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HB2625
HOUSE OF REPRESENTATIVES
H.B. NO.
2625
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII
A BILL FOR AN ACT
relating
to 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 vacant,
abandoned, and fire-damaged residential properties impose significant costs on
communities throughout Hawaii.
�
These
properties reduce surrounding property values, attract criminal activity,
create public safety hazards, and diminish the tax base available to fund
essential government services.
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The
legislature further finds that Hawaii faces a severe housing shortage, with
demand for affordable housing far exceeding available supply.
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Vacant and blighted residential properties
represent an underutilized resource that, if acquired and redeveloped, could
contribute to the State's housing inventory while simultaneously eliminating
neighborhood blight.
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The
legislature further finds that existing mechanisms for addressing vacant and
abandoned properties, including tax lien foreclosure and voluntary acquisition,
are inadequate to address the scope of the problem.
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The Hawaii housing finance and development
corporation possesses eminent domain authority under existing law but lacks a
dedicated program and streamlined procedures for acquiring and redeveloping
blighted residential properties.
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The
legislature further finds that the city and county of Honolulu has demonstrated
success in encouraging affordable rental housing development through its
affordable rental housing program.
�
That
program's combination of relaxed development standards, financial incentives,
and affordability requirements has enabled private development of affordable
rental housing on underutilized parcels.
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The
legislature further finds that enshrining similar development standards and
incentives in state law will facilitate the redevelopment of properties
acquired under this Act and provide consistency across all counties.
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The
purpose of this Act is to:
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(1)
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Establish the vacant and blighted residential
property redevelopment program within the Hawaii housing finance and
development corporation;
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(2)
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Create expedited procedures for the
acquisition of qualifying vacant and blighted residential properties;
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(3)
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Establish statewide development standards and
incentives modeled on the city and county of Honolulu's affordable rental
housing program to facilitate redevelopment of acquired properties as
affordable housing;
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(4)
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Provide for the redevelopment of acquired
properties as affordable rental housing; and
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(5)
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Appropriate funds for the implementation of
this program.
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SECTION
2.
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Chapter 201H, Hawaii Revised
Statutes, is amended by adding a new part to be appropriately designated and to
read as follows:
"
Part .
�
VACANT AND BLIGHTED RESIDENTIAL
PROPERTY REDEVELOPMENT PROGRAM
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201H-A
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Definitions.
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As used in this part, unless the context
otherwise requires:
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"Affordable
rental housing project" means a multifamily dwelling developed on property
acquired under this part that meets all of the following criteria:
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(1)
�
A minimum of eighty per cent of the dwelling
units in the project are rented to households with incomes that do not exceed
one hundred per cent of the area median income for the applicable county, as
established annually by the United States Department of Housing and Urban
Development, as adjusted for household size;
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(2)
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The dwelling units described in paragraph (1)
are rented at or below the rental rate limits established by the United States
Department of Housing and Urban Development for households earning one hundred
per cent of the area median income for the applicable household size; and
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(3)
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The fee owner of the land has executed a
declaration of restrictive covenants in a form approved by the corporation.
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"Area
median income" means the median family income for the applicable county,
as established annually by the United States Department of Housing and Urban
Development.
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"Blighted
residential property" or "blighted property" means a parcel
containing a residential structure that meets one or more of the following
criteria:
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(1)
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The structure is unfit for human habitation
due to fire damage, structural defects, or lack of essential utilities;
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(2)
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The structure has been condemned by a county
building official;
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(3)
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The structure poses an imminent threat to
public health or safety;
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(4)
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The structure has been substantially damaged
by a natural disaster and has not been repaired within twenty-four months of
the damage occurring; or
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(5)
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The structure has been determined by the
corporation, after inspection, to require rehabilitation costs exceeding fifty
per cent of the structure's pre-damage or pre-deterioration market value.
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"Declaration
of restrictive covenants" means the declaration of covenants, conditions,
and restrictions in a form approved by the corporation and signed by the fee
owner or owners of the land, including its improvements, on which an affordable
rental housing project is built, and that is recorded in the bureau of
conveyances, if regular system property, or the office of the assistant
registrar of the land court of the State, if the land is registered under
chapter 501.
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"Eligible
developer" means a private developer, nonprofit organization, community
land trust, public housing authority, or other entity that has been selected by
the corporation to develop an affordable rental housing project on property
acquired under this part.
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"Floor
area ratio" means the ratio of the total floor area of all buildings on a
lot to the lot area.
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"Program"
means the vacant and blighted residential property redevelopment program
established under this part.
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"Vacant
residential property" means a parcel containing a residential structure
that:
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(1)
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Has been unoccupied for a continuous period of
no less than twelve months;
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(2)
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Shows visible signs of abandonment, including
but not limited to:
���������
(A)
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Overgrown vegetation;
���������
(B)
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Accumulated debris;
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(C)
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Unsecured or boarded openings;
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(D)
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Disconnected utilities; or
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(E)
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Delinquent property taxes or assessments; and
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(3)
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Is not actively listed for sale or lease with
a licensed real estate broker, or subject to a pending building permit for
rehabilitation or redevelopment.
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�201H-B
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Vacant and blighted residential property
redevelopment program; establishment.
�
(a)
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There is established within
the corporation the vacant and blighted residential property redevelopment
program.
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The purpose of the program
shall be to:
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(1)
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Identify, acquire, and redevelop vacant and
blighted residential properties throughout the State;
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(2)
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Eliminate conditions of blight that threaten
public health, safety, and welfare;
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(3)
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Increase the supply of affordable rental
housing; and
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(4)
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Stabilize and improve neighborhoods adversely
affected by vacant and blighted properties.
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(b)
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The corporation shall administer the program
and may adopt rules pursuant to chapter 91 necessary to implement this part.
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(c)
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The corporation may delegate program
functions to the counties pursuant to intergovernmental agreements under
section 201H-10.
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�201H-C
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Powers of the corporation under the program.
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In addition to the powers granted under in
this chapter, the corporation, for purposes of the program, may:
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(1)
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Conduct inspections of properties suspected of
being vacant or blighted residential properties, upon reasonable notice to the
owner of record;
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(2)
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Maintain a registry of vacant and blighted
residential properties;
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(3)
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Acquire vacant and blighted residential
properties by purchase, donation, exchange, or eminent domain;
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(4)
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Clear, demolish, rehabilitate, or redevelop
acquired properties;
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(5)
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Sell, lease, or otherwise dispose of acquired
properties to eligible developers, subject to the development standards and
affordability requirements of this part;
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(6)
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Partner with counties, nonprofit
organizations, community development financial institutions, and private
developers to effectuate the purposes of this part;
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(7)
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Apply for and receive federal, state, and
private grants and loans for program purposes;
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(8)
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Issue requests for proposals for the
redevelopment of acquired properties;
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(9)
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Certify affordable rental housing projects
developed under this part for state tax exemptions and other benefits;
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(10)
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Issue development grants to eligible
developers from the vacant and blighted property redevelopment revolving fund;
and
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(11)
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Exercise any other power necessary to
effectuate the purposes of this part.
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�201H-D
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Affordable rental housing projects; permitted
use.
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(a)
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Affordable rental housing projects developed
on properties acquired under this part shall be a permitted use in any zoning
district that allows residential use, and shall be exempt from any county
zoning ordinance, rule, or regulation that would otherwise prohibit or restrict
the development of multifamily rental housing on the property; provided that
the project complies with the development standards set forth in this part.
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(b)
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Affordable rental housing projects developed
under this part shall proceed directly to the building permit process and no
prior discretionary land use approval shall be required, except as may be
required by state law.
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(c)
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An executed declaration of restrictive
covenants shall be submitted with any building permit application for an
affordable rental housing project under this part.
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All declarations of restrictive covenants
shall run with the land for as long as the affordable rental housing
improvements are standing and shall give notice to all subsequent fee owners of
the land of its affordable rental housing requirements.
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�201H-E
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Setback requirements.
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(a)
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The minimum front yard setback for an affordable rental housing project
developed under this part shall be ten feet or the minimum required by the
underlying county zoning, whichever is less.
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(b)
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The minimum side and rear yard setbacks shall
be five feet or the minimum required by the underlying county zoning, whichever
is less.
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(c)
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Front yard setbacks may be modified to
provide landscaping or other amenities.
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�201H-F
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Building height.
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(a)
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The maximum building height for an affordable
rental housing project developed under this part shall be sixty feet.
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(b)
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Building height shall be measured from the average finished grade at the
building perimeter to the highest point of the roof structure.
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�201H-G
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Density and floor area ratio.
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(a)
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The maximum floor area ratio for an affordable rental housing project
developed under this part shall be 4.0.
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(b)
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The maximum number of affordable rental
housing units for each development site shall be determined by dividing the
square footage equivalent of the maximum allowable floor area ratio for the
site by a factor of eight hundred and rounding down to the nearest whole
number.
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�201H-H
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Lot coverage.
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The maximum lot coverage for an affordable
rental housing project developed under this part shall be eighty per cent of
the lot area.
