SB3202 SD1

PART I

SECTION 1. The legislature finds that Hawaii has the highest housing costs in the nation. Adjusted for inflation, the price of existing homes in Hawaii has increased by one hundred fifty-five per cent since 1984. Meanwhile, the median household income in Hawaii, adjusted for inflation, has only gone up by twenty-four per cent over the same time period. Less than one-third of households in Hawaii can afford a median-priced single-family home, and less than one-half can afford a median-priced condominium. Due to these factors, Hawaii has the highest percentage of homeowners paying more than thirty per cent of their income on their mortgage, making these households more vulnerable to increased stress, mental health problems, and an increased risk of disease. High housing costs also impact the economy in negative ways as many residents are less likely to spend money on consumer goods and services and invest in business startups. High housing prices are the primary contributor to high rates of homelessness nationwide, and, as would be expected given the dire housing market, Hawaii's rate of homelessness is more than double the national average.

The legislature further finds that Hawaii needs to build fifty thousand new homes between 2020 and 2025 to meet the demand for housing. However, over the last five years, Hawaii has only added twenty-seven thousand homes to the housing stock, a little more than one-half of the housing necessary to support the State's population. The legislature notes that Hawaii has the most regulated housing market in the country. Various studies have also concluded that housing regulations slow the rate of construction and lead to higher prices.

The legislature additionally finds that, in 1961, Act 187, Session Laws of Hawaii 1961 (Act 187), was enacted as Hawaii's land use law, with the intent to preserve, protect, and encourage the development of the lands in the State for those uses to which they are best suited for the public welfare. This law is unique in the United States in that both the State and the counties regulate land use. In furtherance of Act 187, the State enacted the Hawaii State Planning Act, codified as chapter 226, Hawaii Revised Statutes, which states that urban growth should be encouraged primarily to existing urban areas where adequate public facilities are already available or can be provided with reasonable public expenditures and away from areas where other important benefits are present, such as protection of important agricultural land or preservation of lifestyles.

The legislature also finds that the dual principles of making urbanization efficient and preserving agricultural and conservation land are being undermined by overly stringent development restrictions within the urban state land use district. The legislature believes that chapter 46, Hawaii Revised Statutes, must be amended to achieve the goals of the Hawaii land use law and Hawaii state plan by encouraging the development of multi-family homes in the urban state land use district, which will reduce the cost of housing, urban sprawl, infrastructure costs, traffic congestion, and carbon emissions.

Accordingly, the purpose of this Act is to:

(1) Allow for the development of a minimum of four homes per lot in the state urban land use district;

(2) Allow for approval for subdivisions of parcels with a minimum lot size of one thousand two hundred square feet in the state urban land use district; and

(3) Amend the calculation of impact fees for certain developments.

PART II

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

"§46- Residential lots in urban districts. (a) Notwithstanding any law, ordinance, or building code or standard to the contrary, a residential lot within an urban district established by chapter 205 shall be allowed at least four residential units.

(b) For residential lots within an urban district established by chapter 205, each county:

(1) Shall allow for attached and detached additional units or accessory dwelling units, as defined by each county;

(2) May:

(A) Impose land use regulations; provided that these standards shall not preclude the development of four or more residential units on each residential lot;

(B) Restrict short-term rentals, as defined by each county, including by imposition of mandatory owner-occupancy requirements for short-term rentals; and

(C) Reject a permit application for development on the residential lot if the county determines there is insufficient infrastructure for the development; and

(3) Shall not adopt:

(A) Accessory or additional dwelling unit owner‑occupancy requirements;

(B) Bans on long-term rentals; or

(C) Setback and design requirements more restrictive than the principal unit. For purposes of this subparagraph, "principal unit" means the single-family housing unit, duplex, triplex, townhouse, or other housing unit located on the same lot as an accessory or additional dwelling unit.

(1) County powers within special management areas delineated pursuant to chapter 205A; and

(2) Any area within an urban district that a county deems to be at high risk of a natural hazard such as flooding, lava, or fire, as determined by the most current data and maps issued by a state or federal department or agency."

SECTION 3. Chapter 205, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

"§205- Private covenants; residential lots; urban district. No private covenant for a residential lot within an urban district adopted after the effective date of Act , Session Laws of Hawaii 2024, shall:

(1) Limit the number of residential units on that lot below the amount allowed pursuant to section 46- ; or

(2) Restrict the long-term rental of residential units on that lot."

