SB826 amends Hawaii’s low-income housing tax credit statute to clarify who may be treated as a housing developer for purposes of claiming the credit. As amended, the bill specifies that a taxpayer may claim the credit against Hawaii net income tax liability, and that the credit may be allocated by a partnership or limited liability company in any manner agreed to by the partners or members, so long as the recipient is recognized under state law. It also clarifies that a taxpayer may claim the state credit even if the taxpayer is not eligible for the federal low-income housing tax credit under section 42 of the Internal Revenue Code.
The bill’s reported House draft further states that the School Facilities Authority is not eligible as a housing developer for purposes of the low-income housing tax credit. The measure is set to take effect on July 1, 3000, which is a placeholder effective date commonly used in Hawaii bills to avoid immediate enactment while the measure is under consideration.
Impact
SB826 would amend section 235-110.8, Hawaii Revised Statutes, governing the low-income housing tax credit, by broadening and clarifying allocation rules for partnerships and LLCs and by decoupling eligibility for the state credit from eligibility for the federal LIHTC. In its House draft, it would also exclude the School Facilities Authority from qualifying as a housing developer for this credit. The bill affects taxpayers, developers, partnerships, limited liability companies, and entities involved in affordable housing projects, while leaving the underlying tax credit structure in place.
Sentiment
The available voting history shows strong support for the bill in committee, with unanimous passage in Senate Housing and a 13-0 vote in Senate Ways and Means after amendments. No committee transcripts were provided, but the recorded votes suggest broad agreement on the bill’s policy direction and little visible opposition at the committee stage.
Contention
The main point of potential contention is the House draft’s clarification that the School Facilities Authority is not eligible as a housing developer for purposes of the credit, which narrows the set of entities that can benefit from the program. More generally, the bill’s changes to partnership and LLC allocation rules and its separation of state-credit eligibility from federal LIHTC eligibility could raise questions about who may claim the credit and how it may be structured, but the committee votes indicate these issues were not strongly divisive in the Senate.