SB 534: HCDA; OHA; Kakaako Makai; Residential Development; Height Limit; Workforce Housing; Owner-Occupant; Hawaii Community Development Revolving Fund; Special Account; Kakaako Makai; Association Fee; Tax Increment Financing; Working Group; Report; Appropriations

A BILL FOR AN ACT

RELATING TO THE HAWAII COMMUNITY DEVELOPMENT AUTHORITY.

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

PART I

     SECTION 1.  The legislature finds that the office of Hawaiian affairs was established under article XII, section 5, of the Hawaii State Constitution to "hold title to all the real and personal property now or hereafter set aside or conveyed to it which shall be held in trust for native Hawaiians and Hawaiians."  The office of Hawaiian affairs' board of trustees is authorized by article XII, section 6, of the Hawaii State Constitution "to manage and administer the proceeds from the sale or other disposition of the lands . . . and income derived from whatever sources for native Hawaiians and Hawaiians, including all income and proceeds from that pro rata portion of the trust referred to in section 4 of this article [the public land trust] for native Hawaiians."  The board of trustees is also authorized under article XII, section 6, "to exercise control over real and personal property set aside by state, federal or private sources and transferred to the board for native Hawaiians and Hawaiians."

     In section 1 of Act 15, Session Laws of Hawaii 2012 (Act 15), the legislature found that a purpose of the Act was to:

[E]ffectively and responsibly fulfill the constitutional obligation to native Hawaiians under article XII, sections 4 and 6, of the State Constitution between November 7, 1978, up to and including June 30, 2012 . . . and providing additional resources to the office in the form of fee simple title to certain parcels of land[.]

In the same section of Act 15, the legislature declared that the "[c]onveyance of the fee simple interest to the lands . . . will allow the State to effectively and responsibly meet [those] constitutional obligations to native Hawaiians."

     Further, section 2 of Act 15 stated, "the fee simple interest to the . . . parcels of land . . . is conveyed to the office of Hawaiian affairs as grantee, as of July 1, 2012, as is, where is[.]"  In the same section of Act 15, however, the legislature specifically directed that, "[t]he [properties] are and shall remain (even after conveyance to the office) under the jurisdiction and authority of the Hawaii community development authority, with respect to zoning, land use conditions[,] and all other matters over which the authority has jurisdiction and authority to act" and "shall be subject to all laws, except sections 206E-8, 206E-10, 206E‑34, Hawaii Revised Statutes, and otherwise provided in this Act."

     Particularly pertinent to the purpose of Act 15, in section 6, the legislature further declared that:

The [p]roperties conveyed by this Act shall be deemed income and proceeds from the public land trust, as if the [p]roperties had been paid out of the income and proceeds from the public land trust pursuant to article XII, section 6 of the Hawaii State Constitution.

     Relying on its board of trustees' authority to "exercise control" over lands that the office of Hawaiian affairs holds in trust for native Hawaiians and to "manage and administer" the income and proceeds from the public land trust lands it receives, the office of Hawaiian affairs has asked the legislature to enact this Act to allow the office of Hawaiian affairs to maximize the income or proceeds that certain parcels of land conveyed by Act 15 could generate for the purposes of bettering the conditions of native Hawaiians, by allowing the parcels to be developed for residential use.

     The legislature further finds that the ongoing transformation of Kakaako into a place where the people of Honolulu can live, work, and play should increase the revenue generating potential of the land conveyed to the office of Hawaiian affairs by Act 15 and concomitantly increase the number of programs and kinds of services for which the office of Hawaiian affairs was created and is able to provide for native Hawaiians.  The legislature further finds that even more revenue could be generated to provide programs and services to better the conditions of native Hawaiians if the office of Hawaiian affairs were permitted to develop some or all of the parcels it received under Act 15 for residential use.

     The legislature agrees that the residential development restriction to which the parcels transferred to the office of Hawaiian affairs by Act 15 were and continue to be subject should be lifted for certain parcels to the extent necessary to allow the office of Hawaiian affairs to realize the maximum income or proceeds that those parcels could generate if they were developed for residential use.

     The legislature further finds that the State continues to suffer from a shortage of affordable housing with fewer families able to afford to buy or rent a home in the State.  Hawaii is the most expensive state in the nation for housing, with its housing costs being 2.7 times the national average.  Housing costs in the State have tripled since 1990, resulting in a $850,000 median price for a single-family home.  This price equates to a $252,000 annual income needed to afford a new median priced home and fewer than one in three households in the State meet that income threshold.  In addition, Native Hawaiians suffer disproportionately from this lack of affordable housing.  Native Hawaiians have the highest rate of poverty and the lowest median household income of the major ethnic groups in the State, causing many to become homeless or to leave the State.  Therefore, it is essential that a certain percentage of the residential units developed on certain parcels of land conveyed to the office of Hawaiian affairs pursuant to Act 15 be workforce housing allocated to households within a certain income range.

     The legislature also acknowledges that Act 172, Session Laws of Hawaii 2023, appropriated funds into and out of the school facilities special fund to construct housing prioritized for teachers, educators, and staff.  Likewise, the legislature finds that priority for the workforce housing developed on certain parcels of lands conveyed to the office of Hawaiian affairs pursuant to Act 15 should be given to certain essential workforce in the area.

     Furthermore, the legislature acknowledges the extensive planning and community outreach efforts by the Kakaako community planning advisory council, which resulted in the 2011 Kakaako Makai Conceptual Master Plan; the office of Hawaiian affairs' efforts, which produced the 2013 Kakaako Makai Strategic Management Plan; and the Hawaii community development authority's work and adoption of the 2017 Kakaako Makai Area Parks Master Plan and the 2023 Kakaako Community Development District Makai Area Plan.  The legislature strongly encourages the office of Hawaiian affairs to incorporate development concepts from these various plans into its master plan development proposal for Kakaako makai to create a live, work, and play community that addresses the recreational, cultural, educational, economic, and workforce housing needs of the State.

     Finally, the legislature finds that inasmuch as this Act furthers one of the principle purposes for which the office of Hawaiian affairs was established as a state agency, its provisions should be deemed consistent with and not violative of article XI, section 5, of the Hawaii State Constitution.

     The purpose of this part is to enhance the revenue generating capacity of certain parcels of land in the Kakaako makai area, including parcels that were conveyed to the office of Hawaiian affairs pursuant to Act 15 while making housing available to the essential workforce in the area by:

     (1)  Clarifying the process by which the Hawaii community development authority may approve residential development on certain parcels of Kakaako makai;

     (2)  Raising the building height limit and the maximum floor area ratio on certain parcels;

     (3)  Requiring fifty per cent plus one of the residential units developed on certain parcels to be allocated to households with income at or below one hundred forty per cent of the area median income in perpetuity, with priority given to individuals who are essential workers working within a five-mile radius of Kakaako makai, including but not limited to essential workers working for an employer in the health care, hospitality, education, law enforcement, civil service, or construction industry;

     (4)  Limiting the sale of residential units developed in certain residential developments to prospective owner‑occupants; and

     (5)  Establishing a Kakaako makai special account in the office of Hawaiian affairs special fund and association fee to fund various services and projects in the Kakaako makai area.

     SECTION 2.  Chapter 206E, Hawaii Revised Statutes, is amended by adding three new sections to part II to be appropriately designated and to read as follows:

     "§206E-A  Limited residential development in Kakaako; public hearing; height limit; disclosures; nuisance mitigation; workforce housing.  (a)  If the authority finds that a developer's plan or proposal for a residential development in that portion of the Kakaako community development district makai of Ala Moana boulevard and between Kewalo basin and the foreign trade zone is reasonable and consistent with the development rules and policies of the Kakaako community development district, then the authority may approve the proposed residential development project; provided that approval may be granted only after the applicant seeking approval conducts public hearings pursuant to subsection (b) and section 206E-5.6.

