HB1732

SECTION 1. The legislature finds that Hawaii is in the midst of a crisis as a substantial number of residents are unable to secure attainable housing to rent or own. The exorbitant cost of real estate renders homeownership unattainable for many local families, with the average price of a home in Hawaii surpassing $800,000, an amount considerably beyond the financial reach of most local working residents.

The legislature further finds that Hawaii has been struggling with outmigration as local working residents are compelled to leave the islands in search of more affordable living situations. The department of business, economic development, and tourism reported that between July 1, 2022, and July 1, 2023, Hawaii's population decreased by twelve people each day. As a result, for the first time in history, a greater number of Native Hawaiians reside outside of Hawaii than in it. This exodus signifies a loss not only of population but also of cultural heritage.

A 2025 Holomua Collective survey of more than three thousand two hundred local working residents found that seventy-five per cent of respondents are either planning to leave Hawaii or are unsure they can stay due to the high cost of living. Among those who expect to move, about one-third said they plan to leave within five years, while many others were unsure of their timeline.

The legislature also finds that another crucial aspect of Hawaii's housing crisis is the shortage of attainable workforce housing for essential workers like teachers, police officers, health care providers, and others who serve the community. With limited attainable workforce housing options and high building costs, it is becoming increasingly difficult to find suitable places for these workers to live, driving crucial workers to relocate to the mainland United States. Allowing people to live closer to where they work will help preserve infrastructure, reduce greenhouse gas emissions, improve workers' mental health, and help businesses by reducing commute times.

The legislature additionally finds that like Hawaii, the town of Vail, Colorado has a tourism-based economy in which local working residents struggle to find attainable housing in part due to the large percentage of vacant homes owned by non-residents. In 2018, in an attempt to provide for local workforce housing and invest in the future of its town, the town of Vail implemented "Vail InDEED", a voluntary program that allowed the town to buy and place deed restrictions in perpetuity on local homes from willing buyers that limited occupancy to owner-occupants or resident tenants who live and work in the town of Vail. In conjunction with other government efforts, this program has resulted in the establishment of over one thousand deed-restricted residences for local working residents, helped provide more attainable housing options for local working residents, and created a culture in which Vail residents want to live in and support deed-restricted residences.

The legislature believes Hawaii can learn from the town of Vail, and that a program similar to Vail InDEED could develop a stock of homes in Hawaii that are dedicated to locals. This program could be effective in helping local families buy homes by bringing together the needs of employers, workers, and the community. Prioritizing workforce housing that ensures occupants live or work in the vicinity of their home will help alleviate the shortage of workforce housing, reduce traffic and emissions of greenhouse gases, mitigate adverse impacts from new development, and build stronger communities. Additionally, this program would not only aid people in securing housing but would also contribute to the preservation of Hawaii's distinctive culture by ensuring that local families remain in the State.

The legislature emphasizes the importance of responsible stewardship of public funds. One means of fulfilling this responsibility is ensuring that public investments in housing result in a retained public equity interest.

Deed restrictions on real property have a quantifiable financial value for the holder of the deed restriction, and this value tends to grow and appreciate over time. Deed restrictions may also be bought and sold. Any deed restriction purchased by a county creates an equity interest in the underlying property, which may be sold in the future if doing so serves the public interest.

Accordingly, the purpose of this Act is to establish the kamaaina homes program as an investment in the future of Hawaii and keep local working families in the State by securing a dedicated housing supply specifically for locals.

SECTION 2. Chapter 201H, Hawaii Revised Statutes, is amended by adding a new subpart to part III to be appropriately designated and to read as follows:

" . Kamaaina Homes Program

§201H-A Definitions. As used in this subpart, unless the context otherwise requires:

"Appreciated value of the property" means the most recent county-appraised value of the property minus the county-appraised value of the property at the time the deed restriction was placed on the property.

"Eligible homebuyer" means a person or family, without regard to race, creed, national origin, or sex, who:

(1) Is a citizen of the United States or a resident alien;

(2) Is a resident domiciled in the State;

(3) Is at least eighteen years of age;

(4) Agrees to sell to the county and place a deed restriction on the property that complies with section 201H-C;

(5) Agrees to comply with annual reporting requirements pursuant to section 201H-F;

(6) Owns no other real property with a deed restriction pursuant to this subpart; and

(7) Meets any other qualifications established by rules adopted by the corporation or county.

