Hawaii-2010-SB2876-Introduced

SECTION 1. The legislature finds that Honolulu has become the primary urban core for the State, with the increasing concentration of density at its downtown and Kakaako center. In Act 153, Session Laws of Hawaii 1976, the legislature created the Hawaii community development authority as the authority in charge of the planning and development of Kakaako, one of the main centers of urban living in Honolulu. This was due to its central location and largely unplanned and underutilized condition at the time.

The State realizes the importance of Kakaako due to its location and has invested millions of dollars in clean-up and the building of infrastructure so that this area can become a high density community. The legislature finds that the State further needs to partner with the landowners in the area to fully develop this community.

The opportunities presented by the planning framework in place and the fact that there are but a few large landowners in Kakaako make it imperative that planning incentives continue to be made available for Kakaako in accordance with the Kakaako development plan.

As originally envisioned in the Kakaako community development district plan, dated February 1982, Kakaako was projected to have nineteen thousand multi-family units, seventy-five per cent of which were to be made available to Hawaii residents at affordable prices and rents, of which at least twenty per cent would be subject to government restrictions and subsidies for lower income residents and approximately fifty-five per cent for the middle income residents. However, as of 2009, only approximately two thousand newly built housing units in Kakaako are deemed to be affordable while five thousand of those newly built housing units are in the luxury range. The legislature has concerns with the reduction of the supply available to low and middle income household groups to what has amounted to twenty per cent of residential unit requirement. Further, with approximately thirty per cent of the designated redevelopment area already developed in the district, it is imperative that an acceptable quantity of affordable housing units be provided in Kakaako for Hawaii residents because Hawaii's taxpayers have made a substantial investment in infrastructural improvements in the Kakaako community development district dedicating it as the urban core of the city of Honolulu as an alternative to further urban sprawl in suburban and rural areas of the island of Oahu.

Accordingly, the purpose of this Act is to encourage the development of affordable residential housing units by statutorily imposing a reserved housing requirement for the Kakaako mauka area of the Kakaako community development district for planned developments on land areas in excess of twenty thousand square feet or more.

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

"§206E- Reserved housing requirement for the Kakaako mauka area. (a) The reserved housing requirement imposed by this section shall apply only to applications for a planned development permit project, that is a development that is forty-five feet or higher in height or contains a floor area ratio of one and one-half or greater. The countable floor area of a development on a lot within the Kakaako mauka area shall be developed and made available for reserved housing units for the following land areas:

(1) Less than twenty thousand square feet, there shall be no reserved housing requirements;

(2) Between twenty thousand square feet but less than eighty thousand square feet, the reserved housing requirements for any:

(A) Residential building square footage shall be twenty per cent; and

(B) Commercial building square footage shall be ten per cent; and

(3) Eighty thousand square feet or more, the reserved housing requirement for any:

(A) Residential building square footage shall be thirty per cent; and

(B) Commercial building square footage shall be twenty per cent.

If a developer is issued a temporary or permanent certificate of occupancy pursuant to a planned development permit project containing a reserved housing requirement within five years from the effective date of this Act, the authority shall grant a five per cent density bonus for the planned development permit project for every additional twenty thousand square feet of floor area designated by the authority as reserved housing beyond the minimum reserved housing square footage required by a this part; provided that the extra density is used solely for reserved housing units.

After five years from the effective date of this Act, each residential and commercial development percentage requirement stated above shall be increased by an additional five per cent of the countable floor area of a development unless the legislature determines there is adequate reserved housing in Kakaako at that time.

In order to achieve a proper balance of commercial and residential uses in the urban core, when a five thousand reserved housing inventory in the Kakaako mauka area has been achieved, all reserved housing requirements for commercial floor area developments shall terminate.

A project that has a building permit and obtains its certificate of occupancy prior to seven years after the effective date of this Act shall use the percentage as of the effective date of this Act.

The developer of the development shall divide the floor area required for reserved housing into, and construct the number, types, and sizes of reserved housing units set by the authority. The authority shall establish sale prices or rents to be charged that are affordable to families intended to be served by the reserved housing units. The authority shall also set the number of parking stalls to be assigned to the reserved housing units.

(b) For properties of eighty thousand square feet or more, the following flexibility options shall be applicable to allow a developer to offset the reserved housing requirements under subsection (a):

(1) An additional reserved housing requirement credit offset of one-half of one reserved housing requirement credit shall apply if a unit remains an affordable rental for twenty years; and

(2) If a developer transfers land to the authority, the developer shall receive one-half of one reserved housing requirement credit for each reserved housing unit developed by the authority.

(c) Notwithstanding any law to the contrary, the for-sale reserved housing units shall remain reserved housing units for not less than ten years; provided that if a purchaser of a reserved housing unit wishes to transfer the title of the housing unit before the ten year period expires, the authority shall have the right of first refusal to purchase the housing unit at a price that shall not exceed the sum of:

(1) The original purchase price of the housing unit, as defined in rules adopted pursuant to chapter 91 by the authority;

(2) The cost of any improvement made by a the purchaser to the housing unit, as defined by a rules adopted pursuant to chapter 91 by the authority; and

(3) Simple interest on the original purchase price of the housing unit and any capital improvement costs paid by the purchaser at the rate of one per cent per year;

provided that this subsection shall not apply to any reserved housing unit that is developed on private land that has not received any governmental monetary subsidy.

(d) All reserved housing units developed shall be exempt from all infrastructure assessments and public facilities fees imposed by the authority.

(e) The authority shall set the types and sizes of amenities, in accordance with any limited amenities requirements as stated in the definition of "reserved housing units", to be included in the reserved housing units and establish sale prices or rents to be charged that are affordable to families intended to be served by the reserved housing units in order to promote the provision of the reserved housing units. The authority also shall set the number of parking stalls to be assigned to the reserved housing units. The authority may adopt rules providing for a contribution, in lieu of the provision of reserved housing units, of a fee simple assignment of real property within the Kakaako mauka area.

(f) Subject to the rules of the authority, reserved housing units shall be built and made available for occupancy prior to or concurrently with the development of the lot that required the provision of the reserved housing units. The authority shall prohibit the issuance of any certificate of occupancy for any of the other uses before the issuance of the certificate of occupancy for all the required reserved housing floor area or units.

(g) Any project that provides more reserved housing units or floor area than is required under this section may transfer excess housing credits to another project in the Kakaako community development district toward satisfaction of the reserved housing units requirement of that project as follows:

(1) $70,000 for a studio with one bathroom not exceeding five hundred square feet;

(2) $90,000 for a one-bedroom with one bathroom not exceeding six hundred square feet;

(3) $110,000 for a two-bedroom with one bathroom not exceeding eight hundred fifty square feet;

(4) $120,000 for a two-bedroom with one and one-half bathrooms not exceeding nine hundred square feet;

(5) $130,000 for a two-bedroom with two bathrooms not exceeding one thousand square feet;

(6) $135,000 for a three-bedroom with one and one-half bathrooms not exceeding one thousand one hundred square feet;

(7) $140,000 for a three-bedroom with two bathrooms not exceeding one thousand two hundred square feet; and

(8) $145,000 for a four-bedroom with two bathrooms not exceeding one thousand three hundred square feet.

The authority shall annually review the amount and price for the transfer of the excess credits and is authorized to increase the amount as deemed necessary; provided that the authority shall consider adjustments in construction costs and changes based on government subsidies received. The terms of the reserved housing credits transfer shall be approved by the authority.

(h) For the purposes of this section:

"Community service use" means any of the following uses:

(1) Nursing or convalescent home, nursing facility, assisted living administration, or ancillary assisted living amenities for the elderly or persons with disabilities;

(2) Child care, day care, or senior citizen center;

(3) Nursery school or kindergarten;

(4) Church;

(5) Charitable institution or nonprofit organization;

(6) Public use;

(7) Public utility; or

(8) Consulate.

"Countable floor area" of a development means the total floor area of every building on the lot of a development, except the floor area developed for the following:

(1) Industrial use;

(2) Community service use; or

(3) Special facility use;

provided that the term "industrial use" shall be defined by rules adopted by the Hawaii community development authority applicable to the Kakaako community development district as of the effective date of this Act.

"Development" means the construction of a new building or other structure on a lot, the relocation of an existing building on another lot, the use of a tract of land for a new use, or the enlargement of an existing building or use.

"Floor area":

(1) Means the total area of the several floors of a building, including basement but not unroofed areas, measured from the exterior faces of the exterior walls or from the center line of party walls separating portions of a building. The floor area of a building or portion thereof not provided with surrounding exterior walls shall be the usable area under the horizontal projection of the roof or floor above, excluding elevator shafts, corridors, and stairways; and

(2) Shall not include the area for parking facilities and loading spaces, driveways, access ways, lanai or balconies of dwelling or lodging units that do not exceed fifteen per cent of the total floor area of the units to which they are appurtenant, attic areas with head room less than seven feet, covered rooftop areas, and rooftop machinery, equipment, and elevator housings on the top of buildings.

"Kakaako mauka area" means that portion of the Kakaako community development district established by section 206E-32, that is bound by King Street, Piikoi Street from its intersection with King Street to Ala Moana Boulevard, Ala Moana Boulevard, exclusive, from Piikoi Street to its intersection with Punchbowl Street, and Punchbowl Street to its intersection with King Street.

"Lot" means a duly recorded parcel of land that can be used, developed, or built upon as a unit.

"Median income" means the median annual income, adjusted for family size, for households in the city and county of Honolulu as most recently established by the United States Department of Housing and Urban Development for the Section 8 housing assistance payment program.

"Planned development permit" means the permit issued by the authority for new construction developments that are over forty-five feet in height or have a floor area ratio greater than one and one-half.

"Reserved housing unit":

(1) Means a multi-family dwelling unit that is developed for:

(A) Purchase by a family that:

(i) Has an income of not more than one hundred forty per cent of the median income; and

(ii) Complies with other eligibility requirements established by statute or rule; or

(B) Rent to a family that:

(i) Has an income of not more than one hundred per cent of the median income; and

(ii) Complies with other eligibility requirements established by statute or rule;

(2) Shall be one of the following types of dwelling units:

(A) Studio with one bathroom, not exceeding five hundred square feet in size;

(B) One bedroom with one bathroom, not exceeding six hundred square feet in size;

(D) Two bedrooms with one and one-half bathrooms, not exceeding nine hundred square feet in size;

(E) Two bedrooms with two bathrooms not exceeding one thousand square feet in size;

(F) Three bedrooms with one and one-half bathrooms, not exceeding one thousand one hundred square feet in size;

(G) Three bedrooms with two bathrooms, not exceeding one thousand two hundred square feet in size; and

(H) Four bedrooms with two bathrooms, not exceeding one thousand three hundred square feet in size; and

(3) Shall be a multi-family unit that contains limited amenities and is not included in a central air conditioned building.

"Special facility use" means a use in a "special facility" as defined under section 206E-181."

SECTION 3. Section 206E-4, Hawaii Revised Statutes, is amended to read as follows:

"§206E-4 Powers; generally. Except as otherwise limited by this chapter, the authority may:

(1) Sue and be sued;

(2) Have a seal and alter the same at pleasure;

(3) Make and execute contracts and all other instruments necessary or convenient for the exercise of its powers and functions under this chapter;

(4) Make and alter bylaws for its organization and internal management;

(5) Make rules with respect to its projects, operations, properties, and facilities, which rules shall be in conformance with chapter 91;

(6) Through its executive director appoint officers, agents, and employees, prescribe their duties and qualifications, and fix their salaries, without regard to chapter 76;

(7) Prepare or cause to be prepared a community development plan for all designated community development districts;

(8) Acquire, reacquire, or contract to acquire or reacquire by grant or purchase real, personal, or mixed property or any interest therein; to own, hold, clear, improve, and rehabilitate, and to sell, assign, exchange, transfer, convey, lease, or otherwise dispose of or encumber the same;

(9) Acquire or reacquire by condemnation real, personal, or mixed property or any interest therein for public facilities, including [~~but not limited to~~] streets, sidewalks, parks, schools, and other public improvements;

(10) By itself, or in partnership with qualified persons, acquire, reacquire, construct, reconstruct, rehabilitate, improve, alter, or repair, or provide for the construction, reconstruction, improvement, alteration, or repair of any project; own, hold, sell, assign, transfer, convey, exchange, lease, or otherwise dispose of or encumber any project, and in the case of the sale of any project, accept a purchase money mortgage in connection therewith; and repurchase or otherwise acquire any project [~~which~~] that the authority has [~~theretofore~~] sold or otherwise conveyed, transferred, or disposed of;

(11) Arrange or contract for the planning, replanning, opening, grading, or closing of streets, roads, roadways, alleys, or other places, or for the furnishing of facilities or for the acquisition of property or property rights or for the furnishing of property or services in connection with a project;

(12) Grant options to purchase any project or to renew any lease entered into by it in connection with any of its projects, on [~~such~~] terms and conditions as it deems advisable;

(13) Prepare or cause to be prepared plans, specifications, designs, and estimates of costs for the construction, reconstruction, rehabilitation, improvement, alteration, or repair of any project, and from time to time to modify [~~such~~] the plans, specifications, designs, or estimates;

(14) Provide advisory, consultative, training, and educational services, technical assistance, and advice to any person, partnership, or corporation, either public or private, to carry out the purposes of this chapter, and engage the services of consultants on a contractual basis for rendering professional and technical assistance and advice;

(15) Procure insurance against any loss in connection with its property and other assets and operations in [~~such~~] amounts and from [~~such~~] insurers as it deems desirable;

(16) Contract for and accept gifts or grants in any form from any public agency or from any other source;

(17) Do any and all things necessary to carry out its purposes and exercise the powers given and granted in this chapter; and

(18) Allow satisfaction of any affordable housing requirements imposed by law or the authority upon any proposed development project through the construction of reserved housing[,] units, as defined in section [~~206E-101,~~] 206E- , by a person on land located outside the [~~geographic boundaries of the authority's jurisdiction~~; provided that the authority shall not permit any person to make cash payments in lieu of providing reserved housing, except to account for any fractional unit that results after calculating the percentage requirement against residential floor space or total number of units developed. The substituted housing shall be located on the same island as the development project and shall be substantially equal in value to the required reserved housing units that were to be developed on site. The authority shall establish the following priority in the development of reserved housing:

~~(A)~~ ~~Within the~~] lot of the proposed development project, but within the same community development district;

[~~(B)~~ ~~Within areas immediately surrounding the community development district;~~

~~(C)~~ ~~Areas within the central urban core;~~

~~(D)~~ ~~In outlying areas within the same island as the development project.~~] provided that the prohibitions of section 206E-31.5(2) shall apply.

The Hawaii community development authority shall adopt rules relating to the approval of reserved housing [~~that are~~] units to be developed outside [~~of a community development district. The rules shall include, but are not limited to, the establishment of guidelines to ensure compliance with the above priorities.~~] the lot of a proposed development project, but within the same community development district, in accordance with this paragraph."

SECTION 4. Section 206E-15, Hawaii Revised Statutes, is amended to read as follows:

"§206E-15 Residential projects; cooperative agreements. [~~(a)~~] If the authority deems it desirable to develop a residential project, it may enter into an agreement with qualified persons to construct, maintain, operate, or otherwise dispose of the residential project. Sale, lease, or rental of dwelling units in the project shall be as provided by [~~the~~] rules established by the authority. The authority may enter into cooperative agreements with the Hawaii housing finance and development corporation for the financing, development, construction, sale, lease, or rental of dwelling units and projects.

[(b) The authority may transfer the housing fees collected from private residential developments for the provision of housing for residents of low-or moderate-income to the Hawaii housing finance and development corporation for the financing, development, construction, sale, lease, or rental of such housing within or without the community development districts. The fees shall be used only for projects owned by the State or owned or developed by a qualified nonprofit organization. For the purposes of this section, "nonprofit organization" means a corporation, association, or other duly chartered organization registered with the State, which organization has received charitable status under the Internal Revenue Code of 1986, as amended.]"

SECTION 5. Section 206E-33, Hawaii Revised Statutes, is amended to read as follows:

"§206E-33 Kakaako community development district; development guidance policies. The following shall be the development guidance policies generally governing the authority's action in the Kakaako community development district:

(1) Development shall result in a community [~~which~~] that permits an appropriate land mixture of residential, commercial, industrial, and other uses. In view of the innovative nature of the mixed use approach, urban design policies should be established to provide guidelines for the public and private sectors in the proper development of this district; while the authority's development responsibilities apply only to the area within the district, the authority may engage in any studies or coordinative activities permitted in this chapter [~~which~~] that affect areas lying outside the district, where the authority in its discretion decides that those activities are necessary to implement the intent of this chapter. The studies or coordinative activities shall be limited to facility systems, resident and industrial relocation, and other activities with the counties and appropriate state agencies. The authority may engage in construction activities outside of the district; provided that [~~such~~] the construction relates to infrastructure development or residential or business relocation activities; provided further, notwithstanding section 206E-7, that [~~such~~] the construction shall comply with the general plan, development plan, ordinances, and rules of the county in which the district is located;

(2) Existing and future industrial uses shall be permitted and encouraged in appropriate locations within the district. No plan or implementation strategy shall prevent continued activity or redevelopment of industrial and commercial uses [~~which~~] that meet reasonable performance standards;

(3) Activities shall be located [~~so as~~] to provide primary reliance on public transportation and pedestrian facilities for internal circulation within the district or designated subareas;

(4) Major view planes, view corridors, and other environmental elements, such as natural light and prevailing winds, shall be preserved through necessary regulation and design review;

(5) Redevelopment of the district shall be compatible with plans and special districts established for the Hawaii Capital District, and other areas surrounding the Kakaako district;

(6) Historic sites and culturally significant facilities, settings, or locations shall be preserved;

(7) Land use activities within the district, where compatible, shall to the greatest possible extent be mixed horizontally, that is, within blocks or other land areas, and vertically, as integral units of multi-purpose structures;

(8) Residential development may require a mixture of densities, building types, and configurations in accordance with appropriate urban design guidelines[;] and the integration, both vertically and horizontally, of residents of varying incomes, ages, and family groups; [~~and an increased supply of housing for residents of low-or moderate-income may be required as a condition of redevelopment in residential use.~~] provided that the reserved housing requirements of section 206E- shall be imposed upon a development when applicable. Residential development shall provide necessary community facilities, such as open space, parks, community meeting places, child care centers, parking stalls consistent with county requirements, and other services, within and adjacent to residential development; and

(9) Public facilities within the district shall be planned, located, and developed [~~so as~~] to support the redevelopment policies for the district established by this chapter and plans and rules adopted pursuant to it."

SECTION 6. Section 206E-101, Hawaii Revised Statutes, is amended by amending the definition of "reserved housing" to read as follows:

""Reserved housing" means [~~housing designated for residents in the low-or moderate-income ranges who meet such~~] a reserved housing unit, as defined under section 206E- , developed and made available for purchase by a family that has a household income of not more than one hundred forty per cent of the area median income and that meets other eligibility requirements as the authority may adopt by rule."

SECTION 7. The Hawaii community development authority shall adopt new or amend existing rules to implement this Act without regard to the public notice and public hearing requirements of section 91-3, Hawaii Revised Statutes, or the small business impact review requirements of chapter 201M, Hawaii Revised Statutes. The authority shall adopt the rules no later than . Any subsequent amendment of the rules adopted pursuant to this section shall be subject to all applicable provisions of chapters 91 and 201M, Hawaii Revised Statutes.

SECTION 8. Any building that has been issued a foundation or building permit or is under construction prior to the effective date of this Act shall not be subject to this Act or rules adopted pursuant to section 7 of this Act; provided that any existing building or building under construction shall not qualify for any excess housing credit provided for in section 2 of this Act. The development shall be subject to the laws and rules in effect on the date of the permit application.

SECTION 9. (a) Twenty days prior to the convening of the regular session of 2014, the Hawaii community development authority shall submit a report to the legislature, including any proposed legislation, on the status of its reserved housing program in the Kakaako community development district.

(b) The report shall set forth:

(1) The total number of reserved housing units contained in the Kakaako community development district at the time of the report, broken down with regard to:

(A) Size and type of unit;

(B) Age group of occupants of the units; and

(2) The number of reserved housing units that were provided or are under construction at the time of the report as a result of the requirements of this Act;

(3) A recommendation whether the reserved housing requirements contained in this Act should be reduced, remain unchanged, or increased; and

(4) Any other information that it deems relevant to its reserved housing program in the Kakaako community development district.

SECTION 10. This Act shall apply to the unbuilt portion of a major development within the area of approval of an approved master plan; provided that the developer shall have four years from the effective date of this Act to obtain all necessary building or planned development permits to start construction of a specific building, complete any required grading and infrastructure improvements for the major development, and commence construction of the unbuilt portion of the major development before this Act shall apply; provided that any portion of the required affordable housing requirement that is completed within the four year period shall be the only portion that shall not be applicable to the new requirements imposed by this Act.

SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 12. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2876
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII