RELATING TO HOUSING.

SB2070

THE SENATE

S.B. NO.

2070

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

Relating
to HOUSING
.

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

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SECTION 1.
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The legislature finds that the State must
take proactive steps to preserve the long-term affordability of
government-assisted for-sale housing units.
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Currently, affordability restrictions expire after ten years, at which
point residential dwelling units may be sold at market rates.
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This undermines the State's investment in
housing subsidies and exacerbates the housing shortage.

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Accordingly,
the purpose of this Act is to establish a framework for the designation and
regulation of permanently affordable for-sale housing, including price indexing
that allows homeowners to build equity while preserving affordability across
generations.

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

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"
�201H-
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Permanently affordable for-sale housing
program; designation; restrictions on transfer.
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(a)
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Beginning July 1,
, the corporation may designate a for-sale
housing unit as permanently affordable if the unit:

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(1)
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Was developed by or with assistance
from the corporation; and

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(2)
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Is sold to an eligible buyer under
criteria established by the corporation by rule.

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(b)
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Any unit designated as permanently affordable
under this section shall be:

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(1)
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Sold to a qualified resident as
defined in section 201H-32;

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(2)
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Subject to resale only:

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(A)
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With the written approval of the
corporation; provided that the corporation shall have the first option to
purchase the real property or assign the unit to another qualified purchaser;
and

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(B)
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As restricted by a resale price
formula or index established by the corporation's program agreement, which may
include the housing affordability index or other reasonable affordability
measures;

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(3)
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Prohibited from use as a short-term
rental, including for rental periods of fewer than ninety days; and

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(4)
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Subject to additional terms and
conditions as established by rule.

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(c)
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The requirements of subsection (b) shall be enforceable
by deed restrictions, covenants, or other legal instruments recorded against
the unit.

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(d)
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The corporation may waive the restrictions
prescribed in subsection (b) to preserve the intent of this section or comply
with or conform to requirements set forth in federal law.

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(e)
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The corporation shall adopt rules pursuant to
chapter 91 to implement this section, including but not limited to
establishing:

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(1)
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Designation and eligibility criteria
for the permanently affordable for-sale housing program; and

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(2)
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Procedures for the resale and
transfer of ownership of designated units.
"

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SECTION

3
.
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Section
201H-32, Hawaii Revised Statutes, is amended by amending the definition of
"qualified resident" to read as follows:

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""Qualified
resident" means a person who:

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

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(2)
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Is at least eighteen years of age;
and

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

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

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(5)
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Meets the following qualifications:

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

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

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

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SECTION

4
.
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Section
201H-47, Hawaii Revised Statutes, is amended by amending subsection (a) to read
as follows:

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"
(a)
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The following restrictions shall apply to the
transfer of real property developed and sold under this chapter[
,
]
before
July 1, ,
whether in fee simple or leasehold:

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(1)
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For a period of ten years after the
purchase, whether by lease, assignment of lease, deed, or agreement of sale, if
the purchaser wishes to transfer title to the real property, the corporation
shall have the first option to purchase the real property at a price that shall
not exceed the sum of:

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(A)
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The original cost to the purchaser, as
defined in rules adopted by the corporation;

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(B)
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The cost of any improvements added by
the purchaser, as defined in rules adopted by the corporation;

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(C)
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Simple interest on the original cost
and capital improvements to the purchaser at the rate of one per cent per year;
and

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(D)
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The amount, if any, previously paid by
the purchaser to the corporation as the corporation's share of net appreciation
in the real property;

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(2)
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The corporation may purchase the real
property either:

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(A)
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By conveyance free and clear of all
mortgages and liens; or

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(B)
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By conveyance subject to existing
mortgages and liens.

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If
the real property is conveyed in the manner provided in subparagraph (A), it
shall be conveyed to the corporation only after all mortgages and liens are
released.
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If the real property is
conveyed in the manner provided in subparagraph (B), the corporation shall
acquire the real property subject to any first mortgage created for the purpose
of securing the payment of a loan of funds expended solely for the purchase of
the real property by the seller; and any mortgage or lien created for any other
purpose; provided that the corporation has previously consented to it in
writing.

