RELATING TO TRANSIT ORIENTED DEVELOPMENT.

SB1669

THE SENATE

S.B. NO.

1669

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

relating
to transit oriented development
.

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 two highest
costs contributing to the cost of living are housing and transportation.
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By broadening the State's focus to develop
affordable communities, rather than affordable housing, the cost of a single
unit can be reduced by as much as $75,000, and the cost of transportation for
families living there can be reduced by $15,000 or more per year.

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Units in many recent housing projects have
become prohibitively expensive.
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On
average, about $50,000 is added to the cost of a unit per parking stall built
for it, and as much as $25,000 per unit for building amenities.
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Numerous cities have begun separating and
aggregating parking stalls and building amenities, lowering the cost of each
unit produced by as much as $75,000.

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The legislature further finds that building
separate parking garages allows residents in an area to lease space or use a
parking stall as may be needed, rather than having the cost forced upon them
through their mortgage.
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This is
important considering Hawaii's next generation is driving considerably less
than previous generations.
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Since 2000,
the percentage of eighteen- to twenty-nine year olds with drivers licenses has
plummeted nearly forty per cent.
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Many
desire to live in walkable, bikeable communities where they can get around
without the average costly expense of $10,000 per year for a car.

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Additionally, relieving housing developers
of the burden of building excessive amenities and gathering spaces in each
building lowers the cost of living.
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Aggregating
public spaces for open plazas, gathering spaces, parks, and green spaces
available to everyone creates and fosters a better sense of community,
opportunities for better mixed-use commercial, retail, and food options, and at
a lower overall cost.

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The legislature believes that tasking an
agency to plan for and build community amenities such as parks, public spaces,
markets, and other amenities that make communities livable, desirable, and
lower the cost of housing should be a priority, not an afterthought.
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This method can reduce the cost of living, and
equally importantly improve quality of life and mental health and well-being
for residents of all ages.

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The legislature additionally finds that
incorporating mixed-use commercial and retail space into the ground floors of
buildings not only puts daily needs in walking distance of residents, but also
provides lease rent and revenue generating opportunities that can help pay for
maintenance, security, and similar expenses to lower maintenance fees and cost
of living for residents in each building by thousands of dollars per year.

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The legislature asserts that instead of
focusing on just building affordable housing, Hawaii needs an agency tasked
with the full responsibility of building affordable communities, and filling
the gaps in recent development projects to ensure communities are being built
with the parks, public spaces, and everything the public tends to desire and
need.

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Accordingly, the purpose of this Act is to
establish the transit oriented community improvement partnership that shall:

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(1)
�
Coordinate
transit oriented community development to ensure communities are planned and
built with full amenities and infrastructure needed for success;

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(2)
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Build
missing amenities, parking, and other needs to lower the cost of housing and
improve the quality of life in transit oriented communities; and

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(3)
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Establish
programs and support that communities desire such as community improvement
districts to keep public spaces safe and clean and provide opportunities and
pathways for local economic development.

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SECTION
2
.
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The Hawaii Revised Statutes is amended by
adding a new chapter to be appropriately designated and to read as follows:

"
Chapter

transit
oriented community improvement partnership

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� -1
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Definitions.
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As used in this chapter:

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"Board"
means the board of directors of the transit oriented community improvement
partnership.

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"Coordinating
entrepreneur" means a qualified person capable of organizing, operating,
and assuming the risk for enterprises, including securing land and seed
capital, developing, or managing commercial or recreational facilities or
projects, arranging concession agreements, supplying materials, maintaining
equipment and infrastructure, and providing for the processing and marketing of
services or products.

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"Coventure"
means an investment by the partnership in qualified securities of an enterprise
in which a substantial investment is also being made or has been made by a
professional investor to provide seed capital to an enterprise.
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A guarantee by the partnership of qualified
securities provided by a professional investor shall be classified as a
coventure.
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An investment made by the
partnership, which is a direct investment, may later be classified as a
coventure upon an investment by a professional investor.

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"Development
rights" means the rights permitted under an ordinance or law relating to
permitted uses of a property, the density or intensity of use, and the maximum
height and size of improvements thereon.

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"Direct
investment" means an investment by the partnership in qualified securities
of an enterprise where no investment is being or has been made by a
professional investor to provide seed capital to the enterprise.

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"Enterprise"
means a business with its principal place of business in Hawaii, which is or
proposes to be engaged in recreational and commercial area development,
development of new value-added products, enhancement of existing recreational
or commercial commodities, and the application of existing recreation or
commercial areas and appurtenant facilities to productive uses.

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"Fund"
means the community improvement revolving fund.

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"Partnership"
means the transit oriented community improvement partnership.

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"Professional
investor" means any bank, bank holding company, savings institution, farm
credit institution, trust company, insurance company, investment company
registered under the federal Investment Company Act of 1940, financial services
loan company, pension or profit-sharing trust or other financial institution or
institutional buyer, licensee under the federal Small Business Investment Act
of 1958, as amended, or any person, partnership, or other entity of whose
resources, a substantial amount is dedicated to investing in securities or debt
instruments, and whose net worth exceeds $250,000.

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"Project"
means a specific undertaking, improvement, or system consisting of work or
improvement, including personal property or any interest therein acquired,
constructed, reconstructed, rehabilitated, improved, altered, or repaired by
the partnership.