"Qualified business" means a corporation, partnership, sole proprietorship, trust, or foundation, or any other individual or organization carrying on a business, whether or not operated for profit, that:

(1) Has a physical office or other owned or leased real estate within the State;

(2) Has a current and valid business license to operate in the State; and

(3) Pays state income taxes pursuant to chapter 235.

"Qualified business" includes state and county departments and agencies.

§201H-B Kamaaina homes program; established; general provisions. (a) There shall be established within the corporation the kamaaina homes program to provide counties with funding through the dwelling unit revolving fund established pursuant to section 201H-191 to purchase voluntary deed restrictions on property from eligible homebuyers.

(b) Upon application by a county, in a form prescribed by the corporation, the corporation may allocate an annual lump sum, in an amount to be determined by the corporation, necessary for a county to carry out subsection (a); provided that:

(1) The corporation shall not distribute funds solely based on the population size of a county;

(2) A county shall not purchase a deed restriction with funds allocated pursuant to this subpart unless the property is located in a neighborhood identified in the plan approved pursuant to subsection (c);

(3) The total amount contributed by a county to an eligible homebuyer shall not exceed eight per cent of the appraised value of the property;

(4) No funds shall be made available to a county under this subpart unless the county provides funding in the amount of no less than one dollar for every three dollars distributed by corporation; and

(5) The corporation shall not allocate more than $20,000,000 per year under this subpart.

A county may use up to per cent of allocated funds for administrative costs.

(c) The corporation shall not allocate funding to a county pursuant to this subpart until it has a received and approved a plan from the applicant county that identifies neighborhoods within the county that data show are primarily occupied by persons who work in the county and properties located within those neighborhoods are at risk of being sold to persons who will not work in the county.

(d) A county may deposit funds received from the corporation pursuant to subsection (b) into an escrow account until the purchase of a deed restriction is finalized.

(e) Applications for funds in exchange for the purchase of equity in the form of a deed restriction shall be made to the counties and contain the information required by rules adopted under this subpart. At a minimum, the applicant shall:

(1) Be an eligible homebuyer under this subpart who owns no other real property with a deed restriction pursuant to this subpart;

(2) Agree to use state funds exclusively for the purposes described in subsection (g);

(3) Indicate capability to properly use the funds for the purposes described in subsection (g);

(4) Agree not to use state funds for any unauthorized purpose, including entertainment or perquisites;

(5) Comply with any other requirements the county may prescribe;

(6) Comply with all applicable federal, state, and county statutes, rules, and ordinances, including all applicable federal and state laws prohibiting discrimination against any person on the basis of race, color, national origin, religion, creed, sex, age, sexual orientation, disability, or any other characteristic protected under applicable federal or state law;

(7) Agree to indemnify and hold harmless the State and county, and their officers, agents, and employees, from and against all claims arising out of or resulting from activities carried out or projects undertaken with funds provided under this subpart, and procure sufficient insurance to provide this indemnification if requested by the corporation; and

(8) Agree to make available to the county all records relating to the purchase of equity, to allow state agencies to monitor the applicant's compliance with this subpart.

(f) No eligible homebuyer shall receive funds under this subpart if a deed restriction that satisfies section 201H-C already runs with the land of the property.

(g) An eligible homebuyer shall use the entirety of the funds provided by the county pursuant to this subpart as a portion or the entirety of a down payment on the property that the eligible homebuyer intends to purchase and on which a deed restriction shall be placed pursuant to this subpart.

(h) The county shall prioritize eligible homebuyers who work in a profession that is facing a labor shortage as defined by the corporation, including government workers, health care workers, educators, law enforcement officers, correctional facility staff, and agricultural field workers.

(i) Any initial lease for tenancy offered at a property with a deed restriction pursuant to this subpart shall be for a minimum term of six months. An initial lease may convert to a month-to-month lease upon completion of the original term.

(j) The deed restriction placed and owned by the county pursuant to this subpart shall take first priority over other restrictions on the property, if applicable; provided that for a planned community under chapter 421J, a deed restriction may be secondary only to covenants, conditions, and restrictions with a requisite first position.

