S.B. NO.



S.D. 2


H.D. 1














SECTION 1. The legislature finds that one of the most difficult problems faced by low-income individuals, families, kupuna, and the homeless residing in transitional or temporary housing 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 for these persons 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 that provides loans to fund 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 346, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"346‑    Rental deposit loan program. (a) There is established within the department 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 department shall contract nonprofit organizations pursuant to chapter 103F for the administration of the program.

(c) All funds provided to recipient nonprofit organizations 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 nonprofit organization. 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) Persons who are eligible to participate as tenants in the rental deposit loan program shall be limited to low-income individuals, families, the elderly, and homeless families and individuals who are residing in substandard or shared housing, an emergency shelter, or transitional housing operated by a nonprofit corporation, or to families who are temporarily residing in a park, car, or are otherwise without adequate shelter.

(e) The recipient nonprofit organization 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 is reasonably capable of paying the monthly rental payment but does not have the financial resources to pay the rental security deposit, first month's rent, or both.

(f) A contract shall be required for participation in the rental deposit loan program between the nonprofit organization operating the program on behalf of the department and the tenant. The contract shall include but not be limited to the following terms:

(1) Agreement by the tenant to a payment schedule of a specific number of months not to exceed twenty-four months; provided that the deposit held by the owner or owner's agent shall be returned directly to the tenant upon vacating the premises;

(2) The nonprofit organization agrees to encumber or reserve funds through the program upon execution of the agreement;

(3) 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 nonprofit organization; and

(4) 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 nonprofit organizations that have experience in managing affordable housing projects or developing and managing rental deposit loan programs.

(h) A nonprofit organization receiving a grant pursuant to this section may use a portion of the grant for the costs of administering the rental deposit loan program. The department shall approve the amount to be used prior to expenditure; provided that the amount may not exceed ten per cent of the grant.

(i) The staff of the nonprofit organization assigned to administer the program shall solicit housing opportunities for low-income and homeless families and persons, coordinate with local low-income rental property owners, make determinations regarding the eligibility of prospective tenants for the program, and provide information to prospective tenants on relevant provisions of the residential landlord-tenant code, appropriate treatment of property, and the importance of timely rental payments. The staff of the nonprofit organization assigned to administer the program shall be available to property owners and tenants during normal business hours to answer questions or complaints about the program.

Participating nonprofit organizations shall work closely and coordinate with homeless services provider organizations.

(j) Participating nonprofit organizations shall keep statistical records of families and individuals served and provide reports quarterly to the department."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $         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 department of human services for the purposes of this Act.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2050.



Report Title:

Affordable Housing; Rental Deposit Loan Program; Appropriation



Establishes a rental deposit loan program within the department of human services to assist low-income and homeless individuals and families in obtaining affordable rental housing. Effective July 1, 2050. (SB2540 HD1)




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