HB 1317: RELATING TO WORKFORCE HOUSING.

A BILL FOR AN ACT

RELATING TO WORKFORCE HOUSING.

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

     SECTION 1.  The legislature finds that the current executive administration has made significant attempts to increase Hawaii's housing supply, including prioritization of affordable housing and addressing zoning and permitting inefficiencies.  The administration advocated for faster processing of housing permits and increasing land availability for residential development.  Despite these efforts, progress has stalled due to bureaucratic challenges, lengthy regulatory processes, and limited coordination between state agencies.

     The legislature also finds that workforce housing is critical for the State, as housing in close proximity to emerging industries provides affordable living options for essential workers who are vital to the State's economy.  Increasing workforce housing helps stabilize communities, reduce commute times, and enhance the quality of life for residents.  A regulatory sandbox could serve as a pathway to expand workforce housing by allowing developers to test innovative housing solutions under relaxed permitting and regulatory requirements.  By fostering collaboration between dedicated state agencies, the sandbox can accelerate the creation of workforce housing while addressing broader housing shortages in the State.

     The legislature additionally finds that a 2019 study conducted by the Hawaii Housing Planning Study projected that the State would need approximately 50,156 new housing units by 2025 to meet existing demand, with a significant portion of this demand being for workforce housing.  If targeted efforts were made to improve the workforce housing supply, meeting twenty per cent of this demand through innovative regulatory approaches such as a regulatory sandbox could provide more than ten thousand units, significantly easing the housing crisis over the next decade.

     The legislature further finds that, if the Hawaii housing finance and development corporation administers the regulatory sandbox, the corporation can ensure effective operations and alignment with the State's unique needs and priorities.  Establishing an advisory council with environmental and cultural advisors can also help ensure that innovative housing solutions respect Hawaii's natural resources and cultural heritage.  This collaborative approach will balance the urgency of addressing the housing crisis with the responsibility of preserving the State's environmental and cultural integrity.

     Urgency for innovative approaches has never been greater, as the State's housing crisis forces more local families to leave the State in search of affordable living.  Addressing this challenge by developing ten thousand workforce housing units will be a complex endeavor that promises lasting solutions to sustain the State's growth.

     Accordingly, the purpose of this Act is to:

     (1)  Establish a regulatory sandbox with the Hawaii housing finance and development corporation to provide temporary regulatory flexibility for the development of innovative workforce housing solutions; and

     (2)  Establish an advisory council to support the workforce housing regulatory sandbox.

     SECTION 2.  For the purposes of this Act:

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

     "Regulatory sandbox" means a temporarily modified regulatory framework that enables workforce housing developers to test innovative solutions.

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

     SECTION 3.  (a)  There is established the workforce housing regulatory sandbox program to be administered by the corporation.

     (b)  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 to encourage innovation and reduce barriers to construction.

     SECTION 4.  (a)  There is established an advisory council to provide guidance and oversight for the workforce housing regulatory sandbox program.

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

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

     (2)  The executive director of the corporation;

     (3)  The chairperson of the board of land and natural resources;

     (4)  One representative from the state historic preservation division;

     (5)  Each director of a county department of planning or department of planning and permitting, as applicable;

     (6)  Each director of a county department of public works or department of facility maintenance, as applicable;

     (7)  One representative who shall have a demonstrated knowledge of sustainable development practices, to be invited by the chairperson;

     (8)  One representative who shall be a cultural expert in Native Hawaiian traditional and customary practices, to be invited by the chairperson;

     (9)  One representative from the private housing development sector, to be invited by the chairperson;

    (10)  One representative from a nonprofit housing organization, to be invited by the chairperson; and

    (11)  Other members whose expertise is relevant to the goals of the workforce housing regulatory sandbox program, who shall be invited by the advisory council.

     (c)  The advisory council shall:

     (1)  Provide recommendations to the corporation regarding cultural, environmental, and sustainability considerations; and

     (2)  Monitor projects to ensure compliance with the objectives of the regulatory sandbox.

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

     (1)  A description of the proposed innovative workforce housing solution;

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

     (3)  An assessment of potential environmental and cultural impacts, including proposed mitigation measures.

     (b)  Projects shall meet the following criteria for consideration:

     (1)  Demonstrate alignment with the affordability targets of workforce housing;

     (2)  Incorporate sustainable building practice; and

     (3)  Demonstrate potential for significant reduction in construction timelines.

     SECTION 6.  (a)  As authorized under section 3(b), the workforce housing regulatory sandbox program may temporarily waive or modify regulatory requirements for approved projects including but not limited to:

     (1)  Expedited permitting processes;

     (2)  Reduced or waived infrastructure capacity fees; or

     (3)  Flexible zoning and land use requirements.

     (b)  All waivers or modifications shall be subject to review and approval by the advisory council.

