| 47 | | - | SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows: "Chapter financing for condominiums Part I. DIRECT FINANCING § -1 Definitions. As used in this chapter, unless the context clearly requires otherwise: "Authority" means the Hawaii green infrastructure authority as established under section 196-63. "Community development financial institution" means an entity certified as a community development financial institution by the United States Department of the Treasury's Community Development Financial Institutions Fund. "Condominium association" has the same meaning as association as defined in section 514B-3. "Condominium project" has the same meaning as project as defined in section 514B-3. "Financial institution" includes a bank, trust company, banking association, savings and loan association, mortgage company, investment bank, credit union, or nontraditional financial institution. "Loan" includes a line of credit. "Participating community development financial institution" means a community development financial institution participating in the condominium loan loss reserves program. "Qualified condominium association" means a condominium association that meets the eligibility requirements under section -6 and rules adopted by the authority. "Reserve account" means an account established in a participating community development financial institution on approval of the authority in which money is deposited to serve as a reserve to reimburse a participating community development financial institution for losses on loans enrolled in the condominium loan loss reserves program. § -2 Powers; rulemaking. In addition to any other powers authorized by law, the authority may: (1) Contract with any community development financial institution for services, including servicing or administering loans pursuant to this part; and (2) Adopt rules pursuant to chapter 91 to effectuate this chapter, including but not limited to rules relating to: (A) Determinations of any other maintenance or repairs that qualify for financing or refinancing under this chapter; (B) The establishment of interest rates chargeable by the authority for direct loans under this part and by the participating community development financial institutions for loans under part II; (C) The establishment of restrictions on the terms, maturities, collateral, and other requirements not inconsistent with this part; (D) Procedures for validating a qualified condominium association's compliance with the obligation to increase its replacement reserves balance; (E) Determinations of eligibility of a community development financial institution to participate in the condominium loan loss reserves program; (F) Eligibility participation criteria for loans issued by an eligible community development financial institution to a qualified condominium association; and (G) The authorization of a single community development financial institution or a consortium of community development financial institutions to participate in the condominium loan loss reserves program subject to condominium loan loss reserves program guidelines. § -3 Condominium loan program. There is established within the authority the condominium loan program to provide qualified condominium associations with low-cost financing, or refinancing for loans previously obtained, for maintenance or repair projects in accordance with this part. § -4 Condominium loan revolving fund. (a) There is established in the state treasury the condominium loan revolving fund, into which shall be deposited: (1) Moneys received as repayment of loans and interest payments as provided in this chapter; (2) Appropriations made by the legislature to the condominium loan revolving fund; and (3) All interest and investment earnings credited to the assets of the fund. (b) Moneys in the condominium loan revolving fund shall be expended by the authority for: (1) The purposes of providing loans and credit enhancements in accordance with this chapter; and (2) Paying administrative costs of the condominium loan program. § -5 Loans; limitations and conditions. (a) Loans under this chapter shall be for financing, or refinancing previous loans that were used for, the following maintenance or repairs in a condominium project: (1) Installing, repairing, or replacing fire sprinklers or other fire safety measures; (2) Repairing or replacing the pipes; (3) Repairing or replacing the roof; or (4) Any other maintenance or repairs the authority deems qualified for the loans. (b) The loan agreement shall require that the qualified condominium association increase its replacement reserves fund balance over the term of the loan. § -6 Loans; eligibility. The authority may make loans directly to a condominium association that has: (1) Received at least one letter from a financial institution declining its eligibility for a loan to address maintenance or insurance coverage issues; and (2) Obtained full replacement property and hurricane insurance coverage or intends to do so as a condition of any financing received. § -7 Annual reports. The authority shall submit a report to the legislature no later than twenty days prior to the convening of each regular session that details the progress of the condominium loan program, aggregate data on the loans issued under this part, and the balance of the condominium loan revolving fund. § -8 Gifts and grants. The authority may accept gifts, grants, and donations from any source for the purposes of this chapter. PART II. CREDIT ENHANCEMENT THROUGH LOAN LOSS RESERVES § -11 Condominium loan loss reserves program. (a) There is established within the authority the condominium loan loss reserves program to incentivize community development financial institutions, in accordance with this part, to provide loans at competitive rates and terms to condominium associations for the purpose of allowing condominium associations to make necessary maintenance or repairs. (b) The authority shall use moneys in the condominium loan revolving fund to make deposits into a participating community development financial institution's reserve account in an amount specified by this part to be a source of moneys the participating community development financial institution may receive as reimbursement for losses attributable to loans in the condominium loan loss reserves program. § -12 Participating community development financial institutions; reserve account. (a) To participate in the condominium loan loss reserves program, an eligible community development financial institution shall enter into a participation agreement with the authority that sets out the terms and conditions under which the authority will make contributions to the community development financial institution's reserve account and specifies the criteria for a loan to qualify as a loan under this part. (b) On approval by the authority and after a community development financial institution enters into a participation agreement with the authority, the authority shall establish a reserve account at a participating community development financial institution making a loan under this part and deposit an amount equal to five per cent of the original loan amount. The reserve account shall be used by the authority to cover any losses arising from a default of the loan made by the participating community development financial institution under this part or as otherwise provided by this part. (c) When a participating community development financial institution makes a loan enrolled in the condominium loan loss reserves program, the participating community development financial institution shall pay to the authority a fee equal to fifty basis points of the amount deposited into the condominium loan revolving fund to support the loan, which the authority shall deposit into the reserve account, and annually thereafter. The participating community development financial institution may recover from the borrower all or part of the amount the participating community development financial institution is required to pay under this subsection in any manner agreed to by the financial institution and borrower. (d) For each loan under this part, the participating community development financial institution shall provide executed loan documents to the authority, within the period prescribed by the authority, including the amount of fees received from the borrower. § -13 Loans. (a) Except as otherwise provided by this chapter, the authority shall determine the recipient, amount, or interest rate of a loan under this part or the fees or other requirements related to the loan. (b) To qualify as a loan under this part, a loan shall: (1) Be made to a condominium association that has: (A) Received at least one letter from a financial institution declining the condominium association's eligibility for a loan to address maintenance or insurance coverage issues; and (B) Obtained full replacement property and hurricane insurance coverage or intends to do so as a condition of any financing received; (2) Meet the limitations and conditions under section ‑5; and (3) Meet other criteria established by the authority by rules adopted pursuant to chapter 91. (c) For a line of credit to qualify for participation in the condominium loan loss reserves program, a line of credit shall: (1) Be an account at a participating community development financial institution under which the community development financial institution agrees to lend money to a qualified condominium association from time to time to finance one or more projects that are authorized by this chapter; and (2) Contain the same restrictions, to the extent possible, that are placed on a loan that is not a line of credit. (d) A loan under this part may be sold on the secondary market under conditions as may be determined by the participating community development financial institution with the consent of the authority. (e) When enrolling a loan in the condominium loan loss reserves program, a participating community development financial institution may specify an amount to be covered under the condominium loan loss reserves program that is less than the amount allowed under section -12(b). § -14 Limitations on amounts retained in reserve accounts. The maximum aggregate amount the authority may retain on deposit in a reserve account shall not exceed five per cent of the aggregate outstanding principal balance of enrolled loans. On a regular basis, no less than annually, the authority shall withdraw from a reserve account the amounts in excess of the limit and deposit that amount into the condominium loan revolving fund. A withdrawal of money authorized under this section shall not reduce an active reserve account to an amount that is less than the aggregate amount allowed under this section. § -15 State's rights with respect to reserve account. (a) All of the money in a reserve account established under this part shall be the property of the State. (b) The State shall be entitled to earn interest on the amount of contributions made by the authority, borrower, and participating community development financial institution to a reserve account under this part. On a regular basis, no less than annually, the authority shall withdraw from a reserve account the amount of the interest earned by the State. The authority shall deposit the amount withdrawn under this section into the condominium loan revolving fund. (c) The authority shall withdraw from the participating community development financial institution's reserve account the total amount in the account and any interest earned on the account and deposit the amount into the condominium loan revolving fund when: (1) A participating community development financial institution is no longer eligible to participate in the condominium loan loss reserves program or a participation agreement entered into under this part expires without renewal by the authority or institution; and (2) The participating community development financial institution has no outstanding loans under this part. § -16 Participating community development financial institution's annual reports. A participating community development financial institution shall submit an annual report to the authority. The report shall: (1) Provide information regarding outstanding principal balances of the loans under this part, loan losses, and any other information on loans under this part the authority considers appropriate; (2) Include a copy of the participating community development financial institution's most recent financial statement; and (3) Include information regarding the condominium associations with loans under this part. § -17 Authority's annual report; audits. (a) The authority shall submit to the legislature an annual status report on the condominium loan loss reserves program's activities. (b) The condominium loan revolving fund shall be audited at least annually by a firm of independent certified public accountants selected by the authority and provide the results of the audit to the department of business, economic development, and tourism and the legislature. § -18 State liability prohibited. The State shall not be liable to a participating community development financial institution for payment of the principal, interest, or any late charges on a loan made by a participating community development financial institution to a qualified condominium association under this part." SECTION 2. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to be deposited into the condominium loan revolving fund. SECTION 3. There is appropriated out of the condominium loan revolving fund the sum of $ or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to implement the condominium loan program. The sums appropriated shall be expended by the Hawaii green infrastructure authority for the purposes of this Act. SECTION 4. This Act shall take effect on July 1, 3000. |
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| 47 | + | SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows: "Chapter financing for condominiums Part I. DIRECT FINANCING § -1 Definitions. As used in this chapter, unless the context clearly requires otherwise: "Authority" means the Hawaii green infrastructure authority as established under section 196-63. "Community development financial institution" means an entity certified as a community development financial institution by the federal Community Development Financial Institution Fund. "Condominium association" has the same meaning as association as defined under section 514B-3. "Condominium project" has the same meaning as project as defined under section 514B-3. "Financial institution" includes a bank, trust company, banking association, savings and loan association, mortgage company, investment bank, credit union, or nontraditional financial institution. "Loan" includes a line of credit. "Qualified condominium association" means a condominium association that meets the eligibility requirements under section -6 and the rules adopted by the authority. "Participating community development financial institution" means a community development financial institution participating in the condominium loan loss reserves program. "Reserve account" means an account established in a participating community development financial institution on approval of the authority in which money is deposited to serve as a reserve to reimburse a participating community development financial institution for losses on loans enrolled in the condominium loan loss reserves program. § -2 Powers; rulemaking. In addition to any other powers authorized by law, the authority may: (1) Contract with any community development financial institution for services, including servicing or administering loans pursuant to this part; and (2) Adopt rules pursuant to chapter 91 to effectuate this chapter, including but not limited to rules relating to: (A) Determinations of any other maintenance or repairs that qualify for financing or refinancing under this chapter; (B) The establishment of interest rates chargeable by the authority for direct loans under this part and by the participating community development financial institutions for loans under part II; (C) The establishment of restrictions on the terms, maturities, collateral, and other requirements not inconsistent with this part; (D) Procedures for validating a qualified condominium association's compliance with the obligation to increase its replacement reserves balance; (E) Determinations of eligibility of a community development financial institution to participate in the condominium loan loss reserves program; (F) Eligibility participation criteria for loans issued by an eligible community development financial institution to a qualified condominium association; and (G) The authorization of a consortium of community development financial institutions to participate in the condominium loan loss reserves program subject to condominium loan loss reserves program guidelines. § -3 Condominium loan program. There is established within the authority the condominium loan program to provide qualified condominium associations with low-cost financing, or refinancing for loans previously obtained, for maintenance or repair projects in accordance with this part. § -4 Condominium loan revolving fund. (a) There is established in the state treasury the condominium loan revolving fund, into which shall be deposited: (1) Moneys received as repayment of loans and interest payments as provided in this chapter; (2) Appropriations made by the legislature to the condominium loan revolving fund; and (3) All interest and investment earnings credited to the assets of the fund. (b) Moneys in the condominium loan revolving fund shall be expended by the authority for: (1) The purposes of providing loans and credit enhancements in accordance with this chapter; and (2) Paying administrative costs of the condominium loan program. § -5 Loans; limitations and conditions. (a) Loans under this chapter shall be for financing, or refinancing previous loans that were used for, the following maintenance or repairs in a condominium project: (1) Installing, repairing, or replacing fire sprinklers or other fire safety measures; (2) Repairing or replacing the pipes; (3) Repairing or replacing the roof; or (4) Any other maintenance or repairs the authority deems qualified for the loans. (b) The loan agreement shall require that the qualified condominium association increase its replacement reserves fund balance over the term of the loan. § -6 Loans; eligibility. The authority may make loans directly to a condominium association that: (1) Has received at least one letter from a financial institution declining its eligibility for a loan to address maintenance or insurance coverage issues; and (2) Has obtained full replacement insurance coverage or intends to do so as a condition of any financing received. § -7 Annual reports. The authority shall submit a report to the legislature no later than twenty days prior to the convening of each regular session that details the progress of the condominium loan program, aggregate data on the loans issued under this part, and the balance of the condominium loan revolving fund. § -8 Gifts and grants. The authority may accept gifts, grants, and donations from any source for the purposes of this chapter. PART II. CREDIT ENHANCEMENT THROUGH LOAN LOSS RESERVES § -11 Condominium loan loss reserves program. (a) There is established within the authority the condominium loan loss reserves program to incentivize community development financial institutions, in accordance with this part, to provide loans at competitive rates and terms to condominium associations for the purpose of allowing condominium associations to make necessary maintenance or repairs. (b) The authority shall use moneys in the condominium loan revolving fund to make deposits into a participating community development financial institution's reserve account in an amount specified by this part to be a source of moneys the participating community development financial institution may receive as reimbursement for losses attributable to loans in the condominium loan loss reserves program. § -12 Participating community development financial institutions; reserve account. (a) To participate in the condominium loan loss reserves program, an eligible community development financial institution shall enter into a participation agreement with the authority that sets out the terms and conditions under which the authority will make contributions to the community development financial institution's