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"Project
facility" includes improvements, roads and streets, utility and service
corridors, utility lines where applicable, water and irrigation systems,
lighting systems, security systems, sanitary sewerage systems, and other
community facilities where applicable.

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"Qualified
person" means any individual, corporation, partnership, or public agency
possessing the competence, expertise, experience, and resources, including
financial, personnel, and tangible qualifications, as may be deemed desirable
by the partnership in administering this chapter.

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"Qualified
security" means any note, stock, treasury stock bond, debenture, evidence
of indebtedness, certificate of interest or participation in any profit-sharing
agreement, pre-organization certificate of subscription, transferable share, investment
contract, certificate of deposit for a security, certificate of interest or
participation in a patent or patent application, or in royalty or other
payments under a patent or application, or, in general, any interest or
instrument commonly known as a "security" or any certificate for,
receipt for, or option, warrant, or right to subscribe to or purchase any of
the foregoing.

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"Revenue
bonds" means bonds, notes, or other evidence of indebtedness of the
partnership issued to finance any project facility.

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"Seed
capital" means financing that is provided for the development, refinement,
and commercialization of a product or process and other working capital needs.

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"Transit
oriented community improvement area" means those lands within one half of
a mile of a rail line design.

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"Trust
indenture" means an agreement by and between the partnership and a trustee
that sets forth the duties of the trustee with respect to the revenue bonds,
the security thereof, and other provisions as may be deemed necessary or
convenient by the partnership to secure the revenue bonds.

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"Trustee"
means a national or state bank or trust company, within or outside the State,
that enters into a trust indenture.

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"Value-added"
means any activity that increases, by means of development or any other means,
the value of public lands.

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"Walkable
community" means a primarily residential area with mixed uses appurtenant
to the residences wherein the services, commodities, and amenities necessary
for residents to enjoy a complete and fulfilled life are within walking or bike
riding distance along protected or grade-separated paths with minimal conflicts
with other modes of transportation, for both bicycles and pedestrians, with
convenient access to mass transit.

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� -2
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Transit oriented community improvement
partnership; established.
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(a)
�
There

is established the transit oriented
community improvement partnership, that shall be a public body corporate and
politic and an instrumentality and agency of the State.
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The partnership shall be headed by the
board.
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The partnership shall be placed
within the department of transportation for administrative purposes only.

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(b)
�

The partnership shall:

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(1)
�
Plan,
coordinate, and administer programs and projects to develop meaningful
infrastructure, housing, and amenities to create walkable communities along
transit oriented corridors for working families that are affordable, livable,
healthy, happy, equitable, and secure;

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(2)
�
Identify
and designate each transit oriented community improvement area, and may assist
communities with individual projects as may be appropriate;

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(3)
�
Plan
and coordinate with any stakeholders necessary, or negotiate with and seek
support or concessions from any stakeholders as may be prudent, and develop and
execute projects or enter into a public-private partnership to develop and
execute projects, to provide for:

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(A)
�
Infrastructure
for utilities including sewer, water, power, and similar needs;

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(B)
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Transportation
infrastructure; provided that it shall be designed to have the capacity to
enable at least seventy per cent of all daily commutes to, from, and within the
area to be safely and comfortably made by walking, biking micro-mobility, or
public transit, between common destinations, as well as for long-distance daily
commuting without interruption pursuant to section 264-142 and shall include
amenities such as rest stops, secure bicycle and micro-mobility device parking,
emergency support stations with tools and other resources as may be appropriate;

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(C)
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Public
parking hubs of meaningful capacity, including charging for electric vehicles
pursuant to section 225P-8, within a reasonable distance of which the
partnership may waive requirements for or limit the number of parking stalls
required by the State or counties;

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(D)
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Affordable
housing and related infrastructure; provided that at a minimum, a majority of
the ground floor frontage facing each street shall include commercial space;

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(E)
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Public
spaces of meaningful scale and access with an overall ratio of residents to
public spaces and accessible natural green spaces that shall include:

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(i)
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Public parks and gathering spaces;

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(ii)
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Public spaces for hosting markets and events;

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(iii)
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Natural areas with open green space and water for passive
relaxation;

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(iv)
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Public spaces for active recreation; and

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(v)
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Public spaces for pet and animals;

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(F)
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Facilities
for public arts and culture that include:

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(i)
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Public
libraries;

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(ii)
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Public
works of art;

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(iii)
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Galleries, museums, and exhibitions;

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(iv)
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Spaces for performances and events;

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(v)
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Accessible education and narratives on the history, culture, and
people of the area; and

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(vi)
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Flexible spaces and infrastructure for seasonal, rotating, and
evolving programming and engagement;

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(G)
�
Space
for local economic development and community empowerment; provided that the
primary focus is assisting local residents, entrepreneurs, and brands, which
shall include:

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(i)
�
Community-based economic development hubs and cooperative spaces
such as public commercial kitchens, processing facilities, or similar work hubs
available to the community and small businesses;

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(ii)
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Cooperative commercial and retail locations capable of supporting
and aggregating products and services from numerous small businesses;

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(iii)
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Spaces for hosting micro-businesses such as food trucks, market
stalls, and similar temporary business fronts;

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(iv)
�
Spaces for hosting growing small businesses in permanent micro or
small commercial locations or rotating pop-up locations; and

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(v)
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Spaces for hosting larger maturing businesses in regular food,
retail, and commercial locations; and

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(H)
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Opportunities
for revenue generation from any facility, lease, program, or other means as may
be appropriate to help fund the projects, programs, and operations of the
partnership, with a focus on financially sustaining the communities the
partnership was created to support; provided that any revenue generation be
secondary to the primary mission of the partnership; and

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(5)
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Address
established and adopted goals of the State, including the Aloha+ challenge,
sustainable development goals, and other statutory goals.

