RELATING TO WORKFORCE HOUSING.

SB3285

THE SENATE

S.B. NO.

3285

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to workforce 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 current executive administration in Hawaii has made
significant efforts to increase the State's housing supply, including
prioritizing affordable housing development and addressing zoning and
permitting inefficiencies.
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These efforts
have included advocating for faster processing of housing permits and
increasing land availability for residential development.
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Despite these initiatives, housing production
continues to lag due to bureaucratic challenges, lengthy regulatory processes,
and limited coordination among state and county agencies.

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The legislature further finds that
workforce housing is critical to the State's economic stability and long-term
growth.
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Housing located in reasonable
proximity to employment centers and emerging industries provides affordable
living options for essential workers who are vital to the State's economy.
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Expanding the supply of workforce housing can
help stabilize communities, reduce commute times, and improve quality of life
for residents.

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Additionally, the legislature further finds
that innovative regulatory approaches are necessary to address the State's
housing crisis.
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Regulatory sandbox
programs have been used in other policy areas to test time-limited, data-driven
regulatory flexibility without permanently altering existing regulatory
frameworks.
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A workforce housing
regulatory sandbox can provide a pathway for developers to test innovative
housing solutions while maintaining appropriate environmental, cultural, and
public safeguards.
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Through structured
collaboration among state agencies and participating counties, such a program
can accelerate the development of workforce housing while respecting county
land use authority.

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The legislature further finds, however,
that a 2024 Hawaii housing planning study projected that the State would need
approximately 64,490 new housing units by 2027 to meet existing demand, a
significant portion of that demand consisting of workforce housing.
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Targeted efforts to improve the supply of
workforce housing through innovative regulatory approaches, including a
regulatory sandbox, could meaningfully contribute toward meeting this demand and
help alleviate the housing shortage over the coming decade.

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Furthermore, the legislature finds that the
Hawaii housing finance and development corporation is well positioned to
administer a workforce housing regulatory sandbox program due to its experience
financing, facilitating, and coordinating housing development statewide.
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The legislature also finds that the inclusion
of environmental, cultural, infrastructure, and sustainability expertise
through an advisory council can help ensure that innovative housing solutions
respect the State's natural resources, cultural heritage, and community needs.

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The legislature further finds that similar
measures proposing a workforce housing regulatory sandbox program were
introduced during the regular session of 2025, including Senate Bill No. 1200
and its companion House Bill No. 1317, on which the department of the attorney
general provided comments and recommendations.
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The attorney general's comments and recommendations have been considered
and incorporated into the design of this Act to further the intent and purpose
of those measures.

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Accordingly, the purpose of this Act is to:

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(1)
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Establish
a voluntary, time-limited workforce housing regulatory sandbox program
administered by the Hawaii housing finance and development corporation in
coordination with participating counties; and

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(2)
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Establish
an advisory council to provide nonbinding guidance and recommendations to
support the workforce housing regulatory sandbox program.

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SECTION 2.
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As used in this Act:

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"Corporation" means the Hawaii
housing finance and development corporation.

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"Participating county" means a
county that has formally agreed, through resolution, memorandum, or agreement,
or other official action, to participate in the workforce housing regulatory
sandbox program.

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"Regulatory sandbox" means a
time-limited, project-specific framework that allows for temporary regulatory
flexibility for approved workforce housing projects, subject to defined
conditions and expiration.

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"Workforce housing" means housing
primarily targeted for households earning between sixty per cent and one
hundred forty per cent of the area median income, adjusted for family size and
high-cost areas, as defined by the United States Department of Housing and
Urban Development.

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SECTION 3.
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(a)
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There is established the
workforce housing regulatory sandbox program, to be administered by the
corporation in coordination with participating counties.

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(b)
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Notwithstanding any other law, rule, ordinance, or code to the contrary,
the workforce housing regulatory sandbox program shall be vested with the
authority to waive or temporarily modify permitting processes and other
regulatory requirements for eligible workforce housing projects, subject to the
conditions and limitations established by this Act and with the consent of the
participating county.

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(c)
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Participation by a county in the workforce housing regulatory sandbox
program shall be voluntary and shall not be construed to limit or supersede any
authority granted to counties under chapter 46, Hawaii Revised Statutes.

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SECTION 4.
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(a)
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There is established a
workforce housing regulatory sandbox advisory council to provide nonbinding
guidance and recommendations to the corporation.

