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Council postpones final action on proposed changes to affordable‑rental tax classification amid equity concerns
Summary
Council members voted to postpone Bill 39 (changes to affordable rental classification and rent-rate methodology) to June 4 to allow further work on rent‑rate methodology and potential geographic inequities.
The Hawaii County Council postponed consideration of Bill 39 (draft 2) on May 21 after prolonged debate about how to set the maximum rent levels that qualify properties for the affordable‑rental tax classification.
Bill 39 would revise the county’s affordable rental classification, harmonize certain definitions and standardize the rent limit at 80% of Area Median Income (AMI) as published by HHFDC. Multiple council members and staff raised concerns about using countywide AMI to set a single islandwide rent cap because AMI is uniform countywide while housing markets vary substantially between Kona/Waimea and Hilo/Puna. Council members said the change could inadvertently raise rents in some lower‑cost areas or exclude existing owners from the program.
Council members discussed alternate approaches including ZIP‑code‑based exception areas, averaging 60% and 80% AMI to yield a 70% rate outside high‑cost ZIP codes, and directing the Office of Housing and Community Development to develop a rental‑rate methodology. After discussion the council voted to postpone action to the June 4 meeting to allow staff time to refine options and provide analyses and legal input.
Deputy corporation counsel advised the council that earlier proposed language—giving OHCD rulemaking authority under Chapter 19—would be legally problematic because Chapter 19 relates to real property tax administration; that concern shaped the discussion and later withdrawal of one amendment. Council members asked staff to provide clearer implementation timelines, estimates of how many landlords and units could be affected and scenarios showing effects by ZIP code.
