SB 1200: 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 current Governor Josh Green's 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.

     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 shortage 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 Hawaii's natural resources and cultural heritage.  This collaborative approach will balance the urgency of addressing the housing shortage 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 shortage 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 of the department of land and natural resources;

     (4)  One representative from the Hawaii public housing authority;

     (5)  One representative from the Hawaii community development authority;

     (6)  One representative from the office of planning and sustainable development;

     (7)  One representative from each county;

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

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

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

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

    (12)  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, and support for approved projects, and the establishment of one full-time equivalent (1.0 FTE). 

     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; Position; 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.  Establishes a position.  Requires annual reports to the Legislature.  Appropriates funds.  Repeals 6/30/2030.  (SD1)

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. 334

Honolulu, Hawaii

RE:    S.B. No. 1200

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committee on Housing, to which was referred S.B. No. 1200 entitled:

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

begs leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Establish the Workforce Housing Regulatory Sandbox Program within the Hawaii Housing Finance and Development Corporation; 

     (2)  Establish an Advisory Council within the Workforce Housing Regulatory Sandbox Program to advise on environmental and cultural practices within specific developments; 

     (3)  Require annual reports to the Legislature.; 

     (4)  Appropriate funds; and 

     (5)  Repeal the Program on June 30, 2030.

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

     Your Committee finds that workforce housing offers residents housing units that are situated near places of employment or dedicated to certain professions.  As the cost of living in the State remains prohibitive for many residents, providing developers with additional opportunities to develop workforce housing can alleviate financial burdens on residents seeking to remain in the State.  Therefore, this measure allows developers to test innovative housing solutions with relaxed permitting requirements while maintaining environmental and cultural integrity.

     Your Committee notes that HHFDC has a limited ability to dictate county permitting, fee, and zoning processes that are required to commence housing development projects classified as affordable.  Additionally, the exemption process authorized pursuant to section 201H-38, Hawaii Revised Statutes, is a successful, heavily utilized program with well-established requirements that achieve many of the goals of this measure. 

     Your Committee has amended this measure by:

     (1)  Amending the composition of the advisory council to include:

          (A)  One representative from the Hawaii Public Housing Authority;

          (B)  One representative from the Hawaii Community Development Authority;

          (C)  One representative from the Office of Planning and Sustainable Development; and

          (D)  One representative from each county;

     (2)  Inserting language requiring the Hawaii Housing Finance and Development Corporation to establish one full-time equivalent (1.0 FTE) position to assist with the Workforce Housing Regulatory Sandbox Program; and

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

     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 S.B. No. 1200, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1200, S.D. 1, and be referred to your Committee on Ways and Means.

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