THIRTIETH LEGISLATURE, 2019
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO INDIVIDUAL DEVELOPMENT ACCOUNTS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that state-sponsored individual development accounts are an evidence-based method for helping low- and moderate-income people build assets, obtain stable housing, and ensure a financially secure future. Individual development accounts are special savings accounts that match the deposits of low- and moderate-income savers, provided that they participate in financial education and use the savings for targeted purposes such as housing, post-secondary education, small business development, and transportation for work and school. Research demonstrates that these accounts make families more financially secure and communities and local economies more stable.
The purpose of this Act is to amend existing state statutes governing individual development accounts for low- and moderate-income households in Hawaii to assist them with obtaining permanent housing, attending post-secondary education, starting a business, or accessing transportation necessary to earn a living or increase their wages.
SECTION 2. Section 257-1, Hawaii Revised Statutes, is amended as follows:
1. By amending the definition of "qualified expenditures" to read:
""Qualified expenditures" means an expense as determined by a fiduciary organization, which may include but not be limited to:
(1) Costs associated
first] first-time homeownership;
(2) Costs associated with renting a dwelling;
(3) Costs associated with using public transportation;
(4) Costs associated with purchasing or repairing a motor vehicle;
(2)] (5) Post-secondary
[ education;] educational expenses;
(3)] (6) Vocational
(4)] (7) [ Small]
Qualified business capitalization expenses for a small or
micro-business [ capitalization]."
2. By repealing the definition of "qualified principal residence":
residence" means a principal residence (within the meaning of section 1034
of the Internal Revenue Code of 1986), the qualified acquisition costs of which
do not exceed one hundred per cent of the average area purchase price
applicable to such residence (determined in accordance with paragraphs (2) and
(3) of section 143(e) of the Code)."]
SECTION 3. Section 257-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) The income of the household of the individual
development account holder shall not exceed [
eighty] one hundred
per cent of the area household median income."
SECTION 4. Section 257-3, Hawaii Revised Statutes, is amended to read as follows:
§257-3[ ]] Fiduciary organizations. (a)
Fiduciary organizations shall serve as an intermediary between
individual development account holders and financial institutions holding
accounts. The fiduciary organization's
responsibilities may include:
(1) Marketing participation;
(2) Soliciting matching contributions;
(3) Counseling program participants; and
(4) Conducting verification and compliance activities.
Locally-based organizations shall [
enter into a competitive process]
apply to the business development and support division of the department of
business, economic development, and tourism for the right to become
fiduciary organizations for a portion of the state matching dollars that would
be authorized initially. Fiduciary
organization proposals shall be evaluated and participation rights awarded on
the basis of such items as:
(1) Their ability to market the program to potential individual development account holders and potential matching fund contributors;
(2) Their ability to provide safe and secure investments for individual development accounts;
(3) Their overall administrative capacity, including:
(A) Certifications or verifications required to assure compliance with eligibility requirements;
(B) Authorized uses of the accounts matching contributions by individuals or businesses; and
(C) Penalties for unauthorized distributions;
(4) Their capacity to provide financial counseling and other related services to potential participants; and
(5) Their links to other activities designed to increase the independence of individuals and families through high return investments, including homeownership, education and training, and small business development.
If the [
State] business development and support division of
the department of business, economic development, and tourism approves an
application to fund an individual development account project under this
section, the [ State] business development and support division of the
department of business, economic development, and tourism shall[ , not
later than one month after June 28, 1999,] authorize the applicant to
conduct the project with state funds for five project years in accordance with
the approved application and this section[ ; provided that an applicant may
apply for funding during future fiscal years for five project years if the
State lacks the resources to fund an individual development account project
pursuant to this subsection].
(d) For each individual development account
program approved under this section, the State shall make a grant to the
qualified entity or collaboration of entities authorized to conduct the project
on the first day of the project year in an amount not to exceed $100,000 per
year for five years. (e)] (d) From among the individuals eligible for
assistance under the Hawaii individual development account program, each
selected fiduciary organization shall select the individuals whom the fiduciary
organization deems to be best suited to receive such assistance."
SECTION 5. Section 257-7, Hawaii Revised Statutes, is amended to read as follows:
"§257-7 Assets; disregarded. The department of human services shall [
with individual development account fiduciary organizations to] ensure that
the accounts as provided for in this chapter, including any earned interest,
shall be disregarded in the determination of benefits or eligibility for
services account holders may receive from the department of human services as
allowed by federal and state laws and regulations.
The department of human services shall establish rules to be aligned with individual development accounts."
SECTION 6. Section 257-8, Hawaii Revised Statutes, is amended to read as follows:
§257-8[ ]] Matches. (a)
The State shall match an amount of up to $100,000 per calendar year for
individual development accounts.
Not more than a 2:1 match of state funds to account holder deposits
shall be deposited into any individual development account in a given year.] A fiduciary organization shall maintain
sufficient state match funds to finance the aggregate amount of program matches
in a deposit account solely owned by the fiduciary organization at the
financial institution holding the individual development accounts.
State match funds shall only be withdrawn from the fiduciary organization's deposit account when an account holder makes a withdrawal request for a qualified expenditure to the fiduciary organization. State match funds shall not be deposited directly to any individual development account."
SECTION 7. Section 257-10, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) The administrator of the fiduciary
organization, with the cooperation of the participating organizations, shall
maintain records of the names of contributors and the total amount each
contributor contributes to an individual development account match fund for the
taxable year. All contributions shall be
verified by the [
department of human services.] business development
and support division of the department of business, economic development, and
tourism. The [ department of human
services] department of business, economic development, and tourism
shall total all contributions that the [ department] division
certifies. Upon each determination, the
[ department of human services] business development and support
division of the department of business, economic development, and tourism
shall issue a certificate to the taxpayer.
The taxpayer shall file the certificate with the taxpayer's tax return
with the department of taxation.
total amount of certified contributions reaches $1,000,000, the [
division shall immediately discontinue certifying contributions and
notify the department of taxation. In no
instance, shall the total amount of certified contributions exceed $1,000,000
over the five-year period between January 1, [ 2000,] 2020, and
December 31, [ 2004.] 2024."
SECTION 7. Section 257-11, Hawaii Revised Statutes, is amended to read as follows:
§257-11[ ]] Administration; evaluation;
information; reporting. (a) The fiduciary organization running an
individual development account program shall have sole authority over the
administration of the project. The State
may prescribe only such regulations with respect to demonstration projects under
this chapter as are necessary to ensure compliance pursuant to this chapter.
(b) Each individual development account program
shall annually report the number of accounts, the amount of savings and matches
for each account, the uses of the account, and the number of businesses, homes,
and educations purchased, as well as other information as may be required for
responsible operation of the program. (c) The fiduciary organization shall submit to
the legislature its findings and recommendations no later than twenty days
prior to the convening of each legislative session. (d)] (b) Selected fiduciary organizations may use no
more than [ ten] twenty per cent of state funds as appropriated
under this [ chapter[ ]] to cover administrative costs in any
SECTION 8. Section 235-5.6, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:
"(e) The credit under this section shall be
available for taxable years beginning after December 31, [
but shall not be available for taxable years beginning after December 31, [ 2004.]
SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 9. This Act shall take effect on January 1, 2020.
Individual Development Accounts
Expands eligibility for state-funded individual development accounts to households with income up to 100 percent of the area median income. Expands allowable uses of account funds to rental housing and transportation. Clarifies reporting requirements for fiduciary organizations. Requires the Department of Business, Economic Development, and Tourism to certify the tax credits for contributions. Reactivates the tax credit for the five-year period from 2020 through 2024.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.