Haw. Code R. § 15-306-2
As used, in this chapter: "Allowable construction costs" means expenses incurred by a contractor, for contracting, services and materials which are to be incorporated (in such a form as to be perceptible to the senses) into, or used completely by the contractor in, the development and construction of real property improvements and fixtures for a newly constructed, or moderately or substantially rehabilitated eligible housing project that are associated with the residential portion of the project, or that are de minimis non-residential uses within the project.
"Allowable development costs" means amounts incurred by a developer or a contractor for contracting, services, and materials that are used for the planning, development, and construction of a newly constructed, or moderately or substantially rehabilitated, eligible housing project that are associated with the residential portion of the project, or that are de minimis non-residential uses within the project.
"Allowable financing costs" means:
(1) Amounts paid by a developer or owner to the holder of any debt instrument secured by the leasehold or fee simple interest of the developer or owner in an eligible housing project, and to qualified persons or firms in connection with obtaining or administering such financing; and
(2) Interest earned by a developer or owner on construction loan funds; that are associated with the residential portion of the project, or that are de minimis non-residential uses within the project.
"Claimant" means a person or firm filing a claim with the corporation for general excise tax exemptions allowed under section 237-29, HRS.
"Contractor" means a person defined as a contractor under section 237-6, HRS.
"Corporation" means the Hawaii housing finance and development corporation.
"'De minimis non-residential uses"' means non-residential use or commercial use areas within a project, including parking areas set aside for these uses required by zoning regulations or other government approvals, that are not directly related to the provision of housing, are intended to directly benefit the residents of the housing project, and do not exceed a maximum of two percent of a project's gross residential floor area.
"Developed under the sponsorship of a private nonprofit corporation" means a newly constructed, or moderately or substantially rehabilitated housing project developed under a program qualified by the corporation and sponsored by a private nonprofit corporation whose purpose is the provision of affordable housing.
"Economic feasibility" means the ability of the eligible housing project to produce sufficient revenue to pay all operating expenses and charges to provide reasonable return and recapture of the capital invested.
"Eligible housing project" means:
(1) A rental housing project by a qualified person or firm where at least fifty percent of the available units are for households with incomes at or below eighty per cent of the area median family income, as determined by HUD, of which at least twenty per cent of the available units are for households with incomes at or below sixty per cent of the area median family income, as determined by HUD; or
(2) A housing project meeting at least one of the three income criteria and at least one of the three development criteria that follow:
(A) Income criteria:
(i) At least twenty per cent of the units in the project are rented or sold to households with incomes of up to fifty per cent of the area median income as determined by HUD;
(ii) At least forty per cent of the units are rented or sold to households with incomes of up to ninety-five per cent of the area median income, as determined by HUD; or
(iii) At least sixty per cent of the units must be rented or sold to households with incomes of up to one hundred forty per cent of the area median income, as determined by HUD; and
(B) Development criteria:
(i) Rental or for-sale housing projects which are developed under a housing development program pursuant to part II of chapter 2 01H, HRS;
(ii) Rental or for-sale housing projects which are developed or acquired for the provision of affordable housing under a government assistance program approved by the corporation; or
(iii) Rental or for-sale housing projects developed under the sponsorship of a private nonprofit corporation.
''Eligible housing projects"' may include de minimis non-residential uses that are intended to directly benefit the residents of the housing project.
''Government assistance program"' means any housing program qualified by the corporation and administered or operated by the State, the corporation, the United States, or any of their political subdivisions, agencies, or instrumentalities, corporate or otherwise, which may be used to effectuate housing development and acquisition for the provision of affordable housing for qualified persons in the State. "Government assistance program" includes, but is not limited to, the United States Department of Agriculture's 502 and 515 programs; the Federal Housing Administration's 235 program; the United States Department of Housing and Urban Development's HOME, HOPE, 202, and 811 programs; the section 802 military housing program; the military construction and family housing program; the military housing privatization initiative program; the low income housing tax credit program; the corporation's rental housing revolving fund program; the corporation's rental assistance program; the corporation's dwelling unit revolving fund program; tax exempt or taxable multi-family bond financing programs administered by the corporation or any of the counties; the acquisition of land and existing structures for the provision of affordable housing, for which the legislature has appropriated or otherwise authorized funding; residential projects developed by the department of Hawaiian home lands; and residential projects developed by the Hawaii public housing authority.
