S.B. 1462 Summary

• Establishes a limited-profit housing council within the Department of Business, Economic Development, and Tourism to oversee and administer limited-profit housing associations in Hawaii, with co-chairs from the Hawaii Housing Finance and Development Corporation and Hawaii Public Housing Authority.

• Creates a new chapter authorizing domestic corporations to establish as limited-profit housing associations, requiring primary purpose of providing long-term affordable housing, with strict governance standards including independent directors/officers with no financial relationships to contractors.

• Requires limited-profit housing associations to charge fixed prices for affordable housing units based on construction costs, operating expenses, and replacement reserves, with tenant/buyer right to court review of pricing disputes.

• Restricts profit distributions to once annually at a rate not exceeding the permissible interest rate determined by the council, and limits member/shareholder withdrawals to nominal capital contribution value.

• Exempts income earned by limited-profit housing associations from Hawaii income tax if used for primary business activities within five years, and exempts real property conveyances to or by such associations from transfer taxes; effective July 1, 2050, except tax provisions effective January 1, 2024.