State lawmakers want to help middle-income Hawaii residents purchase new homes with subsidies, under an envisioned pilot program that is pending authorization in the Legislature.

The unique and still largely conceptual approach to increase the supply of midpriced housing would have a state agency chip in to help moderate-income households buy new market-priced homes made more affordable with a taxpayer subsidy.

A bill to allow creation of such a program passed the state House on a 49-0 vote March 3, and on Thursday was advanced by the second of two Senate committees on the way to an expected full Senate vote.

The measure, House Bill 677, was drafted to provide $10 million for a five-year pilot project run by the Hawaii Housing Finance and Development Corp., an agency that mainly helps developers finance affordable- housing projects.

Rep. Troy Hashimoto, the bill’s lead introducer, said the rough idea is for HHFDC to contribute $100,000 toward 100 new-home purchases by moderate- income households.

Under such a program, households earning between 80% and 120% of a county’s median income could qualify for the subsidy and would have to pay back the stake adjusted for appreciation when the home is resold or after 30 years, whichever happens first.

The payback would allow HHFDC to redeploy money and make the home purchase subsidy program a revolving one if successful, according to Hashimoto (D, Wailuku-Waikapu).

“It’s not a grant,” he said. “It’s supposed to help (participants) build equity.”

HHFDC has been enthusiastic about the idea and supports the bill.

Denise Iseri-Matsubara, who was the agency’s director until recently leaving to head the city Office of Housing and Homelessness, described the envisioned program as an innovative way to buy down the cost of housing and help Hawaii’s workforce.

“We really want to see this bill go through,” she said at a Feb. 24 House Finance Committee hearing.

HHFDC has continued to strongly support the bill since Iseri-Matsubara’s departure.

Another supporter who testified at the Legislature was Nani Medeiros, the state’s chief housing coordinator in the office of Gov. Josh Green.

Still, many details about how such a program would be implemented need to be formulated through administrative rule-making or perhaps further amendments to the bill.

For instance, it’s unclear whether there would be some kind of parameter for the price of homes that could be bought with a subsidy, and how homes from among different developers would be selected.

Sen. Stanley Chang, chair of the Senate Committee on Housing, raised concerns during a March 16 hearing and said in a committee report that HHFDC needs to collaborate with the Legislature over establishing criteria and prioritization for applicants.

Chang (D, Hawaii Kai- Kahala-Diamond Head) noted his general aversion to affordable-housing lottery programs where a small number of people get a huge benefit.

“That’s why it’s so important to be very specific about the criteria as to who gets these large benefits, and make sure that they’re in furtherance of state policy goals,” he said during the hearing, where the bill was advanced on a 4-0 vote.

HHFDC said Thursday that it intends to give priority to first-time homebuyers and others considered in most need, and that homes would be lower-priced or starter units within projects where half of all homes already are priced for households earning no more than 140% of the median income.

Under HB 677, program subsidies would be restricted to households earning 80% to 120% of a county’s median income. The range on Oahu currently is $73,200 to $109,800 for a single person, $83,600 to $125,400 for a couple and $104,480 to $156,720 for a family of four.

On Thursday the Senate Ways and Means Committee passed the bill on a 13-0 vote.

If the bill clears the full Senate, it would still have to be amended in a House- Senate conference committee to be effective because the amount of money to be appropriated under the bill, initially $10 million, was zeroed out in a House committee amendment as a way to further discussion or allow for compromises.