(k) The deed restriction placed and owned by the county pursuant to this subpart shall be automatically extinguished and shall not attach in subsequent transfers of title when a mortgage holder or other party becomes the owner of the property pursuant to a foreclosure by action, power of sale foreclosure, or conveyance in lieu of foreclosure after commencement of a foreclosure action.

Any law to the contrary notwithstanding, a mortgagee under a mortgage covering property that is deed restricted pursuant to this subpart, before commencing foreclosure proceedings, shall notify the corporation and county in writing of:

(1) Any default by the mortgagor within ninety days after the occurrence of the default; and

(2) Any intention of the mortgagee to foreclose the mortgage under chapter 667 at least forty-five days before commencing foreclosure proceedings;

provided that failure to provide notice to the corporation shall not affect the mortgage holder's rights under the mortgage.

(l) Counties shall be responsible for validating evidence and ensuring compliance with this subpart. Counties may contract with nongovernmental persons or entities to ensure compliance. Counties shall report any property not in compliance with this subpart to the corporation.

(m) If a county does not expend moneys allocated by the corporation pursuant to this section within one year of receipt, the moneys shall be returned to the corporation and placed in the dwelling unit revolving fund established pursuant to section 201H-191.

(n) A county may sell its equity in the form of a deed restriction:

(1) For fair market value if the county finds that the sale is in the public interest; or

(2) To the owner of a deed-restricted property for an amount equal to the original amount provided by the corporation and county to purchase equity in the form of a deed restriction plus eight per cent of the appreciated value of the property;

provided that the moneys from a sale under this subsection shall be returned to the corporation and county at a ratio proportionate with the respective amounts provided to the eligible homebuyer for the original deed restriction pursuant to this subpart; provided further that the moneys returned to the corporation shall be placed in the dwelling unit revolving fund established pursuant to section 201H-191.

(o) The corporation and each county may establish, revise, charge, and collect fees and premiums and impose costs as necessary, reasonable, or convenient to effectuate the purposes of this subpart.

(p) The corporation may adopt rules pursuant to chapter 91 for the purposes of this subpart. Each county may adopt rules pursuant to chapter 91 for purposes of this subpart; provided that the rules shall not conflict with rules adopted by the corporation.

§201H-C Deed restriction; requirements. (a) Notwithstanding any other law to the contrary, and except as otherwise provided in section 201H-B(k), a deed restriction placed pursuant to this subpart shall be recorded against the property and shall run with the land in perpetuity, binding all future owners, successors, and assigns.

(b) Notwithstanding any other law to the contrary, a deed restriction placed on the property shall require that the property be occupied by at least one owner-occupant or tenant who:

(1) Works an average of thirty hours or more per week at a qualified business;

(2) Previously worked an average of thirty hours or more per week at a qualified business, was an occupant of a deed-restricted property pursuant to this subpart, and:

(A) Is retired;

(B) Is involuntarily unemployed; or

(3) Is a relative, by blood, marriage, or adoption, of an owner-occupant or tenant of the property who satisfies paragraph (1) or (2).

§201H-D Remedies. (a) A county that reasonably believes a property subject to a deed restriction under this subpart is not in compliance with this subpart may bring action against the owner of the property for civil remedies based in contract or real property law, including but not limited to claiming a lien or obtaining specific performance.

(b) In addition to the remedies available under subsection (a), if a property subject a deed restriction under this subpart is sold and it is determined that the property was occupied in a manner not in compliance with this subpart, the corporation or a county may bring an action against the homeowner in the appropriate circuit court and shall be entitled to fifty per cent of the appreciated value of the property at the time of sale, to be collected by the corporation or county, as applicable.

(c) Any financial remedy owed to the corporation and county pursuant to this section shall be allocated to the corporation and county at a ratio proportionate with the respective amounts provided to the eligible homebuyer for the original deed restriction pursuant to this subpart; provided that all financial remedies owed to the corporation shall be placed in the dwelling unit revolving fund established under section 201H-191.

§201H-E Environmental impact statement; conveyance tax; procurement code; exemptions. (a) Any action on property subject to a deed restriction under this subpart shall be exempt from chapter 343.

(b) Property sold for which a county has purchased a deed restriction pursuant to this subpart shall be exempt from chapter 247.

§201H-F Annual compliance reporting. No later than of each year, beginning in the year following the first year of occupancy of the property after the deed restriction has been entered into, the property owner shall submit to the county a written statement with accompanying evidence verifying that the property was occupied by a qualified owner-occupant or tenant during all of the prior calendar year; provided that, if applicable, a copy of the lease form currently used for the property shall be submitted with the statement."

SECTION 3. Section 46-15.2, Hawaii Revised Statutes, is amended to read as follows:

"§46-15.2 Housing; additional county powers. In addition and supplemental to the powers granted to counties by section 46-15.1, a county shall have and may exercise any of the following powers:

(1) To provide assistance and aid to persons of low- and moderate-income in acquiring housing by:

(A) Providing loans secured by a mortgage;

(B) Acquiring the loans from private lenders where the county has made advance commitment to acquire the loans; and

(C) Making and executing contracts with private lenders or a public agency for the origination and servicing of the loans and paying the reasonable value of the services;

(2) In connection with the exercise of any powers granted under this section or section 46-15.1, to establish one or more loan programs and to issue bonds under chapter 47 or 49 to provide moneys to carry out the purposes of this section or section 46-15.1; provided that:

(A) If bonds are issued pursuant to chapter 47 to finance one or more loan programs, the county may establish qualifications for the program or programs as it deems appropriate;

(B) If bonds are issued pursuant to chapter 49 to finance one or more loan programs, the loan program or programs shall comply with part III, subpart B of chapter 201H, to the extent applicable;

(C) If bonds are issued pursuant to section 47-4 or chapter 49, any loan program established pursuant to this section or any county-owned dwelling units constructed under section 46-15.1 shall be and constitute an "undertaking" under section 49‑1 and chapter 49 shall apply to the loan program or county-owned dwelling units to the extent applicable;

(D) In connection with the establishment of any loan program pursuant to this section, a county may employ financial consultants, attorneys, real estate counselors, appraisers, and other consultants as may be required in the judgment of the county and fix and pay their compensation from funds available to the county therefor;

(E) Notwithstanding any limitation otherwise established by law, with respect to the rate of interest on any loan made under any loan program established pursuant to this section, the loan may bear a rate or rates of interest per year as the county shall determine; provided that no loan made from the proceeds of any bonds of the county shall be under terms or conditions that would cause the interest on the bonds to be deemed subject to income taxation by the United States;

(F) Notwithstanding any limitation otherwise established by law, with respect to the amount of compensation permitted to be paid for the servicing of loans made under any loan program established pursuant to this section, a county may fix any reasonable compensation as the county may determine;

(G) Notwithstanding the requirement of any other law, a county may establish separate funds and accounts with respect to bonds issued pursuant to chapter 47 or 49 to provide moneys to carry out the purposes of this section or section 46-15.1 as the county may deem appropriate;

(H) Notwithstanding any provision of chapter 47 or 49 or of any other law, but subject to the limitations of the state constitution, bonds issued to provide moneys to carry out the purposes of this section or section 46-15.1 may [be]:

(i) Be sold at public or private sale at a price; [~~may bear~~]

(ii) Bear interest at a rate or rates per year; [~~may be~~]

(iii) Be payable at a time or times; [~~may mature~~]

(iv) Mature at a time or times; [~~may be~~]

(v) Be made redeemable before maturity at the option of the county, the holder, or both, at a price or prices and upon terms and conditions; and [~~may be~~]

(vi) Be issued in coupon or registered form, or both, as the county may determine;

(I) If deemed necessary or advisable, the county may designate a national or state bank or trust company within or without the State to serve as trustee for the holders of bonds issued to provide moneys to carry out the purposes of this section or section 46-15.1, and enter into a trust indenture, trust agreement, or indenture of mortgage with the trustee whereby the trustee may be authorized to receive and receipt for, hold, and administer the proceeds of the bonds and to apply the proceeds to the purposes for which the bonds are issued, or to receive and receipt for, hold, and administer the revenues and other receipts derived by the county from the application of the proceeds of the bonds and to apply the revenues and receipts to the payment of the principal of, or interest on the bonds, or both. Any trust indenture, trust agreement, or indenture of mortgage entered into with the trustee may contain any covenants and provisions as may be deemed necessary, convenient, or desirable by the county to secure the bonds. The county may pledge and assign to the trustee any agreements related to the application of the proceeds of the bonds and the rights of the county thereunder, including the rights to revenues and receipts derived thereunder. Upon appointment of the trustee, the director of finance of the county may elect not to serve as fiscal agent for the payment of the principal and interest, and for the purchase, registration, transfer, exchange, and redemption, of the bonds; or may elect to limit the functions the director of finance performs as a fiscal agent; and may appoint a trustee to serve as the fiscal agent; and may authorize and empower the trustee to perform the functions with respect to payment, purchase, registration, transfer, exchange, and redemption, as the director of finance deems necessary, advisable, or expedient, including without limitation the holding of the bonds and coupons that have been paid and the supervision and conduction or the destruction thereof in accordance with law;

(J) If a trustee is not appointed to collect, hold, and administer the proceeds of bonds issued to provide moneys to carry out the purposes of this section or section 46-15.1, or the revenues and receipts derived by the county from the application of the proceeds of the bonds, as provided in subparagraph (I), the director of finance of the county may hold the proceeds or revenues and receipts in a separate account in the treasury of the county, to be applied solely to the carrying out of the ordinance, trust indenture, trust agreement, or indenture of mortgage, if any, authorizing or securing the bonds; and

(K) Any law to the contrary notwithstanding, the investment of funds held in reserves and sinking funds related to bonds issued to provide moneys to carry out the purposes of this section or section 46-15.1 shall comply with section 201H-77; provided that any investment that requires approval by the county council pursuant to section 46-48 or 46-50 shall first be approved by the county council;

(3) To acquire policies of insurance and enter into banking arrangements as the county may deem necessary to better secure bonds issued to provide money to carry out the purposes of this section or section 46-15.1, including without limitation contracting for a support facility or facilities as may be necessary with respect to bonds issued with a right of the holders to put the bonds and contracting for interest rate swaps; [~~and~~]

(4) To enter into negotiations for, and purchase deed restrictions on, properties from eligible homebuyers pursuant to subpart , part III of chapter 201H; and

[~~(4)~~] (5) To do any and all other things necessary or appropriate to carry out the purposes and exercise the powers granted in section 46-15.1 and this section."

SECTION 4. Section 103D-102, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Notwithstanding subsection (a), this chapter shall not apply to contracts by governmental bodies:

(1) Solicited or entered into before July 1, 1994, unless the parties agree to its application to a contract solicited or entered into [~~prior to~~] before July 1, 1994;

(2) To disburse funds, irrespective of their source:

(A) For grants as defined in section 42F-101, made by the State in accordance with standards provided by law as required by article VII, section 4, of the state constitution; or by the counties pursuant to their respective charters or ordinances;

(B) To make payments to or on behalf of public officers and employees for salaries, fringe benefits, professional fees, or reimbursements;

(C) To satisfy obligations that the State is required to pay by law, including paying fees, permanent settlements, subsidies, or other claims, making refunds, and returning funds held by the State as trustee, custodian, or bailee;

(D) For entitlement programs, including public assistance, unemployment, and workers' compensation programs, established by state or federal law;

(E) For dues and fees of organizations of which the State or its officers and employees are members, including the National Association of Governors, the National Association of State and County Governments, and the Multi-State Tax Commission;

(F) For deposit, investment, or safekeeping, including expenses related to their deposit, investment, or safekeeping;

(G) To governmental bodies of the State;

(H) As loans, under loan programs administered by a governmental body; [~~and~~]

(I) For contracts awarded in accordance with chapter 103F; and

(J) For the purchase of deed restrictions for the kamaaina homes program established under subpart , part III of chapter 201H;

(3) To procure goods, services, or construction from a governmental body other than the university of Hawaii bookstores, from the federal government, or from another state or its political subdivision;

(4) To procure the following goods or services that are available from multiple sources but for which procurement by competitive means is either not practicable or not advantageous to the State:

(A) Services of expert witnesses for potential and actual litigation of legal matters involving the State, its agencies, and its officers and employees, including administrative quasi-judicial proceedings;

(B) Works of art for museum or public display;

(C) Research and reference materials including books, maps, periodicals, and pamphlets, which are published in print, video, audio, magnetic, or electronic form;

(D) Meats and foodstuffs for the Kalaupapa settlement;

(E) Opponents for athletic contests;

(F) Utility services whose rates or prices are fixed by regulatory processes or agencies;

(G) Performances, including entertainment, speeches, and cultural and artistic presentations;

(H) Goods and services for commercial resale by the State;

(I) Services of printers, rating agencies, support facilities, fiscal and paying agents, and registrars for the issuance and sale of the State's or counties' bonds;

(J) Services of attorneys employed or retained to advise, represent, or provide any other legal service to the State or any of its agencies, on matters arising under laws of another state or foreign country, or in an action brought in another state, federal, or foreign jurisdiction, when substantially all legal services are expected to be performed outside the State;

(K) Financing agreements under chapter 37D;

(L) Educational materials and related training for direct student instruction in career and technical education programs as defined in section 302A-101, including supplies, implements, tools, machinery, electronic devices, or other goods purchased by the department of education; provided that:

(i) The department of education shall acquire three written quotes for purchases that exceed $100,000 made pursuant to this subparagraph;

(ii) Awards over $2,500 shall comply with section 103D-310(c); and

(iii) Awards over $500,000 shall be approved by the superintendent of education; and

(M) Any other goods or services that the policy board determines by rules or the chief procurement officer determines in writing is available from multiple sources but for which procurement by competitive means is either not practicable or not advantageous to the State; and

(5) That are specific procurements expressly exempt from any or all of the requirements of this chapter by:

(A) References in state or federal law to provisions of this chapter or a section of this chapter, or references to a particular requirement of this chapter; and

(B) Trade agreements, including the Uruguay Round General Agreement on Tariffs and Trade (GATT), that require certain non-construction and non-software development procurements by the comptroller to be conducted in accordance with its terms."

SECTION 5. Section 201H-191, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There [is] shall be created a dwelling unit revolving fund. The funds appropriated for the purpose of the dwelling unit revolving fund and all moneys received or collected by the corporation for the purpose of the revolving fund shall be deposited in the revolving fund. The proceeds in the revolving fund shall be used:

(1) To reimburse the general fund to pay the interest on general obligation bonds issued for the purposes of the revolving fund;

(2) For necessary expenses in administering housing development programs, regional state infrastructure programs, and the government employee housing program pursuant to part V; [~~and~~]

(3) To carry out the purposes of housing development programs, regional state infrastructure programs, and the government employee housing program pursuant to part V, including but not limited to the expansion of community facilities and regional state infrastructure constructed in conjunction with housing and mixed-use transit-oriented development projects, permanent primary or secondary financing, and supplementing building costs, federal guarantees required for operational losses, and all things required by any federal agency in the construction and receipt of federal funds or low-income housing tax credits for housing projects[.]; and

(4) The administration and purchase of equity in the form of deed restrictions as part of the kamaaina homes program under subpart ; provided that there shall be no area median income requirements for moneys expended for the purposes of this program."

SECTION 6. Section 247-3, Hawaii Revised Statutes, is amended to read as follows:

"§247-3 Exemptions. The tax imposed by section 247-1 shall not apply to:

(1) Any document or instrument that is executed [~~prior to~~] before January 1, 1967;

(2) Any document or instrument that is given to secure a debt or obligation;

(3) Any document or instrument that only confirms or corrects a deed, lease, sublease, assignment, transfer, or conveyance previously recorded or filed;

(4) Any document or instrument between [~~husband and wife,~~] spouses, reciprocal beneficiaries, or parent and child, in which only a nominal consideration is paid;

(5) Any document or instrument in which there is a consideration of $100 or less paid or to be paid;

(6) Any document or instrument conveying real property that is executed pursuant to an agreement of sale, and where applicable, any assignment of the agreement of sale, or assignments thereof; provided that the taxes under this chapter have been fully paid upon the agreement of sale, and where applicable, upon [~~such~~] assignment or assignments of agreements of sale;

