HB 1740

HOUSE OF REPRESENTATIVES
H.B. NO.
1740
THIRTY-THIRD LEGISLATURE, 2026
H.D. 2
STATE OF HAWAII
S.D. 2
C.D. 1
A BILL FOR AN ACT
RELATING TO THE HAWAII HOUSING FINANCE AND DEVELOPMENT
CORPORATION.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
���� SECTION 1.� The legislature acknowledges that Hawaii's
housing shortage is exacerbated when housing developed or supported through
public approvals subsequently exits the pool of housing inventory available to
residents.� Furthermore, the legislature
recognizes that affordability restrictions limited by time may result in units
being sold or rented without consideration of local residency or occupancy,
thereby undermining the long-term objectives of housing programs.
���� The legislature further finds that
perpetual deed restrictions can help preserve residential housing for future
generations by ensuring that units are sold exclusively to qualified residents
and that occupancy is limited to individuals domiciled within the State.� These restrictions are intended to promote
local ownership, encourage resident occupancy, and reduce vacant investment
holdings and transient usage.
���� Additionally, the legislature notes
that the Hawaii housing finance and development corporation requires qualified
residents to demonstrate financial viability to purchase or the ability to pay
rent for units in certain housing projects.�
However, lenders and landlords already conduct necessary underwriting
and screening, and duplicative reviews by the corporation may cause unwarranted
delays and administrative burden.
���� The legislature also recognizes that
certain ownership-based criteria in the existing definition of qualified
resident may inadvertently limit mobility for local households and disrupt
typical progression through the housing market, such as when growing families
need to move to larger units.� Deed‑restricted
units should be permitted to be rented on a long-term basis and not be subject
to perpetual owner-occupancy requirements following an initial occupancy
period, as long as residency and occupancy standards remain enforced and
transient use is prohibited.
���� Accordingly, the purpose of this Act
is to strengthen the long-term public benefit of Hawaii housing finance and
development corporation-approved housing projects by:
���� (1)� Removing certain
financial screening and ownership qualifications for purchasers of a unit in a
corporation-approved housing project;
���� (2)� Limiting
a qualified resident from owning a majority interest in no more than one
property suitable for dwelling purposes, but requiring the disposal of such
property within two years; and
���� (3)� Amending exemptions from
statutes, ordinances, charter provisions, and rules for certain housing
projects developed by the corporation that satisfy certain conditions,
including requirements related to employment, owner-occupancy, and deed
restrictions.
���� SECTION 2.� Section 201H-32, Hawaii Revised Statutes, is
amended by amending the definition of "qualified resident" to read as
follows:
���� ""Qualified resident"
means a person who:
���� (1)� Is a citizen of
the United States or a resident alien;
���� (2)� Is at least
eighteen years of age;
���� (3)� Is domiciled in
the State and physically resides in the dwelling unit purchased or rented under
this chapter;
��� [[(4)]� [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]
���� [(5)]� [Meets the
following qualifications:]
��������� [(A)]� [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]
��������� [(B)]� [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]]
���� (4)� Owns
a majority interest in no more than one property suitable for dwelling
purposes; provided that the property shall be disposed of within two years of
owning a housing unit developed under this chapter; and
���� (5)� In the case of
purchasers of market-priced units in an economically integrated housing
project[[, the term "qualified resident" means a person who is]]:
��������� (A)� Is
a citizen of the United States or a resident alien; [[is]]
��������� (B)� Is
domiciled in the State and shall physically reside in the dwelling unit
purchased; [[is]]
��������� (C)� Is
at least eighteen years of age; and [[meets]]
��������� (D)� Meets
other qualifications as determined by the developer."