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(c)
�

The partnership may:

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(1)
�
Through
administrative rules, establish and implement a community improvement district,
to be governed by an approved independent entity with a board represented by
stakeholders from the community with the purpose of providing additional
services or improvements to the district;

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(2)
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Provide
grant funding to support the establishment and up to one year of operations of
a community improvement district;

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(3)
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Adopt
rules to establish a fee mechanism to provide long-term funding for a community
improvement district, subject to approval by a majority of stakeholders which
it is designed to serve;

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(4)
�
Establish
regular communications to residents and businesses within a transit oriented
community improvement area, or other community as may be appropriate, to
provide regular updates, information, or similar communication that builds
relations and a sense of community amongst those living and working in the area.
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The partnership may designate or contract
with another entity to carrier out this function; and

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(5)
�
Require
all or a portion of commercial lease rent to be used to subsidize the cost of
property maintenance, security, or similar needs for residents in the building.

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� -3
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Board of Directors.
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(a)
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The board of directors of the transit oriented community improvement
partnership shall consist of seven voting members.
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The members shall include:

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(1)
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The
director of finance, or the director's designee;

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(2)
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The
department of transportation multimodal transportation coordinator, or the
coordinator's designee;

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(3)
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The
co-chairs of the Hawaii climate change mitigation and adaptation commission, or
the co-chairs' designee;

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(4)
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A
member with history and expertise in affordable housing, to be appointed by the
governor;

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(5)
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A
member with history and expertise in public spaces, to be appointed by the
governor;

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(6)
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A
member with history and expertise in urban planning, to be appointed by the
president of the senate; and

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(7)
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A
member with history and expertise in community-based economic development, to
be appointed by the speaker of the house of representatives.

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Chairs of the house of representatives and
senate standing committees with jurisdiction over transportation and housing
shall serve as ex-officio non-voting members.

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(b)
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No
member shall have a financial interest or conflict of interest in any project,
parcel, business, or development located in the community improvement district.

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(c)
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The
term of office of the two voting members appointed by the speaker of the house
of representatives and the president of the senate shall be four years each.

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(d)
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The
board shall appoint an executive director, who shall serve at the pleasure of
the board and be exempt from chapter 76.
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The salary of the executive director shall be set by the board.

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(e)
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The
board, through its executive director, may appoint officers, agents, and
employees and:

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(1)
�
Prescribe
their duties and qualifications; and

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(2)
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Fix
their salaries, without regard to chapter 76.

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� -4
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Powers; generally.
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(a)
�
Except
as otherwise limited by this chapter, the partnership may:

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(1)
�
Sue
and be sued;

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(2)
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Have
a seal and alter the same at its pleasure;

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(3)
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Make
and alter bylaws for its organization and internal management;

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(4)
�
Adopt
rules under chapter 91 necessary to effectuate this chapter in connection with
its projects, operations, and properties;

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(5)
�
Make
and execute contracts and all other instruments necessary or convenient for the
exercise of its powers and functions under this chapter;

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(6)
�
Carry
out surveys, research, investigations, site visits, and similar examinations
into technological, business, financial, consumer trends, and other aspects of
affordable housing, transportation, walkable communities, public spaces,
leisure or recreational land uses in the national and international community;

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(7)
�
Acquire
or contract to acquire by grant or purchase:

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(A)
�
All
privately owned real property or any interest therein and the improvements
thereon, if any, that are determined by the partnership to be necessary or
appropriate for its purposes under this chapter, including real property
together with improvements, if any, in excess of that needed for use in cases
where small remnants would otherwise be left or where other justifiable cause
necessitates the acquisition to protect and preserve the contemplated
improvements, or public policy demands the acquisition in connection with the improvements;
and

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(B)
�
Encumbrances,
in the form of leases, licenses, or otherwise, needed by the partnership or any
state department or agency for public purposes; and the disposition of
subdivided lots, house lots, apartments or other economic units, or economic
development;

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(8)
�
Own,
hold, improve, and rehabilitate any real, personal, or mixed property acquired;
and sell, assign, exchange, transfer, convey, lease, or otherwise dispose of,
or encumber the same;

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(9)
�
By
itself, or in partnership with qualified persons or other governmental
agencies, acquire, construct, reconstruct, rehabilitate, improve, alter, or
repair any infrastructure or accessory facilities in connection with any
project; own, hold, sell, assign, transfer, convey, exchange, lease, or
otherwise dispose of, or encumber any project; and develop or manage, by
itself, or in partnership with qualified persons or other governmental
agencies, any project that meets the purposes of this chapter;

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(10)
�
In
cooperation with any governmental agency, or otherwise through direct
investment or coventure with a professional investor or enterprise or any other
person, or otherwise, acquire, construct, operate, and maintain public land
facilities, including but not limited to leisure, recreational, commercial,
residential, hotel, office space, and business facilities, at rates or charges
determined by the partnership;

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(11)
�
Assist
developmental, transit oriented, recreational, and visitor industry related
enterprises, or projects developed or managed by the partnership, by conducting
detailed marketing analysis and developing marketing and promotional strategies
to strengthen the position of those enterprises and to better exploit local, national,
and international markets;

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(12)
�
Receive,
examine, and determine the acceptability of applications of qualified persons
for allowances or grants for the development of new recreation and
community-related products, the expansion of established recreation and visitor
industry or land development enterprises, and the altering of existing
recreational, visitor industry related, or land development enterprises;

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(13)
�
Coordinate
its activities with any federal or state programs;

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(14)
�
Grant
options to purchase any project or to renew any lease entered into by the
partnership in connection with any of its projects, on the terms and conditions
it deems advisable;

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(15)
�
Provide
advisory, consultative, training, and educational services and technical
assistance to any person or partnership, either public or private, to carry out
the purposes of this chapter, and engage the services of consultants on a
contractual basis for rendering professional and technical assistance and
advice;

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(16)
�
Procure
insurance against any loss in connection with its property and other assets and
operations in amounts and from insurers as it deems desirable;

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(17)
�
Accept
gifts or grants in any form from any public agency or other source;

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(18)
�
Issue
bonds to finance the cost of a project and provide for the security thereof, in
the manner and pursuant to the procedure prescribed in this chapter;

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(19)
�
Subject
to approval by the board, assume management responsibilities for transit
centers, infrastructure, parks and water features;

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(20)
�
Recommend
to the department of transportation and the board of land and natural resources
the purchase of any privately owned properties that may be appropriate for
development; and

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(21)
�
Do
all things necessary or proper to carry out the purposes of this chapter.

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(b)
�

Notwithstanding any provisions under subsection (a) to the contrary, the
partnership shall not acquire, contract to acquire by grant or purchase, own,
hold, sell, assign, exchange, transfer, convey, lease, or otherwise dispose of,
or encumber any real, personal, or mixed property that is owned by the
department of transportation as of July 1, 2025, except as expressly provided
in this chapter.

����
(c)
�

The powers conferred herein shall be liberally construed to effectuate
the purposes of this chapter.

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� -5
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Community improvement projects; development
plans and implementation.
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(a)
�
The partnership may develop and implement
plans for community improvement projects where appropriate to create projects
that meet the mission of the partnership.

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(b)
�

The partnership may enter into cooperative agreements with other
stakeholders, and capabilities of the persons or agencies are deemed necessary
and appropriate to execute the mission of the partnership.

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(c)
�

Notwithstanding any provisions of this chapter to the contrary, when
leasing partnership-controlled land or facilities, the partnership may contract
with a financial institution chartered under chapter 412 or a federal financial
institution, as defined under section 412:1-109, that transacts business in the
State to provide lease management services.
�

For the purposes of this subsection, "lease management
services" includes the collection of lease rent and any other moneys owed
to the partnership related to the lease of land or facilities under the
partnership's control.

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(d)
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The partnership may amend the community improvement plans as may be
necessary or appropriate.

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� -6
�
Project facility program.
�
(a)
�

The partnership may develop a project to identify necessary project
facilities within a project area.

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(b)
�

Unless and except as otherwise provided by law, whenever the partnership
undertakes, or causes to be undertaken, any project facility as part of a
project, the cost of providing the project facilities may be assessed against
the real property in the project area specially benefiting from the project
facilities.
�
Subject to the express
written consent of the landowners directly affected, the partnership shall
determine the properties that will benefit from the project facilities to be
undertaken and may establish assessment areas that include the properties
specially benefiting from the project facilities.
�
The partnership shall fix the assessments
against the real property specially benefited.

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(c)
�

Unless and except as otherwise provided by law, the partnership may
adopt rules pursuant to chapter 91 to establish the method of undertaking and
financing project facilities in a project area.

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(d)
�

Any other law to the contrary notwithstanding, in assessing real
property for project facilities, the partnership shall assess the real property
within a project area according to the special benefits conferred upon the real
property by the project facilities.
�

These methods may include an assessment on a frontage basis or according
to the area of real property within a project area, or any other assessment
method that assesses the real property according to the special benefit
conferred, or any combination thereof.
�

No assessment levied under this section against real property specially
benefited under this chapter shall constitute a tax on real property within the
meaning of any law.

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(e)
�

Any other provisions to the contrary notwithstanding, the partnership,
at its discretion, may enter into any agreement with the county in which
project facilities are located, to implement the purposes of this section.

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(f)
�

If all or a part of the project facilities to be financed through bonds
by the partnership may be dedicated to the county in which the project
facilities are to be located, the partnership shall ensure that the project
facilities or applicable portions thereof are designed and constructed to meet
county requirements.

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� -7
�
Approval of projects, plans, and programs.
�
Every project, plan, and project facility
program developed by the partnership shall be approved by the board.

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� -8
�
Bonds.
�

(a)
�
The partnership, with the
approval of the governor, may issue, from time to time, revenue bonds in
amounts not exceeding the total amount of bonds authorized to be issued by the
legislature for the purpose of constructing, acquiring, remodeling, furnishing,
and equipping any project facility, including the acquisition of the site of
the facility; or acquiring non-public lands through purchase to sustain and
preserve leisure or recreational enterprises within a contiguous geographic
area.

