Bill Text: HI HCR108 | 2022 | Regular Session | Introduced

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Bill Title: Urging The Hawaii Housing Finance And Development Corporation To Combat Hostile And Harmful Actions By Profit-driven Investors And Aggregators Participating In The State's Low-income Housing Tax Credit Program.

Spectrum: Partisan Bill (Democrat 18-0)

Status: (Passed) 2022-04-26 - Resolution adopted in final form. [HCR108 Detail]

Download: Hawaii-2022-HCR108-Introduced.html

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HOUSE OF REPRESENTATIVES	H.C.R. NO.	108
THIRTY-FIRST LEGISLATURE, 2022
STATE OF HAWAII

HOUSE CONCURRENT

RESOLUTION

 

 

URGING THE HAWAII HOUSING FINANCE AND DEVELOPMENT CORPORATION TO COMBAT HOSTILE AND HARMFUL ACTIONS BY PROFIT-DRIVEN INVESTORS AND AGGREGATORS participating in the state's low-income housing tax credit program.

 

 

 

     WHEREAS, many nonprofit housing development organizations in the State and throughout the nation have a mission to keep housing affordable in perpetuity; and

 

     WHEREAS, creating affordable housing and keeping housing permanently affordable will help address the 50,000 housing unit shortage in the State; and

 

     WHEREAS, in the case of Low-Income Housing Tax Credit (LIHTC) Program projects, nonprofit developers apply for these tax credits from the State and then sell the tax credits to banks or other institutions with high tax liabilities, with proceeds from the sale of the LIHTC tax credits funding the construction or renovation of buildings; and

 

     WHEREAS, an investor who purchases LIHTC tax credits maintains some ownership in the project during a fifteen-year compliance period in which the investor receives the tax benefits; and

 

WHEREAS, a nonprofit developer may exercise the right of first refusal to purchase the entire project at the end of the fifteen—year compliance period from the investor at a minimal cost to maintain permanent affordability; and

 

WHEREAS, however, predatory investors seeking to make a profit sell LIHTC properties at market rate after the compliance period ends, after taking advantage of the tax credit benefits received during this same period; and

 

WHEREAS, predatory investors have been manipulating the LIHTC Program for personal profit by devising methods to hold on to the LIHTC affordable housing beyond the fifteenth year and then selling the property at market rate, thereby blocking a nonprofit organization's right of first refusal; and

 

WHEREAS, by blocking the right of first refusal, predatory investors attempt to extract more profit out of affordable housing development, which is beyond what the LIHTC Program was designed to offer; and

 

WHEREAS, predatory actors are often not the original investor partners, but rather are predatory agents called aggregators who buy up ownership interest in LIHTC projects from original investors with the expectation that they will be able to block property transfer to nonprofits at year fifteen and then sell the buildings at market rate; and

 

WHEREAS, aggregators use a variety of tactics to block the right of first refusal of nonprofit organizations by disputing different aspects of the property transfer in lengthy and expensive court battles; and

 

WHEREAS, disputes over project transfers drain the resources of nonprofit organizations, as resource-strapped nonprofit organizations do not have the capacity to fight these legal battles; and

 

WHEREAS, protecting the right of first refusal of nonprofit organizations participating in the LIHTC Program is of critical importance, especially amid the housing and homelessness crises in the State; and

 

WHEREAS, to maintain the integrity and intent of the LIHTC Program, which was established to help finance the development or substantial rehabilitation of affordable rental housing, it is imperative to end the predatory practice of aggregators that undermine the goals of LIHTC, take advantage of the investor interests they already hold in LIHTC projects, and systematically challenge nonprofit organizations' project transfer rights under the LIHTC Program; now, therefore,

 

     BE IT RESOLVED by the House of Representatives of the Thirty-first Legislature of the State of Hawaii, Regular Session of 2022, the Senate concurring, that the Hawaii Housing Finance and Development Corporation is urged to combat hostile and harmful actions by profit-driven investors and aggregators participating in the State's Low-Income Housing Tax Credit Program; and

 

     BE IT FURTHER RESOLVED that the Hawaii Housing Finance and Development Corporation is urged to combat these actions by amending the 2023/2024 Qualified Application Plan for the LIHTC Program to qualify and confirm the ability of nonprofit developers to exercise their contracted right of first refusal or purchase options; and

 

BE IT FURTHER RESOLVED that the Hawaii Housing Finance and Development Corporation is also urged to amend LIHTC regulatory agreements to eliminate processes and tactics that prevent nonprofit organizations from exercising their right of first refusal; and

 

BE IT FURTHER RESOLVED that Hawaii's congressional delegation is requested to work on federal legislation that strengthens the right of first refusal in LIHTC projects and addresses predatory corporations that profiteer off existing affordable LIHTC housing that was developed using public resources; and

 

     BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to each member of Hawaii's congressional delegation and Executive Director of the Hawaii Housing Finance and Development Corporation.

 

 

 

	OFFERED BY:	_____________________________

Report Title: 

Low-Income Housing Tax Credit; HHFDC; Qualified Application Plan; Right of First Refusal