     (b)  An applicant seeking approval of a plan or proposal for any residential development pursuant to this section shall hold a public hearing before submitting the plan or proposal to the authority.  Notice shall be published in accordance with section 1-28.5, at least thirty days before the hearing.  The notice shall include:

     (1)  The date, time, and place of the hearing;

     (2)  A statement of the topic of the hearing; and

     (3)  A description of where, when, and how the residential development proposal may be viewed by the public.

All interested persons may submit data or opinions, orally or in writing, in conjunction with the hearing.

     (c)  An applicant seeking approval of a plan or proposal for residential development pursuant to this section shall submit the following before submitting its plan or proposal to the authority:

     (1)  A completed environmental impact statement pursuant to chapter 343;

     (2)  Documentation of all requirements being met pursuant to part III of chapter 205A for parcels within the shoreline area; and

     (3)  Documentation from the department of health verifying that the applicant has adequately removed or capped any hazardous substances, pollutants, or contaminants present on a parcel pursuant to chapter 128D and any rules that the department of health has adopted thereunder.

     (d)  The authority shall, before approving any plan or proposal for residential development pursuant to this section:

     (1)  Hold a public hearing; and

     (2)  Fully consider all written and oral submissions received at the public hearings held by the applicant and the authority.

     (e)  Any other law to the contrary notwithstanding, the building height limit shall be four hundred feet and the maximum floor area ratio shall not exceed 10.0 for any residential development approved by the authority on the parcels bounded by Ala Moana boulevard, Ilalo street, Ward avenue, and Forrest avenue pursuant to this section; provided that this subsection shall only apply to parcels owned by the office of Hawaiian affairs.

     (f)  Any plan or proposal for residential development submitted to the authority for approval pursuant to this section shall include an assessment and proposed mitigation plan for any possible noise, odor, and other aircraft-related nuisances that may affect the development.  The office of Hawaiian affairs and any person developing the residential development approved by the authority pursuant to this section shall, before entering into any lease agreement for any lot, parcel, structure, or unit of a structure located within the development, provide written notice to potential lessees and residents of the possible noise, odor, and other aircraft-related nuisances.

     (g)  Any plan or proposal for residential development submitted to the authority for approval pursuant to this section shall include an assessment and proposed mitigation or adaptation plan for any risk to the development due to its location within a sea level rise exposure area.  An applicant shall use the sea level rise scenario that most closely corresponds with the final year of the expected lifespan of the development in its assessment and proposed mitigation or adaptation plan.

     (h)  Any residential development approved by the authority on the parcels bounded by Ala Moana boulevard, Ilalo street, and Forrest avenue pursuant to this section shall allocate at least fifty per cent plus one unit of the residential units in the development to households with income at or below one hundred forty per cent of the area median income in perpetuity, with priority given to individuals who are essential workers working within a five-mile radius of Kakaako makai, including but not limited to essential workers working for an employer in the health care, hospitality, education, law enforcement, civil service, or construction industry; provided that nothing in this subsection shall be construed to limit eligibility for exemptions for housing developments under chapter 201H.

     (i)  Notwithstanding any other law to the contrary, no residential unit in a residential development approved by the authority pursuant to this section, shall be sold to any person other than a prospective owner-occupant.

     (j)  For the purposes of this section:

     "Owner-occupant" has the same meaning as defined in section 514B-95.

     "Sea level rise exposure area" means the mapped zone on the school of ocean and earth science technology coastal viewer, or its successor, that displays the aggregate of certain coastal hazard layers, including passive flooding, groundwater inundation, emergent and shallow groundwater, drainage backflow, annual high wave-driven flooding, compound flooding scenarios, and future erosion hazard zones.

     §206E-B  Kakaako makai association fee.  The office of Hawaiian affairs shall determine a Kakaako makai association fee to be collected from residents, tenants, and lessees of certain parcels of Kakaako makai identified in section 206E-A(a).

     §206E-C  Kakaako makai special account.  Kakaako makai association fees collected pursuant to section 206E-B shall be deposited into a special account in the office of Hawaiian affairs special fund.  Moneys from the special account shall be used to fund various services and projects, including but not limited to maintenance, improvements, free public parking for park users, public beach access, security, and parks and open spaces, for the Kakaako community development district makai of Ala Moana boulevard and between Kewalo Basin and the foreign trade zone, including the Kewalo Basin area.  Disbursements from the special account shall be made in accordance with procedures adopted by the authority and approved by the director of finance."

     SECTION 3.  Section 206E-12, Hawaii Revised Statutes, is amended to read as follows:

     "§206E-12  Dedication for public facilities as condition to development.  (a) The authority shall establish rules requiring dedication for public facilities of land or facilities, or cash payments in lieu thereof, by developers as a condition of developing real property pursuant to the community development plan.  Where state and county public facilities dedication laws, ordinances, or rules differ, the provision for greater dedication shall prevail.

     (b)  Rules adopted by the authority pursuant to subsection (a) shall not apply to residential developments approved by the authority pursuant to section 206E-A."

     SECTION 4.  Section 206E-31.5, Hawaii Revised Statutes, is amended to read as follows:

     "§206E-31.5  Prohibitions.  Anything contained in this chapter to the contrary notwithstanding, and except as provided in section 206E-A(a), the authority is prohibited from:

     (1)  Selling or otherwise assigning the fee simple interest in any lands in the Kakaako community development district to which the authority in its corporate capacity holds title, except with respect to:

          (A)  Utility easements;

          (B)  Remnants as defined in section 171-52;

          (C)  Grants to any state or county department or agency;

          (D)  Private entities for purposes of any easement, roadway, or infrastructure improvements; or

          (E)  Reserved housing as defined in section 206E-101; or

     (2)  Approving any plan or proposal for any residential development in that portion of the Kakaako community development district makai of Ala Moana boulevard and between Kewalo Basin and the foreign trade zone."

PART II

     SECTION 5.  Chapter 206E, Hawaii Revised Statutes, is amended by adding a new section to part II to be appropriately designated and to read as follows:

     "§206E-    Tax increment financing; Hawaii community development authority; powers.  (a)  The authority may establish an infrastructure financing, implementation, and improvement district for the purpose of collecting state or county revenues generated by development within a district to fund or finance infrastructure improvements within the districts; provided that the use of any county revenues or county surcharge revenues shall require an executed agreement with the county that provides for the funding, financing, scheduling, and delivery of infrastructure improvements in accordance with an infrastructure implementation plan as approved by the state and county.

     (b)  For the purposes of this section:

     "County" means the city and county of Honolulu.

     "Infrastructure financing, implementation, and improvement district" means a contiguous or noncontiguous geographic area comprising lands within a transit-oriented development zone or outside of a transit-oriented development zone that is delineated for the purpose of infrastructure funding or financing under this section."

PART III

     SECTION 6.  Section 206E-31, Hawaii Revised Statutes, is repealed.

     ["[§206E-31]  Kakaako community development district; purposes.  The legislature finds that:

     (1)  The Kakaako district is centrally located in Honolulu proper, in close proximity to the central business district, the government center, commercial, industrial and market facilities, major existing and contemplated transportation routes and recreational and service areas;

     (2)  Due to its present function as a service and light industrial area, the district is relatively underdeveloped and has especially in view of its proximity to the urban core where the pressure for all land uses is strong the potential for increased growth and development that can alleviate community needs such as low-income housing, parks and open space, and commercial and industrial facilities;

     (3)  The district, if not redeveloped or renewed, has the potential to become a blighted and deteriorated area.  Due to its present economic importance to the State in terms of industry and subsequent employment, there is a need to preserve and enhance its value and potential;

     (4)  Kakaako has a potential, if properly developed and improved, to become a planned new community in consonance with surrounding urban areas.

     In coordinating community development in the Kakaako district, the authority shall plan a mixed-use district whereby industrial, commercial, residential, and public uses may coexist compatibly within the same area.

     The authority shall plan for the above uses, but shall also respect and support the present function of Kakaako as a major economic center, providing significant employment in such areas as light industrial, wholesaling, service, and commercial activity."]

     SECTION 7.  Section 206E-32, Hawaii Revised Statutes, is repealed.

     ["§206E-32  District; established, boundaries.  The Kakaako community development district is established.  The district shall include that area bounded by King Street; Piikoi Street from its intersection with King Street to Ala Moana Boulevard; Ala Moana Boulevard, inclusive, from Piikoi Street to its intersection with the Ewa boundary of Ala Moana Park also identified as the Ewa boundary of tax map key 2-3-37:01; the Ewa boundary of tax map key 2-3-37:01 from its intersection with Ala Moana Boulevard to the shoreline; the shoreline from its intersection with the property line representing the Ewa boundary of property identified by tax map key 2-3-37:01 to the property line between Pier 2 and Pier 4; the property line between Pier 2 and Pier 4 from its intersection with the shoreline to Ala Moana Boulevard; Ala Moana Boulevard from its intersection with the property line between lands identified by Pier 2 and Pier 4 to Punchbowl Street; and Punchbowl Street to its intersection with King Street; provided that the following parcels at Pier 1 and Pier 2 shall be deleted from the Kakaako community development district boundaries and conveyed to the department of land and natural resources to be set aside for the department of transportation and the foreign-trade zone division of the department of business, economic development, and tourism, to ensure continued maritime and foreign commerce use:  all of lot 3 and parcels 2, 3-A, A, and B of the Forrest Avenue subdivision, as shown on the map filed with the bureau of conveyances of the State of Hawaii as file plan 2335; and lots A-1 and A-2, as shown on map 2, filed in the office of the assistant registrar of the land court of the State of Hawaii with land court application 1328; and provided further that all existing easements affecting and appurtenant to the parcels to be deleted from the Kakaako community development district boundaries shall not be affected by this change.

     The district shall also include that parcel of land identified by tax map key 2-1-14:16, situated mauka of Pier 6 and Pier 7 and makai of Nimitz Highway, being the site for the existing Hawaiian Electric power plant and related facilities."]

     SECTION 8.  Section 206E-33, Hawaii Revised Statutes, is repealed.

     ["§206E-33  Kakaako community development district; development guidance policies.  The following shall be the development guidance policies generally governing the authority's action in the Kakaako community development district:

     (1)  Development shall result in a community which permits an appropriate land mixture of residential, commercial, industrial, and other uses.  In view of the innovative nature of the mixed use approach, urban design policies should be established to provide guidelines for the public and private sectors in the proper development of this district; while the authority's development responsibilities apply only to the area within the district, the authority may engage in any studies or coordinative activities permitted in this chapter which affect areas lying outside the district, where the authority in its discretion decides that those activities are necessary to implement the intent of this chapter.  The studies or coordinative activities shall be limited to facility systems, resident and industrial relocation, and other activities with the counties and appropriate state agencies.  The authority may engage in construction activities outside of the district; provided that such construction relates to infrastructure development or residential or business relocation activities; provided further, notwithstanding section 206E-7, that such construction shall comply with the general plan, development plan, ordinances, and rules of the county in which the district is located;

     (2)  Existing and future industrial uses shall be permitted and encouraged in appropriate locations within the district.  No plan or implementation strategy shall prevent continued activity or redevelopment of industrial and commercial uses which meet reasonable performance standards;

     (3)  Activities shall be located so as to provide primary reliance on public transportation and pedestrian facilities for internal circulation within the district or designated subareas;

     (4)  Major view planes, view corridors, and other environmental elements such as natural light and prevailing winds, shall be preserved through necessary regulation and design review; provided that no portion of any building or structure in the Kakaako Mauka area shall exceed four hundred eighteen feet in height;

     (5)  Redevelopment of the district shall be compatible with plans and special districts established for the Hawaii Capital District, and other areas surrounding the Kakaako district;

     (6)  Historic sites and culturally significant facilities, settings, or locations shall be preserved;

     (7)  Land use activities within the district, where compatible, shall to the greatest possible extent be mixed horizontally, that is, within blocks or other land areas, and vertically, as integral units of multi-purpose structures;

     (8)  Residential development may require a mixture of densities, building types, and configurations in accordance with appropriate urban design guidelines; integration both vertically and horizontally of residents of varying incomes, ages, and family groups; and an increased supply of housing for residents of low- or moderate-income may be required as a condition of redevelopment in residential use.  Residential development shall provide necessary community facilities, such as open space, parks, community meeting places, child care centers, and other services, within and adjacent to residential development;

     (9)  Public facilities within the district shall be planned, located, and developed so as to support the redevelopment policies for the district established by this chapter and plans and rules adopted pursuant to it; and

    (10)  Development shall consider the impacts of climate change, sea level rise, and climate-resilient development in the design and siting of buildings."]

     SECTION 9.  Section 206E-34, Hawaii Revised Statutes, is repealed.

     ["[§206E-34  Cultural public market.]  (a)  There shall be established within the Hawaii community development authority a state cultural public market.

     (b)  The cultural public market shall be located on state land within the Kakaako Makai area and developed pursuant to sections 206E-31, 206E-32, and 206E-33.  A public parking lot shall be included.

     (c)  The Hawaii community development authority shall:

     (1)  Designate and develop the state-owned land for the cultural public market;

     (2)  Accept, for consideration, input regarding the establishment of the cultural public market from the following departments and agencies:

          (A)  The department of agriculture;

          (B)  The department of business, economic development, and tourism;

          (C)  The department of land and natural resources;

          (D)  The department of labor and industrial relations; and

          (E)  The Hawaii tourism authority;

     (3)  Consider and determine the propriety of using public-private partnerships in the development and operation of the cultural public market;

     (4)  Develop, distribute, and accept requests for proposals from private entities for plans to develop and operate the cultural public market; and

     (5)  Ensure that the Hawaiian culture is the featured culture in the cultural public market.

     (d)  Requests for proposals for the cultural public market shall contemplate but not be limited to the inclusion of the following types of facilities and services:

     (1)  Retail outlets for ethnically diverse products;

     (2)  Venues for businesses with ethnic themes, including restaurants and other service-related businesses;

     (3)  Theaters, stages, and arenas designed to showcase cultural performing artists as well as community performing arts;

     (4)  Exhibition space or museums that showcase artwork created by international and local artists; and

     (5)  Museums or other educational facilities focusing on the history and cultures of the various ethnic groups within Hawaii, including Hawaiian history."]

     SECTION 10.  (a)  There is established within the Hawaii community development authority a Kakaako community development district working group to plan, coordinate, and facilitate the transfer of the Kakaako community development district and its functions from the Hawaii community development authority to the city and county of Honolulu.

     (b)  The working group shall:

     (1)  Identify all sources of funding, programs, and rules and regulations relating to the Kakaako community development district and determine whether a source of funding, program, or rules and regulations shall:

          (A)  Remain under the jurisdiction of the Hawaii community development authority;

          (B)  Remain under the jurisdiction of the respective state agency;

          (C)  Be transferred to the city and county of Honolulu; or

          (D)  Be transferred to any other appropriate state or county department or agency or organization;

     (2)  In making the determinations pursuant to paragraph (1), consider:

          (A)  The compatibility of the source of funding, program, or rules and regulations with the other ongoing responsibilities and functions of a respective state or county department or agency;

          (B)  The efficient use of public funds;

          (C)  The consistency of the source of funding, program, or rules and regulations with the adopted long-range community plans and goals of a respective state or county department or agency; and

          (D)  Any applicable federal requirements or programs; and

     (3)  Hold at least one public hearing to receive public input on the proposed transfer and to solicit recommendations from community stakeholders.