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(b)
�

All revenue bonds shall be issued pursuant to part III of chapter 39,
except as provided in this chapter.

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(c)
�

The revenue bonds shall be issued in the name of the partnership and not
in the name of the State.
�
The final
maturity date of the revenue bonds may be any date not exceeding thirty years
from the date of issuance.

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� -9
�
Revenue bonds; payment and security.
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(a)
�

The revenue bonds shall be payable from and secured by the improvements
to real properties specially benefited or improved and the assessments thereon,
or by the revenues derived from the project facility for which the revenue
bonds were issued, including revenue derived from insurance proceeds and
reserve accounts, and earnings thereon.

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(b)
�

The partnership may pledge revenues derived from the project facility
financed from the proceeds of the revenue bonds to the punctual payment of the
principal, interest, and redemption premiums, if any, on the revenue bonds.

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(c)
�

The revenue bonds may be additionally secured by the pledge or
assignment of the loans and other agreements or any note or other undertaking,
obligation, or property held by the partnership to secure the loans.

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(d)
�

Any pledge made by the partnership shall create a perfected security
interest in the revenues, moneys, or property pledged and thereafter received
by the partnership, from and after the time that the financing statement with
respect to the revenues, moneys, or property pledged and thereafter received
are filed with the bureau of conveyances.
�

Upon the filing, the revenues, moneys, or property pledged and
thereafter received by the partnership shall immediately be subject to a lien
of any pledge without any physical delivery thereof or having claims of any
kind in tort, contract, or otherwise against the partnership, irrespective of
whether the parties have notice thereof.
�

This section shall apply to any financing statement heretofore or
hereafter filed with the bureau of conveyances with respect to any pledge made
to secure revenue bonds issued under this chapter.

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� -10
�
Revenue bonds; interest rate, price, and
sale.
�
(a)
�
The revenue bonds issued pursuant to this
chapter shall bear interest at a rate or rates and shall be payable on a date
or dates, as the partnership determines.

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(b)
�

The partnership shall include the costs of undertaking the project
facility for which the revenue bonds are issued in determining the principal
amount of revenue bonds to be issued.
�
In
determining the cost of undertaking the project facility, the partnership may
include:

����
(1)
�
The
cost of constructing, acquiring, remodeling, furnishing, and equipping the
project facility, including the acquisition of the site of the facility;

����
(2)
�
The
cost of purchasing or funding loans or other agreements entered into for the
project facility;

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(3)
�
The
costs of studies and surveys;

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(4)
�
Insurance
premiums;

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(5)
�
Underwriting
fees;

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(6)
�
Financial
consultant, legal, accounting, and marketing services incurred;

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(7)
�
Reserve
account, trustee, custodian, and rating agency fees; and

����
(8)
�
Any
capitalized interest.

����
(c)
�

The revenue bonds may be sold at public or private sale, and for a price
as may be determined by the partnership.

����
� -11
�
Revenue bonds; investment of proceeds and
redemption.
�
Subject to any agreement
with the holders of its revenue bonds, the partnership may:

����
(1)
�
Invest
moneys not required for immediate use, including proceeds from the sale of
revenue bonds, in any investment in accordance with procedures prescribed in a
trust indenture; and

����
(2)
�
Purchase
revenue bonds out of any fund or money of the partnership available therefor,
and hold, cancel, or resell the revenue bonds.

����
� -12
�
Revenue bonds; subaccounts.
�
A separate subaccount shall be established
for each project facility financed from the proceeds of the revenue bonds
secured under the same trust indenture.
�

Each subaccount shall be designated "project facility revenue bond
subaccount" and shall bear additional designation as the partnership deems
appropriate to properly identify the fund.

����
� -13
�
Trustee; designation, duties.
�
(a)
�
The
partnership shall designate a trustee for each issue of revenue bonds secured
under the same trust indenture.

����
(b)
�

The trustee shall be authorized by the partnership to hold and
administer the project facility revenue bond subaccount established pursuant to
section -12, to receive and receipt for, hold, and administer
the revenues derived by the partnership from the project facility for which the
revenue bonds were issued, and to apply these revenues to the payment of the
cost of:

����
(1)
�
Undertaking
the project facility;

����
(2)
�
Administering
and operating the proceedings providing for the issuance of the revenue bonds;

����
(3)
�
The
principal or interest on these bonds;

����
(4)
�
The
establishment of reserves; and

����
(5)
�
Other
purposes as may be authorized in the proceedings providing for the issuance of
the revenue bonds.

����
(c)
�

Notwithstanding section 39-68 to the contrary, the director of finance
may appoint the trustee to serve as fiscal agent for the:

(1)
�
Payment
of the principal of and interest on the revenue bonds; and

����
(2)
�
Purchase,
registration, transfer, exchange, and redemption of the bonds.

����
(d)
�

The trustee shall perform additional functions with respect to the
payment, purchase, registration, transfer, exchange, and redemption of the
bonds, as the director of finance may deem necessary, advisable, or expeditious,
including the holding of the revenue bonds and coupons that have been paid and
the supervision of the destruction thereof in accordance with applicable law.

