SB2417

THE SENATE	S.B. NO.	2417
TWENTY-NINTH LEGISLATURE, 2018
STATE OF HAWAII

A BILL FOR AN ACT

Relating to housing.

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

SECTION 1. The legislature finds that the State of Hawaii has a housing crisis. In a report titled Measuring Housing Demand in Hawaii, 2015-2025, the department of business, economic development, and tourism forecast demand for additional housing units by county to be 25,847 units for Honolulu, 19,610 for Hawaii, 13,949 for Maui, and 5,287 for Kauai during the 2015-2025 period.

Housing Oahu: Affordable Housing Strategy, a report by the City and County of Honolulu, states, "The marketplace is not building enough affordable housing to keep up with demand. Many people live in overcrowded homes, spend more than 45% of their incomes on combined housing and transportation costs, or are homeless and living on the streets. Oahu would need more than 24,000 additional housing units to address pent-up demand combined with new household formation by 2016. Over 18,000 or 75% of the total projected demand is for households earning less than 80% of area median income (AMI), or $76,650 for a family of four."

While the various government studies forecast an acute housing shortage over the next ten years, there has been a lack of measurable progress at the county level to enact policies that will stimulate housing production to meet projected demand. A popular strategy to increase affordable housing units known as inclusionary zoning, which requires or encourages developers to make a certain percentage of housing units affordable in exchange for cost offsets, is criticized as having the opposite effect. Critics argue that inclusionary zoning programs, particularly mandatory ones, constrict development, as the requirement to set aside a percentage of units for lower-income households makes proposed housing projects unfeasible.

The legislature finds that a healthy housing market provides opportunities for owners to move up to higher priced units, thus freeing up lower priced units for new buyers and renters to enter the market. To help address this, the legislature approved Act 127, Session Laws of Hawaii 2016, which established a goal of developing or vesting the development of at least 22,500 affordable rental housing units ready for occupancy by December 31, 2026. The legislature was the first public body to proactively set production goals for more affordable rental housing units on state owned lands. These units would primarily serve families with income at or below one hundred forty per cent of area median income.

However, the legislature notes that there is little likelihood that a sufficient number of units will be built to overcome housing shortages if the current land use entitlement process, including imposition of exactions during zoning and permitting, remains the same.

The purpose of this Act is to allow the private sector to increase the supply of "workforce housing", units priced for the average working family in Hawaii, by reducing impediments for housing development projects. This Act focuses on housing for households with income at or below one hundred forty per cent of area median income. The goal is to provide ten per cent of the forecast demand annually in each county: 2,585 new housing starts for the city and county of Honolulu; 1,961 new housing starts for the county of Hawaii; 1,395 new housing starts for the county of Maui; and 529 new housing starts for the county of Kauai, over the next ten-year period.

SECTION 2. Chapter 46, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§46- Exaction and zoning exemptions. (a) Notwithstanding any law to the contrary, any residential housing project where one hundred per cent of the units are affordable to households with income at or below one hundred forty per cent of the median family income shall be:

(1) Exempt from any exactions or inclusionary zoning requirements imposed by an agency of the State or county; provided that the project is in full compliance with all applicable public health and safety building codes and ordinances; and

(2) Eligible to develop, with the Hawaii housing finance and development corporation, housing projects that shall be exempt from any statutes, ordinances, charter provisions, and rules of any government agency relating to planning, zoning, construction standards for subdivisions, development and improvement of land, and the construction of dwelling units thereon, pursuant to section 201H-38.

(b) As used in this section, "affordable" means having gross housing costs, including utilities, that are no more than thirty per cent of the occupant's income."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2018.

INTRODUCED BY:	_____________________________