     (c)  The working group shall comprise the following members:

     (1)  The executive director of the Hawaii housing finance and development corporation or the executive director's designee;

     (2)  The director of business, economic development, and tourism or the director's designee;

     (3)  The director of the Hawaii community development authority or the director's designee;

     (4)  The mayor of the city and county of Honolulu or the mayor's designee;

     (5)  The director of the department of planning and permitting of the city and county of Honolulu or the director's designee; and

     (6)  The director of the department of transportation services of the city and county of Honolulu or the director's designee.

     (d)  The working group shall elect from among its members a chairperson and a vice-chairperson.

     (e)  The members of the working group shall serve without compensation but shall be reimbursed for expenses, including travel expenses, necessary for the performance of their duties.

     (f)  No member of the working group shall be subject to chapter 84, Hawaii Revised Statutes, solely because of the member's participation in the working group.

     (g)  The Hawaii community development authority shall provide administrative and logistical support to the working group.

     (h)  The working group 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 the regular session of 2026.  The report shall include:

     (1)  A proposed transfer schedule and timeline; and

     (2)  A summary of the public hearing conducted pursuant to this section, including any community feedback received.

     SECTION 11.  In recognition that both the State and city and county of Honolulu require time to effectuate a complete transfer, all laws, rules, and regulations governing the Kakaako community development district that are in effect as of the effective date of this Act shall remain in full force and effect for five years from the effective date of this Act.  After the expiration of the five-year period, any funding, programs, and rules and regulations applicable to the Kakaako community development district under part II of chapter 206E, Hawaii Revised Statutes, shall be transferred to the city and county of Honolulu.

     SECTION 12.  There is appropriated out of the general revenues of the State of Hawaii the sum of $           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 Hawaii community development authority to provide administrative and logistical support to the working group established pursuant to section 11 of this Act.

     The sums appropriated shall be expended by the Hawaii community development authority for the purposes of this Act.

PART IV

     SECTION 13.  In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

     SECTION 14.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 15.  This Act shall take effect on July 1, 2025; provided that sections 7, 8, 9, and 10 of this Act shall take effect on July 1, 2030.

Report Title:

HCDA; OHA; Kakaako Makai; Residential Development; Height Limit; Workforce Housing; Owner-Occupant; Hawaii Community Development Revolving Fund; Special Account; Kakaako Makai; Association Fee; Tax Increment Financing; Working Group; Report; Appropriations

Description:

Part I:  Clarifies the process by which the Hawaii Community Development Authority may approve residential development on certain parcels of Kakaako Makai.  Raises the building height limit and the maximum floor area ratio on certain parcels in the area.  Requires a certain percentage of the residential units developed on certain parcels to be allocated to households at or below a certain income level in perpetuity, with priority given to certain essential workforce in the area.  Limits the sale of residential units developed in certain residential developments to prospective owner-occupants.  Requires the Office of Hawaiian Affairs to determine a Kakaako Makai association fee to be collected from residents, tenants, and lessees of certain parcels to be deposited into a special account in the Office of Hawaiian Affairs Special Fund to fund various services and projects in the Kakaako Makai area.  Part II:  Authorizes the HCDA to engage in tax increment financing with respect to the Kakaako Community Development District.  Establishes a Kakaako Community Development District Working Group to plan, coordinate, and facilitate the transfer of the Kakaako Community Development District and its functions from the HCDA to the City and County of Honolulu.  Requires a report to the Legislature.  Appropriates funds.  (Proposed SD2)

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 THE HAWAII COMMUNITY DEVELOPMENT AUTHORITY.

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

     SECTION 1.  The legislature finds that the office of Hawaiian affairs was established under article XII, section 5, of the Hawaii State Constitution to "hold title to all the real and personal property now or hereafter set aside or conveyed to it which shall be held in trust for native Hawaiians and Hawaiians."  The office of Hawaiian affairs' board of trustees is authorized by article XII, section 6, of the Hawaii State Constitution "to manage and administer the proceeds from the sale or other disposition of the lands . . . and income derived from whatever sources for native Hawaiians and Hawaiians, including all income and proceeds from that pro rata portion of the trust referred to in section 4 of this article [the public land trust] for native Hawaiians".  The board of trustees is also authorized under article XII, section 6, "to exercise control over real and personal property set aside by state, federal or private sources and transferred to the board for native Hawaiians and Hawaiians."

     In section 1 of Act 15, Session Laws of Hawaii 2012 (Act 15), the legislature found that a purpose of the Act was to:

[E]ffectively and responsibly fulfill the constitutional obligation to native Hawaiians under article XII, sections 4 and 6, of the State Constitution between November 7, 1978, up to and including June 30, 2012 . . . and providing additional resources to the office in the form of fee simple title to certain parcels of land[.]

In the same section of Act 15, the legislature declared that the "[c]onveyance of the fee simple interest to the lands . . . will allow the State to effectively and responsibly meet [those] constitutional obligations to native Hawaiians."

     Further, section 2 of Act 15 stated, "the fee simple interest to the . . . parcels of land . . . is conveyed to the office of Hawaiian affairs as grantee, as of July 1, 2012, as is, where is[.]"  In the same section of Act 15, however, the legislature specifically directed that, "[t]he [properties] are and shall remain (even after conveyance to the office) under the jurisdiction and authority of the Hawaii community development authority, with respect to zoning, land use conditions[,] and all other matters over which the authority has jurisdiction and authority to act" and "shall be subject to all laws, except sections 206E-8, 206E-10, 206E‑34, Hawaii Revised Statutes, and otherwise provided in this Act".

     Particularly pertinent to the purpose of Act 15, in section 6, the legislature further declared that:

The [p]roperties conveyed by this Act shall be deemed income and proceeds from the public land trust, as if the [p]roperties had been paid out of the income and proceeds from the public land trust pursuant to article XII, section 6 of the Hawaii State Constitution.

     Relying on its board of trustees' authority to "exercise control" over lands that the office of Hawaiian affairs holds in trust for native Hawaiians and to "manage and administer" the income and proceeds from the public land trust lands it receives, the office of Hawaiian affairs has asked the legislature to enact this Act to allow the office of Hawaiian affairs to maximize the income or proceeds that certain parcels of land conveyed by Act 15 could generate for the purposes of bettering the conditions of native Hawaiians, by allowing the parcels to be developed for residential use.

     The legislature further finds that the ongoing transformation of Kakaako into a place where the people of Honolulu can live, work, and play should increase the revenue generating potential of the land conveyed to the office of Hawaiian affairs by Act 15 and concomitantly increase the number of programs and kinds of services for which the office of Hawaiian affairs was created and is able to provide for native Hawaiians.  The legislature further finds that even more revenue could be generated to provide programs and services to better the conditions of native Hawaiians if the office of Hawaiian affairs were permitted to develop some or all of the parcels it received under Act 15 for residential use.

     The legislature agrees that the residential development restriction to which the parcels transferred to the office of Hawaiian affairs by Act 15 were and continue to be subject should be lifted for certain parcels to the extent necessary to allow the office of Hawaiian affairs to realize the maximum income or proceeds that those parcels could generate if they were developed for residential use.

