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SR 38

REQUESTING THE DEPARTMENT OF BUSINESS, ECONOMIC DEVELOPMENT, AND TOURISM TO CONDUCT A STUDY ON THE FEASIBILITY OF UTILIZING MEZZANINE LOANS TO INCREASE THE RATE OF HOUSING PRODUCTION IN THE STATE.

2026 Regular Session Introduced by Stanley Chang and 4 co-sponsors

Hawaii requests study on using mezzanine loans to accelerate housing development and address shortage through hybrid financing structures.

Offered.
#dbedt #housingdevelopment #mezzanineloans #report #study
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Bill Summary · SR 38

Legislative bill overview

Senate Resolution 38 requests Hawaii's Department of Business, Economic Development, and Tourism (DBEDT) to study whether mezzanine loans—a hybrid financing tool combining debt and equity characteristics—could accelerate residential construction in the state. The study would examine feasibility, implementation mechanisms, and potential impact on housing production rates.

Why is this important

Hawaii faces a severe affordable housing shortage, with construction costs and financing barriers limiting new supply. Mezzanine loans, which bridge gaps between primary mortgages and equity investment, could unlock funding for developers who struggle to meet traditional lending requirements, potentially increasing housing unit production on limited developable land.

Potential points of contention

  • Cost to consumers: Mezzanine loans carry higher interest rates than conventional mortgages; developers may pass these costs to homebuyers, potentially contradicting affordability goals
  • Risk allocation: Mezzanine lenders occupy a riskier position; if projects fail, taxpayer-backed programs or public investments could absorb losses
  • Study scope limitations: A feasibility study alone doesn't guarantee implementation; without follow-up legislation, findings may languish without actionable policy changes
  • Prioritization concerns: Critics may argue resources should focus on proven solutions (zoning reform, direct public funding) rather than exploring new financing mechanisms

Compiled from official sources — confirm details with the bill’s official record.

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