����
(e)
�

Nothing in this chapter shall limit or be construed to limit the powers
granted to the director of finance in sections 36-3, 39-13, and 39-68(a), to
appoint the trustee or others as fiscal agents, paying agents, and registrars
for the revenue bonds or to authorize and empower those fiscal agents, paying
agents, and registrars to perform the functions referred to in those sections.

����
� -14
�
Trust indenture.
�
(a)
�
A
trust indenture may:

����
(1)
�
Contain
covenants and provisions authorized by part III of chapter 39, and as may be
deemed necessary or convenient by the partnership for the purposes of this
chapter;

����
(2)
�
Allow
the partnership to pledge and assign to the trustee loans and other agreements
related to the project facility, and the rights of the partnership thereunder,
including the right to receive revenues thereunder and to enforce the
provisions thereof; and

����
(3)
�
Contain
provisions deemed necessary or desirable by the partnership to obtain or
permit, by grant, interest, subsidy, or otherwise, the participation of the
federal government in the financing of the costs of undertaking the project
facility.

����
(b)
�

A trust indenture shall also contain provisions as to:

����
(1)
�
The
investment of the proceeds of the revenue bonds, the investment of any reserve
for the bonds, the investment of the revenues of the project facility, and the
use and application of the earnings from investments; and

����
(2)
�
The
terms and conditions upon which the holders of the revenue bonds or any portion
of them or any trustee thereof may institute proceedings for the foreclosure of
any loan or other agreement or any note or other undertaking, obligation, or
property securing the payment of the bonds and the use and application of the
moneys derived from the foreclosure.

����
� -15
�
Transfer of public lands.
�
(a)
�

Notwithstanding chapter 171 or any provisions of this chapter to the
contrary, the department of transportation may transfer, subject to the
approval of the board of land and natural resources, development rights for
lands under its jurisdiction to the partnership for purposes of this chapter;
provided that:

����
(1)
�
If
the property to be developed is two hundred acres or less and the board of land
and natural resources approves the transfer of development rights appurtenant
to the property to be developed, the development rights shall be transferred to
the partnership;

����
(2)
�
If
the property to be developed is greater than two hundred acres and the board of
land and natural resources approves the transfer of development rights
appurtenant to the property to be developed, the development rights shall be
transferred to the partnership, subject to disapproval by the legislature by
two-thirds vote of either the senate or the house of representatives or by
majority vote of both houses in any regular or special session next following
the date of transfer; and

����
(3)
�
The
size of any property to be developed shall be deemed to be conclusively
determined by the state surveyor.

����
(b)
�

If the partnership finds that state lands under the control and
management of the department of transportation or other public agencies are
suitable for its purposes under this chapter, the partnership may lease the
lands from the agency having the control and management of those lands, upon the
terms and conditions as may be agreed to by the parties.

����
(c)
�

Notwithstanding the provisions of subsection (b) to the contrary, no
public lands shall be leased to the partnership if the lease would impair any
covenant between the State or any county, or any department or board thereof,
and the holders of bonds issued by the State or the county, or any department
or board thereof.

����
� -16
�
Community improvement revolving fund;
established; use of partnership funds.
�

(a)
�
There is established the
community improvement revolving fund, to which shall be credited any state
appropriations to the fund, any sums collected as a result of bonds issued
pursuant to this chapter, any revenues generated from the facilities, or other
moneys made available to the fund, to be expended as directed by the
partnership.

����
(b)
�

Notwithstanding any provisions of this chapter to the contrary,
revenues, income, and receipts derived from the project facilities shall be set
apart in a separate subaccount and applied solely for the following purposes:

����
(1)
�
The
principal and interest on the bonds;

����
(2)
�
The
cost of administering, operating, and maintaining the project not to exceed
fifteen per cent of the sums collected, net of principal and interest payments,
on account of assessments and interest for any specific project facility;

����
(3)
�
The
establishment of program reserves not to exceed eighty-five per cent of the
sums collected, net of principal and interest payments, on account of
assessments and interest for any specific project facility; provided that
accumulated reserves shall be credited to and become a part of the special land
and development fund, established under section 171-19, except in the case of a
specific project facility that is situated in part or wholly within a small
boat harbor, in which case those accumulated reserves attributable to the
portions of the facility situated in the small boat harbor shall be credited to
and become a part of the boating special fund, established under section 248-8;
and

����
(4)
�
Other
purposes as may be authorized in the proceedings providing for the issuance of
the bonds.

����
If any surplus remains in any subaccount
after the payment of the bonds chargeable against that subaccount, the surplus
shall be credited to and become a part of the community improvement revolving
fund, except as provided in paragraph (3).
�

Notwithstanding any other law to the contrary, moneys in the fund may be
used to make up any deficiencies in the subaccount.

����
(c)
�

The partnership shall hold the fund in an account or accounts separate
from other funds.
�
Except as otherwise
provided in subsection (b), the partnership shall invest and reinvest the fund
and the income thereof to:

����
(1)
�
Purchase
qualified securities issued by enterprises for the purpose of raising seed
capital; provided that the investment shall comply with the requirements of
this chapter;

����
(2)
�
Make
grants, loans, and provide other monetary forms of assistance necessary to
carry out the purposes of this chapter; and

����
(3)
�
Purchase
securities as may be lawful investments for fiduciaries in the State.

����
All appropriations, grants, contractual
reimbursements, and other funds not designated for this purpose may be used to
pay for the proper general expenses and to carry out the purposes of the
partnership.

