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Today marks the Second Lateral deadline. By this deadline, all Senate bills with House referrals and all House bills with Senate referrals must move to their final committees in order to remain alive. The next major deadline is April 14th, which is when all amended bills in the non-originating body are decked for Third Reading.

General Excise Tax

The purpose of HB 1309 is to allow the counties to establish a county surcharge on the state excise and use taxes to fund public transportation in the counties. Legislative Committee members Beau Springer and Craig Hirai testified in strong opposition to the proposed tax increase. Essentially, this bill would increase the general excise tax by 25%, equating to about $900 a family of four can expect to pay on goods and services each year, according to the Tax Foundation of Hawaii.

In the joint hearing before the Senate Committee on Transportation and Government Operations and the Committee on Intergovernmental Affairs, passed the bill and will now go before the Senate Committee on Ways and Means. This is the final committee before it goes to the Senate floor for approval. We anticipate that this bill will go to conference at which time HAR wants to apply the greatest pressure on legislators not to pass the bill.

The Hawaii Association of REALTORS® is currently working on a media campaign to prevent the passage of this bill as well as other bills that propose to increase the cost of everything we buy; thereby increasing the cost of living and doing business in Hawaii. Please be prepared for our Calls-to-Action in the next couple of weeks.

Leasehold Conversion
HB 1554 was heard on Monday in the Senate Committee on Commerce, Consumer Protection, and Housing. This bill would allow a fee owner a tax exemption of 75% of the gain realized from the sale of the leased fee interest in a residential house lot or multi-family residential leasehold unit to the lessee of the house lot or unit, or the sale of the leased fee interest in a multi-family residential leasehold property to the association of apartment owners or the residential cooperative corporation of a multi-family residential leasehold property.

The Hawaii Association of REALTORS® submitted testimony in support of the bill with amendments. The committee has now amended the bill to exempt from taxation 100% of the gain realized rather than 75%. They also included in the exemption gains realized from the sale of the leased fee interest in a multi-family residential leasehold property to the property's residential cooperative corporation.

Real Property Disclosure

The purpose of SB 953 is to require sellers of residential property to disclose the close proximity of agricultural lands to buyers. Legislative Committee member Tracy Stice testified in general support of the intent but requested that the bill be held.

Tracy expressed to the House Committee on Agriculture and the Committee on Water, Land, and Ocean Resources that this bill is unnecessary and as REALTORS® we are already required to disclosure this information under the current disclosure law. This will also cause undue burden to the seller as they will need to retrieve zoning information from the planning office.

The Committees passed the bill and amended the effective date to January 1, 2006 to allow HAR to change their disclosure forms to reflect this new requirement.

Important Agricultural Lands

SB 1593 was heard yesterday in the House Committee on Agriculture and the Committee on Water, Land, and Ocean Resources. The bill proposes to expand and enhance the use of rural districts through a one-time reclassification of lands that were classified agriculture prior to June 4, 1976, based upon studies and recommendations from each county.

Legislative Committee member Tracy Stice testified in support of the bill. Many bills this session are dealing with the problems of agriculture existing near or adjacent to residential areas. By enlarging the use of the rural district, a buffer zone can be created between residential and agricultural areas. The mixed uses available under rural zoning allow a transition rather than an abrupt line dividing farms from homes.

Since this is empowering legislation for the counties and gives the counties the primary input on the re-zoning, a step closer to homerule is accomplished. The Land Use Commission requirement of a 2/3 vote for approval of the recommendations from the county is too strong. A simple majority should be adequate for approval.

Owner-Builder Tax

SB 1870 was heard yesterday in the House Committee on Housing. The purpose is to impose a general excise tax on owner-builders on the value of the building of their own personal residences. Legislative Committee member Mary Begier submitted testimony which raised questions on what problems the bill was attempting to resolve and commented that HAR believes there is no basis on which to tax the value of services or contracting provided by an individual to himself. The problem appeared to be the avoidance of the tax on goods and services on the part of people who are not true owner-builders. Another premise of the bill is to encourage the use of licensed contractors and an attempt to impose the general excise tax upon those who are unlicensed.

The Hawaii Association of REALTORS® and other parties discussed the issue and came to a compromise on ways to not penalize the legitimate owner-builder and to create a tax form that would track the length of time an “owner-builder” actually occupied that home.

To view any of the bill text and testimonies submitted by the HAR, visit http://www.hawaiirealtors.com/government_affairs/LA/testimonies.asp.

More details on specific bills will be provided in future Government Affairs Weekly

If you have any questions or comments that you would like forwarded to the Legislative Committee, please call 733-7060 or 1-888-737-9070 or by e-mail at govtaffairs@hawaiirealtors.com.

For the most current and detailed information on bills, go to http://www.capitol.hawaii.gov for bill status and descriptions.