     SECTION 7.  Developers participating in the workforce housing regulatory sandbox program shall ensure that:

     (1)  Sale prices or rents remain affordable for workforce households earning between sixty per cent and one hundred forty per cent of the area median income for a minimum of ten years;

     (2)  Units shall be prohibited from being used as short-term rentals for at least ten years;

     (3)  Units shall be owned or rented by legal United States residents and occupied full-time by the resident's household; and

     (4)  At least one adult in each household shall work an average of thirty hours or more per week at a business operating in the State;

provided that deed restrictions or equivalent legal mechanisms shall be used to enforce the requirements in accordance with this section.

     SECTION 8.  (a)  The corporation shall monitor the progress of all projects in the workforce housing regulatory sandbox program and ensure compliance with the objectives of this Act.

     (b)  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 for the duration of the program.  The report shall include:

     (1)  The number and types of projects approved;

     (2)  The regulatory modifications granted;

     (3)  Outcomes related to affordability, sustainability, and construction timelines; and

     (4)  Future improvements or extension of the workforce housing regulatory sandbox program.

     SECTION 9.  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 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 for the establishment and operation of the workforce housing regulatory sandbox program established pursuant to this Act, including administrative costs, staffing, and support for approved projects.

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

     SECTION 10.  This Act shall take effect on July 1, 3000; provided that this Act shall be repealed on June 30, 2030.

Report Title:

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

Description:

Establishes the Workforce Housing Regulatory Sandbox Program within the Hawaii Housing Finance and Development Corporation.  Establishes an advisory council within the Workforce Housing Regulatory Sandbox Program to advise on environmental and cultural practices within specific developments.  Requires annual reports to the Legislature.  Appropriates funds.  Repeals 6/30/2030.  Effective 7/1/3000.  (HD1)

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

A BILL FOR AN ACT

relating to workforce housing.

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

     SECTION 1.  The legislature finds that the current Governor Josh Green's administration has made significant attempts to increase Hawaiʻi's housing supply, including prioritization of affordable housing and addressing zoning and permitting inefficiencies.  The administration advocated for faster processing of housing permits and increasing land availability for residential development.  Despite these efforts, progress has stalled due to bureaucratic challenges, lengthy regulatory processes, and limited coordination between state agencies.

     The legislature also finds that workforce housing is critical for the State, as housing in close proximity to emerging industries provides affordable living options for essential workers who are vital to the State's economy.  Increasing workforce housing helps stabilize communities, reduce commute times, and enhance the quality of life for residents.  A regulatory sandbox could serve as a pathway to expand workforce housing by allowing developers to test innovative housing solutions under relaxed permitting and regulatory requirements.  By fostering collaboration between dedicated state agencies, the sandbox can accelerate the creation of workforce housing while addressing broader housing shortages in the State.

     Furthermore, the legislature additionally finds that a 2019 study conducted by the Hawaii Housing Planning Study projected that the State would need approximately 50,156 new housing units by 2025 to meet existing demand, with a significant portion of this demand being for workforce housing.  If targeted efforts were made to improve the workforce housing supply, meeting twenty per cent of this demand through innovative regulatory approaches such as a regulatory sandbox could provide more than ten thousand units, significantly easing the housing crisis over the next decade.

     The legislature further finds that, if the Hawaii housing finance and development corporation administers the regulatory sandbox, the corporation can ensure effective operations and alignment with the State's unique needs and priorities.  Further, establishing an advisory council with environmental and cultural advisors can help ensure that innovative housing solutions respect Hawaiʻi's natural resources and cultural heritage.  This collaborative approach will balance the urgency of addressing the housing crisis with the responsibility of preserving the State's environmental and cultural integrity.

     Urgency for innovative approaches has never been greater, as the State's housing crisis forces more local families to leave the State in search of affordable living.  Addressing this challenge by developing ten thousand workforce housing units will be a complex endeavor that promises lasting solutions to sustain the State's growth.

     Accordingly, the purpose of this Act is to:

     (1)  Establish a regulatory sandbox with the Hawaii housing finance and development corporation to provide temporary regulatory flexibility for the development of innovative workforce housing solutions; and

     (2)  Establish an advisory council to support the workforce housing regulatory sandbox.

     SECTION 2.  For the purposes of this Act:

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

     "Regulatory sandbox" means a temporarily modified regulatory framework that enables workforce housing developers to test innovative solutions.

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

     SECTION 3.  (a)  There is established the workforce housing regulatory sandbox program to be administered by the corporation.

     (b)  The workforce housing regulatory sandbox program shall waive or temporarily modify permitting processes and other regulatory requirements for eligible workforce housing projects to encourage innovation and reduce barriers to construction.

     SECTION 4.  (a)  There is established an advisory council to provide guidance and oversight for the workforce housing regulatory sandbox program.

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

     (1)  A representative from the corporation;

     (2)  A representative from the board of land and natural resources;

     (3)  A representative from the state historic preservation division;

     (4)  One representative who shall have a demonstrated knowledge of sustainable development practices;

     (5)  One representative who shall be a cultural expert in Native Hawaiian traditional and customary practices;

     (6)  One representative from the private housing development sector;

     (7)  One representative from a nonprofit housing organization; and

     (8)  Other members whose expertise is relevant to the goals of the workforce housing regulatory sandbox program, who shall be invited by the advisory council.

     (c)  The advisory council shall:

     (1)  Provide recommendations to the corporation regarding cultural, environmental, and sustainability considerations; and

     (2)  Monitor projects to ensure compliance with the objectives of the regulatory sandbox.

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

     (1)  A description of the proposed innovative workforce housing solution;

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

     (3)  An assessment of potential environmental and cultural impacts, including proposed mitigation measures.

     (b)  Projects shall meet the following criteria for consideration:

     (1)  Demonstrate alignment with the affordability targets of workforce housing;

     (2)  Incorporate sustainable building practice; and

     (3)  Demonstrate potential for significant reduction in construction timelines.

     SECTION 6.  (a)  The corporation may temporarily waive or modify regulatory requirements for approved projects including but not limited to:

     (1)  Expedited permitting processes;

     (2)  Reduced or waived infrastructure capacity fees; or

     (3)  Flexible zoning and land use requirements.

     (b)  All waivers or modifications shall be subject to review and approval by the advisory council.

     SECTION 7.  Developers participating in the workforce housing regulatory sandbox program shall ensure that:

     (1)  Sale prices or rents remain affordable for workforce households earning between sixty per cent and one hundred forty per cent of the area median income for a minimum of ten years;

     (2)  Units shall be prohibited from being used as short-term rentals for at least ten years;

     (3)  Units shall be owned or rented by legal United States residents and occupied full-time by the resident's household; and

     (4)  At least one adult in each household shall be employed full-time or the equivalent for ten years;

provided that deed restrictions or equivalent legal mechanisms shall be used to enforce the requirements in accordance with this section.

     SECTION 8.  (a)  The corporation shall monitor the progress of all projects in the workforce housing regulatory sandbox program and ensure compliance with the objectives of this Act.

     (b)  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 for the duration of the program.  The report shall include:

     (1)  The number and types of projects approved;

     (2)  The regulatory modifications granted;

     (3)  Outcomes related to affordability, sustainability, and construction timelines; and

     (4)  Future improvements or extension of the workforce housing regulatory sandbox program.

     SECTION 9.  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 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 for the establishment and operation of the workforce housing regulatory sandbox program established pursuant to this Act, including administrative costs, staffing, and support for approved projects.

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

     SECTION 10.  This Act shall take effect on July 1, 2025; provided that this Act shall be repealed on June 30, 2030.

Report Title:

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

Description:

Establishes the Workforce Housing Regulatory Sandbox Program within the Hawaii Housing Finance and Development Corporation.  Establishes an Advisory Council within the Workforce Housing Regulatory Sandbox Program to advise on environmental and cultural practices within specific developments.  Requires annual reports to the Legislature.  Appropriates funds.  Repeals 6/30/2030.

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

STAND. COM. REP. NO.  138

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 1317

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Housing, to which was referred H.B. No. 1317 entitled:

"A BILL FOR AN ACT RELATING TO WORKFORCE HOUSING,"

begs leave to report as follows:

     The purpose of this measure is to:

     (1)  Establish a Workforce Housing Regulatory Sandbox Program within the Hawaii Housing Finance and Development Corporation to expedite permitting and regulatory requirements for workforce housing projects; and

     (2)  Establish an advisory council within the Workforce Housing Regulatory Sandbox Program to provide guidance and oversight.

     Your Committee received testimony in support of this measure from the Hawaii Housing Finance and Development Corporation and Hawaii Chamber of Commerce.

     Your Committee finds that the State continues to face a severe housing shortage, with a critical need for workforce housing to support the State's economy and provide affordable living options for essential workers.  Your Committee further finds that despite efforts to streamline permitting and increase land availability, bureaucratic challenges have hindered progress.  Your Committee believes that a regulatory sandbox offers a pathway to foster innovative housing solutions and accelerate the development of workforce housing throughout the State.

     Your Committee has amended this measure by:

     (1)  Specifying that notwithstanding any other law, rule, ordinance, or code to the contrary, the Workforce Housing Regulatory Sandbox Program (Program) is vested with the authority to waive or temporarily modify permitting processes and other regulatory requirements for eligible workforce housing projects;

     (2)  Modifying the membership of the Workforce Housing Regulatory Sandbox Program Advisory Council, including adding the following:

          (A)  The Director of the Office of Planning and Sustainable Development, who shall serve as the Chairperson;

          (B)  Each director of a county department of planning or department of planning and permitting, as applicable; and

          (C)  Each director of a county department of public works or department of facility maintenance, as applicable;

     (3)  Clarifying that one adult in each household participating in the Program shall work an average of thirty hours or more per week at a business operating in the State;

     (4)  Changing the effective date to July 1, 3000, to encourage further discussion; and

     (5)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1317, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1317, H.D. 1, and be referred to your Committee on Water & Land.

Respectfully submitted on behalf of the members of the Committee on Housing,