����
(d)
�

The partnership shall purchase qualified securities issued by an
enterprise only after:

����
(1)
�
Receiving:

����
����
(A)
�
An application from the enterprise containing
a business plan that is consistent with the business and public land
development plan, including a description of the enterprise and its management,
product, and market;

���������
(B)
�
A
statement of the amount, timing, and projected use of the capital required;

���������
(C)
�
A
statement of the potential economic impact of the enterprise, including the
number, location, and types of jobs expected to be created; and

���������
(D)
�
Any
other information as the partnership shall require;

����
(2)
�
Determining,
based upon the application submitted, that:

���������
(A)
�
The
proceeds of the investment will be used only to cover the seed capital needs of
the enterprise, except as authorized in this section;

���������
(B)
�
The
enterprise has a reasonable chance of success;

���������
(C)
�
The
enterprise has the reasonable potential to create employment within the State
and offers employment opportunities to residents;

���������
(D)
�
The
coordinating entrepreneur and other founders of the enterprise have already
made or are prepared to make a substantial financial and time commitment to the
enterprise;

���������
(E)
�
The
securities to be purchased are qualified securities;

���������
(F)
�
There
is a reasonable possibility that the partnership will recoup at least its
initial investment; and

���������
(G)
�
Binding
commitments have been made to the partnership by the enterprise for adequate
reporting of financial data to the partnership, which shall include a
requirement for an annual or other periodic audit of the books of the
enterprise, and for control by the partnership that it considers prudent over
the management of the enterprise, in order to protect the investment of the
partnership, including membership on the board of directors of the enterprise,
ownership of voting stock, input in management decisions, and the right of
access to the financial and other records of the enterprise; and

����
(3)
�
Entering
into a binding agreement with the enterprise concerning the manner of payback
by the enterprise of the funds advanced, granted, loaned, or received from the
partnership.
�
The manner of payback may
include the payment of dividends, returns from the public sale of corporate
securities or products, royalties, and other methods of payback acceptable to
the partnership.
�
In determining the
manner of payback the partnership shall establish a rate of return or rate of
interest to be paid on any investment, loan, or grant of partnership funds
under this section.

����
(e)
�

If the partnership makes a direct investment, the partnership shall also
find that a reasonable effort has been made to find a professional investor to
make an investment in the enterprise as a coventure, and that the effort was
unsuccessful.
�
The findings, when made by
the partnership, shall be conclusive.

����
(f)
�

The partnership shall make investments in qualified securities issued by
an enterprise in accordance with the following limits:

����
(1)
�
Not
more than $500,000 shall be invested in the securities of any one enterprise,
except that more than a total of $500,000 may be invested in the securities of
any one enterprise if the partnership finds, after its initial investment, that
additional investments in that enterprise are required to protect the initial
investment of the partnership, and the other findings set forth in subsection
(d) and this subsection are made as to the additional investment;

����
(2)
�
The
partnership shall not own securities representing more than forty-nine per cent
of the voting stock of any one enterprise at the time of purchase by the
partnership after giving effect to the conversion of all outstanding
convertible securities of the enterprise, except that if a severe financial
difficulty of the enterprise occurs, threatening the investment of the
partnership in the enterprise, a greater percentage of those securities may be
owned by the partnership; and

����
(3)
�
Not
more than fifty per cent of the assets of the partnership shall be invested in
direct investments at any time.

����
(g)
�

No investment, loan, grant, or use of corporate funds for the purposes
of this chapter shall be subject to chapter 42F.

����
� -17
�
Exemption from taxation.
�
The partnership shall not be required to pay
state taxes of any kind.

����
� -18
�
Exemption from requirements.
�
Notwithstanding section 171-42 and except as
otherwise provided in this chapter, projects pursuant to this chapter shall be
exempt from all statutes, ordinances, charter provisions, and rules of any
government agency relating to special improvement district assessments or
requirements; land use, zoning, and construction standards for development, and
improvement of land; provided that the community improvement planning
activities of the partnership shall be coordinated with the county planning
departments and the county land use plans, policies, and ordinances.

����
� -19
�
Annual report.
�
The partnership shall submit to the governor
and the legislature a complete and detailed report of its plans and activities no
later than twenty days prior to the convening of each regular session."

����
SECTION
3
.
�
Section 206E-4, Hawaii Revised Statutes, is
amended to read as follows:

����
"�
206E-4
�
Powers; generally.
�
Except as otherwise limited by this chapter,
the authority may:

����
(1)
�
Sue and be sued;

����
(2)
�
Have a seal and alter the same at
pleasure;

����
(3)
�
Make and execute contracts and all
other instruments necessary or convenient for the exercise of its powers and
functions under this chapter;

����
(4)
�
Make and alter bylaws for its
organization and internal management;

����
(5)
�
Make rules with respect to its
projects, operations, properties, and facilities, which rules shall be in
conformance with chapter 91;

����
(6)
�
Through its executive director appoint
officers, agents, and employees, prescribe their duties and qualifications, and
fix their salaries, without regard to chapter 76;

����
(7)
�
Prepare or cause to be prepared a
community development plan for all designated community development districts;