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(b)
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The advisory council shall consist of the following members:

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(1)
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The
director of the office of planning and sustainable development, who shall serve
as chairperson;

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(2)
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One
member representing the Hawaii housing finance and development corporation;

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(3)
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One
member representing the board of land and natural resources;

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(4)
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One
member representing the state historic preservation division of the department
of land and natural resources;

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(5)
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One
member representing the Hawaii public housing authority;

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(6)
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One
member representing the Hawaii community development authority;

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(7)
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The
director of the department of planning or department of planning and
permitting, as applicable, of each county;

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(8)
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The
director of the department of public works or department of facility
maintenance, as applicable, of each county; and

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(9)
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Four
members to be invited by the chair, comprising:

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(A)
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One
member with demonstrated knowledge of sustainable development practices;

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(B)
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One
member with expertise in Native Hawaiian traditional and customary practices;

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(C)
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One
member representing the private housing development sector; and

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(D)
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One
member representing a nonprofit housing organization.

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(c)
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The advisory council shall:

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(1)
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Provide
advisory recommendations regarding environmental, cultural, infrastructure, and
sustainability considerations; and

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(2)
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Assist
in identifying best practices and lessons learned from sandbox projects.

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(d)
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The advisory council shall not have approval, veto, or decision-making
authority over regulatory waivers or project approvals.

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(e)
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The advisory council shall be subject to chapter 92, Hawaii Revised
Statutes.

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(f)
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A majority of the appointed members shall constitute a quorum for the
transaction of business.

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SECTION 5.
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(a)
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Developers seeking participation
in the regulatory sandbox program shall submit an application to the
corporation that includes:

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(1)
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A
description of the proposed workforce housing project and innovative elements;

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(2)
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An
explanation of how the project addresses affordability, sustainability, and
construction timelines;

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(3)
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Identification
of the county or counties in which the project is located; and

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(4)
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Documentation
demonstrating the county's participation or consent, if applicable.

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(b)
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The corporation may consult with the advisory council before approving
an application.

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SECTION 6.
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(a)
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With the written consent of
the participating county, the corporation may approve temporary waivers or
modifications of county-administered permitting, zoning, or infrastructure
requirements for an approved project under the program.

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(b)
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Any waiver or modification granted pursuant to this section shall:

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(1)
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Be
project-specific;

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(2)
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Be
limited in duration and expire on the earliest of:

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(A)
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Issuance
of a certificate of occupancy;

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(B)
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Ten
years from the date of the project approval; or

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(C)
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Termination
of the project's participation in the program; and

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(3)
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Not
be construed as establishing precedent or permanently altering any county or
state regulatory requirement.

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(c)
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Upon expiration, all applicable laws, ordinances, rules, and codes shall
apply as if no waiver or modification had been granted.

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SECTION 7.
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(a)
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Developers participating in
the program shall ensure that:

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(1)
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Sale
prices or rents remain affordable to workforce households earning between sixty
per cent and one hundred forty per cent of the area median income under rules
adopted by the corporation;

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(2)
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Units
are not used as short-term rentals during the affordability period; and

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(3)
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Units
are occupied on a full-time basis by the resident household.

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(b)
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The requirements of this section shall be enforced through deed
restrictions or equivalent legal mechanisms.

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SECTION 8.
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(a)
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The corporation shall
administer and oversee the workforce housing regulatory sandbox program.

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(b)
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The corporation shall establish one full-time equivalent (1.0 FTE)
position to administer and support the workforce housing regulatory sandbox
program, including coordination with participating counties, developers, and
the advisory council.

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(c)
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The corporation shall submit a report of its findings and
recommendations, including any proposed legislation, to the legislature no
later than twenty days prior to the convening of each regular session
.
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The report shall include:

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(1)
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The
number and type of projects approved;

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(2)
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The
nature and duration of any regulatory waivers granted;

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(3)
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Measurable
outcomes related to affordability and project timelines; and

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(4)
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Recommendations
regarding continuation, modification, or termination of the program.

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SECTION 9.
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There is appropriated out of the general revenues of the State of Hawaii
the sum of $5,000,000 or so much thereof as may be necessary for fiscal year
2026-2027 for the establishment and operation, including administrative costs
and support for approved projects, of the workforce housing regulatory sandbox
program established by this Act, and for the establishment of one full-time
equivalent (1.0 FTE) position.

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The sum appropriated shall be expended by
the Hawaii housing finance and development corporation for the purposes of this
Act.

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SECTION 10.
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This Act shall take effect on July 1, 2026 and shall be repealed on June
30, 2031.

INTRODUCED BY:

_____________________________

Report Title:

HHFDC;
Workforce Housing Regulatory Sandbox Program; Advisory Council; Workforce
Housing; Permitting; Affordable Housing; Position; Reports; Appropriation

Description:

Establishes
the Workforce Housing Regulatory Sandbox Program within the Hawaii Housing
Finance and Development Corporation.
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Establishes an advisory council within the Workforce Housing Regulatory
Sandbox Program to advise on environmental and cultural practices within
specific developments.
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Establishes a
position.
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Requires annual reports to the
legislature.
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Appropriates funds.
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Repeals 6/30/2031.

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