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�201H-I
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Maximum unit sizes.
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The maximum floor area for each dwelling unit
in an affordable rental housing project developed under this part shall be as
follows:
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(1)
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Studio with one bathroom:
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five hundred square feet;
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(2)
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One bedroom with one bathroom:
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six hundred fifty square feet;
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(3)
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One bedroom with one and one-half bathrooms:
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seven hundred square feet;
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(4)
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One bedroom with two bathrooms:
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seven hundred fifty square feet;
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(5)
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Two bedrooms with one bathroom:
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eight hundred square feet;
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(6)
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Two bedrooms with one and one-half bathrooms:
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nine hundred square feet;
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(7)
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Two bedrooms with two bathrooms:
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one thousand square feet;
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(8)
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Three bedrooms with one and one-half
bathrooms:
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one thousand one hundred
square feet;
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(9)
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Three bedrooms with two bathrooms:
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one thousand two hundred square feet;
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(10)
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Four bedrooms with two bathrooms:
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one thousand three hundred square feet; and
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(11)
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Four bedrooms with two and one-half bathrooms:
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one thousand three hundred fifty square
feet.
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�201H-J
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Parking requirements.
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(a)
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Off-street parking spaces shall not be required for affordable rental
housing projects developed under this part; provided that an eligible developer
may voluntarily provide parking.
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(b)
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Bicycle parking shall not be required for
affordable rental housing projects developed under this part; provided that if
an eligible developer voluntarily provides short-term or long-term bicycle
parking on site, such parking may encroach into required yards.
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(c)
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Loading zones shall not be required for
affordable rental housing projects developed under this part.
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�201H-K
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Other exemptions.
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Affordable rental housing projects developed
under this part shall be exempt from:
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(1)
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Park dedication requirements under county
subdivision ordinances;
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(2)
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Impact fees for schools, traffic, parks, or
other public facilities, to the extent permitted by law;
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(3)
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Any county ordinance requiring the provision
of affordable housing units as a condition of development; and
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(4)
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Elevator requirements, unless mandated by the
state building code for the specific building type and height.
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�201H-L
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Income and rent requirements.
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(a)
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All affordable rental housing projects developed on properties acquired
under this part shall meet the following affordability requirements:
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(1)
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A minimum of eighty per cent of the dwelling
units shall be rented to households with incomes at or below one hundred per
cent of the area median income for the applicable county, as adjusted for
household size;
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(2)
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Of the units required to be affordable under
paragraph (1), at least twenty-five per cent shall be rented to households with
incomes at or below eighty per cent of the area median income for the
applicable county, as adjusted for household size;
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(3)
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Units rented to households with incomes at or
below eighty per cent of area median income shall be rented at or below the
rental rate limits established by the United States Department of Housing and
Urban Development for households earning eighty per cent of the area median
income for the applicable household size;
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(4)
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Units rented to households with incomes above
eighty per cent but at or below one hundred per cent of area median income
shall be rented at or below the rental rate limits established by the United
States Department of Housing and Urban Development for households earning one
hundred per cent of the area median income for the applicable household size;
and
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(5)
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The remaining twenty per cent of units may be
rented at market rates.
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(b)
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The affordability requirements of this
section shall remain in effect for a minimum period of thirty years from the
date of initial occupancy; provided that affordability restrictions recorded in
the declaration of restrictive covenants shall run with the land for as long as
the affordable rental housing improvements are standing.
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�201H-M
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Real property tax exemption.
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(a)
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Notwithstanding any other law to the contrary, the portion of real
property used for affordable rental housing units in an affordable rental
housing project developed under this part shall be exempt from real property
taxes for a period of fifteen years from the date of initial occupancy;
provided that:
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(1)
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The affordable rental housing units are rented
to households earning eighty per cent or below of the area median income; and
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(2)
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The affordable rental housing units are rented
at or below the rental rate limits established by the United States Department
of Housing and Urban Development for households earning eighty per cent of the
area median income for the applicable household size.
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(b)
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Real property taxes on the land underlying an
affordable rental housing project developed under this part shall be frozen at
the pre-development assessed value during the period of construction; provided
that the period of construction shall not exceed three years from the date of
building permit issuance.
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201H-N
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Vacant and blighted property redevelopment
revolving fund.
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(a)
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There is established in the state treasury
the vacant and blighted property redevelopment revolving fund, to be
administered by the corporation.
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The
fund shall be used to provide loans, grants, or other financial assistance for
the acquisition, rehabilitation, or redevelopment of vacant or blighted real
property for purposes consistent with this part.
