RELATING TO HOUSING.

HB739

HOUSE OF REPRESENTATIVES

H.B. NO.

739

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

relating
to housing
.

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

����
SECTION 1.
�
The legislature finds that Hawaii is in the
midst of a crisis as a substantial number of residents are unable to secure
attainable housing to rent or to own.
�

The exorbitant cost of real estate renders homeownership unattainable
for many local families, with the average price of a home in Hawaii surpassing
$800,000, an amount considerably beyond the financial reach of most local
working residents.

����
The legislature further finds that
Hawaii has been struggling with outmigration as local working residents are
compelled to leave the islands in search of more affordable living
situations.
�
The department of business,
tourism, and economic development reported that, on average, between July 1,
2022, and July 1, 2023, an average of twelve people departed from Hawaii each
day.
�
As a result, for the first time in
history, a greater number of Native Hawaiians reside outside of Hawaii than in
it.
�
This exodus signifies a loss not
only of population but also of cultural heritage.

����
A recent study of nearly fifteen hundred
local working residents conducted by Holomua Collective found that seventy per
cent of respondents plan to leave or are considering leaving Hawaii as they
cannot afford to live here.
�
Nearly half
of that seventy per cent plan to move within the next five years.

����
The legislature also finds that
another crucial aspect of Hawaii's housing crisis is the shortage of attainable
housing for essential workers like teachers, police officers, health care
providers, and others who serve the community.
�

With limited attainable housing options and high building costs, it

is
becoming increasingly difficult to find suitable places for these workers to
live, driving crucial workers to relocate to the continent.

����
The legislature additionally finds
that like Hawaii, the town of Vail, Colorado has a tourism-based economy in
which local working residents struggle to find attainable housing in part due
to the large percentage of vacant homes owned by non-residents.
�
In 2018, in an attempt to provide for local
workforce housing and invest in the future of its town, the town of Vail
implemented "Vail InDEED", a voluntary program that allowed the town
to buy and place deed restrictions in perpetuity on local homes from willing
buyers that limited occupancy to owner-occupants or resident tenants that live
and work in the town of Vail.
�
Since
2018, the program has resulted in the establishment of over one thousand deed
restricted residences for local working residents, helped provide more
attainable housing options for local working residents, and created a culture
in which Vail residents want to live in and support the deed restricted
residences.

����
The legislature believes Hawaii can
learn from the town of Vail, and that a program similar to Vail InDEED could
develop a stock of homes in Hawaii that are dedicated to locals.
�
This program could be effective in helping
local families buy homes by bringing together the needs of employers, workers,
and the community.
�
Additionally, this
program would not only aid people in securing housing but would also contribute
to the preservation of Hawaii
�
s distinctive culture by ensuring
that local families remain in the State.

����
Accordingly, the purpose of this Act
is to establish and fund the kamaaina homes program as an investment in the
future of Hawaii and keep local working families in the State by securing a
dedicated housing supply specifically for locals.

����
SECTION 2.
�
Chapter 201H, Hawaii Revised Statutes, is
amended by adding a new subpart to part III to be appropriately designated and
to read as follows:

" .
�
KAMAAINA HOMES PROGRAM

����
�
201H-A
�
Definitions.
�
As used in this subpart, unless the context
otherwise requires:

����
"Eligible homeowner or
homebuyer" means a person or family, without regard to race, creed,
national origin, or sex, who:

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

����
(2)
�
Is a resident domiciled
in the State;

����
(3)
�
Is
at least eighteen years of age;

����
(4)
�
Agrees to sell to
the county and place a deed restriction on the property that is in compliance
with section 201H-C;

����
(5)
�
Agrees to comply
with annual reporting requirements as provided pursuant to section 201H-E;

����
(6)
�
Owns no other
property with a deed restriction pursuant to this subpart; and

����
(7)
�
Meets any other
qualifications as established by rules adopted by the corporation or county.

����
"Qualified business" means
a corporation, partnership, sole proprietorship, trust or foundation, or any
other individual or organization carrying on a business, whether or not
operated for profit that:

����
(1)
�
Has
a physical
presence within the State;

����
(2)
�
Has
a current and
valid business license to operate in the State;

����
(3)
�
Is s
ubject to state
income taxes pursuant to chapter 235; and

����
(4)
�
Is generally
recognized as an operating business within the community.

"Qualified business" includes
s
tate and county departments and
agencies.

����
�
201H-B
�
Kamaaina homes program; established; general
provisions.
�
(a)
�
There is established within the corporation
the kamaaina homes program to provide counties funding through the dwelling
unit revolving fund established pursuant to section 201H-191 to purchase
voluntary deed restrictions from eligible homeowners or homebuyers.

����
(b)
�

Upon application by a county, in a form prescribed by the corporation,
the corporation shall allocate a dollar amount necessary for a county to
purchase a voluntary deed restriction from an eligible homeowner or homebuyer;
provided that a county shall apply for no less than
$ at a time.

����
(c)
�

A county may deposit funds received from the corporation pursuant to
subsection (b) into an escrow account until the purchase of a deed restriction
is finalized.

����
(d)
�

No eligible homeowner or homebuyer shall be granted funds under this
subpart if a deed restriction that satisfies section 201H-C already runs with
the land of the property.

����
(e)
�

Any initial lease for tenancy offered at a property with a deed
restriction placed pursuant to this subpart shall be for a minimum of six
months.
�
An initial lease may transfer to
a month-to-month lease upon completion of the original term.

����
(f)
�

The deed restriction placed and owned by the county pursuant to this
subpart shall take first priority over other restrictions on the property, if
applicable.

����
(g)
�

Counties shall be responsible for validating the evidence and ensuring
compliance with this subpart.
�
Counties
may contract with non-government persons or entities to ensure compliance with
this subpart.
�
Counties shall report any
property not in compliance with this subpart to the corporation.

����
(h)
�

If a property with a deed restriction in place pursuant to this subpart
is sold to a nonresident, or at sale it is determined that the property has
been rented to a nonresident, the corporation may bring action against the
homeowner in the appropriate circuit court and shall be entitled to fifty per
cent of appreciation at the time of sale, to be collected by the corporation
and placed in the dwelling unit revolving fund established under section
201H-191.

����
(i)
�

If a county does not expend moneys allocated pursuant to this section
within one year of receipt, the moneys shall be returned to the corporation and
placed in the dwelling unit revolving fund established under section 201H-191.

����
(j)
�

The corporation and each county may establish, revise, charge, and
collect fees, premiums, and impose costs as necessary, reasonable, or
convenient to effectuate the purposes of this subpart.

����
(k)
�

The corporation may adopt rules pursuant to chapter 91 for the purposes
of this subpart.
�
Each county may adopt
rules pursuant to chapter 91 for purposes of this subpart; provided that the
rules shall not conflict with rules adopted by the corporation.

����
�
201H-C
�
Deed restriction; requirements.
�
(a)
�

Notwithstanding any other law to the contrary, a deed restriction shall
be recorded against the property and shall run with the land in perpetuity,
binding all future owners, successors, and assigns.

����
(b) Notwithstanding any other law to
the contrary, a deed restriction placed on a property and held by a county
pursuant to this subpart shall require that the property be occupied by at
least one owner-occupant or tenant who:

����
(1)
�
Works an average
of thirty hours or more per week at a qualified business within the State;

����
(2)
�
Is involuntarily
unemployed:

���������
(A)
�
From a job in
which the owner-occupant or tenant worked an average of thirty hours or more
per week at a qualified business within the State at the time of initial
occupancy; and

���������
(B)
�
For a period of
less than three hundred sixty-five days;

����
(3)
�
Is retired;
provided that the retiree:

���������
(A)
�
Was sixty-five
years of age or older at the time of retirement; and

���������
(B)
�
Worked an average
of thirty hours or more per week at a qualified business within the county for
ten consecutive years immediately preceding retirement; or

����
(4)
�
Has a disability,
as defined in section 515-2; provided that the owner or tenant with a
disability worked an average of thirty hours or more per week at a qualified
business within the State for five consecutive years immediately prior to the
determination of disability.

����
�201H-D
�

Remedies.
�
A county that
reasonably believes a property with a deed restriction in place pursuant to
this subpart is not in compliance with this subpart may bring action against
the owner of the property for remedies based in contract or real property law,
including but not limited to liens or specific performance.

����
�
201H-E
�
Conveyance tax; environmental impact
statement; procurement code; exemptions.
�

(a)
�
An action on property with a
deed restriction in place pursuant to this subpart shall be exempt from chapter
343.

����
(b)
�

Property sold for which a county has purchased a deed restriction
pursuant to this subpart shall be exempt from chapter 247.

����
(c)
�

Any contract entered into by a county pursuant to this subpart shall be
exempt from chapter 103D.

����
�
201H-F
�
Annual reporting.
�
No later than of
each year, beginning in the year following the first year of occupancy of the
property after the deed restriction has been entered into, the owner of the
property shall submit a written statement with accompanying evidence to the
county verifying the property was occupied by a qualified owner-occupant or
tenant during all of the prior calendar year; provided that, if applicable, a
copy of the lease form currently used for the property shall be submitted with
the statement."

����
SECTION
3
.
�
Section
46-15.2, Hawaii Revised Statutes, is amended to read as follows:

����
"
�46-15.2
�
Housing; additional
county powers.
�
In addition and
supplemental to the powers granted to counties by section 46-15.1, a county
shall have and may exercise any of the following powers:

����
(1)
�
To provide
assistance and aid to persons of low- and moderate-income in acquiring housing
by:

���������
(A)
�
Providing loans
secured by a mortgage;

���������
(B)
�
Acquiring the
loans from private lenders where the county has made advance commitment to
acquire the loans; and

���������
(C)
�
Making and
executing contracts with private lenders or a public agency for the origination
and servicing of the loans and paying the reasonable value of the services;

����
(2)
�
In connection with
the exercise of any powers granted under this section or section 46-15.1, to
establish one or more loan programs and to issue bonds under chapter 47 or 49
to provide moneys to carry out the purposes of this section or section 46-15.1;
provided that:

���������
(A)
�
If bonds are
issued pursuant to chapter 47 to finance one or more loan programs, the county
may establish qualifications
for
the program or programs
as it deems appropriate;

���������
(B)
�
If bonds are
issued pursuant to chapter 49 to finance one or more loan programs, the loan
program or programs shall comply with part III, subpart B of chapter 201H
, to the extent applicable
;

���������
(C)
�
If bonds are
issued pursuant to section 47-4 or chapter 49, any loan program established
pursuant to this section or any county-owned dwelling units constructed under
section 46-15.1 shall be and constitute an "undertaking" under
section 49‑1 and chapter 49 shall apply to the loan program or
county-owned dwelling units to the extent applicable;

���������
(D)
�
In connection with
the establishment of any loan program pursuant to this section, a county may
employ financial consultants, attorneys, real estate counselors, appraisers,
and other consultants as may be required in the judgment of the county and fix
and pay their compensation from funds available to the county therefor;

���������
(E)
�
Notwithstanding
any limitation otherwise established by law, with respect to the rate of
interest on any loan made under any loan program established pursuant to this
section, the loan may bear a rate or rates of interest per year as the county
shall determine; provided that no loan made from the proceeds of any bonds of
the county shall be under terms or conditions that would cause the interest on
the bonds to be deemed subject to income taxation by the United States;

���������
(F)
�
Notwithstanding
any limitation otherwise established by law, with respect to the amount of
compensation permitted to be paid for the servicing of loans made under any
loan program established pursuant to this section, a county may fix any
reasonable compensation as the county may determine;

���������
(G)
�
Notwithstanding
the requirement of any other law, a county may establish separate funds and
accounts with respect to bonds issued pursuant to chapter 47 or 49 to provide
moneys to carry out the purposes of this section or section 46-15.1 as the
county may deem appropriate;

���������
(H)
�
Notwithstanding
any provision of chapter 47 or 49 or of any other law, but subject to the
limitations of the state constitution, bonds issued to provide moneys to carry
out the purposes of this section or section 46-15.1 may be sold at public or
private sale at a price; may bear interest at a rate or rates per year; may be
payable at a time or times; may mature at a time or times; may be made
redeemable before maturity at the option of the county, the holder, or both, at
a price or prices and upon terms and conditions; and may be issued in coupon or
registered form, or both, as the county may determine;

���������
(I)
�
If deemed
necessary or advisable, the county may designate a national or state bank or
trust company within or without the State to serve as trustee for the holders
of bonds issued to provide moneys to carry out the purposes of this section or
section 46-15.1, and enter into a trust indenture, trust agreement, or
indenture of mortgage with the trustee whereby the trustee may be authorized to
receive and receipt for, hold, and administer the proceeds of the bonds and to
apply the proceeds to the purposes for which the bonds are issued, or to
receive and receipt for, hold, and administer the revenues and other receipts
derived by the county from the application of the proceeds of the bonds and to
apply the revenues and receipts to the payment of the principal of, or interest
on the bonds, or both.
�
Any trust
indenture, trust agreement, or indenture of mortgage entered into with the
trustee may contain any covenants and provisions as may be deemed necessary,
convenient, or desirable by the county to secure the bonds.
�
The county may pledge and assign to the
trustee any agreements related to the application of the proceeds of the bonds
and the rights of the county thereunder, including the rights to revenues and
receipts derived thereunder.
�
Upon
appointment of the trustee, the director of finance of the county may elect not
to serve as fiscal agent for the payment of the principal and interest, and for
the purchase, registration, transfer, exchange, and redemption, of the bonds;
or may elect to limit the functions the director of finance performs as a
fiscal agent; and may appoint a trustee to serve as the fiscal agent; and may
authorize and empower the trustee to perform the functions with respect to
payment, purchase, registration, transfer, exchange, and redemption, as the
director of finance deems necessary, advisable, or expedient, including without
limitation the holding of the bonds and coupons that have been paid and the
supervision and conduction or the destruction thereof in accordance with law;

