The following testimony was submitted by the Grassroot Institute of Hawaii on Feb. 18, 2026, for consideration by the Senate Committees on Economic Development and Tourism and Commerce and Consumer Protection.
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Feb. 18, 2026, 10:05 a.m.
Hawaii State Capitol
Conference Room 229 and Videoconference
To: Senate Committee on Economic Development and Tourism
Sen. Lynn Decoite, Chair
Sen. Glenn Wakai, Vice Chair
Senate Committee on Commerce and Consumer Protection
Sen. Jarrett Keohokalole, Chair
Sen. Carol Fukunaga, Vice Chair
From: Grassroot Institute of Hawaii
Ted Kefalas, Director of Strategic Campaigns
RE: TESTIMONY IN OPPOSITION TO SB2362 — RELATING TO TAXATION
Aloha Chairs, Vice Chairs and other members of the Committees,
The Grassroot Institute of Hawaii opposes SB2362, which would repeal the dividends paid deduction for income earned by investors in real estate investment trusts.
This measure could deter investment in Hawaii’s real estate market, which could negatively impact affordable housing production at a time when Hawaii needs more capital available for housing — not less.
A 2024 update to the Hawaii Housing Planning Study estimated that the state needs 64,490 new housing units built between 2023 and 2027 to keep up with demand.[1] Since affordable housing projects often operate at a low margin, any higher costs associated with development could dissuade investment in Hawaii projects.
A new REIT tax scheme would also hurt the state’s business climate in general.
The Hawaii Business Revitalization Task Force found that Hawaii ranks among the bottom 10 states in business costs, access to capital and technology and innovation.[2] This bill would frustrate any attempts to improve in these rankings.
The bill claims that the measure would bring in $26 million in revenues to the state, but this claim should be considered suspect because it ignores any potential reduction in revenues due to decreased economic activity.
In 2016, the state Department of Business, Economic Development and Tourism surveyed Hawaii’s real estate sector and found that businesses occupying REIT-owned properties generated more than $200 million in excise taxes from their sales.[3]
To the extent that REITs would look elsewhere to invest, this bill would reduce new construction and the excise and property tax revenues associated with it.
Thank you for the opportunity to testify.
Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
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[1] “Hawaii Housing Planning Study 2024,” prepared by SMS Research and Marketing Services, Inc., FSR Consulting LLC and Ward Research, Inc. for the Hawai’i Housing Finance and Development Corporation, Table 39A, p. 124.
[2] “Business Revitalization Task Force Report,” November 2025,
[3] “Real Estate Investment Trusts in Hawaii: Analysis and Survey Results,” Hawaii Department of Business, Economic Development and Tourism, September 2016, p. 4.