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(b)
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The corporation may expend moneys from the
fund for:
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(1)
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The purchase, long
‑
term
lease, or other acquisition of vacant or blighted real property;
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(2)
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Planning, design, environmental review,
permitting, and related pre
‑
development activities;
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(3)
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The stabilization, clearing, remediation, or
rehabilitation of vacant or blighted real property;
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(4)
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Redevelopment activities that facilitate the
construction of affordable housing, mixed
‑
use projects that include
affordable housing components, or community
‑
serving amenities;
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(5)
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Administrative expenses directly related to
the purposes of this section, not to exceed per cent
of annual fund expenditures; and
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(6)
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Any other purpose the corporation determines
necessary to carry out the intent of this section.
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(c)
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The fund shall consist of:
����
(1)
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Appropriations made by the legislature;
����
(2)
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Moneys received from federal, state, or county
sources;
����
(3)
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Moneys received from fees, assessments, or
other charges collected by the corporation related to vacant or blighted
property redevelopment, if applicable;
����
(4)
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Loan repayments, interest, and other returns
on investments made from the fund; and
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(5)
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Any other moneys received by the corporation
for the purposes of this section.
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�201H-O
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Development grants.
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(a)
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The corporation may provide development grants from the vacant and
blighted property redevelopment revolving fund under section 201H-N to eligible
developers who develop affordable rental housing projects on properties
acquired under this part.
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(b)
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Grants shall be awarded according to the
following schedule:
����
(1)
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For dwelling units with a floor area of less
than three hundred square feet:
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$40 per
square foot of dwelling floor area;
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(2)
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For dwelling units with a floor area of three
hundred square feet or more:
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$12,000 per
dwelling unit or $15 per square foot, whichever is greater; and
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(3)
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For dwelling units rented to households
earning sixty per cent or below of the area median income:
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an additional $3 per square foot of dwelling
floor area.
����
(c)
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Grants may be provided on either a
preconstruction basis or a post-construction basis, but not both.
����
(d)
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Preconstruction grant recipients shall be
required to pay their workers wages at rates no less than the wages prevailing
in the applicable county for corresponding classes of laborers and mechanics as
determined pursuant to section 104-2.
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�201H-P
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Waiver of fees.
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Affordable rental housing projects developed
under this part shall be exempt from:
����
(1)
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Building permit fees;
����
(2)
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Plan review fees;
����
(3)
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Sewer connection fees and wastewater system
facility charges;
����
(4)
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Water system facility charges and new meter
costs;
����
(5)
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Grading and grubbing permit fees; and
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(6)
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Any other permit fees charged by a state
agency for the development of the project."
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SECTION
3
.
�
There
is appropriated out of the general revenues of the State of Hawaii the sum of
$25,000,000 or so much thereof as may be necessary for fiscal year 2026-2027 to
be deposited into the
vacant and blighted property redevelopment
revolving fund
.
����
SECTION
4
.
�
There
is appropriated out of the
vacant and blighted property redevelopment
revolving fund
the sum of
$25,000,000 or so much thereof as may be necessary for fiscal year 2026-2027
for the purposes of the
vacant and blighted residential property
redevelopment program
.
����
The sum appropriated shall be expended by
the Hawaii housing finance and development corporation for the purposes of this
Act.
����
SECTION
5.
�
There is appropriated out of the
general revenues of the State of Hawaii the sum of $750,000 or so much thereof
as may be necessary for fiscal year 2026-2027 for administrative expenses of
the vacant and blighted residential property redevelopment program, including
personnel costs, property inspections, and program development.
����
The sum
appropriated shall be expended by the Hawaii housing finance and development
corporation for the purposes of this Act.
����
SECTION
6.
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In codifying the new sections added
by section 2 of this Act, the revisor of statutes shall substitute appropriate
section numbers for the letters used in designating the new sections in this
Act.
����
SECTION
7.
�
If any provision of this Act, or the
application thereof to any person or circumstance, is held invalid, the
invalidity does not affect other provisions or applications of the Act that can
be given effect without the invalid provision or application, and to this end
the provisions of this Act are severable.
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SECTION 8.
�
This Act shall take effect on July 1, 2026.
INTRODUCED BY:
_____________________________
Report Title:
HHFDC;
Vacant
and Blighted Residential Property Redevelopment Program; Revolving Fund; Real
Property Tax Exemption; Appropriations
Description:
Establishes
the
Vacant and Blighted Residential Property Redevelopment Program
within the Hawaii Housing Finance and Development Corporation.
�
Appropriates funds.
The summary description
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not legislation or evidence of legislative intent.