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The
corporation's interest created by this section shall constitute a statutory
lien on the real property and shall be superior to any other mortgage or lien,
except for any first mortgage created for the purpose of securing the payment
of a loan of funds expended solely for the purchase of the real property by the
seller; any mortgage insured or held by a federal housing agency; and any
mortgage or lien created for any other purpose; provided that the corporation
has previously consented to it in writing.
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The amount paid by the corporation to the
seller shall be the difference, if any, between the purchase price determined
by paragraph (1)(A) to (D), and the total of the outstanding principal balances
of the mortgages and liens assumed by the corporation;

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(3)
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A purchaser may refinance real property
developed and sold under this chapter; provided that the purchaser shall not
refinance the real property within ten years from the date of purchase for an
amount in excess of the purchase price as determined by paragraph (1)(A) to
(C); provided further that the purchaser shall obtain the corporation's written
consent if any restriction on the transfer of the real property remains
applicable;

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(4)
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After the end of the tenth year from
the date of initial purchase or execution of an agreement of sale, the
purchaser may sell the real property and sell or assign the property free from
any price restrictions; provided that the purchaser shall be required to pay to
the corporation the sum of:

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(A)
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The balance of any mortgage note,
agreement of sale, or other amount owing to the corporation;

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(B)
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Any subsidy or deferred sales price
made by the corporation in the acquisition, development, construction, and sale
of the real property, and any other amount expended by the corporation not
counted as costs under section 201H-45 but charged to the real property by good
accounting practice as determined by the corporation whose books shall be prima
facie evidence of the correctness of the costs;

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(C)
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Interest on the subsidy or deferred
sales price, if applicable, and any other amount expended at a rate established
by the corporation computed as to the subsidy or deferred sales price, if
applicable, from the date of purchase or execution of the agreement of sale,
and as to any amount expended, from the date of expenditure; provided that the
computed interest shall not extend beyond thirty years from the date of
purchase or execution of the agreement of sale of the real property.
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If any proposed sale or transfer will not
generate an amount sufficient to pay the corporation the sum as computed under
this paragraph, the corporation shall have the first option to purchase the
real property at a price that shall not exceed the sum as computed under
paragraphs (1) and (2); and

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(D)
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The corporation's share of appreciation
in the real property as determined under rules adopted pursuant to chapter 91,
when applicable;

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(5)
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Notwithstanding any provision in this
section to the contrary, pursuant to rules adopted by the corporation, the
subsidy or deferred sales price described in paragraph (4)(B) and any interest
accrued pursuant to paragraph (4)(C) may be paid, in part or in full, at any
time; and

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(6)
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Notwithstanding any provision in this
section to the contrary, the corporation's share of appreciation in the real
property described in paragraph (4)(D):

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(A)
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Shall apply when the sales price of the
real property that is developed and sold under this chapter is less than the
then-current, unencumbered, fair market value of the real property, as
determined by a real property appraisal obtained prior to the closing of the
sale;

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(B)
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Shall be a restriction that runs with
the land until it is paid in full and released by the corporation, or
extinguished pursuant to subsection (f); and

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(C)
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May be paid, in part or in full, at any
time after recordation of the sale."

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SECTION
5.
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Statutory material to be repealed is
bracketed and stricken.
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New statutory
material is underscored.

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SECTION
6.
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This Act shall take effect on July 1,
2050.

INTRODUCED BY:

_____________________________

Report Title:

HHFDC;
Real Property; Qualified Resident; Permanently Affordable; For-Sale Housing;
Restrictions on Transfer

Description:

Authorizes
the Hawaii Housing Finance and Development Corporation to designate certain
for-sale housing units as permanently affordable.
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Requires the HHFDC to adopt rules to
implement the Permanently Affordable For-Sale Housing Program.
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Repeals certain requirements defining a
qualified resident.
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Removes certain
restrictions applicable to the transfer of real property developed and sold
under chapter 201H, HRS.
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Effective 7/1/2050.

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