H.C.R. NO.














reaffirming the commitment to increase THE STATE'S affordable housing STOCK by not allocating special purpose revenue bonds and discouraging the use of special purpose revenue bonds.




     WHEREAS, special purpose revenue bonds allow non-governmental entities serving a public purpose to use the name of the State of Hawaii to sell bonds whose interests are exempt from federal and state taxation, thus making these bonds attractive and lowering the cost to these non-governmental entities; and


     WHEREAS, in Hawaii, special purpose revenue bonds are more commonly issued by the State to assist electric utilities and hospitals, but other entities like manufacturing enterprises, educational programs and organizations, agricultural enterprises, and processing enterprises, are also able to seek special purpose revenue bond authorization; and


     WHEREAS, interest rates for special purpose revenue bonds are based on the financial strength of the non-governmental entities, rather than the State, and are sold to private investors who provide the actual funds and invest their funds in exchange for tax-exempt or taxable interest payments; and


     WHEREAS, special purpose revenue bonds do not count against the State's debt ceiling and do not affect the bond rating of the State; and


     WHEREAS, there is no aggregate ceiling on the amount of special purpose revenue bonds that the State can issue in a year, but the volume cap for private activity bonds is determined by the Internal Revenue Service each year; and


     WHEREAS, certain special purpose revenue bonds, excluding special purpose revenue bonds for hospitals, retirement and nursing homes, private schools and universities, certain airports, harbors, and solid waste disposal facilities, may be subject to a private activity bond volume cap; and


     WHEREAS, private activity bonds are tax-exempt bonds issued by or on behalf of the State or counties to finance qualified projects of a private user, such as multi-family housing projects, industrial enterprises, manufacturing enterprises, and utilities; and


     WHEREAS, the largest user of the private activity bond volume cap is the Hawaii Housing Finance and Development Corporation, as it is the State's sole issuer of the federal and state Low-Income Housing Tax Credits; and


     WHEREAS, these housing credits, combined with private activity bonds, allow developers to feasibly build rental housing projects for low-income households at or below sixty percent of the area median income; and


     WHEREAS, while the four percent Low-Income Housing Tax Credit is not subject to a volume cap, the private activity bond is subject to a volume cap that has limited the development of affordable rental housing in the State; and


     WHEREAS, under the Internal Revenue Code, the four percent Low-Income Housing Tax Credit must be used in conjunction with private activity bond financing; and


     WHEREAS, during the 2021 financing cycle, developers requested over $500,000,000 dollars of private activity bonds that would have financed nearly two thousand seven hundred affordable housing units; and


     WHEREAS, however, due to the State's bond cap constraints, the Hawaii Housing Finance and Development Corporation was only able to allocate $151,000,000 in private activity bonds that helped to finance seven hundred fifty rental units; and


     WHEREAS, the demand for private activity bonds was so great that it exceeded the available bond cap by a four-to-one ratio; and


     WHEREAS, in recognition that certain special purpose revenue bonds can divert much needed private activity bonds that can address the housing crisis, the Legislature enacted Act 182, Session Laws of Hawaii 2022, which, among other things, established a moratorium on the issuance of special purpose revenue bonds unless requested by the Governor from June 30, 2022, until December 31, 2028, to allow the maximum private activity bond volume cap to be used for housing; now, therefore,


     BE IT RESOLVED by the House of Representatives of the Thirty-second Legislature of the State of Hawaii, Regular Session of 2023, the Senate concurring, that this body reaffirms its commitment to increase the State's affordable housing stock by not allocating special purpose revenue bonds and discouraging the use of special purposes revenue bonds; and


     BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Governor, Lieutenant Governor, Director of Budget and Finance, and Executive Director of the Hawaii Housing Finance and Development Corporation.









Report Title: 

Special Purpose Revenue Bonds; Private Activity Bonds