���������
(J)
�
If a trustee is
not appointed to collect, hold, and administer the proceeds of bonds issued to
provide moneys to carry out the purposes of this section or section 46-15.1, or
the revenues and receipts derived by the county from the application of the proceeds
of the bonds, as provided in subparagraph (I), the director of finance of the
county may hold the proceeds or revenues and receipts in a separate account in
the treasury of the county, to be applied solely to the carrying out of the
ordinance, trust indenture, trust agreement, or indenture of mortgage, if any,
authorizing or securing the bonds; and

���������
(K)
�
Any law to the
contrary notwithstanding, the investment of funds held in reserves and sinking
funds related to bonds issued to provide moneys to carry out the purposes of
this section or section 46-15.1 shall comply with section 201H-77; provided
that any investment that requires approval by the county council pursuant to
section 46-48 or 46-50 shall first be approved by the county council;

����
(3)
�
To acquire
policies of insurance and enter into banking arrangements as the county may
deem necessary to better secure bonds issued to provide money to carry out the
purposes of this section or section 46-15.1, including without limitation
contracting for a support facility or facilities as may be necessary with
respect to bonds issued with a right of the holders to put the bonds and
contracting for interest rate swaps; [
and
]

����
(4)
�
To enter into
negotiations for, and purchase deed restrictions on, housing properties from
eligible homeowners and homebuyers pursuant to subpart , part
III of chapter 201H; and

���
[
(4)
]

(5)
�
To do any and all other things
necessary or appropriate to carry out the purposes and exercise the powers
granted in section 46-15.1 and this section."

����
SECTION
4
.
�
Section 201H-191, Hawaii
Revised Statutes, is amended by amending subsection (a) to read as follows:

����
"
(a)
�
There is created a dwelling unit revolving
fund.
�
The funds appropriated for the
purpose of the dwelling unit revolving fund and all moneys received or
collected by the corporation for the purpose of the revolving fund shall be
deposited in the revolving fund.
�
The
proceeds in the revolving fund shall be used [
to reimburse
]
for:

����
(1)
�
Reimbursements
to
the general fund to pay the interest on general obligation bonds issued
for the purposes of the revolving fund[
, for the necessary
]
;

����
(2)
�
Necessary

expenses in administering housing development programs and regional state
infrastructure programs[
, and for carrying
]
;

����
(3)
�
Carrying

out the purposes of housing development programs and regional state
infrastructure programs, including but not limited to the expansion of
community facilities and regional state infrastructure constructed in
conjunction with housing and mixed-use transit-oriented development projects,
permanent primary or secondary financing, and supplementing building costs,
federal guarantees required for operational losses, and all things required by
any federal agency in the construction and receipt of federal funds or low
‑
income
housing tax credits for housing projects[
.
]
; and

����
(4)
�
The
administration
of and purchase of deed restrictions as part of the
kamaaina homes program under subpart

; provided that there shall be no area median income
requirements for moneys expended for the purposes of this program.
"

����
SECTION 5.
�
Section 247-3, Hawaii Revised Statutes, is
amended to read as follows:

����
"
�247-3
�
Exemptions.
�
The tax imposed by section 247-1 shall not
apply to:

����
(1)
�
Any document or
instrument that is executed prior to January 1, 1967;

����
(2)
�
Any document or
instrument that is given to secure a debt or obligation;

����
(3)
�
Any document or
instrument that only confirms or corrects a deed, lease, sublease, assignment,
transfer, or conveyance previously recorded or filed;

����
(4)
�
Any document or
instrument between husband and wife, reciprocal beneficiaries, or parent and
child, in which only a nominal consideration is paid;

����
(5)
�
Any document or
instrument in which there is a consideration of $100 or less paid or to be
paid;