PART III

SECTION 4. Section 46-4, Hawaii Revised Statutes, is amended to read as follows:

"§46-4 County zoning. (a) This section and any ordinance, rule, or regulation adopted in accordance with this section shall apply to lands not contained within the forest reserve boundaries as established on January 31, 1957, or as subsequently amended.

Zoning in all counties shall be accomplished within the framework of a long-range, comprehensive general plan prepared or being prepared to guide the overall future development of the county. Zoning shall be one of the tools available to the county to put the general plan into effect in an orderly manner. Zoning in the counties of Hawaii, Maui, and Kauai means the establishment of districts of such number, shape, and area, and the adoption of regulations for each district to carry out the purposes of this section. In establishing or regulating the districts, full consideration shall be given to all available data as to soil classification and physical use capabilities of the land to allow and encourage the most beneficial use of the land consonant with good zoning practices. The zoning power granted herein shall be exercised by ordinance [~~which~~] that may relate to:

(1) The areas within which agriculture, forestry, industry, trade, and business may be conducted;

(2) The areas in which residential uses may be regulated or prohibited;

(3) The areas bordering natural watercourses, channels, and streams, in which trades or industries, filling or dumping, erection of structures, and the location of buildings may be prohibited or restricted;

(4) The areas in which particular uses may be subjected to special restrictions;

(5) The location of buildings and structures designed for specific uses and designation of uses for which buildings and structures may not be used or altered;

(6) The location, height, bulk, number of stories, and size of buildings and other structures;

(7) The location of roads, schools, and recreation areas;

(8) Building setback lines and future street lines;

(9) The density and distribution of population;

(10) The percentage of a lot that may be occupied, size of yards, courts, and other open spaces;

(11) Minimum and maximum lot sizes; and

(12) Other regulations the boards or city council find necessary and proper to permit and encourage the orderly development of land resources within their jurisdictions.

The council of any county shall prescribe rules, regulations, and administrative procedures and provide personnel it finds necessary to enforce this section and any ordinance enacted in accordance with this section. The ordinances may be enforced by appropriate fines and penalties, civil or criminal, or by court order at the suit of the county or the owner or owners of real estate directly affected by the ordinances.

Any civil fine or penalty provided by ordinance under this section may be imposed by the district court, or by the zoning agency after an opportunity for a hearing pursuant to chapter 91. The proceeding shall not be a prerequisite for any injunctive relief ordered by the circuit court.

Nothing in this section shall invalidate any zoning ordinance or regulation adopted by any county or other agency of government pursuant to the statutes in effect prior to July 1, 1957.

The powers granted herein shall be liberally construed in favor of the county exercising them, and in [~~such~~] a manner [~~as to promote~~] that promotes the orderly development of each county or city and county in accordance with a long-range, comprehensive general plan to ensure the greatest benefit for the State as a whole. This section shall not be construed to limit or repeal any powers of any county to achieve these ends through zoning and building regulations, except insofar as forest and water reserve zones are concerned and as provided in subsections (c) [~~and~~], (d)[.], (g), and section 46- .

Neither this section nor any ordinance enacted pursuant to this section shall prohibit the continued lawful use of any building or premises for any trade, industrial, residential, agricultural, or other purpose for which the building or premises is used at the time this section or the ordinance takes effect; provided that a zoning ordinance may provide for elimination of nonconforming uses as the uses are discontinued, or for the amortization or phasing out of nonconforming uses or signs over a reasonable period of time in commercial, industrial, resort, and apartment zoned areas only. In no event shall [~~such~~] the amortization or phasing out of nonconforming uses apply to any existing building or premises used for residential (single-family or duplex) or agricultural uses. Nothing in this section shall affect or impair the powers and duties of the director of transportation as set forth in chapter 262.

(b) Any final order of a zoning agency established under this section may be appealed to the circuit court of the circuit in which the land in question is found. The appeal shall be in accordance with the Hawaii rules of civil procedure.

(c) [~~Each~~] Except as provided in section 46- , each county may adopt reasonable standards to allow the construction of two single-family dwelling units on any lot where a residential dwelling unit is permitted.

(d) Neither this section nor any other law, county ordinance, or rule shall prohibit group living in facilities with eight or fewer residents for purposes or functions that are licensed, certified, registered, or monitored by the State; provided that a resident manager or a resident supervisor and the resident manager's or resident supervisor's family shall not be included in this resident count. These group living facilities shall meet all applicable county requirements not inconsistent with the intent of this subsection, including but not limited to building height, setback, maximum lot coverage, parking, and floor area requirements.

(e) Neither this section nor any other law, county ordinance, or rule shall prohibit the use of land for employee housing and community buildings in plantation community subdivisions as defined in section 205-4.5(a)(12); in addition, no zoning ordinance shall provide for the elimination, amortization, or phasing out of plantation community subdivisions as a nonconforming use.

(f) Neither this section nor any other law, county ordinance, or rule shall prohibit the use of land for medical cannabis production centers or medical cannabis dispensaries established and licensed pursuant to chapter 329D; provided that the land is otherwise zoned for agriculture, manufacturing, or retail purposes.

(g) Notwithstanding any other law, county ordinance, or rule to the contrary, the director of the county agency responsible for land use shall give final approval for any application for subdivision, consolidation, or resubdivision of parcels within the state urban land use district; provided that:

(1) All resulting parcels are residentially zoned and at least one thousand two hundred square feet in area;

(2) The parcel being subdivided is not located on a site that is:

(A) Designated as important agricultural land;

(B) On wetlands, as defined in the United States Fish and Wildlife Service Manual, Part 660 FW2;

(D) A habitat for protected or endangered species;

(E) Within a state historic district or designated as a historic property on the Hawaii register of historic places or the national register of historic places;

(F) Within lava zone one or lava zone two, as designated by the United States Geological Survey; or

(G) Within the special management area, as defined in section 205A-22;

(3) The proposed subdivision would not require the demolition or alteration of housing that is subject to:

(A) A recorded covenant, ordinance, or law that restricts rents to levels affordable to households of moderate, low, or very low income; or

(B) Any form of rent or price control through an agency's valid exercise of its police power; and

(4) The parcel of record was in existence prior to the effective date of Act , Session Laws of Hawaii 2024;

provided further that the director of the county agency responsible for land use shall adopt rules pursuant to chapter 91 to define the development standards and related infrastructure conditions to receive application approval from the respective director, including prohibitions if the parcel is located in the special management area, as defined in section 205A-22."

PART IV

SECTION 5. Section 46-143, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) An impact fee shall be substantially related to the needs arising from the development and shall not exceed a proportionate share of the costs incurred or to be incurred in accommodating the development. The following [~~seven~~] factors shall be considered in determining a proportionate share of public facility capital improvement costs:

(1) The level of public facility capital improvements required to appropriately serve a development, based on a needs assessment study that identifies:

(A) Deficiencies in existing public facilities;

(B) The means, other than impact fees, by which existing deficiencies will be eliminated within a reasonable period of time; and

(2) The availability of other funding for public facility capital improvements, including but not limited to user charges, taxes, bonds, intergovernmental transfers, and special taxation or assessments;

(3) The cost of existing public facility capital improvements;

(4) The methods by which existing public facility capital improvements were financed;

(5) The extent to which a developer required to pay impact fees has contributed in the previous five years to the cost of existing public facility capital improvements and received no reasonable benefit therefrom, and any credits that may be due to a development because of such contributions;

(6) The extent to which a developer required to pay impact fees over the next twenty years may reasonably be anticipated to contribute to the cost of existing public facility capital improvements through user fees, debt service payments, or other payments, and any credits that may accrue to a development because of future payments; [~~and~~]

(7) The extent to which a developer is required to pay impact fees as a condition precedent to the development of non-site related public facility capital improvements, and any offsets payable to a developer because of this provision[.]; and

(8) The square footage of the development; provided that:

(A) In cases where the developer is converting an existing structure, the square footage of the existing structure shall be deducted from the total square footage of the development when calculating impact fees; and

(B) In cases where the public facility impacted is a water or sewage facility, the appropriate board of water supply may choose to calculate impact fees based on the total number of fixtures in the development, rather than by square footage."

PART V

SECTION 6. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect on January 1, 2026.

THE SENATE	S.B. NO.	3202
THIRTY-SECOND LEGISLATURE, 2024		S.D. 1
STATE OF HAWAII