Property tax break for building affordable housing

(a) For the purposes of this section, the following definitions shall apply unless the context clearly indicates or requires a different meaning. Qualifying Construction Work. Work: (1) To construct new buildings or portions thereof, or to construct additions or substantial rehabilitations, as defined in § 29-1.2 , to existing buildings; provided that the new or existing building is located on land that is classified in accordance with § 8-7.1 as residential, residential A, hotel and resort, or commercial; or (2) To construct an affordable rental housing project pursuant to Chapter 32 . (b) Any incremental increase in the valuation of the real property primarily attributable to qualifying construction work will be exempt from property taxes; provided that: (1) The qualifying construction work creates affordable dwelling units pursuant to Chapter 29 ; (2) The qualifying construction work creates affordable dwelling units pursuant to a planned development-transit permit pursuant to § 21-9.100-10 , or an interim planned development-transit permit pursuant to § 21-9.100-5 ; (3) The real property is developed in compliance with HRS § 201H-36(a)(5); or (4) The qualifying construction work creates affordable rental housing units that: (A) Are rented to households earning 100 percent and below of the AMI; and (B) For a period of at least 15 years after a certificate of occupancy is issued for the affordable rental housing project, the affordable units are rented at or below the rental rate limits established by the United States Department of Housing and Urban Development for households earning 100 percent of the AMI for the applicable household size; pursuant to Chapter 32 . (c) A claim for exemption must be filed with the director on or before September 30 preceding the first tax year for which the exemption is claimed on a form as may be prescribed by the director, and must be supported by documentation establishing the date of the issuance of the building permit for demolition, if applicable, or the building permit for new buildings or portions thereof, additions, or substantial rehabilitations, and documenting the creation of: (1) Affordable dwelling units pursuant to Chapter 29 ; (2) A planned development-transit permit pursuant to § 21-9.100-10 ; (3) An interim planned development-transit permit pursuant to § 21-9.100-5 ; (4) Affordable rental dwelling units pursuant to HRS § 201H-36(a)(5); or (5) Affordable rental housing units that: (A) Are rented to households earning 100 percent and below of the AMI; and (B) For a period of at least 15 years after a certificate of occupancy is issued for the affordable rental housing project, the affordable units are rented at or below the rental rate limits established by the United States Department of Housing and Urban Development for households earning 100 percent of the AMI for the applicable household size; pursuant to Chapter 32 . (d) The real property tax will be based on the assessed value of the property for the tax year immediately preceding the tax year during which the building permit for demolition, if applicable, or a building permit for new buildings or portions thereof, additions, or substantial rehabilitations for the qualifying construction work was issued. (e) The claim for exemption, once allowed, will expire: (1) Three calendar years after issuance of a building permit for new buildings or portions thereof, additions, or substantial rehabilitations; (2) Upon issuance of a certificate of completion; or (3) Upon issuance of any certificate of occupancy; whichever occurs first. The director may extend this exemption for good cause. (f) If, within five years after the expiration of the claim for an exemption under subsection (b)(4), an affordable rental housing project is not in compliance with the executed declaration of restrictive covenants, the exemption will be retroactively revoked and the taxpayer shall reimburse the city for the total exemption amount. Editor’s note: * Section 8-10.34 will be repealed on June 1, 2030, in accordance with Ordinance 18-1 and Ordinance 19-8, as amended by Ordinance 25-25 . Amendments made to § 8-10.34 in Ordinance 19-8, as amended by Ordinance 23-12 , will be repealed on June 1, 2030; provided that any exemption under § 8-10.34(b)(4) for qualifying work for affordable rental housing units that are rented to households earning 100 percent and below of the area median income, will remain in effect for the duration of the exemption period as determined under § 8-10.34(e).