Hawaii Legislator Floats Bill Banning Foreign Buyers From Island

Key Takeaways:

– Hawaii State Senator Brenton Awa has presented a bill aimed at banning foreign buyers from purchasing or investing in property on the island.
– The senator believes that the bill will improve affordability for residents, as home prices have been driven up by people from outside of the state.
– The bill would prevent foreign buyers from owning or having a controlling interest in a property, with some exceptions.
– Foreign buyers who purchased property before July 1, 2024, would not be affected by the ban, but they would need to register their property with the Hawaii State Attorney General’s office by Jan. 1, 2025.
– Any foreign buyer who attempts to purchase or invest in a property after July 1, 2024, would be required to sell or divest from the property after three years.
– The bill has faced opposition from organizations such as the Department of Commerce and Consumer Affairs and the Hawaii chapter of the Commercial Real Estate Development Association.
– Despite the opposition, many Hawaiians have expressed support for the bill, citing frustration with foreigners and mainland U.S. citizens driving up prices.
– The vote on the bill has been deferred until February 13.
– This is the second foreign buyer ban to make headlines this month, with a panel of judges ruling in favor of buyers impacted by a similar bill in Florida.

inman:

Hawaii State Senator Brenton Awa has presented a bill aimed at banning foreign buyers from purchasing or investing in property on the island. The senator said the bill, if passed, would be an important to improving affordability for residents.

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Nine months after Florida passed a foreign buyer ban aimed at citizens of eight countries considered enemies of the United States, a Hawaii state senator has presented a foreign buyer ban aimed at curbing worsening affordability for local buyers.

Sen. Brenton Awa

“The people want this,” Senator Brenton Awa told Honolulu news outlet KHON2 on Tuesday. “During the pandemic, right before I got into office here, we saw the home prices jump up $400,000 within a year, and that was because people outside were coming in.”

Awa’s bill, Senate Bill 2617, would prevent foreign buyers from directly or indirectly owning or having a controlling interest in a property, except for a de minimus indirect interest of “five percent of any class of registered equities or less than five percent in the aggregate in multiple classes of registered equities.”

The bill does not apply to foreigners who bought or invested in property before July 1, 2024. However, there’s a provision that requires them to register their property with the Hawaii State Attorney General’s office by Jan. 1, 2025, or face a $1,000 daily fine.

Lastly, any foreign buyer who attempts to purchase or invest in a property on or after July 1, 2024, would be required to “sell, transfer, or otherwise divest” from the property after three years. The only exception in the bill is for foreign buyers who purchase a property for diplomatic purposes that are “recognized, acknowledged, or allowed by the federal government.”

“When [foreigners come] in with cash, and our salaries over here are less than those of the people who are ready to retire, we can’t compete,” Awa said. “This year, we just went straight for what another state had already passed, across the board foreigners banned and there might be amendments we have to make, but we’ll see.”

The Hawaii State Legislature hosted a public hearing on Tuesday where the Department of Commerce and Consumer Affairs, the Department of the Attorney General, the Department of Land and Natural Resources, the Hawaii chapter of the Commercial Real Estate Development Association (NAIOP), and the Hawaii Credit Union League opposed SB2617.

The opponents agreed with Awa about Hawaii’s affordability issue but said the bill violates the Equal Credit Opportunities Act and would open the state to years of litigation and substantial monetary liability.

Reyn Tanaka

NAIOP Hawaii President Reyn Tanaka said SB2617, if passed, would do irreparable harm to Hawaii by pushing affordable housing developers away from the state.

“NAIOP Hawaii stands in opposition to this measure which would seek to prohibit any foreign principal from owning property in Hawaii,” he said in a public letter. “Prohibiting foreign ownership of property in Hawaii may result in severe economic impacts by preventing outside investment in affordable housing, retail, healthcare, office buildings and other commercial projects that will serve our community and local families for decades to come.”

“NAIOP Hawaii is concerned with potential negative economic impacts SB 2617 would have on development of all product types in Hawaii,” he added. “Development in Hawaii is already among the most heavily regulated [in the] entire country which stifles economic growth, and SB 2617 would make Hawaii one of only a few states to disallow foreign investment and ownership of property.”

While state leaders pushed back on the bill, everyday Hawaiians supported Awa’s mission, as evidenced by more than 1,500 pages of written comments expressing their frustration with foreigners and mainland U.S. citizens coming to the state and driving up prices.

“We STRONGLY SUPPORT this bill. It’s about time!” Hawaii native De Mont Kalai Manaole said during an in-person testimony. “From the arrival of foreigners, Hawaii has had a “FOR SALE” sign embedded on our shores: Robinson claimed Ni’ihau, Elison claimed all, except for 55 Hawaiian homestead lots of Ni’ihau [and] of course now, Zuckerberg thinks Kaua’i belongs to him at the expense of the ‘Ohana Kuleana landowners.”

“It’s time we put up a new sign that reads: HAWAII IS NOT FOR SALE!!!” they added.

The nearly two-hour public hearing ended with legislators deferring the vote on SB2617 until February 13.

This is the second foreign buyer ban to make the headlines this month.

On Tuesday, a panel of judges with the 11th U.S. Circuit Court of Appeals ruled in favor of two buyers impacted by Senate Bill 264, a controversial bill that curbs buyers’ ability to own properties near military installments or critical infrastructure facilities in Florida.

The judges awarded homebuyers Yifan Shen and Zhiming Xu a temporary injunction that will allow them to continue with two transactions halted by the bill. The American Civil Liberties Union is now working on an April appeal to permanently topple the bill, which has been criticized for furthering anti-Chinese stereotypes.

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Property Chomp's Take:

Hawaii State Senator Brenton Awa has proposed a bill aimed at banning foreign buyers from purchasing or investing in property on the island. The senator believes that this measure is necessary to improve affordability for local residents.

According to Awa, the rising home prices in Hawaii can be attributed to people from outside the state buying properties. He claims that during the pandemic, home prices increased by $400,000 within a year, primarily due to foreign buyers.

The bill, known as Senate Bill 2617, would prohibit foreign buyers from directly or indirectly owning or having a controlling interest in a property, with the exception of a minimal indirect interest. The bill also includes a provision that requires foreigners who purchased or invested in property before July 1, 2024, to register their property with the Hawaii State Attorney General's office by January 1, 2025. Failure to do so would result in a daily fine of $1,000. Additionally, foreign buyers who attempt to purchase or invest in a property after July 1, 2024, would be required to sell or divest from the property after three years.

However, there are concerns about the bill raised by various organizations, including the Department of Commerce and Consumer Affairs, the Department of the Attorney General, the Department of Land and Natural Resources, the Hawaii chapter of the Commercial Real Estate Development Association (NAIOP), and the Hawaii Credit Union League. These opponents argue that the bill violates the Equal Credit Opportunities Act and could lead to years of litigation and substantial monetary liability.

Reyn Tanaka, the president of NAIOP Hawaii, expressed concern that the bill would deter affordable housing developers from investing in the state. He argued that prohibiting foreign ownership of property in Hawaii could have severe economic impacts by preventing outside investment in various projects that serve the community.

Despite these concerns, Senator Awa has received support from everyday Hawaiians who are frustrated with foreigners and mainland U.S. citizens driving up property prices. During a public hearing on the bill, many individuals expressed their support for the proposed ban, stating that it is time to protect Hawaii from being sold off to outsiders.

The vote on Senate Bill 2617 has been deferred until February 13. In the meantime, the debate over foreign buyer bans continues. In Florida, a panel of judges recently ruled in favor of two buyers impacted by a similar ban, which restricts ownership of properties near military installations or critical infrastructure facilities. The American Civil Liberties Union is working on an appeal to challenge the Florida ban, citing concerns about anti-Chinese stereotypes.

As the affordability crisis in Hawaii persists, the discussion around foreign buyer bans will likely continue. While some believe that these measures are necessary to protect local residents, others argue that they could have unintended consequences for the state's economy. The ultimate decision will depend on a careful consideration of all perspectives and the potential long-term impacts of such a ban.

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