SB534

SECTION 1. The legislature finds that the office of Hawaiian affairs was established under article XII, section 5, of the Hawaii State Constitution to "hold title to all the real and personal property now or hereafter set aside or conveyed to it which shall be held in trust for native Hawaiians and Hawaiians." The office of Hawaiian affairs' board of trustees is authorized by article XII, section 6, of the Hawaii State Constitution "to manage and administer the proceeds from the sale or other disposition of the lands . . . and income derived from whatever sources for native Hawaiians and Hawaiians, including all income and proceeds from that pro rata portion of the trust referred to in section 4 of this article [the public land trust] for native Hawaiians". The board of trustees is also authorized under article XII, section 6, "to exercise control over real and personal property set aside by state, federal or private sources and transferred to the board for native Hawaiians and Hawaiians."

In section 1 of Act 15, Session Laws of Hawaii 2012 (Act 15), the legislature found that a purpose of the Act was to:

[E]ffectively and responsibly fulfill the constitutional obligation to native Hawaiians under article XII, sections 4 and 6, of the State Constitution between November 7, 1978, up to and including June 30, 2012 . . . and providing additional resources to the office in the form of fee simple title to certain parcels of land[.]

In the same section of Act 15, the legislature declared that the "[c]onveyance of the fee simple interest to the lands . . . will allow the State to effectively and responsibly meet [those] constitutional obligations to native Hawaiians."

Further, section 2 of Act 15 stated, "the fee simple interest to the . . . parcels of land . . . is conveyed to the office of Hawaiian affairs as grantee, as of July 1, 2012, as is, where is[.]" In the same section of Act 15, however, the legislature specifically directed that, "[t]he [properties] are and shall remain (even after conveyance to the office) under the jurisdiction and authority of the Hawaii community development authority, with respect to zoning, land use conditions[,] and all other matters over which the authority has jurisdiction and authority to act" and "shall be subject to all laws, except sections 206E-8, 206E-10, 206E‑34, Hawaii Revised Statutes, and otherwise provided in this Act".

Particularly pertinent to the purpose of Act 15, in section 6, the legislature further declared that:

The [p]roperties conveyed by this Act shall be deemed income and proceeds from the public land trust, as if the [p]roperties had been paid out of the income and proceeds from the public land trust pursuant to article XII, section 6 of the Hawaii State Constitution.

Relying on its board of trustees' authority to "exercise control" over lands that the office of Hawaiian affairs holds in trust for native Hawaiians, and to "manage and administer" the income and proceeds from the public land trust lands it receives, the office of Hawaiian affairs has asked the legislature to enact this Act to allow the office of Hawaiian affairs to maximize the income or proceeds that certain parcels of land conveyed by Act 15 could generate for the purposes of bettering the conditions of native Hawaiians, by allowing the parcels to be developed for residential use.

The legislature further finds that the ongoing transformation of Kakaako into a place where the people of Honolulu can live, work, and play should increase the revenue generating potential of the land conveyed to the office of Hawaiian affairs by Act 15 and concomitantly increase the number of programs and kinds of services for which the office of Hawaiian affairs was created and is able to provide for native Hawaiians. The legislature further finds that even more revenue could be generated to provide programs and services to better the conditions of native Hawaiians, if the office of Hawaiian affairs were permitted to develop some or all of the parcels it received under Act 15 for residential use.

The legislature agrees that the residential development restriction to which the parcels transferred to the office of Hawaiian affairs by Act 15 were and continue to be subject should be lifted for certain parcels to the extent necessary to allow the office of Hawaiian affairs to realize the maximum income or proceeds that those parcels could generate if they were developed for residential use.

The legislature further finds that the State continues to suffer from a shortage of affordable housing with fewer families able to afford to buy or rent a home in the State. Hawaii is the most expensive state in the nation for housing, with its housing costs being 2.7 times the national average. Housing costs in the State have tripled since 1990, resulting in a $850,000 median price for a single-family home. This price equates to a $252,000 annual income needed to afford a new median priced home and fewer than one in three households in the State meet that income threshold. In addition, Native Hawaiians suffer disproportionately from this lack of affordable housing. Native Hawaiians have the highest rate of poverty and the lowest median household income of the major ethnic groups in the State, causing many to become homeless or to leave the State. Therefore, it is essential that a certain percentage of the residential units developed on certain parcels of land conveyed to the office of Hawaiian affairs pursuant to Act 15 be workforce housing allocated to households within a certain income range.

