RELATING TO THE HAWAII COMMUNITY DEVELOPMENT AUTHORITY.

HB605

HOUSE OF REPRESENTATIVES

H.B. NO.

605

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

relating
to the hawaii community development authority
.

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 office of
Hawaiian affairs was established under article XII, section 5, of the Hawaii
State Constitution to "hold title to all the real and personal property
now or hereafter set aside or conveyed to it which shall be held in trust for
native Hawaiians and Hawaiians."
�

The office of Hawaiian affairs' board of trustees is authorized by
article XII, section 6, of the Hawaii State Constitution
"
to manage and administer the
proceeds from the sale or other disposition of the lands . . . and income
derived from whatever sources for native Hawaiians and Hawaiians, including all
income and proceeds from that pro rata portion of the trust referred to in
section 4 of this article [the public land trust] for native Hawaiians".
�
The board of trustees is also authorized
under article XII, section 6, "to exercise control over real and personal
property set aside by state, federal or private sources and transferred to the
board for native Hawaiians and Hawaiians."

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In
section 1 of Act 15, Session Laws of Hawaii 2012 (Act 15), the legislature
found that a purpose of the Act was to:

[E]ffectively and responsibly fulfill the
constitutional obligation to native Hawaiians under article XII, sections 4 and
6, of the State Constitution between November 7, 1978, up to and including June
30, 2012 . . . and providing additional resources to the office in
the form of fee simple title to certain parcels of land[.]

In the same
section of Act 15, the legislature declared that the "[c]onveyance of the
fee simple interest to the lands . . . will allow the State to effectively and
responsibly meet [those] constitutional obligations to native Hawaiians."

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Further,
section 2 of Act 15 stated, "the fee simple interest to the . . . parcels
of land . . . is conveyed to the office of Hawaiian affairs as grantee, as of
July 1, 2012, as is, where is[.]"
�

In the same section of Act 15, however, the legislature specifically
directed that, "[t]he [properties] are and shall remain (even after
conveyance to the office) under the jurisdiction and authority of the Hawaii
community development authority, with respect to zoning, land use conditions[,]
and all other matters over which the authority has jurisdiction and authority
to act" and "shall be subject to all laws, except sections 206E-8,
206E-10, 206E‑34, Hawaii Revised Statutes, and otherwise provided in this
Act".

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Particularly
pertinent to the purpose of Act 15, in section 6, the legislature further
declared that:

The [p]roperties conveyed by this Act shall
be deemed income and proceeds from the public land trust, as if the
[p]roperties had been paid out of the income and proceeds from the public land
trust pursuant to article XII, section 6 of the Hawaii State Constitution.

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Relying
on its board of trustees' authority to "exercise control" over lands
that the office of Hawaiian affairs holds in trust for native Hawaiians, and to
"manage and administer" the income and proceeds from the public land
trust lands it receives, the office of Hawaiian affairs has asked the
legislature to enact this Act to allow the office of Hawaiian affairs to
maximize the income or proceeds that certain parcels of land conveyed by Act 15
could generate for the purposes of bettering the conditions of native
Hawaiians, by allowing the parcels to be developed for residential use.

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The
legislature further finds that the ongoing transformation of Kakaako into a
place where the people of Honolulu can live, work, and play should increase the
revenue generating potential of the land conveyed to the office of Hawaiian
affairs by Act 15 and concomitantly increase the number of programs and kinds
of services for which the office of Hawaiian affairs was created and is able to
provide for native Hawaiians.
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The
legislature further finds that even more revenue could be generated to provide
programs and services to better the conditions of native Hawaiians, if the
office of Hawaiian affairs were permitted to develop some or all of the parcels
it received under Act 15 for residential use.

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The
legislature agrees that the residential development restriction to which the
parcels transferred to the office of Hawaiian affairs by Act 15 were and
continue to be subject should be lifted for certain parcels to the extent
necessary to allow the office of Hawaiian affairs to realize the maximum income
or proceeds that those parcels could generate if they were developed for
residential use.

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The legislature
further
finds that the State continues to suffer
from a shortage of affordable housing with fewer families able to afford to buy
or rent a home in the State.
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Hawaii is the
most expensive state in the nation for housing, with its housing
costs
being
2.7 times the national average
.
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Housing costs in the State
have tripled since 1990, resulting in a
$850,000 median price for a single-family home.
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This price equates to a $252,000 annual income needed to afford a new
median priced home and fewer than one in three households in the State meet
that income threshold.
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In addition,
Native Hawaiians suffer disproportionately from this lack of affordable
housing.
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Native Hawaiians have the
highest rate of poverty and the lowest median household income of the major
ethnic groups in the State, causing many to become homeless or to leave the
State.
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Therefore, it
is essential that a certain percentage of the residential units developed on certain
parcels of land conveyed to the office of Hawaiian affairs pursuant to Act 15 be
workforce housing allocated to households within a certain income range.

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The legislature
also acknowledges that Act 172, Session Laws of Hawaii 2023, appropriated funds
into and out of the school facilities special fund to construct housing
prioritized for teachers, educators, and staff.
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Likewise, the legislature finds that priority for the workforce housing
developed on certain parcels of lands conveyed to the office of Hawaiian
affairs pursuant to Act 15 should be given to certain essential workforce in
the area.

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Furthermore, the
legislature acknowledges the extensive planning and community outreach efforts
by the Kakaako community planning advisory council, which resulted in the 2011
Kakaako Makai Conceptual Master Plan; the office of Hawaiian affairs' efforts,
which produced the 2013 Kakaako Makai Strategic Management Plan; and the Hawaii
community development authority's work and adoption of the 2017 Kakaako Makai
Area Parks Master Plan and the 2023 Kakaako Community Development District
Makai Area Plan.
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The legislature strongly
encourages the office of Hawaiian affairs to incorporate development concepts
from these various plans into its master plan development proposal for Kakaako
makai to create a live, work, and play community that addresses the
recreational, cultural, educational, economic, and workforce housing needs of
the State.

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Finally,
the legislature finds that inasmuch as this Act furthers one of the principle
purposes for which the office of Hawaiian affairs was established as a state
agency, its provisions should be deemed consistent with and not violative of
article XI, section 5, of the Hawaii State Constitution.

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The purpose of
this Act is to enhance the revenue generating capacity of certain parcels of
land in the Kakaako makai area, including parcels that were conveyed to the
office of Hawaiian affairs pursuant to Act 15 while making housing available to
the essential workforce in the area by:

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(1)
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Allowing
the Hawaii community development authority to approve residential development
on
certain
parcels
;

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(2)
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Raising
the building height limit
on
certain parcels;

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(3)
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Requir
ing
fifty per cent plus one of
the
residential
units
developed on certain

parcels to be
allocated to
households with income at or below one hundred forty per cent of the area
median income, with priority given to individuals who are essential workers
working within a five-mile radius of Kakaako makai
, including
but not limited to essential workers working for an employer
in
the health

care,
hospitality, education, law enforcement, civil service, or construction
industry
;

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(4)
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Limiting
the sale of residential units developed in certain residential developments to prospective
owner-occupants; and

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(5)
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Establishing
a Kakaako makai special fund and association fee to fund various services and
projects in the Kakaako makai area.

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SECTION
2.
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Chapter 206E, Hawaii Revised
Statutes, is amended by adding three new sections to part II to be
appropriately designated and to read as follows:

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"
�206E-A
�

Limited residential development in Kakaako; public hearing; height
limit; disclosures; nuisance mitigation; workforce housing.
�
(a)
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The authority may approve any plan or proposal for any residential
development in Kakaako on any parcels identified in the parcels bounded by:

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(1)
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Ala Moana Boulevard;

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(2)
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Forrest Avenue from its intersection
with Ala Moana Boulevard to Ilalo Street;

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(3)
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Ilalo Street from its intersection
with Forrest Avenue to Ohe Street;

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(4)
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Ohe Street from its intersection
with Ilalo Street to Olomehani Street;

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(5)
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Olomehani Street from its
intersection with Ohe Street to Ahui Street;

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(6)
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Ahui Street from its intersection
with Olomehani Street to the shoreline of the Kewalo Basin; and

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(7)
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The shoreline of Kewalo Basin to its
intersection with Ala Moana Boulevard;

provided that approval may be
granted only after the applicant seeking approval conducts a public hearing
held in accordance with subsection (b).

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(b)
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An applicant seeking approval of a plan or
proposal for any residential development pursuant to this section shall hold a
public hearing that shall be exempt from chapter 91 prior to submitting the
plan or proposal to the authority.
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Notice shall be published in accordance with section 1-28.5, at least
thirty days prior to the hearing.
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The
notice shall include:

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(1)
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The date, time, and place of the
hearing;

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(2)
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A statement of the topic of the
hearing; and

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(3)
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A description of where, when, and
how the residential development proposal may be viewed by the public.

All
interested persons may submit data or opinions, orally or in writing, in
conjunction with the hearing.

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(c)
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An applicant seeking approval of a plan or
proposal for residential development pursuant to this section shall fully
address all issues and questions raised in the written and oral submissions
permitted pursuant to subsection (b) regarding the proposed residential
development prior to submitting the plan or proposal to the authority.

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(d)
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The authority shall, prior to approving any
plan or proposal for residential development pursuant to this section:

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(1)
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H
old a public hearing; and

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(2)
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F
ully consider all written
and oral submissions received at the public hearings held by the applicant and
the authority.

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(e)
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Any other law to the contrary
notwithstanding, the building height limit shall be four hundred feet for any
residential development approved by the authority on the parcels bounded by Ala
Moana Boulevard, Ilalo Street, and Forrest Avenue pursuant to this section.