"HRS" means the Hawaii Revised Statutes.
"HUD" means the United States Department of Housing and Urban Development.
"Limited distribution mortgagor" means an entity which may consist of a person, partnership, association, or limited liability partnership and company which has executed with the federal, state, or county agency a regulatory agreement as to rents, charges, profits, dividends, development costs, and methods of operation.
"Lower income households" mean households with incomes up to and including one hundred forty per cent of the area median income as determined by HUD.
"Moderate rehabilitation" means rehabilitation to upgrade a unit to a decent, safe, and sanitary condition, or to repair or replace major building systems or components in danger of failure.
"Non de minimis development costs" means the cost to construct the non de minimis use area in a project. Non de minimis development costs are not considered "allowable development costs."
(1) If the project's non de minimis use area does not have unfinished commercial construction specifications (i.e., "shell" space which is substantially unfinished and intended to be built out by or for a commercial tenant, as determined by HHFDC in its sole discretion), "non de minimis development costs" shall be calculated by using the ratio of the project's non de minimis use area including associated parking areas to the project's total area, multiplied by the total development cost excluding any offsite development costs.
(2) Alternatively, projects with non de minimis use area with unfinished commercial construction specifications may opt to calculate the non de minimis development costs by multiplying the non de minimis use area by one hundred sixty dollars ($160.00) per square foot. This multiplier shall be adjusted annually each July 1 using the consumer price index series title: all items in U.S. city average, all urban consumers, not seasonally adjusted, for the month of April published by the U.S. Department of Labor, Bureau of Labor Statistics.
(3) If the project contains a mixture of finished and unfinished commercial areas, only the unfinished commercial areas may use the alternative calculation method.
''Non de minimis use area"' means the floor area of a project, plus associated parking areas, that is not directly related to the provision of housing for the project and is not de minimis non-residential use.
"Nonprofit corporation" means a corporation incorporated under chapter 414D, HRS.
"Qualified person or firm" means an individual, partnership, joint venture, corporation, association, limited liability partnership, limited liability company, business, trust, or any organized group of persons or legal entities, or any combination thereof, which possesses all professional or vocational licenses necessary to do business in the State of Hawaii in conjunction with the planning, design, financing, construction (including materials and supplies for new construction, moderate rehabilitation, and substantial rehabilitation), sale, or rental of eligible housing projects.
"Regulatory agreement" means the agreement under which projects shall be regulated by the corporation, in a published format determined by the corporation and recorded in the bureau of conveyances, including, but not limited to, a development agreement, deed restriction, other recorded written agreement or determination that the claimant's project is legally bound to the affordability requirements as set out in the application or applications with the corporation or other governmental agencies, whichever is applicable. A regulatory agreement shall include, but is not limited to, the right of the corporation to recapture a proportionate share of the approximate project construction cost savings from the exemption from general excise taxes if the project's units do not remain restricted for income-qualified tenants for the full remaining term of the regulatory agreement, and such additional covenants and restrictions as may be determined necessary by the corporation on a case-by-case basis.
"Staff" means the employed personnel of the corporation.
"State" means the State of Hawaii.
''Substantial rehabilitation"' means the improvement of a property to a decent, safe, and sanitary condition that requires more than routine or minor repairs or improvements and may include, but is not limited to, the gutting and extensive reconstruction of a unit or cosmetic improvements coupled with the curing of a substantial accumulation of deferred maintenance. Substantial rehabilitation also includes rehabilitation activity that is necessary to correct substandard conditions to make essential improvements, and to repair major systems in danger of failure. The term "major systems" includes, but is not limited to, such items as roof structures, ceiling, wall or floor structures, foundations, elevators, and plumbing or electrical repair, replacement, or in some cases removal. Substantial rehabilitation activities also include energy and other natural resource conservation related repairs and improvements, as well as improvements required to provide access or added safety for the handicapped or elderly and renovation, alteration, or remodeling to convert or adapt structurally sound property to the design and condition required for a specific use (e.g., conversion of a hotel to housing for elders).
Haw. Code R. § 15-306-2