The legislature also acknowledges that Act 172, Session Laws of Hawaii 2023, appropriated funds into and out of the school facilities special fund to construct housing prioritized for teachers, educators, and staff. Likewise, the legislature finds that priority for the workforce housing developed on certain parcels of lands conveyed to the office of Hawaiian affairs pursuant to Act 15 should be given to certain essential workforce in the area.

Furthermore, the legislature acknowledges the extensive planning and community outreach efforts by the Kakaako community planning advisory council, which resulted in the 2011 Kakaako Makai Conceptual Master Plan; the office of Hawaiian affairs' efforts, which produced the 2013 Kakaako Makai Strategic Management Plan; and the Hawaii community development authority's work and adoption of the 2017 Kakaako Makai Area Parks Master Plan and the 2023 Kakaako Community Development District Makai Area Plan. The legislature strongly encourages the office of Hawaiian affairs to incorporate development concepts from these various plans into its master plan development proposal for Kakaako makai to create a live, work, and play community that addresses the recreational, cultural, educational, economic, and workforce housing needs of the State.

Finally, the legislature finds that inasmuch as this Act furthers one of the principle purposes for which the office of Hawaiian affairs was established as a state agency, its provisions should be deemed consistent with and not violative of article XI, section 5, of the Hawaii State Constitution.

The purpose of this Act is to enhance the revenue generating capacity of certain parcels of land in the Kakaako makai area, including parcels that were conveyed to the office of Hawaiian affairs pursuant to Act 15 while making housing available to the essential workforce in the area by:

(1) Allowing the Hawaii community development authority to approve residential development on certain parcels;

(2) Raising the building height limit on certain parcels;

(3) Requiring fifty per cent plus one of the residential units developed on certain parcels to be allocated to households with income at or below one hundred forty per cent of the area median income, with priority given to individuals who are essential workers working within a five-mile radius of Kakaako makai, including but not limited to essential workers working for an employer in the health care, hospitality, education, law enforcement, civil service, or construction industry;

(4) Limiting the sale of residential units developed in certain residential developments to prospective owner-occupants; and

(5) Establishing a Kakaako makai special fund and association fee to fund various services and projects in the Kakaako makai area.

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

"§206E-A Limited residential development in Kakaako; public hearing; height limit; disclosures; nuisance mitigation; workforce housing. (a) The authority may approve any plan or proposal for any residential development in Kakaako on any parcels identified in the parcels bounded by:

(1) Ala Moana Boulevard;

(2) Forrest Avenue from its intersection with Ala Moana Boulevard to Ilalo Street;

(3) Ilalo Street from its intersection with Forrest Avenue to Ohe Street;

(4) Ohe Street from its intersection with Ilalo Street to Olomehani Street;

(5) Olomehani Street from its intersection with Ohe Street to Ahui Street;

(6) Ahui Street from its intersection with Olomehani Street to the shoreline of the Kewalo Basin; and

(7) The shoreline of Kewalo Basin to its intersection with Ala Moana Boulevard;

provided that approval may be granted only after the applicant seeking approval conducts a public hearing held in accordance with subsection (b).

(b) An applicant seeking approval of a plan or proposal for any residential development pursuant to this section shall hold a public hearing that shall be exempt from chapter 91 prior to submitting the plan or proposal to the authority. Notice shall be published in accordance with section 1-28.5, at least thirty days prior to the hearing. The notice shall include:

(1) The date, time, and place of the hearing;

(2) A statement of the topic of the hearing; and

(3) A description of where, when, and how the residential development proposal may be viewed by the public.

All interested persons may submit data or opinions, orally or in writing, in conjunction with the hearing.

