SB2424

SECTION 1. The legislature finds that the department of Hawaiian home lands produced no new housing units during the fiscal year ending June 30, 2017, and closed out the year with $30,000,000 in unspent federal housing funds. The number of eligible beneficiaries awaiting residential leases totals more than twenty-two thousand individuals statewide, with roughly half of the wait list applicants on Oahu.

The legislature further finds that the department of Hawaiian home lands has historically lagged terribly behind in addressing its wait list of native Hawaiian beneficiaries. The Hawaiian Homes Commission Act, 1920, as amended, requires the department of Hawaiian home lands to provide houses as well as leases of land. Section 101 of the Hawaiian Homes Commission Act of 1920 states in pertinent part as follows:

(b) The principal purposes of this Act include but are not limited to:

(1) Establishing a permanent land base for the benefit and use of native Hawaiians, upon which they may live, farm, ranch, and otherwise engage in commercial or industrial or any other activities as authorized in this Act;

(2) Placing native Hawaiians on the lands set aside under this Act in a prompt and efficient manner and assuring long-term tenancy to beneficiaries of this Act and their successors . . . (Emphasis added)

The legislature additionally finds that micro housing is an emerging trend and a feasible type of housing that can help achieve the housing obligations of the department of Hawaiian home lands by reducing the cost of development and fostering an adequate supply of housing, particularly for native Hawaiians for whom "affordable housing" is oftentimes simply unaffordable. "Tiny homes" are a form of affordable housing that may address the State's persistent housing shortage. Tiny homes and their multifamily counterpart, micro-unit apartments, are typically constructed using a modular, prefabricated build system or hybrid that involves some conventional construction. Tiny homes are also ideal for accessory dwelling units, popularly known for decades as ohana units, which are usually add-ons to existing homes and can serve as either affordable rentals or additional shelter for overcrowded residences.

The legislature further finds that micro housing or tiny homes are a cost-effective way to address the housing shortage in Hawaii because these homes make efficient use of scarce and expensive land. It is estimated that ten thousand homestead lots are suitable for tiny homes, and native Hawaiians could benefit from funding to construct tiny homes.

Furthermore, legalizing micro housing will help the department of Hawaiian home lands to achieve its objectives for socio-cultural advancement with regard to housing, as set forth in Act 349, Session Laws of Hawaii 1990, which proposes the addition of the following language to section 101 of the Hawaiian Homes Commission Act, 1920, as amended: "The Congress of the United States and the State of Hawaii declare that the policy of this Act is to enable native Hawaiians to return to their lands in order to fully support self-sufficiency for native Hawaiians and the self-determination of native Hawaiians . . . "

The Hawaii housing finance and development corporation is the State's premier housing finance and development agency with a mission to increase and preserve the supply of workforce and affordable housing statewide by providing leadership, tools, and resources to facilitate housing development. Housing finance and development agencies across the nation, including such agencies in Arizona and California, have tribal set-aside programs to provide leadership, tools, and resources to facilitate housing development specifically on native trust lands as a strategy to address the high need for affordable housing among their native peoples.

The legislature further finds that the federal Community Development Financial Institutions Fund provides awards to organizations that make credit, capital, and other critical financial services available to disadvantaged businesses and low-income communities throughout the country. Several organizations in Hawaii are recipients of awards from various Community Development Financial Institutions Fund programs and may be able to provide matching funds to assist in the construction of micro housing units for certain lessees of native Hawaiian trust lands managed by the department of Hawaiian home lands or to provide loan assistance to purchase or lease the micro housing units.

The purpose of this Act is to:

(1) Authorize the construction and use of micro housing units on Hawaiian home lands managed by the department of Hawaiian home lands;

(2) Authorize the use of the Hawaiian home loan fund and Hawaiian home general loan fund for assistance in purchasing or renting micro housing units for use on Hawaiian home lands managed by the department of Hawaiian home lands and leased to native Hawaiian beneficiaries; and

(3) Make an appropriation to the Hawaii housing finance and development corporation to:

(A) Construct micro housing units, subject to certain conditions; and

(B) Building the general organizational capacity of native Hawaiian-controlled nonprofit housing developers.

SECTION 2. Chapter 107, Hawaii Revised Statutes, is amended by adding a new section to part II to be appropriately designated and to read as follows:

"§107- Micro housing; exemptions. (a) Notwithstanding any county zoning laws, permit provisions, or building code provisions to the contrary, the construction and use of micro housing units on Hawaiian home lands managed by the department of Hawaiian home lands and leased to native Hawaiian beneficiaries shall be allowed.