(7) Any deed, lease, sublease, assignment of lease, agreement of sale, assignment of agreement of sale, instrument or writing in which the United States or any agency or instrumentality thereof or the State or any agency, instrumentality, or governmental or political subdivision thereof are the only parties thereto;

(8) Any document or instrument executed pursuant to a tax sale conducted by the United States or any agency or instrumentality thereof or the State or any agency, instrumentality, or governmental or political subdivision thereof for delinquent taxes or assessments;

(9) Any document or instrument conveying real property to the United States or any agency or instrumentality thereof or the State or any agency, instrumentality, or governmental or political subdivision thereof pursuant to the threat of the exercise or the exercise of the power of eminent domain;

(10) Any document or instrument that solely conveys or grants an easement or easements;

(11) Any document or instrument whereby owners partition their property, whether by mutual agreement or judicial action; provided that the value of each owner's interest in the property after partition is equal in value to that owner's interest before partition;

(12) Any document or instrument between marital partners or reciprocal beneficiaries who are parties to a divorce action or termination of reciprocal beneficiary relationship that is executed pursuant to an order of the court in the divorce action or termination of reciprocal beneficiary relationship;

(13) Any document or instrument conveying real property from a testamentary trust to a beneficiary under the trust;

(14) Any document or instrument conveying real property from a grantor to the grantor's revocable living trust, or from a grantor's revocable living trust to the grantor as beneficiary of the trust;

(15) Any document or instrument conveying real property, or any interest therein, from an entity that is a party to a merger or consolidation under chapter 414, 414D, 415A, 421, 421C, 425, 425E, or 428 to the surviving or new entity;

(16) Any document or instrument conveying real property, or any interest therein, from a dissolving limited partnership to its corporate general partner that owns, directly or indirectly, at least a ninety per cent interest in the partnership, determined by applying section 318 (with respect to constructive ownership of stock) of the federal Internal Revenue Code of 1986, as amended, to the constructive ownership of interests in the partnership; [~~and~~

[](17)[]] Any document or instrument that conforms to the transfer on death deed as authorized under chapter 527[.]; and

(18) Any document or instrument conveying real property with a county-owned deed restriction pursuant to subpart , part III of chapter 201H, including any document or instrument conveying the county-owned deed restriction."

SECTION 7 Section 525-4, Hawaii Revised Statutes, is amended to read as follows:

"§525-4 Exclusions from statutory rule against perpetuities. Section 525-1 shall not apply to:

(1) A fiduciary's power to sell, lease, or mortgage property, and the power of a fiduciary to determine principal and income;

(2) A discretionary power of a trustee to distribute principal before termination of a trust;

(3) A nonvested property interest held by a charity, government, or governmental agency or subdivision, if the nonvested property interest is preceded by an interest held by another charity, government, or governmental agency or subdivision;

(4) A property interest in or a power of appointment with respect to a pension, profit-sharing, stock bonus, health, disability, death benefit, income deferral, or other current or deferred benefit plan for one or more employees, independent contractors, or their beneficiaries or spouses;

(5) A property interest, power of appointment, or arrangement that was not subject to the common-law rule against perpetuities or is excluded by any other applicable law; [or]

(6) A trust described in chapter 554G[.]; or

(7) A property interest in property with a county-owned deed restriction in place pursuant to subpart , part III of chapter 201H."

SECTION 8. The Hawaii housing finance and development corporation shall submit a report of its evaluation of the kamaaina homes program established in section 2 of this Act, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2032.

SECTION 9. 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 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 11. This Act shall take effect on July 1, 2026; provided that:

(1) Section 6 shall take effect on January 1, 2027;

(2) The amendments made to section 103D-102(b), Hawaii Revised Statutes, by section 4 of this Act shall not be repealed when that section is reenacted on July 1, 2027, pursuant to section 4 of Act 150, Session Laws of Hawaii 2024; and

(3) On January 1, 2032, this Act shall be repealed and sections 46-15.2, 103D-102, 201H-191, 247-3, and 525‑4, Hawaii Revised Statutes, shall be reenacted in the form in which they read on the day before the effective date of this Act.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1732
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII