Affordable housing proposal that would go after non-residents deemed unconstitutional

HONOLULU (HawaiiNewsNow) - A new proposal to tackle Hawaii’s affordable housing crisis by addressing sales to non-residents.

Lawmakers now have until the end of the week to come up with another idea. Or – they will have to wait until next year.

Senate Bill 34 was deferred and deemed unconstitutional on Tuesday.

“Today was a rough one, because oh, man, tell you what, yeah, it’s kind of emotional, a lot of work. And this is something that people really want. We just got to find a way,” said Republican Sen. Brenton Awa.

Awa’s idea was to go after the Hawaii Real Property Tax Act.

That means 7.25% of any profit made by nonresidents on Hawaii real estate must go to the state. Awa wanted 75% of the profit to go to the state instead.

However, the Director of Taxation said Tuesday it ultimately wouldn’t work.

“It does call into question some legal issues. Any time treating local residents differently than nonresidents,” said Gary Suganuma.

“I hate to be the one to say this because I’m over here pushing for locals and I don’t care who’s telling me it’s unconstitutional, you can’t do this. But we’re pushing, pushing, pushing, and what do we find out? Well, shoot, that’s actually the rules that we live under,” Awa said.

Before the decision to defer, a lot of testifiers came out in support of the measure.

“One of the biggest drivers of homelessness and evictions that I’ve seen, working at Hope Services, especially during the pandemic, has been the influx of out of state buyers purchasing property, driving up prices and displacing residents,” said Kristen Alice, Hope Services Hawaii Director of Community Relations.

“I was excited to see a bill that finally had serious consequences for those who want to use Hawaii’s limited real estate market as an investment in a vehicle to make money,” Alice said.

Awa, and other supporters have until the end of the week to come up with an alternative plan, or wait until next year.

“You got ideas, send them in because we got real short time, by this Friday. We need an alternative plan to this thing heard,” said Awa.

The Attorney General’s office said it is currently discussing the bill with Senator Awa.

“The Department of the Attorney General’s role in the legislative process is to review bills for potential legal issues and to advise the legislature accordingly,” said Nathan Chee, Supervising Deputy Attorney General of the Tax and Charities Division.

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