(b) For purposes of this section, "micro housing unit" means a dwelling unit with a total floor area of less than eight hundred square feet, including a bed, kitchen, kitchen sink, cooking and refrigeration appliance, and a partitioned off bathroom containing a toilet and a bathtub or shower."

SECTION 3. Section 214, Hawaii Homes Commission Act, 1920, as amended, is amended by amending subsection (a) to read as follows:

"(a) The department may make loans from revolving funds to any lessee or native Hawaiian to whom, or any cooperative association to which, a lease has been issued under section 207(a) of this Act or a license has been issued under section 207(c)(1)(B) of this Act. Such loans may be made for the following purposes:

(1) The repair or maintenance or purchase or erection of dwellings on any tract, and the undertaking of other permanent improvements thereon;

(2) The purchase of livestock, swine, poultry, fowl, aquaculture stock, and farm and aquaculture equipment;

(3) Otherwise assisting in the development of tracts and of farm, ranch, and aquaculture operations, including:

(A) The initial and on-going development, improvement, operation, and expansion of homestead farms, ranches, and aquaculture enterprises;

(B) The liquidation of indebtedness incurred for any of the foregoing purposes relating to farm loans aged less than five years;

(D) The planning, layout, and installation of soil and water conservation practices; and

(E) Providing relief and rehabilitation to homestead farmers and ranchers due to damage by rain and windstorms, droughts, tidal wave, earthquake, volcanic eruption, and other natural catastrophes, and for livestock disease, epidemics, crop blights, and serious effects of prolonged shipping and dock strikes;

(4) The cost of breaking up, planting, and cultivating land and harvesting crops, the cost of excavating or constructing aquaculture ponds and tanks, the purchase of seeds, fertilizers, feeds, insecticides, medicines, and chemicals for disease and pest control for animals, fish, shellfish, and crops, and the related supplies required for farm, ranch, and aquaculture operations, the erection of fences and other permanent improvements for farm, ranch, and aquaculture purposes and the expense of marketing; [~~and~~]

(5) To assist licensees in the operation or erection of theaters, garages, service stations, markets, stores, and other mercantile establishments, all of which shall be owned by native Hawaiians or by organizations formed and controlled by native Hawaiians[.]; and

(6) To provide loans to qualifying lessees for the purchase or lease of micro housing units for use on Hawaiian home lands; provided that:

(A) Each loan shall not exceed $125,000;

(B) The department of Hawaiian home lands shall determine the criteria for lessees to meet in order to qualify for loans pursuant to this paragraph; and

(C) For purposes of this paragraph, "micro housing unit" means a dwelling unit with a total floor area of less than eight hundred square feet, including a bed, kitchen, kitchen sink, cooking and refrigeration appliance, and a partitioned off bathroom containing a toilet and a bathtub or shower. "Micro housing unit" includes an accessory dwelling unit."

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $5,000,000 or so much thereof as may be necessary for fiscal year 2018-2019 for the construction of micro housing units as defined in section 107‑ , Hawaii Revised Statutes, to be matched on a dollar-for-dollar basis by funds awarded through the Native Community Development Financial Institutions Program; provided that:

(1) The cost of construction of each micro housing unit shall not exceed $125,000;

(2) A micro housing unit may be constructed on an existing homestead lot upon which a home already exists only if the micro housing unit is to be occupied by another individual or family related to the existing lessee; and

(3) Awarded Native Community Development Financial Institutions shall determine the criteria for lessees to qualify for loans pursuant to this paragraph.

SECTION 5. There is appropriated out of the general revenues of the State of Hawaii the sum of $1,000,000 or so much thereof as may be necessary for fiscal year 2018-2019 to build the general organizational capacity of native Hawaiian-controlled nonprofit housing developers; provided that the nonprofit developers:

(1) Have a board of directors that consists of members who are at least fifty-one per cent of native Hawaiian ancestry; and

(2) Are able to demonstrate past experience developing housing units on Hawaiian home lands.

The sum appropriated shall be expended by the Hawaii housing finance and development corporation for the purposes of this Act.

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2018; provided that section 3 shall take effect with the consent of the United States Congress.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2424
TWENTY-NINTH LEGISLATURE, 2018
STATE OF HAWAII