Some influential Hawaii lawmakers want to make a historic investment in a state program that helps finance private development of low-income rental housing.

Members of the Senate Ways and Means Committee have proposed giving $300 million to a state agency that helps developers produce affordable homes.

The deposit would be made to the Rental Housing Revolving Fund of the Hawaii Housing Finance and Development Corp., which has received $25 million to $50 million appropriations from the Legislature in recent years and a record $200 million in 2018.

The current proposed contribution would help finance construction of 1,938 new affordable rental homes and rehabilitation of 800 rentals, according to the committee.

HHFDC’s rental housing fund must be used for housing that serves households earning no more than 80% of a county’s median income, including at least 5% of units in a project reserved for households earning no more than 30% of the median income.

The agency distributes this funding through competitive awards to owners and developers of such housing typically as low-interest loans or grants that get combined with other funding sources, including state and federal low-income housing tax credits.

Last year, HHFDC awarded $83 million from the fund to help finance 512 homes for seven developers who were among 16 applicants that sought $269 million from the fund to help finance 2,200 homes.

The $200 million appropriation from 2018 is helping produce 1,600 affordable rentals.

HHFDC typically seeks legislative appropriations for its rental housing fund, which also receives 50% of real estate conveyance tax proceeds up to a maximum $38 million.

This year, House Bill 1748 was introduced to provide money for the fund, though no dollar amount was specified. After being advanced by two committees following public hearings, the full House passed the measure on March 4 in a 46-0 vote that sent the bill to the Senate for consideration.

An identical bill was introduced in the Senate. This measure, Senate Bill 2155, never received a hearing. But Senate Ways and Means voted on March 3 to amend a different bill having to do with vacant state land assessments as a vehicle to provide $300 million for HHFDC’s rental housing fund.

The land assessment measure, SB 2372, received no public hearing on the subject of rental housing financing. But the House bill received supportive testimony.

In response to the $300 million deposit plan, HHFDC said in a statement that in general it appreciates any infusion into its rental housing fund.

Denise Iseri-Matsubara, the agency’s director, said in written testimony on the House bill that a continual stream of cash flowing into the rental housing fund is needed to meet demand from a pipeline of planned projects.

“The demand for this resource continually exceeds the supply,” she said.

Hawaii Appleseed Center for Law and Economic Justice, a nonprofit advocacy organization, noted that HHFDC’s rental housing fund draws matching federal funds that have not been maximized in the past.

“We need all of the funding for affordable housing that we can secure,” the organization said in written testimony.

Kevin Carney, vice president of nonprofit development firm EAH Housing, relayed in written testimony that the company has experienced the shortage of HHFDC rental housing funds in competition with other developers.

Two EAH projects that received rental housing fund awards last year are a 140-unit project in Aiea reserved for seniors and a 92-unit project in Hilo also serving seniors with a priority for elderly veterans and elderly spouses of deceased veterans.

The Aiea project, called Halewiliko Highlands, will feature studios and one-bedroom units with projected monthly rents between $498 and $1,139 for households earning between 30% and 60% of the median income in Honolulu. HHFDC’s rental housing fund will provide a loan up to $23.8 million to help pay for the $50.8 million project.

The Hilo project, West Kawili Street Seniors/Veterans Housing, will feature one-bedroom units with projected monthly rents between $856 and $1,120 for households earning between 30% and 80% of the median income in Hawaii County. This project received a $16.6 million loan from the rental housing fund toward its $45.8 million cost.

SB 2372 proposes to distribute a $300 million contribution statewide, with $148 million going to Oahu projects, $76 million aimed at Maui County, $40 million for Hawaii island and $36 million on Kauai.

All the funding would be proceeds from state general obligation bond sales.

The bill also includes $10 million for a proposed five-year pilot program under which HHFDC would help Hawaii residents earning between 80% and 120% of a county median income buy a home on the private market.

HHFDC money received by such a homebuyer would represent equity in the home, and the buyer would need to pay back HHFDC a proportional share of appreciated equity within 30 years.

“The Senate has been working tirelessly to find meaningful solutions to address the state’s housing shortage,” Sen. Donovan Dela Cruz, Ways and Means chair, said in a statement.

SB 2372 is now headed for consideration in the House.