Bill Text: HI HB1633 | 2024 | Regular Session | Introduced
Bill Title: Relating To Contractors.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Vetoed) 2024-07-09 - Vetoed on 07-09-24 - Returned from the Governor without approval (Gov. Msg. No. 1358). [HB1633 Detail]
Download: Hawaii-2024-HB1633-Introduced.html
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
1633 |
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THIRTY-SECOND LEGISLATURE, 2024 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to contractors.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds the State faces a critical shortage of affordable rental housing, creating challenges for residents seeking accessible and diverse housing options. The escalating demand for rental properties, coupled with limited housing supply, has led to increased housing costs and economic strain on families throughout the State.
The legislature further finds that current regulations and barriers hinder homeowners in Hawaii from efficiently converting their single-family properties into multifamily dwellings, limiting their ability to actively participate in addressing the housing crisis.
Accordingly, the purpose of this Act is to remove the one-year prohibition on leasing residential units built by owner-builders who act as their own general contractor.
SECTION 2. Section 444-2.5, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:
"(a) This chapter shall not
apply to owners or lessees of property who build or improve residential or farm
buildings or structures on property for their own use, or for use by their
grandparents, parents, siblings, or children, and who do not offer the
buildings or structures for sale [or lease]; provided that:
(1) To qualify for an
exemption under this section, the owner or lessee shall register for the
exemption as provided in section 444-9.1;
(2) The exemption under this section shall not apply to electrical or plumbing work that must be performed only by persons or entities licensed in accordance with this chapter, unless the owner or lessee of the property is licensed for such work under chapter 448E;
(3) An owner or lessee exempted under this section
shall:
(A) Supervise the construction activity on the
exempt buildings or structures;
(B) Hire subcontractors appropriately licensed
under this chapter to perform any part of the construction activity for which a
license is required;
(C) Ensure that any electrical or plumbing work is
performed by persons and entities appropriately licensed under this chapter or
chapter 448E;
(D) Deduct Federal Insurance Contributions Act and
withholding taxes and provide workers' compensation insurance for persons
working on the construction activity who are not licensed under this chapter or
chapter 448E and who shall be considered employees of the owner or lessee; and
(E) Ensure that the construction activity complies
with all applicable laws, ordinances, building codes, and zoning regulations;
(4) Until completion of the construction activity,
an owner or lessee exempted under this section shall make available the
following records for immediate inspection upon request by the department:
(A) A copy of the building permit application;
(B) A copy of the issued building permit;
(C) Copies of all contracts with the names of all
persons who performed or are performing work on the exempt buildings and
structures; and
(D) Proof of payment to all persons contracted to
work on the exempt buildings and structures; and
(5) Upon completion of the construction activity,
an owner or lessee exempted under this section shall keep and maintain the
records identified in paragraph (4) for a period of three years from completion
of the construction activity and shall make the records available for
inspection within seven business days upon request by the department.
(b)
Proof of the sale [or lease,] or offering for sale [or lease,]
of the structure within one year after completion shall be prima facie evidence
that the construction or improvement of the structure was undertaken for the
purpose of sale [or lease]; provided that this subsection shall not
apply to:
(1) Residential properties sold [or leased]
to employees of the owner or lessee;
(2) Construction or improvements performed
pursuant to an approved building permit where the estimated valuation of work
to be performed, as reflected in the building permit, is less than $10,000; or
(3) Any sale [or lease] caused by an
eligible unforeseen hardship as determined by the board pursuant to subsection
(c).
(c) The board shall determine the eligibility of
an unforeseen hardship claimed by an owner under subsection
(b); provided that an alleged unforeseen hardship shall not be deemed eligible
if the board determines that the construction or improvement of the structure
was undertaken for the purpose of sale [or lease]. An exemption for an unforeseen
hardship shall not be denied solely because of lack of completion, as the term
is defined in subsection (e). An
owner seeking a determination of eligibility of an unforeseen hardship shall:
(1) Be in compliance with the requirements set forth in the disclosure statement required to be provided under section 444-9.1; and
(2) Submit a written application to the board at
any time prior to selling[, leasing,] or offering to sell [or lease]
the property describing the nature of the applicant's unforeseen hardship. The application shall include supporting
documentation detailing the hardship, such as:
(A) Evidence of receipt of unemployment compensation;
(B) Tax returns;
(C) Medical records;
(D) Bank statements;
(E) Divorce decrees ordering sale of property;
(F) Mortgage default letters; or
(G) Bankruptcy filings.
The board shall communicate its determination to the owner in writing within ninety days of receiving a completed application under this subsection."
SECTION 3. Section 444-9.1, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) The county shall provide applicants for the exemption under section 444-2.5 with a disclosure statement in substantially the following form:
"Disclosure Statement
State
law requires construction to be done by licensed contractors. You have applied for a permit under an
exemption to that law. The exemption
provided in section 444-2.5, Hawaii Revised Statutes, allows you, as the owner
or lessee of your property, to act as your own general contractor even though
you do not have a license. You must
supervise the construction yourself. You
must also hire licensed subcontractors. The
building must be for your own use and occupancy. It may not be built for sale [or lease]. If you sell [or lease] a building you
have built yourself within one year after the construction is complete, the law
will presume that you built it for sale [or lease], which is a violation
of the exemption, and you may be prosecuted for this. It is your responsibility to make sure that
subcontractors hired by you have licenses required by state law and by county
licensing ordinances. Electrical or
plumbing work must be performed by contractors licensed under chapters 448E and
444, Hawaii Revised Statutes. Any person
working on your building who is not licensed must be your employee which means
that you must deduct F.I.C.A. and withholding taxes and provide workers'
compensation for that employee, all as prescribed by law. Your construction must comply with all
applicable laws, ordinances, building codes, and zoning regulations. If you violate section 444-2.5 or fail to
comply with the requirements set forth in this disclosure statement, you may be
fined $5,000 or forty per cent of the appraised value of the building as
determined by the county tax appraiser, whichever is greater, for the first
offense; and $10,000 or fifty per cent of the appraised value of the building
as determined by the county tax appraiser, whichever is greater, for any
subsequent offense."
The county shall not issue a building permit to the owner-applicant until the applicant signs a statement that the applicant has read and understands the disclosure form."
SECTION 4. Statutory material to be repealed is bracketed and stricken.
SECTION 5. This Act shall take effect upon its approval.
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Report Title:
Contractors; Owner-builder Exemption; Disclaimer
Description:
Removes the leasing restriction on owner-builders who obtain an owner-builder exemption to act as their own general contractor.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