     The legislature further finds that the State continues to suffer from a shortage of affordable housing with fewer families able to afford to buy or rent a home in the State.  Hawaii is the most expensive state in the nation for housing, with its housing costs being 2.7 times the national average.  Housing costs in the State have tripled since 1990, resulting in a $850,000 median price for a single-family home.  This price equates to a $252,000 annual income needed to afford a new median priced home and fewer than one in three households in the State meet that income threshold.  In addition, Native Hawaiians suffer disproportionately from this lack of affordable housing.  Native Hawaiians have the highest rate of poverty and the lowest median household income of the major ethnic groups in the State, causing many to become homeless or to leave the State.  Therefore, it is essential that a certain percentage of the residential units developed on certain parcels of land conveyed to the office of Hawaiian affairs pursuant to Act 15 be workforce housing allocated to households within a certain income range.

     The legislature also acknowledges that Act 172, Session Laws of Hawaii 2023, appropriated funds into and out of the school facilities special fund to construct housing prioritized for teachers, educators, and staff.  Likewise, the legislature finds that priority for the workforce housing developed on certain parcels of lands conveyed to the office of Hawaiian affairs pursuant to Act 15 should be given to certain essential workforce in the area.

     Furthermore, the legislature acknowledges the extensive planning and community outreach efforts by the Kakaako community planning advisory council, which resulted in the 2011 Kakaako Makai Conceptual Master Plan; the office of Hawaiian affairs' efforts, which produced the 2013 Kakaako Makai Strategic Management Plan; and the Hawaii community development authority's work and adoption of the 2017 Kakaako Makai Area Parks Master Plan and the 2023 Kakaako Community Development District Makai Area Plan.  The legislature strongly encourages the office of Hawaiian affairs to incorporate development concepts from these various plans into its master plan development proposal for Kakaako makai to create a live, work, and play community that addresses the recreational, cultural, educational, economic, and workforce housing needs of the State.

     Finally, the legislature finds that inasmuch as this Act furthers one of the principle purposes for which the office of Hawaiian affairs was established as a state agency, its provisions should be deemed consistent with and not violative of article XI, section 5, of the Hawaii State Constitution.

     The purpose of this Act is to enhance the revenue generating capacity of certain parcels of land in the Kakaako makai area, including parcels that were conveyed to the office of Hawaiian affairs pursuant to Act 15 while making housing available to the essential workforce in the area by:

     (1)  Clarifying the process by which the Hawaii community development authority may approve residential development on certain parcels of Kakaako makai;

     (2)  Raising the building height limit and the maximum floor area ratio on certain parcels;

     (3)  Requiring fifty per cent plus one of the residential units developed on certain parcels to be allocated to households with income at or below one hundred forty per cent of the area median income in perpetuity, with priority given to individuals who are essential workers working within a five-mile radius of Kakaako makai, including but not limited to essential workers working for an employer in the health care, hospitality, education, law enforcement, civil service, or construction industry;

     (4)  Limiting the sale of residential units developed in certain residential developments to prospective owner‑occupants; and

     (5)  Establishing a Kakaako makai special account in the office of Hawaiian affairs special fund and association fee to fund various services and projects in the Kakaako makai area.

     SECTION 2.  Chapter 206E, Hawaii Revised Statutes, is amended by adding three new sections to part II to be appropriately designated and to read as follows:

     "§206E-A  Limited residential development in Kakaako; public hearing; height limit; disclosures; nuisance mitigation; workforce housing.  (a)  If the authority finds that a developer's plan or proposal for a residential development in that portion of the Kakaako community development district makai of Ala Moana boulevard and between Kewalo basin and the foreign trade zone is reasonable and consistent with the development rules and policies of the Kakaako community development district, then the authority may approve the proposed residential development project; provided that approval may be granted only after the applicant seeking approval conducts public hearings pursuant to subsection (b) and section 206E-5.6.

     (b)  An applicant seeking approval of a plan or proposal for any residential development pursuant to this section shall hold a public hearing before submitting the plan or proposal to the authority.  Notice shall be published in accordance with section 1-28.5, at least thirty days prior to the hearing.  The notice shall include:

     (1)  The date, time, and place of the hearing;

     (2)  A statement of the topic of the hearing; and

     (3)  A description of where, when, and how the residential development proposal may be viewed by the public.

All interested persons may submit data or opinions, orally or in writing, in conjunction with the hearing.

     (c)  An applicant seeking approval of a plan or proposal for residential development pursuant to this section shall submit the following before submitting its plan or proposal to the authority:

     (1)  A completed environmental impact statement pursuant to chapter 343;

     (2)  Documentation of all requirements being met pursuant to part III of chapter 205A for parcels within the shoreline area; and

     (3)  Documentation from the department of health verifying that the applicant has adequately removed or capped any hazardous substances, pollutants, or contaminants present on a parcel pursuant to chapter 128D and any rules that the department of health has adopted thereunder.

     (d)  The authority shall, before approving any plan or proposal for residential development pursuant to this section:

     (1)  Hold a public hearing; and

     (2)  Fully consider all written and oral submissions received at the public hearings held by the applicant and the authority.

     (e)  Any other law to the contrary notwithstanding, the building height limit shall be four hundred feet and the maximum floor area ratio shall not exceed 10.0 for any residential development approved by the authority on the parcels bounded by Ala Moana Boulevard, Ilalo Street, Ward Avenue, and Forrest Avenue pursuant to this section; provided that this subsection shall only apply to parcels owned by the office of Hawaiian affairs.

     (f)  Any plan or proposal for residential development submitted to the authority for approval pursuant to this section shall include an assessment and proposed mitigation plan for any possible noise, odor, and other aircraft-related nuisances that may affect the development.  The office of Hawaiian affairs and any person developing the residential development approved by the authority pursuant to this section shall, before entering into any lease agreement for any lot, parcel, structure, or unit of a structure located within the development, provide written notice to potential lessees and residents of the possible noise, odor, and other aircraft-related nuisances.

     (g)  Any residential development approved by the authority on the parcels bounded by Ala Moana Boulevard, Ilalo Street, and Forrest Avenue pursuant to this section shall allocate at least fifty per cent plus one unit of the residential units in the development to households with income at or below one hundred forty per cent of the area median income in perpetuity, with priority given to individuals who are essential workers working within a five-mile radius of Kakaako makai, including but not limited to essential workers working for an employer in the health care, hospitality, education, law enforcement, civil service, or construction industry; provided that nothing in this subsection shall be construed to limit eligibility for exemptions for housing developments under chapter 201H.

     (h)  Notwithstanding any other law to the contrary, no residential unit in a residential development approved by the authority pursuant to this section, shall be sold to any person other than a prospective owner-occupant.

     (i)  For the purposes of this section, "owner-occupant" has the same meaning as defined in section 514B-95.

     §206E-B  Kakaako makai association fee.  The office of Hawaiian affairs shall determine a Kakaako makai association fee to be collected from residents, tenants, and lessees of certain parcels of Kakaako makai identified in section 206E-A(a).

     §206E-C  Kakaako makai special account.  Kakaako makai association fees collected pursuant to section 206E-B shall be deposited into a special account in the office of Hawaiian affairs special fund.  Moneys from the special account shall be used to fund various services and projects, including but not limited to maintenance, improvements, free public parking for park users, public beach access, security, and parks and open spaces, for the Kakaako community development district makai of Ala Moana Boulevard and between Kewalo Basin and the foreign trade zone, including the Kewalo Basin area.  Disbursements from the special account shall be made in accordance with procedures adopted by the authority and approved by the director of finance."

     SECTION 3.  Section 206E-12, Hawaii Revised Statutes, is amended to read as follows:

     "§206E-12  Dedication for public facilities as condition to development.  (a) The authority shall establish rules requiring dedication for public facilities of land or facilities, or cash payments in lieu thereof, by developers as a condition of developing real property pursuant to the community development plan.  Where state and county public facilities dedication laws, ordinances, or rules differ, the provision for greater dedication shall prevail.

     (b)  Rules adopted by the authority pursuant to subsection (a) shall not apply to residential developments approved by the authority pursuant to section 206E-A."

