SB2915.DOC

SECTION 1. The legislature finds that predictability in the development approval process would encourage the most efficient use of resources at the least economic cost to the public. This predictability is especially important in view of the substantial investment required for any development project and the more conservative lending and investment practices resulting from the recent economic crisis.

Public benefits derived from the implementation of master plans in the Kakaako community development district, include expanded open space and recreational opportunities for Hawaii's residents, newly constructed market and reserved housing, major private sector investments to stimulate economic growth, and on-and off-site infrastructure and other improvements that support the broader community. Master plans are intended to create well-designed communities that improve the urban environment in Honolulu. These benefits may not be realized unless development rights for a specific period are clearly vested and investments are made to develop and complete the proposed projects.

Development agreements are a mechanism to strengthen the implementation of an approved master plan. These agreements encourage private and public participation in the implementation of the master plan, reduce the economic cost of development, and allow for the orderly construction of recreational and publicly available facilities through the vesting of rights to develop the balance of the projects. Development agreements provide assurances to the applicant for a particular development project in the master plan area, that upon approval of the master plan, the applicant may proceed with the project in accordance with all applicable statutes, ordinances, resolutions, rules, and policies then in existence and that the project will not be restricted or prohibited by the State or county's subsequent enactment or adoption of laws, ordinances, resolutions, rules, or policies.

The Hawaii community development authority laws, codified as chapter 206E, Hawaii Revised Statutes, and the plans and rules adopted pursuant thereto provide for the vesting of certain development rights upon the approval by Hawaii community development authority of, among other matters, master plans and development agreements in connection with an approved master plan. To achieve the goals and public benefits from each approved master plan, owners, developers, and their lenders and investors need a predictable and stable framework that assures these parties they can develop and complete their proposed projects pursuant to the terms of an approved development agreement.

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

" . Development Agreements

§206E-A Definitions. As used in this subpart:

"Person" means an individual, group, partnership, firm, association, corporation, trust, government agency, government official, administrative body, tribunal, or any other form of business or legal entity.

"Principal" means a person who has entered into a development agreement pursuant to the procedures specified in this subpart, including any successor in interest.

§206E-B Authorization to negotiate development agreements; final approval. (a) The executive director of the authority may enter into direct negotiations for a development agreement with any person having interest in real property located in the Kakaako community development district, for the development of the property in accordance with this section; provided that:

(1) Any development agreement entered pursuant to this subpart shall be consistent with the terms and conditions of the applicable master plan;

(2) The development agreement shall not exceed the term of the applicable master plan, unless an extension is granted by the authority; and

(3) The executive director shall conduct a periodic review, as determined by the development agreement, to ensure compliance with the terms and conditions of the development agreement.

(b) Any development agreement negotiated by the executive director shall be subject to final approval by the authority. The authority may modify the development agreement as deemed necessary.

§206E-C Public hearings. Notwithstanding any other law to the contrary, the authority shall conduct at least one public hearing on any request for approval for a development agreement, as required under section 206E-B(b). The authority may hold the public hearing in conjunction with any applicable master plan public hearing held prior to the approval of the master plan.

§206E-D Periodic review; termination of the development agreement. (a) If, as a result of a periodic review, the executive director finds that the principal is in material breach of the terms or conditions of the development agreement, the executive director, with the approval of the authority, shall serve notice upon the principal in writing within thirty days of the authority's approval. The notice shall describe with reasonable particularity the nature of the material breach and any evidence supporting the executive director's finding. The principal shall have a minimum of ninety days to cure the material breach. If the authority deems necessary, the principal may be granted a longer period of time to cure the material breach.

(b) If the principal fails to cure the material breach within the time period allotted, pursuant to subsection (a), the authority may terminate or modify the development agreement as deemed necessary; provided that the principal has had adequate opportunity to either refute the finding of material breach or consent to any amendment to address the concerns of the authority with regard to the finding of material breach.

§206E-E Specific provisions of development agreements. (a) For the purposes of this subpart, any development agreement entered into shall include:

(1) A description of the land subject to the development agreement;

(2) Specifications regarding the use of the land, the density or intensity of use, the maximum height and size of any proposed buildings, and any reserved housing requirements;

(3) Any public dedication requirements and public dedication credits, consistent with the applicable master plan; and

(4) A provision specifying that upon final approval of the authority, and subsequent execution of the development agreement, the development rights included shall be deemed vested.

(b) The development agreement may include commencement and completion dates; provided that any dates included may be extended upon the mutual agreement of the authority, the executive director, and the principal upon a showing of good cause.

(d) Any state, county, or federal agency may be a party to a development agreement; provided that the development agreement identifies which government agency shall be responsible for administration of the agreement.

§206E-F Amendment or cancellation of the development agreement. A development agreement may be amended or cancelled, in whole or in part, by mutual agreement of all parties, or their successors in interest; provided that if the authority determines that a proposed amendment would substantially alter the original development agreement, the authority shall hold a public hearing, in accordance with section 206E-C, prior to any approval.

§206E-G Enforceability; applicable laws. (a) Unless the development agreement is terminated, pursuant to section 206E-D, or cancelled, pursuant to section 206E-F, the agreement shall be enforceable by any principal, including the executive director and the authority.

(b) Any relevant state law, county ordinance, resolution, rule, or policy governing the development and use of the land subject to the development agreement shall remain in full force and effect throughout the term of the development agreement. Any subsequent state law, county ordinance, resolution, rule, or policy adopted after the execution of the development agreement shall not affect the agreement unless expressly stated otherwise.

(c) The principal of any development agreement in effect on July 1, 2010, may request that the authority approve modifications of the existing agreement to conform with this subpart.

§206E-H Recordation. The executive director, on behalf of the authority, shall record a copy of the development agreement or any amendment made pursuant to section 206E-F, with the registrar of the bureau of conveyances within twenty days after the authority approves the development agreement or any amendment thereto. The development agreement shall be binding upon all principals, including the authority, and any benefits shall inure to all principals, including the authority."

SECTION 3. Chapter 206E, part II, Hawaii Revised Statutes, is amended by designating sections 206E-31 to 206E-35 as subpart A, entitled "General Provisions".

SECTION 4. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 5. In codifying this Act, the revisor of statutes shall substitute appropriate section numbers for the section designations used in section 2 of this Act.

SECTION 6. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2915
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII