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Restore higher savings amounts for housing in HB2787 HD2

The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Senate Committee on Housing on March 12, 2024.
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March 12, 2024, 1 p.m.
Hawaii State Capitol
Conference Room 225 and Videoconference

To: Senate Committee on Housing
      Sen. Stanley Chang, Chair
      Sen. Troy N. Hashimoto, Vice-Chair

From: Grassroot Institute of Hawaii 
           Ted Kefalas, Director of Strategic Campaigns

COMMENTS IN SUPPORT OF HB2787 HD2 —RELATING TO THE INDIVIDUAL HOUSING ACCOUNT PROGRAM

Aloha Chair Chang, Vice-Chair Hashimoto and other Committee members,

The Grassroot Institute of Hawaii would like to comment in support of HB2787 HD2, which could increase the amount of money that individuals or couples could add to their tax-deductible “individual housing accounts” under the state’s Individual Housing Account Program.

The bill would also direct the state Department of Taxation to raise awareness about these accounts.

The purpose of the state’s Individual Housing Account Program is to help prospective first-time homebuyers save money to be used for buying a house. Currently, individuals can contribute up to $5,000 a year to their accounts and couples up to $10,000 a year. The maximum they can contribute is $25,000.

Earlier versions of this bill proposed quadrupling these various amounts, but unfortunately, this measure now leaves those proposed increased amounts blank.

We urge the committee to reinstate the earlier proposed increases at the same levels or even higher.

In any case, updating this clause is long overdue. These amounts have not been increased since the program was launched in 1982.[1] A year prior, median home prices in Honolulu were in the $188,000 range.[2] With the median home price now hovering around $1 million, it is clear these figures should be increased significantly.

Thank you for the opportunity to testify.

Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
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[1]OHA-6: HB1746/SB2135 Individual Housing Account Tax Incentives,” Office of Hawaiian Affairs, 2018, p. 1.
[2] Louise A. Rose and Sumner La Croix, “Urban Land Price: The Extraordinary Case of Honolulu, Hawaii,” Working paper 88-7, July 1988, forthcoming for Urban Economics, p. 1.

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