RELATING TO THE HAWAII HOUSING FINANCE AND DEVELOPMENT CORPORATION.

HB1740

HOUSE OF REPRESENTATIVES

H.B. NO.

1740

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to the hawaii housing finance and development corporation
.

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

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SECTION 1.

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The legislature acknowledges that
Hawaii's housing shortage is exacerbated when housing developed or supported
through public approvals subsequently leaves the inventory available to
residents.
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Furthermore, the legislature
recognizes that affordability restrictions limited by time may result in units
being sold or rented without consideration of local residency or occupancy,
thereby undermining the long-term objectives of housing programs.

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The
legislature further finds that perpetual deed restrictions can help preserve
residential housing for future generations by ensuring that units are sold
exclusively to qualified residents and that occupancy is limited to individuals
domiciled within the State.
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These
restrictions are intended to promote local ownership, encourage resident
occupancy, and reduce vacant investment holdings and transient usage.

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Additionally,
the legislature notes that the Hawaii housing finance and development
corporation requires qualified residents to demonstrate financial viability to
purchase or the ability to pay rent for units in certain housing projects.
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However, lenders and landlords already
conduct necessary underwriting and screening, and duplicative reviews by the
corporation may cause unwarranted delays and administrative burden.

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The
legislature also recognizes that certain ownership-based criteria in the
existing definition of qualified resident may inadvertently limit mobility for
local households and disrupt typical progression through the housing market,
such as when growing families need to move to larger units.
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Deed-restricted units should be permitted to
be rented on a long-term basis and not be subject to perpetual owner-occupancy
requirements following an initial occupancy period, as long as residency and
occupancy standards remain enforced and transient use is prohibited.

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Accordingly,
the purpose of this Act is to strengthen the long-term public benefit of Hawaii
housing finance and development corporation approved housing projects by:

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(1)
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Removing certain financial screening and
ownership qualifications for purchasers of a unit in a corporation-approved
housing project; and

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(2)
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Requiring perpetual deed restrictions on the
sale of certain units within the housing project.

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SECTION 2.
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Section 201H-32, Hawaii Revised Statutes, is
amended by amending the definition of "qualified resident" to read as
follows:

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""Qualified resident"
means a person who:

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(1)
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Is a citizen of
the United States or a resident alien;

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(2)
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Is at least
eighteen years of age;

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(3)
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Is domiciled in
the State and physically resides in the dwelling unit purchased or rented under
this chapter;
and

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(4)
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[
In the case of
the purchase of real property in fee simple or leasehold, has a gross income
sufficient to qualify for the loan to finance the purchase; or in the case of a
rental, demonstrates an ability to pay rent as determined by the corporation
and meets any additional criteria established by the corporation for the
respective rental housing development for which the applicant is applying; and

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(5)
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Meets the
following qualifications:

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(A)
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Is
a person who either by the person's self, or together with spouse or household
member, does not own a majority interest in fee simple or leasehold lands
suitable for dwelling purposes or a majority interest in lands under any trust
agreement or other fiduciary arrangement in which another person holds the
legal title to the land; and

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(B)
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Is
a person whose spouse or household member does not own a majority interest in
fee simple or leasehold lands suitable for dwelling purposes or more than a
majority interest in lands under any trust agreement or other fiduciary
arrangement in which another person holds the legal title to the land, except
when husband and wife are living apart under a decree of separation from bed
and board issued by the family court pursuant to section 580-71;

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provided that for
]
In
the case of
purchasers of market-priced units in an economically integrated
housing project, [
the term "qualified resident" means a person who
]
is a citizen of the United States or a resident alien; is domiciled in the
State and shall physically reside in the dwelling unit purchased; is at least
eighteen years of age; and meets other qualifications as determined by the
developer."