���� SECTION 3.� Section 201H-38, Hawaii Revised Statutes, is
amended by amending subsection (a) to read as follows:
���� "(a)� The corporation may
develop on behalf of the State or with an eligible developer, or may assist
under a government assistance program in the development of, housing projects
that shall be exempt from all statutes, charter provisions, ordinances, and
rules of any government agency relating to planning, zoning, construction
standards for subdivisions, development and improvement of land, and the
construction of dwelling units thereon; provided that:
���� (1)� The housing projects meet the following conditions:
��������� (A)� The corporation
finds the housing project is consistent with the purpose and intent of this
chapter, meets minimum requirements of health and safety, and provides the
county an opportunity to comment;
��������� (B)� The development of
the proposed housing project does not contravene any safety standards, tariffs,
or rates and fees approved by the public utilities commission for public
utilities or of the various boards of water supply authorized under chapter 54;
��������� (C)� The legislative
body of the county in which the housing project is to be situated has approved
the project with or without modifications:
������������� (i)� The legislative
body shall approve, approve with modification, or disapprove the project by
resolution within forty-five days after the corporation has submitted the
preliminary plans and specifications for the project to the legislative body;
provided further that the legislative body shall not impose stricter
conditions, impose stricter median income requirements, or reduce fee waivers
that will increase the cost of the project beyond those approved by the
corporation.� If, on the forty-sixth day,
a project is not disapproved, it shall be deemed approved by the legislative
body;
������������ (ii)� No action shall be
prosecuted or maintained against any county, its officials, or employees on
account of actions taken by them in reviewing, approving, modifying, or
disapproving the plans and specifications; and
����������� (iii)� The final plans
and specifications for the project shall be deemed approved by the legislative
body if the final plans and specifications do not substantially deviate from
the preliminary plans and specifications.�
The final plans and specifications for the project shall constitute the
zoning, building, construction, and subdivision standards for that
project.� For the purposes of
sections 501-85 and 502-17, the executive director of the corporation or the
responsible county official may certify maps and plans of lands connected with
the project as having complied with applicable laws and ordinances relating to
consolidation and subdivision of lands, and the maps and plans shall be
accepted for registration or recordation by the land court and registrar; and
��������� (D)� The land use
commission has approved, approved with modification, or disapproved a boundary
change within forty-five days after the corporation has submitted a petition to
the commission as provided in section 205-4.�
If, on the forty-sixth day, the petition is not disapproved, it shall be
deemed approved by the commission; or
���� (2)� The
housing projects:
��������� (A)� Meet
the conditions of paragraph (1)[[;]], except for any requirements that
impose income requirements for a housing project; and
�������� [[(B)]� [Do
not impose stricter income requirements than those adopted or established by
the State; and]
��������� [(C)]� [For
the lifetime of the project, require that one hundred per cent of the units in
the project be exclusively for qualified residents.]]
��������� (B)� Notwithstanding
the ten-year owner-occupancy requirement in sections 201H-47 and 201H-49,
ensure that no less than eighty per cent of the units are sold to
qualified residents and shall remain owner-occupied for a minimum of five years
following the initial sale of the unit; provided that upon the initial sale,
each unit in the project shall be subject to a perpetual deed restriction
requiring that:
������������� (i)� The
unit is at all times occupied by a person domiciled in the State, except in
cases of hardship as provided in section 201H-49; provided that any
disability-related temporary absence from the unit, including an absence due to
hospitalization, inpatient rehabilitation, or a medically-necessary care
facility stay, shall be a hardship circumstance under section 201H-49 and shall
not be a violation of the deed restriction;
������������ (ii)� Any
rental of the unit shall be for a minimum lease term of one year or more; and
����������� (iii)� Any
sale of the unit shall be to a qualified resident."
���� SECTION 4.� Statutory material to be repealed is
bracketed and stricken.� New statutory
material is underscored.
���� SECTION 5.� This Act shall take effect upon its approval.
Report Title:
HHFDC;
Qualified Residents; Affordable Housing; Housing Development; Exemptions;
Owner-Occupancy; Deed Restrictions
Description:
Repeals
the prohibition against qualified residents for Hawaii Housing Finance and
Development Corporation-approved projects holding a majority interest in land
and repeals the requirement that qualified residents demonstrate financial
viability or ability to pay rent. �Limits
a qualified resident from owning a majority interest in no more than one property
suitable for dwelling purposes, but requiring the disposal of such property
within two years.� Amends exemptions from
statutes, ordinances, charter provisions, and rules for certain housing
projects developed by the Corporation that satisfy certain conditions,
including requirements related to employment, owner-occupancy, and deed
restrictions.� (CD1)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.