April 8, 2026, 10:15 a.m.
Hawaii State Capitol
Conference Room 211 and Videoconference
To: Senate Committee on Ways and Means
Sen. Donovan M. Dela Cruz, Chair
Sen. Sharon Y. Moriwaki, Vice Chair
Senate Committee on Judiciary
Sen. Karl Rhoads, Chair
Sen. Mike Gabbard, Vice Chair
From: Grassroot Institute of Hawaii
Ted Kefalas, Director of Strategic Campaigns
COMMENTS REGARDING HB1990 HD2 SD1 — RELATING TO RESIDENTIAL REAL PROPERTY
Aloha Chairs, Vice Chairs and other Committee Members,
The Grassroot Institute of Hawaii offers comments on HB1990 HD2 SD1, which would allow counties to commence foreclosure procedures upon residential real property and use the revenues to satisfy unpaid civil fines for unaddressed zoning violations related to the property.
The Legislature deserves praise for inserting language into this bill that protects the equity interest of homeowners and provides that property subject to foreclosure under this section would be sold at fair market value. While we still have concerns about the government’s use of foreclosure in general, this amendment is necessary to ensure that this particular bill passes the tests for constitutionality and simple fairness.
In Tyler v. Hennepin County, Minnesota, the Supreme Court held that the county’s retention of the excess value of the plaintiff’s home above her tax debt violated the U.S. Constitution’s takings clause. That is why it is important that the bill explicitly states that the revenues from the sale after satisfaction of the lien should be remitted to the property owner.
Moreover, the provision requiring that the property be sold promptly at or near market value, will help guard against the possibility that a bad actor could deprive the owner of his or her equity interest in the property.
For example, in Michigan, corruption at the local level resulted in some foreclosed properties being sold to friends and families of local officials at far below market value.[1]
There is currently a case before the U.S. Supreme Court, Pung v. Isabella County, that centers specifically on whether the Fifth Amendment requires compensation based on fair market value in foreclosure situations such as those envisioned by this bill.
Because foreclosure sales might target vulnerable populations, such as the elderly and those who lack the resources to hire attorneys or pay the fines, it is critical to protect the homeowner’s equity interest. If this bill moves forward, we urge the Committee to retain the language that ensures that monies in excess of the lien be returned to property owners and that the property be sold at market value.
Thank you for the opportunity to testify.
Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
1050 Bishop St. #508 | Honolulu, HI 96813 | 808-864-1776 | info@grassrootinstitute.org
[1] “Ending Home Equity Theft,” Pacific Legal Foundation, accessed Feb. 4, 2025.