����
(6)
�
Any document or
instrument conveying real property that is executed pursuant to an agreement of
sale, and where applicable, any assignment of the agreement of sale, or
assignments thereof; provided that the taxes under this chapter have been fully
paid upon the agreement of sale, and where applicable, upon such assignment or
assignments of agreements of sale;

����
(7)
�
Any deed, lease,
sublease, assignment of lease, agreement of sale, assignment of agreement of
sale, instrument or writing in which the United States or any agency or
instrumentality thereof or the State or any agency, instrumentality, or
governmental or political subdivision thereof are the only parties thereto;

����
(8)
�
Any document or
instrument executed pursuant to a tax sale conducted by the United States or
any agency or instrumentality thereof or the State or any agency,
instrumentality, or governmental or political subdivision thereof for
delinquent taxes or assessments;

����
(9)
�
Any document or
instrument conveying real property to the United States or any agency or
instrumentality thereof or the State or any agency, instrumentality, or
governmental or political subdivision thereof pursuant to the threat of the
exercise or the exercise of the power of eminent domain;

���
(10)
�
Any document or
instrument that solely conveys or grants an easement or easements;

���
(11)
�
Any document or
instrument whereby owners partition their property, whether by mutual agreement
or judicial action; provided that the value of each owner's interest in the
property after partition is equal in value to that owner's interest before
partition;

���
(12)
�
Any document or
instrument between marital partners or reciprocal beneficiaries who are parties
to a divorce action or termination of reciprocal beneficiary relationship that
is executed pursuant to an order of the court in the divorce action or termination
of reciprocal beneficiary relationship;

���
(13)
�
Any document or
instrument conveying real property from a testamentary trust to a beneficiary
under the trust;

���
(14)
�
Any document or
instrument conveying real property from a grantor to the grantor's revocable
living trust, or from a grantor's revocable living trust to the grantor as
beneficiary of the trust;

���
(15)
�
Any document or
instrument conveying real property, or any interest therein, from an entity
that is a party to a merger or consolidation under chapter 414, 414D, 415A,
421, 421C, 425, 425E, or 428 to the surviving or new entity;

���
(16)
�
Any document or
instrument conveying real property, or any interest therein, from a dissolving
limited partnership to its corporate general partner that owns, directly or
indirectly, at least a ninety per cent interest in the partnership, determined
by applying section 318 (with respect to constructive ownership of stock) of
the federal Internal Revenue Code of 1986, as amended, to the constructive
ownership of interests in the partnership; [
and

�
[
]
(17)[
]
]
���
Any
document or instrument that conforms to the transfer on death deed as
authorized under chapter 527[
.
]
; and

���
(18)
�
Any document or
instrument conveying real property with a county owned deed restriction
pursuant to subpart , part III of chapter 201H.
"

����
SECTION
6
.
�
Section 525-4, Hawaii
Revised Statutes, is amended to read as follows:

����
"
�525-4
�
Exclusions from statutory
rule against perpetuities.
�
Section
525-1 shall not apply to:

����
(1)
�
A fiduciary's
power to sell, lease, or mortgage property, and the power of a fiduciary to
determine principal and income;

����
(2)
�
A discretionary
power of a trustee to distribute principal before termination of a trust;

����
(3)
�
A nonvested
property interest held by a charity, government, or governmental agency or
subdivision, if the nonvested property interest is preceded by an interest held
by another charity, government, or governmental agency or subdivision;

����
(4)
�
A property
interest in or a power of appointment with respect to a pension,
profit-sharing, stock bonus, health, disability, death benefit, income
deferral, or other current or deferred benefit plan for one or more employees,
independent contractors, or their beneficiaries or spouses;

����
(5)
�
A property
interest, power of appointment, or arrangement that was not subject to the
common-law rule against perpetuities or is excluded by any other applicable law;
[
or
]

����
(6)
�
A trust described
in chapter 554G[
.
]
; or

����
(7)
�
A property
interest in property with a county owned deed restriction in place pursuant to
subpart , part III of chapter 201H.
"

����
SECTION
7
.
�
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
8
.
�
Statutory material to be
repealed is bracketed and stricken.
�
New
statutory material is underscored.

����
SECTION
9
.
�
This Act shall take effect
upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

Kamaaina
Homes Program; Voluntary Deed Restrictions; Counties

Description:

Establishes
the Kamaaina Homes Program to provide funding to the counties to purchase
voluntary deed restrictions from eligible homeowners or homebuyers.

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