     SECTION 4.  Section 206E-31.5, Hawaii Revised Statutes, is amended to read as follows:

     "§206E-31.5  Prohibitions.  Anything contained in this chapter to the contrary notwithstanding, and except as provided in section 206E-A(a), the authority is prohibited from:

     (1)  Selling or otherwise assigning the fee simple interest in any lands in the Kakaako community development district to which the authority in its corporate capacity holds title, except with respect to:

          (A)  Utility easements;

          (B)  Remnants as defined in section 171-52;

          (C)  Grants to any state or county department or agency;

          (D)  Private entities for purposes of any easement, roadway, or infrastructure improvements; or

          (E)  Reserved housing as defined in section 206E-101; or

     (2)  Approving any plan or proposal for any residential development in that portion of the Kakaako community development district makai of Ala Moana boulevard and between Kewalo Basin and the foreign trade zone."

     SECTION 5.  In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

     SECTION 6.  New statutory material is underscored.

     SECTION 7.  This Act shall take effect on July 1, 2025.

Report Title:

HCDA; OHA; Kakaako Makai; Residential Development; Height Limit; Workforce Housing; Owner-Occupant; Hawaii Community Development Revolving Fund; Special Account; Kakaako Makai; Association Fee

Description:

Clarifies the process by which the Hawaii Community Development Authority may approve residential development on certain parcels of Kakaako Makai.  Raises the building height limit and the maximum floor area ratio on certain parcels in the area.  Requires a certain percentage of the residential units developed on certain parcels to be allocated to households at or below a certain income level in perpetuity, with priority given to certain essential workforce in the area.  Limits the sale of residential units developed in certain residential developments to prospective owner-occupants.  Requires the Office of Hawaiian Affairs to determine a Kakaako Makai association fee to be collected from residents, tenants, and lessees of certain parcels to be deposited into a special account in the Office of Hawaiian Affairs Special Fund to fund various services and projects in the Kakaako Makai area.  (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 the hawaii community development authority.

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

     SECTION 1.  The legislature finds that the office of Hawaiian affairs was established under article XII, section 5, of the Hawaii State Constitution to "hold title to all the real and personal property now or hereafter set aside or conveyed to it which shall be held in trust for native Hawaiians and Hawaiians."  The office of Hawaiian affairs' board of trustees is authorized by article XII, section 6, of the Hawaii State Constitution "to manage and administer the proceeds from the sale or other disposition of the lands . . . and income derived from whatever sources for native Hawaiians and Hawaiians, including all income and proceeds from that pro rata portion of the trust referred to in section 4 of this article [the public land trust] for native Hawaiians".  The board of trustees is also authorized under article XII, section 6, "to exercise control over real and personal property set aside by state, federal or private sources and transferred to the board for native Hawaiians and Hawaiians."

     In section 1 of Act 15, Session Laws of Hawaii 2012 (Act 15), the legislature found that a purpose of the Act was to:

[E]ffectively and responsibly fulfill the constitutional obligation to native Hawaiians under article XII, sections 4 and 6, of the State Constitution between November 7, 1978, up to and including June 30, 2012 . . . and providing additional resources to the office in the form of fee simple title to certain parcels of land[.]

In the same section of Act 15, the legislature declared that the "[c]onveyance of the fee simple interest to the lands . . . will allow the State to effectively and responsibly meet [those] constitutional obligations to native Hawaiians."

     Further, section 2 of Act 15 stated, "the fee simple interest to the . . . parcels of land . . . is conveyed to the office of Hawaiian affairs as grantee, as of July 1, 2012, as is, where is[.]"  In the same section of Act 15, however, the legislature specifically directed that, "[t]he [properties] are and shall remain (even after conveyance to the office) under the jurisdiction and authority of the Hawaii community development authority, with respect to zoning, land use conditions[,] and all other matters over which the authority has jurisdiction and authority to act" and "shall be subject to all laws, except sections 206E-8, 206E-10, 206E‑34, Hawaii Revised Statutes, and otherwise provided in this Act".

     Particularly pertinent to the purpose of Act 15, in section 6, the legislature further declared that:

The [p]roperties conveyed by this Act shall be deemed income and proceeds from the public land trust, as if the [p]roperties had been paid out of the income and proceeds from the public land trust pursuant to article XII, section 6 of the Hawaii State Constitution.

     Relying on its board of trustees' authority to "exercise control" over lands that the office of Hawaiian affairs holds in trust for native Hawaiians, and to "manage and administer" the income and proceeds from the public land trust lands it receives, the office of Hawaiian affairs has asked the legislature to enact this Act to allow the office of Hawaiian affairs to maximize the income or proceeds that certain parcels of land conveyed by Act 15 could generate for the purposes of bettering the conditions of native Hawaiians, by allowing the parcels to be developed for residential use.

     The legislature further finds that the ongoing transformation of Kakaako into a place where the people of Honolulu can live, work, and play should increase the revenue generating potential of the land conveyed to the office of Hawaiian affairs by Act 15 and concomitantly increase the number of programs and kinds of services for which the office of Hawaiian affairs was created and is able to provide for native Hawaiians.  The legislature further finds that even more revenue could be generated to provide programs and services to better the conditions of native Hawaiians, if the office of Hawaiian affairs were permitted to develop some or all of the parcels it received under Act 15 for residential use.

     The legislature agrees that the residential development restriction to which the parcels transferred to the office of Hawaiian affairs by Act 15 were and continue to be subject should be lifted for certain parcels to the extent necessary to allow the office of Hawaiian affairs to realize the maximum income or proceeds that those parcels could generate if they were developed for residential use.

     The legislature further finds that the State continues to suffer from a shortage of affordable housing with fewer families able to afford to buy or rent a home in the State.  Hawaii is the most expensive state in the nation for housing, with its housing costs being 2.7 times the national average.  Housing costs in the State have tripled since 1990, resulting in a $850,000 median price for a single-family home.  This price equates to a $252,000 annual income needed to afford a new median priced home and fewer than one in three households in the State meet that income threshold.  In addition, Native Hawaiians suffer disproportionately from this lack of affordable housing.  Native Hawaiians have the highest rate of poverty and the lowest median household income of the major ethnic groups in the State, causing many to become homeless or to leave the State.  Therefore, it is essential that a certain percentage of the residential units developed on certain parcels of land conveyed to the office of Hawaiian affairs pursuant to Act 15 be workforce housing allocated to households within a certain income range.

     The legislature also acknowledges that Act 172, Session Laws of Hawaii 2023, appropriated funds into and out of the school facilities special fund to construct housing prioritized for teachers, educators, and staff.  Likewise, the legislature finds that priority for the workforce housing developed on certain parcels of lands conveyed to the office of Hawaiian affairs pursuant to Act 15 should be given to certain essential workforce in the area.

     Furthermore, the legislature acknowledges the extensive planning and community outreach efforts by the Kakaako community planning advisory council, which resulted in the 2011 Kakaako Makai Conceptual Master Plan; the office of Hawaiian affairs' efforts, which produced the 2013 Kakaako Makai Strategic Management Plan; and the Hawaii community development authority's work and adoption of the 2017 Kakaako Makai Area Parks Master Plan and the 2023 Kakaako Community Development District Makai Area Plan.  The legislature strongly encourages the office of Hawaiian affairs to incorporate development concepts from these various plans into its master plan development proposal for Kakaako makai to create a live, work, and play community that addresses the recreational, cultural, educational, economic, and workforce housing needs of the State.

     Finally, the legislature finds that inasmuch as this Act furthers one of the principle purposes for which the office of Hawaiian affairs was established as a state agency, its provisions should be deemed consistent with and not violative of article XI, section 5, of the Hawaii State Constitution.

