SB731.DOC

THE SENATE	S.B. NO.	731
TWENTY-FIFTH LEGISLATURE, 2009
STATE OF HAWAII

A BILL FOR AN ACT

relating to transit oriented development.

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

SECTION 1. The legislature finds that in addition to increasing mobility, rapid transit can be a significant contributor to more sustainable living. It can stimulate more compact development around transit stations, thereby reducing the pressure for urban sprawl. Community benefits, such as open plazas, and community focal points can also be a part of transit oriented development. And residents living close to transit stations can realize significant savings in transportation costs, as well as the benefits of having daily supportive uses, such as grocery stores, within walking distance.

The legislature further finds, however, that transit oriented developments are often associated with higher financial risk because of the multiple sources of financing required, the added costs of providing more community benefits, and requirements that the community benefits be provided sooner, rather than later. As a result, affordable housing can be more difficult to develop.

The purpose of this Act is to encourage affordable housing as part of transit oriented development by offering loan guaranties to developers for the purpose of developing transit oriented development projects that include affordable housing.

SECTION 2. Chapter 201H, part II, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§201H- Loan guaranty. (a) The corporation may guarantee loans made by commercial lenders authorized to do business in the State, to developers for the purpose of developing transit oriented development projects that include affordable housing; provided that the executive director shall determine that:

(1) The transit oriented development project is located within a transit oriented development zone designated by the respective county; and

(2) The commercial lender has completed its due diligence in approving the loan, including ensuring adequate collateral.

The corporation may impose other conditions that the director deems reasonable to implement the loan guaranty.

(b) In addition to the conditions that the executive director may impose under subsection (a), any loan guaranty made pursuant to this section shall meet the following conditions:

(1) For any loan that finances operating costs, the maximum term of the loan shall be ten years;

(2) For any loan that finances capital improvement costs, the maximum term of the loan shall be twenty years;

(3) The interest rate charged on any loan shall be one per cent below the commercial lender's prime rate for as long as the loan guaranty is in effect;

(4) The loan guaranty may be up to eighty-five per cent of the outstanding principal amount of any single loan, but shall not include any fees or accrued interest associated with the loan or its collection; and

(5) The total principal amount of the guaranteed portion of all loans outstanding at any time shall not exceed $10,000,000.

(d) As used in this section, "transit oriented development" means land use projects of relatively intense concentration involving a mixture of uses that depends upon and supports transit ridership."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________