A pivotal state Senate committee listened to less than two minutes of testimony Tuesday before scrapping a proposal for a statewide rent control program.

Senate Commerce and Consumer Protection Committee Chairwoman Rosalyn Baker deferred Senate Bill 52 indefinitely after considering objections to the measure from the Hawaii Association of Realtors, and from others.

The measure would have prohibited landlords from raising rents more than 10% a year. The measure would have also banned landlords from increasing the rent on the same tenant more than two times in a single year.

Sen Rosalyn Baker motions to testifiers death dying hearing.
Sen. Rosalyn Baker deferred the rent control bill “indefinitely” after reviewing objections made by the Hawaii Association of Realtors and others. Cory Lum/Civil Beat

Under the bill introduced by Sen. Stanley Chang, landlords would be free to make more dramatic adjustments in the rents whenever one tenant moves out and another moves in.

Ken Hiraki, a former state lawmaker who now lobbies for the Hawaii Association of Realtors, argued in written testimony that “rent control does nothing to increase the supply of rental housing and, ultimately, increasing supply is the true long-term solution to Hawaii’s rental housing shortage.”

“Rent control discourages the construction of more rental units, making the problem even worse. Unless a rent control law permits a fair rate of return over time, housing providers may not be able to maintain their units,” Hiraki wrote.

David Chee, a lawyer who practices in the field of landlord-tenant law, said the provisions of the bill might encourage landlords to pressure tenants to move out so the landlords can pump up the rents.

Chee also pointed out rents in Hawaii are frozen during the pandemic emergency, “so, for the foreseeable future, this bill will not have any effect.”

Baker’s decision to shelve SB 52 means the measure is very unlikely to win approval this year.

Senator Stanley Chang . 7 march 2017
Sen. Stanley Chang wants to do away with the mortgage interest deduction for second homes. Cory Lum/Civil Beat/2017

However, Chang is the chairman of the Senate Housing Committee, and was able to use his position to advance another bill he introduced to eliminate the state income tax deduction for interest paid on mortgages for second homes.

Chang said in an interview he wants to use Senate Bill 202 in this time of economic crisis to remove a tax subsidy for second homeowners, thereby increasing state tax collections and discouraging people from holding on to vacant investment properties.

“We’re trying to remove the incentive that state taxpayers are giving to people who are acquiring homes not for their own occupancy,” Chang said.

Hiraki with the Hawaii Association of Realtors opposed that bill as well, saying in written testimony the mortgage interest deduction for second homes “is an important opportunity for individuals to use to invest for retirement or to support their families with Hawaii’s high cost of living and housing.”

“In today’s real estate environment, more homeowners are purchasing a second home for their elderly parents or their adult children who cannot otherwise afford to pay for a home,” Hiraki wrote.

The measure was unanimously approved by Chang’s Housing Committee, and now goes to the Senate Ways and Means Committee for further consideration.

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