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(f)
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Any plan or proposal for
residential development
submitted to the authority for approval pursuant to this section shall include
an assessment and proposed mitigation plan for any
possible noise, odor,
and other aircraft-related nuisances that may affect the development.
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The office of Hawaiian affairs and any person
developing the residential development approved by the authority pursuant to this
section shall, before entering into any lease agreement for any lot, parcel,
structure, or unit of a structure located within the development, provide
written notice to potential lessees and residents of the possible noise, odor,
and other aircraft-related nuisances.

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(g)
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Any
residential development

approved by the authority
on the parcels
bounded by Ala Moana Boulevard, Ilalo Street, and Forrest Avenue
pursuant to this
section
shall allocate
at least fifty per
cent plus one unit of the
residential units in the development to households
with income at or below one hundred forty per cent of the area median income,
with priority given to individuals who are essential workers working within a
five-mile radius of Kakaako makai, including but not limited to essential
workers working for an employer
in the health

care,
hospitality, education, law enforcement, civil service, or construction
industry; provided that nothing in this subsection shall be construed to limit eligibility
for exemptions for housing developments under chapter 201H.

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(h)
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Notwithstanding
any other law to the contrary, no residential unit in a residential development
approved by the authority pursuant to this section, shall be sold to any person
other than a prospective owner-occupant.

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(i)
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For the purposes of this section, "owner-occupant" has the
same meaning as defined in section 514B-95.

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�206E-B
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Kakaako makai association fee.
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The authority
shall determine a Kakaako makai association fee to be collected from all
residential developments in Kakaako on lands identified in section 206E-A(a);
provided that the fee shall be collected from residential owners.

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�206E-C
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Kakaako makai special account.
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Kakaako makai association fees collected
pursuant to section 206E-B shall be deposited into a special account in the
Hawaii community development revolving fund established in section
206E-16.
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Moneys from the special account
shall be used to fund various services and projects, including but not limited
to maintenance, improvements, free public parking for park users, public beach
access, security, and parks and open spaces, for the Kakaako community
development district makai of Ala Moana Boulevard and between Kewalo Basin and
the foreign trade zone, including the Kewalo Basin area.
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Disbursements from the special account shall
be made in accordance with procedures adopted by the authority and approved by
the director of finance.
"

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SECTION

3
.
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Section
206E-12, Hawaii Revised Statutes, is amended to read as follows:

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"
�206E-12
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Dedication for public facilities as condition to development.
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(a)
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The authority shall establish rules requiring dedication for public
facilities of land or facilities, or cash payments in lieu thereof, by
developers as a condition of developing real property pursuant to the community
development plan.
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Where state and county
public facilities dedication laws, ordinances, or rules differ, the provision
for greater dedication shall prevail.

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(b)
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Rules adopted by the authority pursuant to
subsection (a) shall not apply to residential developments approved by the
authority pursuant to section 206E-A.
"

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SECTION

4
.
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Section
206E-31.5, Hawaii Revised Statutes, is amended to read as follows:

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"
�206E-31.5
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Prohibitions.
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Anything
contained in this chapter to the contrary notwithstanding,
and except as
provided in section 206E-A(a),
the authority is prohibited from:

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(1)
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Selling or otherwise assigning the fee
simple interest in any lands in the Kakaako community development district to
which the authority in its corporate capacity holds title, except with respect
to:

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(A)
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Utility easements;

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(B)
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Remnants as defined in section 171-52;

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(C)
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Grants to any state or county
department or agency;

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(D)
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Private entities for purposes of any
easement, roadway, or infrastructure improvements; or

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(E)
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Reserved housing as defined in section
206E-101; or

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(2)
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Approving any plan or proposal for any
residential development in that portion of the Kakaako community development
district makai of Ala Moana boulevard and between Kewalo Basin and the foreign
trade zone."

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SECTION
5.
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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.

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SECTION
6.
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New statutory material is
underscored.

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SECTION
7.
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This Act shall take effect on July 1,
2025.

INTRODUCED BY:

_____________________________

Report Title:

H
CDA
; O
HA
; Kakaako Makai
;
Residential
Development;
Height Limit;
Workforce Housing; Owner-occupant; Hawaii Community Development Revolving Fund;
Special Account; Kakaako Makai; Association Fee

Description:

Allow
s
the Hawaii
C
ommunity

D
evelopment
A
uthority to approve residential
development on certain parcels
of land in the
Kakaako Makai area.

�
R
ais
es
the building height limit on certain
parcels in the area
.
�
Requir
es a certain percentage of the
residential
units
developed on certain parcels
to
be allocated to households at or below a
certain
income level, with priority given to
certain
essential work
force in the area
.
�
Limits the sale of residential units
developed in certain residential developments to prospective owner-occupants.
�
Requires the Hawaii Community Development
Authority to determine a Kakaako Makai Association Fee to be collected from all
residential developments on certain parcels to be deposited into a special
account in the Hawaii Community Development Revolving Fund to fund various
services and projects in the Kakaako Makai area.

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