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SECTION 3.
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Section 201H-38, Hawaii Revised Statutes, is
amended by amending subsection (a) to read as follows:

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(a)
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The corporation may
develop on behalf of the State or with an eligible developer, or may assist
under a government assistance program in the development of, housing projects
that shall be exempt from all statutes, charter provisions, ordinances, and
rules of any government agency relating to planning, zoning, construction
standards for subdivisions, development and improvement of land, and the
construction of dwelling units thereon; provided that:

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(1)
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The housing projects meet
the following conditions:

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(A)
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The corporation
finds the housing project is consistent with the purpose and intent of this
chapter, meets minimum requirements of health and safety, and provides the
county an opportunity to comment;

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(B)
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The development of
the proposed housing project does not contravene any safety standards, tariffs,
or rates and fees approved by the public utilities commission for public
utilities or of the various boards of water supply authorized under chapter 54;

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(C)
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The legislative
body of the county in which the housing project is to be situated has approved
the project with or without modifications:

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(i)
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The legislative
body shall approve, approve with modification, or disapprove the project by
resolution within forty-five days after the corporation has submitted the
preliminary plans and specifications for the project to the legislative body;
provided that the legislative body shall not impose stricter conditions, impose
stricter median income requirements, or reduce fee waivers that will increase
the cost of the project beyond those approved by the corporation.
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If, on the forty-sixth day a project is not
disapproved, it shall be deemed approved by the legislative body;

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(ii)
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No action shall be
prosecuted or maintained against any county, its officials, or employees on
account of actions taken by them in reviewing, approving, modifying, or
disapproving the plans and specifications; and

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(iii)
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The final plans
and specifications for the project shall be deemed approved by the legislative
body if the final plans and specifications do not substantially deviate from
the preliminary plans and specifications.
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The final plans and specifications for the project shall constitute the
zoning, building, construction, and subdivision standards for that
project.
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For purposes of sections 501-85
and 502-17, the executive director of the corporation or the responsible county
official may certify maps and plans of lands connected with the project as
having complied with applicable laws and ordinances relating to consolidation
and subdivision of lands, and the maps and plans shall be accepted for
registration or recordation by the land court and registrar; and

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(D)
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The land use
commission has approved, approved with modification, or disapproved a boundary
change within forty-five days after the corporation has submitted a petition to
the commission as provided in section 205-4.
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If, on the forty-sixth day, the petition is not disapproved, it shall be
deemed approved by the commission; or

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(2)
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The
housing projects[
:

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(A)
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Meet the conditions of paragraph (1);

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(B)
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Do
not impose stricter income requirements than those adopted or established by
the State; and

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(C)
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For
the lifetime of the project, require that one hundred per cent of the units in
the project be exclusively for qualified residents.
]
meet the following
conditions:

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(A)
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The
corporation approves the housing project and finds the housing project is
consistent with the purpose and intent of this chapter, meets minimum
requirements of health and safety, and provides the county an opportunity to
comment; and

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(B)
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No
less than eighty per cent of the units in the housing project are sold to
qualified residents and shall remain owner-occupied for a minimum of one year
following the initial sale of the unit; provided that upon sale, each unit in
the project shall be subject to a perpetual deed restriction requiring that:

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(i)
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The
occupant of the unit is domiciled in the State;

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(ii)
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Any
rental of the unit shall be for a minimum lease term of one year or more; and

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(iii)
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Any
sale of the unit shall be to a qualified resident.
"

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SECTION 4.
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Statutory material to be repealed is
bracketed and stricken.
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New statutory
material is underscored.

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SECTION 5.
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This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

HHFDC; Qualified
Residents; Affordable Housing; Housing Development; Exemptions;
Owner-Occupancy; Deed Restrictions

Description:

Removes
the prohibition against qualified residents for Hawaii Housing Finance and
Development Corporation-approved projects holding a majority interest in land
and removes the requirement that qualified residents demonstrate financial
viability or ability to pay rent.
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Amends
exemptions from statutes, ordinances, charter provisions, and rules for certain
housing projects developed by the Corporation that satisfy certain conditions,
including requirements related to employment, owner-occupancy, and deed
restrictions.

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