Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Human Services and Housing, to which was referred S.B. No. 1026, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this bill is to authorize the Housing and Community Development Corporation of Hawaii (HCDCH) to establish affordable housing requirements with the counties for undeveloped parcels in the Villages of Kapolei, Oahu, Leiali`i, Maui, and La`i`opua, Hawaii.

HCDCH, Special Assistant to the Governor for Housing, and Land Use Research Foundation of Hawaii testified in support of this measure.

Act 15, Session Laws of Hawaii 1988 (Act 15), and conditions imposed by the Land Use Commission (LUC) require HCDCH to provide 60 percent of the total residential units in master planned communities at affordable prices. This 60/40 ratio was imposed during the more prosperous 1980s and early 1990s, and was based on the premise that revenues derived from the sale of the 40 percent market-priced units would offset the cost of the 60 percent affordable units.

With the subsequent economic decline, current prices of market-priced units are insufficient to subsidize the affordable units. As a result, the Villages of Kapolei, Leiali`i, and La`i`opua are no longer feasible to develop.

HCDCH filed separate motions for the three master planned communities with the LUC to amend the 60 percent affordable housing conditions; however, LUC commissioners were unable to resolve whether they had authority to override the provisions of Act 15.

Your Committee finds that this bill will enable HCDCH to work with the counties in establishing affordable housing requirements. This in turn will improve the financial feasibility of developing these communities and stimulate housing development.

Your Committee would like to remind all interested parties that the intent of the purchase of lands and affordable housing ratios are to provide affordable homes and rental units. Your Committee also notes that profits from affordable units should be used to build more affordable homes and rental units. Your Committee acknowledges that the current market condition is not conducive to housing development, but that we should not lose sight of the original intent in the use of these lands.

Your Committee has amended this bill by:

As affirmed by the record of votes of the members of your Committee on Human Services and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1026, S.D. 1, as amended herein, and recommends that it pass Second Reading, in the form attached hereto as S.B. No. 1026, S.D. 1, H.D. 1, and be referred to the Committee on Finance.