H.B. NO.














relating to housing.





SECTION 1. The legislature finds that one of the most difficult problems that low income individuals, families, kupuna, and the homeless residing in transitional or temporary housing face in seeking permanent housing is the necessity of paying a security deposit in addition to paying the first month's rent. It is often impossible to meet both the security deposit requirement and the first month's rent because their savings are nonexistent or depleted due to unemployment or underemployment. Contributing to this difficulty is Hawaii's high cost of living, particularly in the area of housing. A program to guarantee or pay both the security deposit and the first month's rent for struggling low income residents will help the State's poor in obtaining adequate and stable permanent rental housing.

SECTION 2. Chapter 201H, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"201H‑   Rental deposit loan program. (a) There is established within the corporation the rental deposit loan program to assist low income individuals, families, the elderly, and homeless families and individuals in obtaining rental housing by providing loans for security deposit and first month's rent payments.

(b) The corporation shall provide grants pursuant to chapter 103F to counties and nonprofit corporations for the administration of the program.

(c) All funds provided to recipient counties and nonprofit corporations shall be placed into revolving loan funds and deposited in a bank or savings account that is separate from all other funds of the recipient. Each fund and interest earned on amounts in the fund shall be used only as payment of associated bank charges for the maintenance of the fund and for payment of the security deposit and first month's rent required by a residential rental property owner as a condition for entering into a rental agreement with a prospective tenant.

(d) Prospective tenants who are eligible to participate in the rental deposit loan program shall be limited to low income individuals, families, the elderly, and homeless individuals who are residing in substandard or shared housing, an emergency shelter or transitional housing operated by a county or nonprofit corporation, or to families who are temporarily residing in a park, car, or are otherwise without adequate shelter.

(e) The recipient county or nonprofit corporation shall make a determination regarding each person's or family's eligibility to participate in the rental deposit loan program and availability of a local rental unit for that person or family. A determination of eligibility shall include:

(1) A determination that the person or family resides in substandard or overcrowded housing, is homeless, or is in a shelter or transitional housing; and

(2) A verification of income and that the person or family can reasonably make the monthly rental payment but does not have the financial resources to make the rental security deposit, first month's rent, or both.

(f) A three-party contract shall be required of persons participating in the rental deposit loan program. The parties to the contract shall be the county or nonprofit corporation operating the program on behalf of the corporation, the tenant, and the rental property owner or the owner's agent. The contract shall include but is not limited to the following terms:

(1) Agreement by the rental property owner, or owner's agent, to accept the security deposit and first month's rent from the corporation's contracted vendor on behalf of the family or individual who will occupy the premise;

(2) Upon execution of the agreement, the corporation's contracted vendor shall encumber or reserve funds through the program;

(3) Agreement by the tenant to a payment schedule of a specific number of months not to exceed twenty-four months, at which time the deposit held by the owner or owner's agent would be returned directly to the tenant upon vacating the premise;

(4) At any time during the term of the lease agreement, any claims made by the owner or owner's agent against the tenant shall only be against the tenant and not against the corporation's contracted vendor; and

(5) If a deduction from the security deposit is required, the deduction shall be taken only to the extent permitted by the contract and in the manner provided by law, including notice to the legal agency or organization. The tenant shall have no direct use of security deposit funds during the term of the repayment agreement.

(g) When selecting grant recipients, preference shall be given to county agencies and nonprofit organizations that have experience in managing affordable housing projects or developing and managing rental deposit loan programs.

(h) A county or nonprofit corporation receiving a grant pursuant to this section may use a portion of the grant for the costs of administering the rental deposit loan revolving loan fund program. The corporation shall approve the amount so used prior to expenditure, and the amount may not exceed ten per cent of the allocation.

(i) The staff of the grant recipient shall be responsible for soliciting housing opportunities for low income and homeless families and persons, coordinating with local low income rental property owners, making determinations regarding the eligibility of prospective tenants for the program, and providing information to prospective tenants on the tenant-property owner relationship, appropriate treatment of property, and the importance of timely rental payments. The staff of the grant recipient assigned to administer the program shall be reasonably available to property owners and tenants to answer questions or complaints about the program.

Grant recipients shall work closely and coordinate with homeless services provider organizations.

(j) Grant recipients shall keep statistical records on families and individuals served, and provide reports quarterly to the corporation."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $5,000,000 or so much thereof as may be necessary for fiscal year 2014-2015 for the establishment of the rental deposit loan program to assist low income and homeless individuals and families in obtaining adequate and affordable housing.

The sum appropriated shall be expended by the Hawaii housing finance and development corporation for the purposes of this Act.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on January 1, 2015; provided that section 3 shall take effect on July 1, 2014.








Report Title:

Housing; Affordable Housing; Rental Deposit Loan Program; Appropriation



Establishes a rental deposit loan program within the Hawaii housing finance and development corporation to assist low income and homeless individuals and families in obtaining affordable rental housing.




The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.