(c) An applicant seeking approval of a plan or proposal for residential development pursuant to this section shall fully address all issues and questions raised in the written and oral submissions permitted pursuant to subsection (b) regarding the proposed residential development before submitting the plan or proposal to the authority.

(d) The authority shall, before approving any plan or proposal for residential development pursuant to this section:

(1) Hold a public hearing; and

(2) Fully consider all written and oral submissions received at the public hearings held by the applicant and the authority.

(e) Any other law to the contrary notwithstanding, the building height limit shall be four hundred feet for any residential development approved by the authority on the parcels bounded by Ala Moana Boulevard, Ilalo Street, and Forrest Avenue pursuant to this section.

(f) Any plan or proposal for residential development submitted to the authority for approval pursuant to this section shall include an assessment and proposed mitigation plan for any possible noise, odor, and other aircraft-related nuisances that may affect the development. The office of Hawaiian affairs and any person developing the residential development approved by the authority pursuant to this section shall, before entering into any lease agreement for any lot, parcel, structure, or unit of a structure located within the development, provide written notice to potential lessees and residents of the possible noise, odor, and other aircraft-related nuisances.

(g) Any residential development approved by the authority on the parcels bounded by Ala Moana Boulevard, Ilalo Street, and Forrest Avenue pursuant to this section shall allocate at least fifty per cent plus one unit of the residential units in the development to households with income at or below one hundred forty per cent of the area median income, with priority given to individuals who are essential workers working within a five-mile radius of Kakaako makai, including but not limited to essential workers working for an employer in the health care, hospitality, education, law enforcement, civil service, or construction industry; provided that nothing in this subsection shall be construed to limit eligibility for exemptions for housing developments under chapter 201H.

(h) Notwithstanding any other law to the contrary, no residential unit in a residential development approved by the authority pursuant to this section, shall be sold to any person other than a prospective owner-occupant.

(i) For the purposes of this section, "owner-occupant" has the same meaning as defined in section 514B-95.

§206E-B Kakaako makai association fee. The authority shall determine a Kakaako makai association fee to be collected from all residential developments in Kakaako on lands identified in section 206E-A(a); provided that the fee shall be collected from residential owners.

§206E-C Kakaako makai special account. Kakaako makai association fees collected pursuant to section 206E-B shall be deposited into a special account in the Hawaii community development revolving fund established in section 206E-16. Moneys from the special account shall be used to fund various services and projects, including but not limited to maintenance, improvements, free public parking for park users, public beach access, security, and parks and open spaces, for the Kakaako community development district makai of Ala Moana Boulevard and between Kewalo Basin and the foreign trade zone, including the Kewalo Basin area. Disbursements from the special account shall be made in accordance with procedures adopted by the authority and approved by the director of finance."

SECTION 3. Section 206E-12, Hawaii Revised Statutes, is amended to read as follows:

"§206E-12 Dedication for public facilities as condition to development. (a) The authority shall establish rules requiring dedication for public facilities of land or facilities, or cash payments in lieu thereof, by developers as a condition of developing real property pursuant to the community development plan. Where state and county public facilities dedication laws, ordinances, or rules differ, the provision for greater dedication shall prevail.

(b) Rules adopted by the authority pursuant to subsection (a) shall not apply to residential developments approved by the authority pursuant to section 206E-A."

SECTION 4. Section 206E-31.5, Hawaii Revised Statutes, is amended to read as follows:

"§206E-31.5 Prohibitions. Anything contained in this chapter to the contrary notwithstanding, and except as provided in section 206E-A(a), the authority is prohibited from:

(1) Selling or otherwise assigning the fee simple interest in any lands in the Kakaako community development district to which the authority in its corporate capacity holds title, except with respect to:

(A) Utility easements;

(B) Remnants as defined in section 171-52;

(D) Private entities for purposes of any easement, roadway, or infrastructure improvements; or

(E) Reserved housing as defined in section 206E-101; or

(2) Approving any plan or proposal for any residential development in that portion of the Kakaako community development district makai of Ala Moana boulevard and between Kewalo Basin and the foreign trade zone."

SECTION 5. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 6. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2025.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	534
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII