RELATING TO WORKFORCE HOUSING.

HB1317

HOUSE OF REPRESENTATIVES

H.B. NO.

1317

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

relating
to workforce housing
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION 1.
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The
legislature finds that the current Governor Josh Green's administration has
made significant attempts to increase Hawai
ʻ
i's housing supply,
including prioritization of affordable housing and addressing zoning and
permitting inefficiencies.
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The
administration advocated for faster processing of housing permits and
increasing land availability for residential development.
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Despite these efforts, progress has stalled
due to bureaucratic challenges, lengthy regulatory processes, and limited
coordination between state agencies.

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The legislature also finds that workforce
housing is critical for the State, as housing in close proximity to emerging
industries provides affordable living options for essential workers who are
vital to the State's economy.
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Increasing
workforce housing helps stabilize communities, reduce commute times, and
enhance the quality of life for residents.
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A regulatory sandbox could serve as a pathway to expand workforce
housing by allowing developers to test innovative housing solutions under
relaxed permitting and regulatory requirements.
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By fostering collaboration between dedicated state agencies, the sandbox
can accelerate the creation of workforce housing while addressing broader
housing shortages in the State.

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Furthermore, the legislature additionally
finds that a 2019 study conducted by the Hawaii Housing Planning Study
projected that the State would need approximately 50,156 new housing units by
2025 to meet existing demand, with a significant portion of this demand being
for workforce housing.
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If targeted efforts
were made to improve the workforce housing supply, meeting twenty per cent of
this demand through innovative regulatory approaches such as a regulatory
sandbox could provide more than ten thousand units, significantly easing the
housing crisis over the next decade.

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The legislature further finds that, if the
Hawaii housing finance and development corporation administers the regulatory
sandbox, the corporation can ensure effective operations and alignment with the
State's unique needs and priorities.
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Further,
establishing an advisory council with environmental and cultural advisors can
help ensure that innovative housing solutions respect Hawai
ʻ
i's
natural resources and cultural heritage.
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This collaborative approach will balance the urgency of addressing the
housing crisis with the responsibility of preserving the State's environmental
and cultural integrity.

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Urgency for innovative approaches has never
been greater, as the State's housing crisis forces more local families to leave
the State in search of affordable living.
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Addressing this challenge by developing ten thousand workforce housing
units will be a complex endeavor that promises lasting solutions to sustain the
State's growth.

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Accordingly, the purpose of this Act is to:

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(1)
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Establish
a regulatory sandbox with the Hawaii housing finance and development corporation
to provide temporary regulatory flexibility for the development of innovative
workforce housing solutions; and

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(2)
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Establish
an advisory council to support the workforce housing regulatory sandbox.

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SECTION 2.
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For the purposes of this Act:

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"Corporation" means the Hawaii
housing finance and development corporation.

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"Regulatory sandbox" means a temporarily
modified regulatory framework that enables workforce housing developers to test
innovative solutions.

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"Workforce housing" means housing
targeted for households earning between sixty per cent and one hundred forty
per cent of the area median income, adjusted for high-cost area for determining
area median income and family size, as defined by the United States Department
of Housing and Urban Development.

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SECTION 3.
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(a)
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There is established the
workforce housing regulatory sandbox program to be administered by the
corporation.

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(b)
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The
workforce housing regulatory sandbox program shall waive or temporarily modify
permitting processes and other regulatory requirements for eligible workforce
housing projects to encourage innovation and reduce barriers to construction.

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SECTION 4.
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(a)
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There is established an
advisory council to provide guidance and oversight for the workforce housing
regulatory sandbox program.

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(b)
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The advisory council shall consist of the following members:

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(1)
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A
representative from the corporation;

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(2)
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A
representative from the board of land and natural resources;

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(3)
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A
representative from the state historic preservation division;

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(4)
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One
representative who shall have a demonstrated knowledge of sustainable
development practices;

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(5)
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One
representative who shall be a cultural expert in Native Hawaiian traditional
and customary practices;

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(6)
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One
representative from the private housing development sector;

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(7)
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One
representative from a nonprofit housing organization; and

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(8)
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Other
members whose expertise is relevant to the goals of the workforce housing regulatory
sandbox program, who shall be invited by the advisory council.

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(c)
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The advisory council shall:

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(1)
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Provide
recommendations to the corporation regarding cultural, environmental, and
sustainability considerations; and

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(2)
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Monitor
projects to ensure compliance with the objectives of the regulatory sandbox.

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SECTION 5.
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(a)
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Developers seeking entry into
the regulatory sandbox shall submit an application to the corporation that
includes:

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(1)
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A
description of the proposed innovative workforce housing solution;

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(2)
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An
explanation of how the project addresses affordability, sustainability, and
expedited construction; and

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(3)
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An
assessment of potential environmental and cultural impacts, including proposed
mitigation measures.

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(b)
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Projects shall meet the following criteria for consideration:

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(1)
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Demonstrate
alignment with the affordability targets of workforce housing;

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(2)
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Incorporate
sustainable building practice; and

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(3)
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Demonstrate
potential for significant reduction in construction timelines.

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SECTION 6.
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(a)
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The corporation may
temporarily waive or modify regulatory requirements for approved projects
including but not limited to:

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(1)
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Expedited
permitting processes;

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(2)
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Reduced
or waived infrastructure capacity fees; or

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(3)
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Flexible
zoning and land use requirements.

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(b)
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All waivers or modifications shall be subject to review and approval by
the advisory council.

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SECTION 7.
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Developers participating in the workforce housing regulatory sandbox
program shall ensure that:

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(1)
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Sale
prices or rents remain affordable for workforce households earning between
sixty per cent and one hundred forty per cent of the area median income for a
minimum of ten years;

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(2)
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Units
shall be prohibited from being used as short-term rentals for at least ten
years;

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(3)
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Units
shall be owned or rented by legal United States residents and occupied
full-time by the resident's household; and

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(4)
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At
least one adult in each household shall be employed full-time or the equivalent
for ten years;

provided
that deed restrictions or equivalent legal mechanisms shall be used to enforce
the requirements in accordance with this section.

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SECTION 8.
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(a)
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The corporation shall monitor
the progress of all projects in the workforce housing regulatory sandbox program
and ensure compliance with the objectives of this Act.

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(b)
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The corporation shall submit a report of its findings and
recommendations, including any proposed legislation, to the legislature no
later than twenty days prior to the convening of each regular session

for the duration of the program.
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The
report shall include:

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(1)
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The
number and types of projects approved;

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(2)
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The
regulatory modifications granted;

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(3)
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Outcomes
related to affordability, sustainability, and construction timelines; and

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(4)
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Future
improvements or extension of the workforce housing regulatory sandbox program.

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SECTION 9.
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There is appropriated out of the general revenues of the State of Hawaii
the sum of $5,000,000 or so much thereof as may be necessary for fiscal year
2025-2026 and the same sum or so much thereof as may be necessary for fiscal
year 2026-2027 for the establishment and operation of the workforce housing
regulatory sandbox program established pursuant to this Act, including
administrative costs, staffing, and support for approved projects.

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The sums

appropriated shall be expended by the Hawaii housing finance and
development corporation for the purposes of this Act.

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SECTION 10.
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This Act shall take effect on July 1, 2025; provided that this Act shall
be repealed on June 30, 2030.

INTRODUCED BY:

_____________________________

Report Title:

HHFDC;
Workforce Housing Regulatory Sandbox Program; Advisory Council; Workforce
Housing; Permitting; Affordable Housing; Reports; Appropriations

Description:

Establishes
the Workforce Housing Regulatory Sandbox Program within the Hawaii Housing
Finance and Development Corporation.
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Establishes an Advisory Council within the Workforce Housing Regulatory
Sandbox Program to advise on environmental and cultural practices within
specific developments.
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Requires annual
reports to the Legislature.
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Appropriates
funds.
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Repeals 6/30/2030.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.