     The purpose of this Act is to enhance the revenue generating capacity of certain parcels of land in the Kakaako makai area, including parcels that were conveyed to the office of Hawaiian affairs pursuant to Act 15 while making housing available to the essential workforce in the area by:

     (1)  Allowing the Hawaii community development authority to approve residential development on certain parcels;

     (2)  Raising the building height limit on certain parcels;

     (3)  Requiring fifty per cent plus one of the residential units developed on certain parcels to be allocated to households with income at or below one hundred forty per cent of the area median income, with priority given to individuals who are essential workers working within a five-mile radius of Kakaako makai, including but not limited to essential workers working for an employer in the health care, hospitality, education, law enforcement, civil service, or construction industry;

     (4)  Limiting the sale of residential units developed in certain residential developments to prospective owner-occupants; and

     (5)  Establishing a Kakaako makai special fund and association fee to fund various services and projects in the Kakaako makai area.

     SECTION 2.  Chapter 206E, Hawaii Revised Statutes, is amended by adding three new sections to part II to be appropriately designated and to read as follows:

     "§206E-A  Limited residential development in Kakaako; public hearing; height limit; disclosures; nuisance mitigation; workforce housing.  (a)  The authority may approve any plan or proposal for any residential development in Kakaako on any parcels identified in the parcels bounded by:

     (1)  Ala Moana Boulevard;

     (2)  Forrest Avenue from its intersection with Ala Moana Boulevard to Ilalo Street;

     (3)  Ilalo Street from its intersection with Forrest Avenue to Ohe Street;

     (4)  Ohe Street from its intersection with Ilalo Street to Olomehani Street;

     (5)  Olomehani Street from its intersection with Ohe Street to Ahui Street;

     (6)  Ahui Street from its intersection with Olomehani Street to the shoreline of the Kewalo Basin; and

     (7)  The shoreline of Kewalo Basin to its intersection with Ala Moana Boulevard;

provided that approval may be granted only after the applicant seeking approval conducts a public hearing held in accordance with subsection (b).

     (b)  An applicant seeking approval of a plan or proposal for any residential development pursuant to this section shall hold a public hearing that shall be exempt from chapter 91 prior to submitting the plan or proposal to the authority.  Notice shall be published in accordance with section 1-28.5, at least thirty days prior to the hearing.  The notice shall include:

     (1)  The date, time, and place of the hearing;

     (2)  A statement of the topic of the hearing; and

     (3)  A description of where, when, and how the residential development proposal may be viewed by the public.

All interested persons may submit data or opinions, orally or in writing, in conjunction with the hearing.

     (c)  An applicant seeking approval of a plan or proposal for residential development pursuant to this section shall fully address all issues and questions raised in the written and oral submissions permitted pursuant to subsection (b) regarding the proposed residential development before submitting the plan or proposal to the authority.

     (d)  The authority shall, before approving any plan or proposal for residential development pursuant to this section:

     (1)  Hold a public hearing; and

     (2)  Fully consider all written and oral submissions received at the public hearings held by the applicant and the authority.

     (e)  Any other law to the contrary notwithstanding, the building height limit shall be four hundred feet for any residential development approved by the authority on the parcels bounded by Ala Moana Boulevard, Ilalo Street, and Forrest Avenue pursuant to this section.

     (f)  Any plan or proposal for residential development submitted to the authority for approval pursuant to this section shall include an assessment and proposed mitigation plan for any possible noise, odor, and other aircraft-related nuisances that may affect the development.  The office of Hawaiian affairs and any person developing the residential development approved by the authority pursuant to this section shall, before entering into any lease agreement for any lot, parcel, structure, or unit of a structure located within the development, provide written notice to potential lessees and residents of the possible noise, odor, and other aircraft-related nuisances.

     (g)  Any residential development approved by the authority on the parcels bounded by Ala Moana Boulevard, Ilalo Street, and Forrest Avenue pursuant to this section shall allocate at least fifty per cent plus one unit of the residential units in the development to households with income at or below one hundred forty per cent of the area median income, with priority given to individuals who are essential workers working within a five-mile radius of Kakaako makai, including but not limited to essential workers working for an employer in the health care, hospitality, education, law enforcement, civil service, or construction industry; provided that nothing in this subsection shall be construed to limit eligibility for exemptions for housing developments under chapter 201H.

     (h)  Notwithstanding any other law to the contrary, no residential unit in a residential development approved by the authority pursuant to this section, shall be sold to any person other than a prospective owner-occupant.

     (i)  For the purposes of this section, "owner-occupant" has the same meaning as defined in section 514B-95.

     §206E-B  Kakaako makai association fee.  The authority shall determine a Kakaako makai association fee to be collected from all residential developments in Kakaako on lands identified in section 206E-A(a); provided that the fee shall be collected from residential owners.

     §206E-C  Kakaako makai special account.  Kakaako makai association fees collected pursuant to section 206E-B shall be deposited into a special account in the Hawaii community development revolving fund established in section 206E-16.  Moneys from the special account shall be used to fund various services and projects, including but not limited to maintenance, improvements, free public parking for park users, public beach access, security, and parks and open spaces, for the Kakaako community development district makai of Ala Moana Boulevard and between Kewalo Basin and the foreign trade zone, including the Kewalo Basin area.  Disbursements from the special account shall be made in accordance with procedures adopted by the authority and approved by the director of finance."

     SECTION 3.  Section 206E-12, Hawaii Revised Statutes, is amended to read as follows:

     "§206E-12  Dedication for public facilities as condition to development.  (a) The authority shall establish rules requiring dedication for public facilities of land or facilities, or cash payments in lieu thereof, by developers as a condition of developing real property pursuant to the community development plan.  Where state and county public facilities dedication laws, ordinances, or rules differ, the provision for greater dedication shall prevail.

     (b)  Rules adopted by the authority pursuant to subsection (a) shall not apply to residential developments approved by the authority pursuant to section 206E-A."

     SECTION 4.  Section 206E-31.5, Hawaii Revised Statutes, is amended to read as follows:

     "§206E-31.5  Prohibitions.  Anything contained in this chapter to the contrary notwithstanding, and except as provided in section 206E-A(a), the authority is prohibited from:

     (1)  Selling or otherwise assigning the fee simple interest in any lands in the Kakaako community development district to which the authority in its corporate capacity holds title, except with respect to:

          (A)  Utility easements;

          (B)  Remnants as defined in section 171-52;

          (C)  Grants to any state or county department or agency;

          (D)  Private entities for purposes of any easement, roadway, or infrastructure improvements; or

          (E)  Reserved housing as defined in section 206E-101; or

     (2)  Approving any plan or proposal for any residential development in that portion of the Kakaako community development district makai of Ala Moana boulevard and between Kewalo Basin and the foreign trade zone."

     SECTION 5.  In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

     SECTION 6.  New statutory material is underscored.

     SECTION 7.  This Act shall take effect on July 1, 2025.

Report Title:

HCDA; OHA; Kakaako Makai; Residential Development; Height Limit; Workforce Housing; Owner-Occupant; Hawaii Community Development Revolving Fund; Special Account; Kakaako Makai; Association Fee

Description:

Allows the Hawaii Community Development Authority to approve residential development on certain parcels of land in the Kakaako Makai area.  Raises the building height limit on certain parcels in the area.  Requires a certain percentage of the residential units developed on certain parcels to be allocated to households at or below a certain income level, with priority given to certain essential workforce in the area.  Limits the sale of residential units developed in certain residential developments to prospective owner-occupants.  Requires the Hawaii Community Development Authority to determine a Kakaako Makai Association Fee to be collected from all residential developments on certain parcels to be deposited into a special account in the Hawaii Community Development Revolving Fund to fund various services and projects in the Kakaako Makai area.

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. 616

Honolulu, Hawaii

RE:    S.B. No. 534

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committees on Water and Land, Hawaiian Affairs, and Housing, to which was referred S.B. No. 534 entitled:

"A BILL FOR AN ACT RELATING TO THE HAWAII COMMUNITY DEVELOPMENT AUTHORITY,"

beg leave to report as follows:

     The purpose and intent of this measure is to enhance the revenue generating capacity of certain parcels of land in the Kakaako Makai area, including parcels that were conveyed to the Office of Hawaiian Affairs pursuant to Act 15, Session Laws of Hawaii 2012, while authorizing the development of residential housing for the essential workforce in the area by:

     (1)  Allowing the Hawaii Community Development Authority to approve residential development on certain parcels;

     (2)  Raising the building height limit on certain parcels;

     (3)  Requiring fifty percent plus one of the residential units developed on certain parcels to be allocated to households with income at or below one hundred forty percent of the area median income, with priority given to individuals who are essential workers working within a five-mile radius of Kakaako Makai;

     (4)  Limiting the sale of residential units developed in certain residential developments to prospective owner‑occupants; and

            (5)  Establishing a Kakaako Makai Special Fund and association fee to fund various services and projects in the Kakaako Makai area.

     Your Committees received testimony in support of this measure from the Office of Hawaiian Affairs, Department of Hawaiian Home Lands; Hawaiʻi State Teachers Association; Hui Malama Pono Hawaii; Association of Hawaiian Civic Clubs; Iron Workers Stabilization Fund; Queen Emma Hawaiian Civic Club; Kamehameha Schools; United Public Workers AFSCME Local 646, AFL-CIO; Lahaina Hawaiian Civic Club; State of Hawaii Organization of Police Officers; Naalehu Theatre; Native Hawaiian Chamber of Commerce; ILWU International, IBEW 1186; Hawaii State AFL-CIO; Hawaiʻi Lodging & Tourism Association; Nation of Hawaiʻi; Hawaii Government Employees Association; AFSCME Local 152, AFL-CIO; University of Hawaii Professional Assembly; and one hundred eighteen individuals.

     Your Committees received testimony in opposition to this measure from Life of the Land, Friends of Kewalos, Malama Moana, Kakaʻako Makai Community Planning Advisory Council, Free Access Coalition, Alohahawaiionipaa, Hawaiiʻs Thousand Friends, and seventy-seven individuals.

     Your Committees received comments on this measure from the Hawaiʻi Community Development Authority, Department of the Attorney General, Department of Transportation, Department of Budget and Finance, and four individuals.

Findings

     Your Committees find that the Legislature conveyed certain parcels of land in Kakaako Makai to the Office of Hawaiian Affairs (OHA) pursuant to Act 15, Session Laws of Hawaii 2012 (Act 15) for OHA to  effectively and responsibly fulfill its constitutional obligations to Native Hawaiians.  However, Act 15 also required that the Hawaii Community Development Authority (HCDA) retain its jurisdiction and authority over the zoning and land use conditions of the lands conveyed to OHA, which contradicts OHA's constitutional obligation to exercise control over lands that OHA holds in trust for Native Hawaiians, and to manage and administer the income and proceeds from the public land trust lands it receives.  Your Committees also find that residential development in Kakaako Makai is prohibited due to health hazards posed by the landfill and industrial facilities once located in the area.  These obstacles not only prevent OHA from developing these parcels of land to their fullest potential, they also prevent OHA from effectively funding programs and services to better the conditions of Native Hawaiians.

     Your Committees further find that lifting the ban on residential development for certain parcels in Kakaako Makai conveyed to OHA would allow OHA to fully realize the revenue-generating potential of these parcels.  Furthermore, authorizing OHA to develop residential housing projects would also address the shortage of affordable housing that the State currently experiences.  Your Committees note that the shortage of affordable housing disproportionately affects Native Hawaiians, who have the highest rate of poverty and the lowest median household income of the major ethnic groups in the State, causing many to become homeless or to leave the State.  It is essential that, if OHA is authorized to develop residential housing projects on certain parcels, a certain percentage of the residential units be allocated to households within a certain income range to benefit the essential workforce and Native Hawaiians.

     Accordingly, this measure would make housing available to the essential workforce and Native Hawaiians by authorizing the HCDA to approve residential development on certain parcels; provided that fifty percent plus one of the residential units developed on certain parcels be allocated to households of a certain income range in perpetuity and that the sale of residential units on certain parcels be limited to prospective owner-occupants.

Committee Discussion

     Your Committees note that the residential developments this measure enables will be complicated, years-long projects.  These projects will likely require that OHA request the State for funding multiple times during development.  Additionally, while these projects will provide units for affordable housing, these residential projects alone are not enough to address the State's shortage of affordable housing.

     Your Committees further note that requiring a certain number of parcels to be allocated to households with an income at or below one hundred sixty percent of the area median income may be more appropriate than an area media income of one hundred forty percent.

     Your Committees also note the concern that while this measure contains a provision to ensure that residential units are sold only to prospective owner-occupants, there is ambiguity as to whether an owner-occupant would use their unit as a primary residence.  Your Committees find that homeowner loans and mortgages require that the homeowner live in the property for which the loan or mortgage was made as their primary residence.  Failure to do so on the part of the homeowner would put the homeowner's loan or mortgage at risk, incentivizing them to honor the agreement.

     Your Committees additionally note that during the process of completing an environmental impact statement, the applicant for residential development will be required to address climate adaptation and mitigation, including sea level rise; a mitigation plan for noise, odor, and other nuisances that may affect the surrounding area; and the effects of development on water resources, including the aquifer.

Comments and Concerns

     Your Committees note the concerns raised by the Attorney General regarding the possibility that the Kakaako Makai Association Fee may be construed as a tax.  Your Committees find that this issue raises concerns that merit further consideration and respectfully request that subsequent Committees to which this measure is referred examine this matter.

     Your Committees also note that existing statute does not provide for an Office of Hawaiian Affairs Special Fund.  Your Committees respectfully request that subsequent Committees consider whether an Office of Hawaiian Affairs Special Fund to receive funds collected from the proposed Kakaako Makai Association Fee should be established in statute.

     Your Committees have amended this measure by:

     (1)  Clarifying the process by which the Hawaii Community Development Authority may approve the development of residential projects on certain parcels of Kakaako Makai to ensure that an applicant's proposals undergo public hearings and are subject to community feedback;

     (2)  Inserting language that requires applicants to complete an environmental impact statement before submitting a residential project to the Hawaii Community Development Authority for approval;

     (3)  Requiring that the applicant obtain documentation from the Department of Health verifying that the applicant has adequately removed or capped any hazardous substances, pollutants, and contaminants detected on a parcel to be developed before submitting a residential project to the Hawaii Community Development Authority for approval;

     (4)  Specifying that the maximum floor area ratio for any residential development on certain parcels of Kakaako Makai shall not exceed 10.0;

     (5)  Specifying that only the parcels owned by the Office of Hawaiian Affairs in Kakaako Makai are subject to the increased height limit and maximum floor area ratio allowances;

     (6)  Inserting language to ensure that fifty percent plus one unit of the residential units developed be allocated to households with an income at or below one hundred forty percent remain affordable in perpetuity;

     (7)  Clarifying that the Office of Hawaiian Affairs shall determine the Kakaako Makai Association Fee to be collected from residents, tenants, and lessees of parcels in Kakaako Makai, to be deposited into a special account of the Office of Hawaiian Affairs Special Fund; and

     (8)  Amending section 1 to reflect its amended purpose; and

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

     As affirmed by the records of votes of the members of your Committees on Water and Land, Hawaiian Affairs, and Housing that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 534, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 534, S.D. 1, and be referred to your Committees on Judiciary and Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Water and Land, Hawaiian Affairs, and Housing,