Hawaii Administrative Rules › Title 15 - DEPARTMENT OF BUSINESS, ECONOMIC DEVELOPMENT AND TOURISM › Hawaii Housing Finance and Development Corporation › Chapter 306 - GENERAL EXCISE TAX EXEMPTIONS › Subchapter 1 - GENERAL PROVISIONS › Section 15-306-2 - Definitions

Current through June, 2024
As used, in this chapter: "Allowable construction costs"
					 means expenses incurred by a contractor, for contracting, services and
					 materials which are to be incorporated (in such a form as to be perceptible to
					 the senses) into, or used completely by the contractor in, the development and
					 construction of real property improvements and fixtures for a newly
					 constructed, or moderately or substantially rehabilitated eligible housing
					 project that are associated with the residential portion of the project, or
					 that are de minimis non-residential uses within the project.
"Allowable development costs" means amounts incurred by a
					 developer or a contractor for contracting, services, and materials that are
					 used for the planning, development, and construction of a newly constructed, or
					 moderately or substantially rehabilitated, eligible housing project that are
					 associated with the residential portion of the project, or that are de minimis
					 non-residential uses within the project.
"Allowable financing costs" means:
(1) Amounts paid by a developer or owner to the holder of
					 any debt instrument secured by the leasehold or fee simple interest of the
					 developer or owner in an eligible housing project, and to qualified persons or
					 firms in connection with obtaining or administering such financing; and
(2) Interest earned by a developer or owner on construction
					 loan funds; that are associated with the residential portion of the project, or
					 that are de minimis non-residential uses within the project.
"Claimant" means a person or firm filing a claim with the
					 corporation for general excise tax exemptions allowed under section
					 237-29,
					 HRS.
"Contractor" means a person defined as a contractor under
					 section
					 237-6,
					 HRS.
"Corporation" means the Hawaii housing finance and
					 development corporation.
"'De minimis non-residential uses"' means non-residential
					 use or commercial use areas within a project, including parking areas set aside
					 for these uses required by zoning regulations or other government approvals,
					 that are not directly related to the provision of housing, are intended to
					 directly benefit the residents of the housing project, and do not exceed a
					 maximum of two percent of a project's gross residential floor area.
"Developed under the sponsorship of a private nonprofit
					 corporation" means a newly constructed, or moderately or substantially
					 rehabilitated housing project developed under a program qualified by the
					 corporation and sponsored by a private nonprofit corporation whose purpose is
					 the provision of affordable housing.
"Economic feasibility" means the ability of the eligible
					 housing project to produce sufficient revenue to pay all operating expenses and
					 charges to provide reasonable return and recapture of the capital
					 invested.
"Eligible housing project" means:
(1) A rental housing project by a qualified person or firm
					 where at least fifty percent of the available units are for households with
					 incomes at or below eighty per cent of the area median family income, as
					 determined by HUD, of which at least twenty per cent of the available units are
					 for households with incomes at or below sixty per cent of the area median
					 family income, as determined by HUD; or
(2) A housing project meeting at least one of the three
					 income criteria and at least one of the three development criteria that
					 follow:
(A) Income criteria:
(i) At least twenty per cent of the units in the project
					 are rented or sold to households with incomes of up to fifty per cent of the
					 area median income as determined by HUD;
(ii) At least forty per cent of the units are rented or
					 sold to households with incomes of up to ninety-five per cent of the area
					 median income, as determined by HUD; or
(iii) At least sixty per cent of the units must be rented
					 or sold to households with incomes of up to one hundred forty per cent of the
					 area median income, as determined by HUD; and
(B) Development criteria:
(i) Rental or for-sale housing projects which are developed
					 under a housing development program pursuant to part II of chapter
					 2 01H, HRS;
(ii) Rental or for-sale housing projects which are
					 developed or acquired for the provision of affordable housing under a
					 government assistance program approved by the corporation; or
(iii) Rental or for-sale housing projects developed under
					 the sponsorship of a private nonprofit corporation.
''Eligible housing projects"' may include de minimis
					 non-residential uses that are intended to directly benefit the residents of the
					 housing project.
''Government assistance program"' means any housing program
					 qualified by the corporation and administered or operated by the State, the
					 corporation, the United States, or any of their political subdivisions,
					 agencies, or instrumentalities, corporate or otherwise, which may be used to
					 effectuate housing development and acquisition for the provision of affordable
					 housing for qualified persons in the State. "Government assistance program"
					 includes, but is not limited to, the United States Department of Agriculture's
					 502 and 515 programs; the Federal Housing Administration's 235 program; the
					 United States Department of Housing and Urban Development's HOME, HOPE, 202,
					 and 811 programs; the section 802 military housing program; the military
					 construction and family housing program; the military housing privatization
					 initiative program; the low income housing tax credit program; the
					 corporation's rental housing revolving fund program; the corporation's rental
					 assistance program; the corporation's dwelling unit revolving fund program; tax
					 exempt or taxable multi-family bond financing programs administered by the
					 corporation or any of the counties; the acquisition of land and existing
					 structures for the provision of affordable housing, for which the legislature
					 has appropriated or otherwise authorized funding; residential projects
					 developed by the department of Hawaiian home lands; and residential projects
					 developed by the Hawaii public housing authority.
"HRS" means the Hawaii Revised Statutes.
"HUD" means the United States Department of Housing and
					 Urban Development.
"Limited distribution mortgagor" means an entity which may
					 consist of a person, partnership, association, or limited liability partnership
					 and company which has executed with the federal, state, or county agency a
					 regulatory agreement as to rents, charges, profits, dividends, development
					 costs, and methods of operation.
"Lower income households" mean households with incomes up
					 to and including one hundred forty per cent of the area median income as
					 determined by HUD.
"Moderate rehabilitation" means rehabilitation to upgrade a
					 unit to a decent, safe, and sanitary condition, or to repair or replace major
					 building systems or components in danger of failure.
"Non de minimis development costs" means the cost to
					 construct the non de minimis use area in a project. Non de minimis development
					 costs are not considered "allowable development costs."
(1) If the project's non de minimis use area does not have
					 unfinished commercial construction specifications (i.e., "shell" space which is
					 substantially unfinished and intended to be built out by or for a commercial
					 tenant, as determined by HHFDC in its sole discretion), "non de minimis
					 development costs" shall be calculated by using the ratio of the project's non
					 de minimis use area including associated parking areas to the project's total
					 area, multiplied by the total development cost excluding any offsite
					 development costs.
(2) Alternatively, projects with non de minimis use area
					 with unfinished commercial construction specifications may opt to calculate the
					 non de minimis development costs by multiplying the non de minimis use area by
					 one hundred sixty dollars ($160.00) per square foot. This multiplier shall be
					 adjusted annually each July 1 using the consumer price index series title: all
					 items in U.S. city average, all urban consumers, not seasonally adjusted, for
					 the month of April published by the U.S. Department of Labor, Bureau of Labor
					 Statistics.
(3) If the project contains a mixture of finished and
					 unfinished commercial areas, only the unfinished commercial areas may use the
					 alternative calculation method.
''Non de minimis use area"' means the floor area of a
					 project, plus associated parking areas, that is not directly related to the
					 provision of housing for the project and is not de minimis non-residential
					 use.
"Nonprofit corporation" means a corporation incorporated
					 under chapter
					 414D, HRS.
"Qualified person or firm" means an individual,
					 partnership, joint venture, corporation, association, limited liability
					 partnership, limited liability company, business, trust, or any organized group
					 of persons or legal entities, or any combination thereof, which possesses all
					 professional or vocational licenses necessary to do business in the State of
					 Hawaii in conjunction with the planning, design, financing, construction
					 (including materials and supplies for new construction, moderate
					 rehabilitation, and substantial rehabilitation), sale, or rental of eligible
					 housing projects.
"Regulatory agreement" means the agreement under which
					 projects shall be regulated by the corporation, in a published format
					 determined by the corporation and recorded in the bureau of conveyances,
					 including, but not limited to, a development agreement, deed restriction, other
					 recorded written agreement or determination that the claimant's project is
					 legally bound to the affordability requirements as set out in the application
					 or applications with the corporation or other governmental agencies, whichever
					 is applicable. A regulatory agreement shall include, but is not limited to, the
					 right of the corporation to recapture a proportionate share of the approximate
					 project construction cost savings from the exemption from general excise taxes
					 if the project's units do not remain restricted for income-qualified tenants
					 for the full remaining term of the regulatory agreement, and such additional
					 covenants and restrictions as may be determined necessary by the corporation on
					 a case-by-case basis.
"Staff" means the employed personnel of the
					 corporation.
"State" means the State of Hawaii.
''Substantial rehabilitation"' means the improvement of a
					 property to a decent, safe, and sanitary condition that requires more than
					 routine or minor repairs or improvements and may include, but is not limited
					 to, the gutting and extensive reconstruction of a unit or cosmetic improvements
					 coupled with the curing of a substantial accumulation of deferred maintenance.
					 Substantial rehabilitation also includes rehabilitation activity that is
					 necessary to correct substandard conditions to make essential improvements, and
					 to repair major systems in danger of failure. The term "major systems"
					 includes, but is not limited to, such items as roof structures, ceiling, wall
					 or floor structures, foundations, elevators, and plumbing or electrical repair,
					 replacement, or in some cases removal. Substantial rehabilitation activities
					 also include energy and other natural resource conservation related repairs and
					 improvements, as well as improvements required to provide access or added
					 safety for the handicapped or elderly and renovation, alteration, or remodeling
					 to convert or adapt structurally sound property to the design and condition
					 required for a specific use (e.g., conversion of a hotel to housing for
					 elders).