Hawaii ballot measure would spur affordable housing bonds

Hawaii Governor’s Office

Hawaii voters will vote Tuesday on a constitutional amendment that would allow the issuance of tax increment bonds beyond county debt limits to support affordable housing projects.

Processing Content

If they agree, more affordable housing financing may be on the table in the Aloha State.

The proposed financing mechanism is intended to help pay for infrastructure needed to support housing and development, including roads, water systems and sewer lines, while strengthening communities against severe weather.

Hawaii Gov. Josh Green signed Senate Bill 3218 on May 22 after it was approved unanimously in both the state Senate and the House.

SB3218 won’t take effect unless voters ratify Question 2 to authorize the resilient infrastructure for shelter and equity, or RISE, bonds.

Green, who is seeking a second term in next week’s election, has supported efforts to solve Hawaii’s housing crisis throughout his time as governor. The state has some of the highest housing costs in the nation, according to a report from the University of Hawaii Economic Research Organization.

The RISE Together Hawaii PAC and its affiliate Pacific Resource Partnership raised millions to run a statewide media campaign urging voters to approve the measure. Organizations like the Hawaii Institute for Public Affairs also support it as a necessary financing tool to fight the state’s housing crisis.

The anti-tax Tax Foundation of Hawaii opposed the effort in testimony when lawmakers crafted the legislation arguing that the amendment is redundant because tax-increment financing laws have been on the state’s books since 1985.

The Tax Foundation doesn’t agree with exemption of RISE bonds from county debt limits. If a housing development experiences delays, cost overruns or fails to generate the projected property tax revenue, local taxpayers and county government could be on the hook to repay bondholders, the foundation said.

While proponents view the bonds as an equitable financing tool, the Tax Foundation notes that counties will effectively sacrifice incremental future property tax revenues. Money that would otherwise go into a county’s general fund to pay for island-wide public services would instead be locked up for decades to pay off the RISE infrastructure debt.