-3. The bill further exempts the administrator for the limited-profit housing council from civil service coverage under section 76-16.
The general sentiment reflected in the available voting history is favorable. The bill passed both the Senate Housing Committee and the Senate Commerce and Consumer Protection Committee on January 29, 2025, each by unanimous votes and with amendments, suggesting broad support for the concept while still refining the proposal. No committee transcripts were provided, so there is no recorded floor or committee debate to indicate opposition in the available materials.
The main points of potential contention are likely to involve the bill’s regulatory structure and tax treatment. The council’s authority over approvals, pricing, mergers, and termination gives the state significant oversight, which may raise questions about administrative burden or flexibility for developers. The restrictions on profits, the requirement that directors and officers have no financial relationship with contractors, and the tax exclusion for association income may also draw scrutiny from those concerned about feasibility, enforcement, or the scope of the tax benefit. At the same time, supporters appear to view these limits as necessary to ensure housing remains affordable and dedicated to qualified residents.
SB24 would add a new chapter to the Hawaii Revised Statutes governing limited-profit housing associations and create a new Limited-Profit Housing Council in chapter 201. It would also amend the tax code to exclude certain association income from taxation, amend the conveyance tax statute to exempt real-property transfers involving these associations, and exempt the council administrator from civil service coverage. The bill would therefore affect housing corporations, state and county housing agencies, the Department of Taxation, and property transactions involving qualifying housing entities.
The available voting history indicates strong support: both the Senate Housing Committee and the Senate Commerce and Consumer Protection Committee passed the bill unanimously and with amendments. That pattern suggests the concept was broadly accepted, while members still wanted to refine the bill’s structure and implementation details. No transcript excerpts were provided, so the record does not show specific verbal support or opposition beyond the favorable committee votes.
Likely areas of contention include the extent of state control over private corporate governance, the requirement that directors and officers be independent of contractors, the limits on profits and dividends, and the tax exemptions granted to these associations. Critics could question whether the council’s approval authority over mergers, pricing, and business interruptions is too restrictive or administratively complex, while supporters would likely argue these safeguards are needed to preserve the bill’s affordable-housing purpose and prevent profit-driven diversion. The bill’s tax exclusions and conveyance-tax exemptions may also be debated as incentives versus revenue losses.