reserve account and specifies the criteria for a loan to qualify as a loan under this part. (b) On approval by the authority and after a community development financial institution enters into a participation agreement with the authority, the authority shall establish a reserve account at a participating community development financial institution making a loan under this part and deposit an amount equal to five per cent of the original loan amount. The reserve account shall be used by the authority to cover any losses arising from a default of the loan made by the participating community development financial institution under this part or as otherwise provided by this part. (c) When a participating community development financial institution makes a loan enrolled in the condominium loan loss reserves program, the participating community development financial institution shall pay to the authority a fee equal to fifty basis points of the amount deposited into the reserve account to support the loan, which the authority shall deposit into the reserve account, and annually thereafter. The participating community development financial institution may recover from the borrower all or part of the amount the participating community development financial institution is required to pay under this subsection in any manner agreed to by the financial institution and borrower. (d) For each loan under this part, the participating community development financial institution shall provide executed loan documents to the authority, within the period prescribed by the authority, including the amount of fees received from the borrower. § -13 Loans. (a) Except as otherwise provided by this chapter, the authority shall not determine the recipient, amount, or interest rate of a loan under this part or the fees or other requirements related to the loan. (b) To qualify as a loan under this part, a loan shall: (1) Be made to a condominium association; (2) Meet the limitations and conditions under section ‑5; and (3) Meet other criteria established by the authority by rules adopted pursuant to chapter 91. (c) For a line of credit to qualify for participation in the condominium loan loss reserves program, a line of credit shall: (1) Be an account at a participating community development financial institution under which the community development financial institution agrees to lend money to a qualified condominium association from time to time to finance one or more projects that are authorized by this chapter; and (2) Contain the same restrictions, to the extent possible, that are placed on a loan that is not a line of credit. (d) A loan under this part may be sold on the secondary market under conditions as may be determined by the participating community development financial institution with the consent of the authority. (e) When enrolling a loan in the condominium loan loss reserves program, a participating community development financial institution may specify an amount to be covered under the condominium loan loss reserves program that is less than the amount allowed under section -12(b). § -14 Limitations on state contribution to reserve account. The maximum aggregate amount the authority may retain on deposit in a reserve account shall not exceed per cent of the aggregate outstanding principal balance of enrolled loans. On a regular basis, no less than annually, the authority shall withdraw from a reserve account the amounts in excess of the limit and deposit that amount into the condominium loan revolving fund. A withdrawal of money authorized under this section shall not reduce an active reserve account to an amount that is less than the aggregate amount allowed under this section. § -15 State's rights with respect to reserve account. (a) All of the money in a reserve account established under this part is property of the State. (b) The State is entitled to earn interest on the amount of contributions made by the authority, borrower, and participating community development financial institution to a reserve account under this part. On a regular basis, no less than annually, the authority shall withdraw from a reserve account the amount of the interest earned by the State. The authority shall deposit the amount withdrawn under this section into the condominium loan revolving fund. (c) The authority shall withdraw from the participating community development financial institution's reserve account the total amount in the account and any interest earned on the account and deposit the amount into the condominium loan revolving fund when: (1) A participating community development financial institution is no longer eligible to participate in the condominium loan loss reserves program or a participation agreement entered into under this part expires without renewal by the authority or institution; and (2) The participating community development financial institution has no outstanding loans under this part. § -16 Participating community development financial institution's annual reports. A participating community development financial institution shall submit an annual report to the authority. The report shall: (1) Provide information regarding outstanding principal balance of the loans under this part, loan losses, and any other information on loans under this part the authority considers appropriate; (2) Include a copy of the participating community development financial institution's most recent financial statement; and (3) Include information regarding the condominium associations with loans under this part. § -17 Authority's annual report; audits. (a) The authority shall submit to the legislature an annual status report on the condominium loan loss reserves program's activities. (b) The condominium loan revolving fund shall be audited at least annually by a firm of independent certified public accountants selected by the authority and provide the results of the audit to the department of business, economic development, and tourism and the legislature. § -18 State liability prohibited. The State shall not be liable to a participating community development financial institution for payment of the principal, the interest, or any late charges on a loan made by a participating community development financial institution to a qualified condominium association under this part." SECTION 2. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to be deposited into the condominium loan revolving fund. SECTION 3. There is appropriated out of the condominium loan revolving fund the sum of $ or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to implement the condominium loan program. The sums appropriated shall be expended by the Hawaii green infrastructure authority for the purposes of this Act. SECTION 4. This Act shall take effect on July 1, 3000. |
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