����
(8)
�
Acquire, reacquire, or contract to
acquire or reacquire by grant or purchase real, personal, or mixed property or
any interest therein; to own, hold, clear, improve, and rehabilitate, and to
sell, assign, exchange, transfer, convey, lease, or otherwise dispose of or
encumber the same;

����
(9)
�
Acquire or reacquire by condemnation
real, personal, or mixed property or any interest therein for public
facilities, including but not limited to streets, sidewalks, parks, schools,
and other public improvements;

���
(10)
�
By itself, or in partnership with
qualified persons, acquire, reacquire, construct, reconstruct, rehabilitate,
improve, alter, or repair or provide for the construction, reconstruction,
improvement, alteration, or repair of any project; own, hold, sell, assign,
transfer, convey, exchange, lease, or otherwise dispose of or encumber any
project, and in the case of the sale of any project, accept a purchase money
mortgage in connection therewith; and repurchase or otherwise acquire any
project that the authority has theretofore sold or otherwise conveyed,
transferred, or disposed of;

���
(11)
�
Arrange or contract for the planning,
replanning, opening, grading, or closing of streets, roads, roadways, alleys,
or other places, or for the furnishing of facilities or for the acquisition of
property or property rights or for the furnishing of property or services in
connection with a project;

���
(12)
�
Grant options to purchase any project
or to renew any lease entered into by it in connection with any of its
projects, on terms and conditions as it deems advisable;

���
(13)
�
Prepare or cause to be prepared plans,
specifications, designs, and estimates of costs for the construction,
reconstruction, rehabilitation, improvement, alteration, or repair of any
project, and from time to time to modify the plans, specifications, designs, or
estimates;

���
(14)
�
Provide advisory, consultative,
training, and educational services, technical assistance, and advice to any
person, partnership, or corporation, either public or private, to carry out the
purposes of this chapter, and engage the services of consultants on a
contractual basis for rendering professional and technical assistance and
advice;

���
(15)
�
Procure insurance against any loss in
connection with its property and other assets and operations in amounts and
from insurers as it deems desirable;

���
(16)
�
Contract for and accept gifts or grants
in any form from any public agency or from any other source;

���
(17)
�
Do any and all things necessary to
carry out its purposes and exercise the powers given and granted in this
chapter; [
and
]

���
(18)
�
Allow satisfaction of any affordable
housing requirements imposed by the authority upon any proposed development
project through the construction of reserved housing, as defined in section
206E-101, by a person on land located outside the geographic boundaries of the
authority's jurisdiction
; provided that the authority may
permit cash payments in lieu of providing reserved housing.
�
The
substituted housing shall be
located on the same island as the development project and shall be
substantially equal in value to the required reserved housing units that were
to be developed on site.
�
The authority
shall establish the following priority in the development of reserved housing:

���������
(A)
�
Within the community development
district;

���������
(B)
�
Within areas immediately surrounding
the community development district;

���������
(C)
�
Areas within the central urban core;

���������
(D)
�
In outlying areas within the same
island as the development project.

�������������
The

Hawaii

community development authority shall adopt rules relating to the approval of
reserved housing that are developed outside of a community development
district.
�
The rules shall include, but
are not limited to, the establishment of guidelines to ensure compliance with
the above priorities[
.
]
; and

���
(19)
�
Assist
the transit oriented community improvement partnership established by section -2
in identifying lands and facilities that may be suitable for community
improvement projects, carrying on marketing analysis to determine the best
revenue-generating programs for some of the locations identified, entering into
public-private agreements to appropriately develop these parcels, and providing
the leadership for the development, financing, improvement, or enhancement of
the selected development opportunities; provided that no assistance shall be
provided unless the authority authorizes the assistance.
"

����
SECTION 4.
�

There is appropriated out of the general revenues of the State of Hawaii
the sum of $ or so
much thereof as may be necessary for fiscal year 2025-2026 and the same sum or
so much thereof as may be necessary for fiscal year 2026-2027 to be deposited
into the community improvement revolving fund established under section
-17.

����
SECTION 5.
�

There is appropriated out of the community improvement revolving fund
the sum of $ or so
much thereof as may be necessary for fiscal year 2025-2026 and the same sum or
so much thereof as may be necessary for fiscal year 2026-2027 for:

����
(1)
�
The
establishment and operation of the transit oriented community improvement
partnership; and

����
(2)
�
The
establishment of three positions as follows:

���������
(A)
�
One
full-time equivalent (1.0 FTE) executive director position;

���������
(B)
�
One
full-time equivalent (1.0 FTE) planner position; and

���������
(C)
�
One
full-time equivalent (1.0 FTE) project development specialist position.

����
The sums

appropriated shall be expended by the transit oriented community
improvement partnership for the purposes of this Act.

����
SECTION 6.
�

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.

����
SECTION 7.
�

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

����
SECTION 8.
�

This Act shall take effect on July 1, 2025.

INTRODUCED BY:

_____________________________

Report Title:

DOT; HCDA;
Transit Oriented Community Improvement Partnership; Community Improvement
Revolving Fund; Exemptions; Reports; Appropriations

Description:

Establishes
the Transit Oriented Community Improvement Partnership within the Department of
Transportation.
�
Establishes the Community
Improvement Revolving Fund.
�
Authorizes
the Hawaii Community Development Authority to assist the mission of the
Partnership.
�
Designates exemptions.
�
Requires annual reports to the
Legislature.
�
Appropriates funds.

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