SB2422

SECTION 1. The legislature finds that Hawaii is in the midst of a severe and persistent housing shortage that touches every community in the State. The Hawaii housing finance and development corporation's 2024 Hawaii housing planning study estimates that, as of the end of 2022, the State faced a shortage of 62,750 housing units for residents. To eliminate that shortage and accommodate expected population change in the housing market between 2023 and 2027, the study concludes that Hawaii will need a total of 77,961 homes by 2027. After accounting for 13,471 units already in the development pipeline, 64,490 additional units must still be planned and built to meet resident demand by 2027.

The legislature further finds that current and recent housing production falls far short of this need. The State added 35,178 housing units statewide between 2017 and 2022, an average of seven thousand units per year. Meeting the target of 77,961 units over the 2023 to 2027 planning period would require averaging more than fifteen thousand homes per year, more than double recent production levels. As long as annual production remains at only a fraction of what is required, the housing shortage will deepen, and more local families will be pushed into overcrowded conditions, long commutes, homelessness, or forced relocation out of the State.

The legislature also finds that a substantial portion of the State's housing stock is unavailable to residents. The study reports that, in 2022, only 21,415 units, about 4.1 per cent of the housing stock, were vacant and available for residents, while 35,884 units, or 9.1 per cent of all housing units, were used for seasonal or vacation purposes. The study notes that converting even a portion of these seasonal or vacation units into homes for year-round residents is a key opportunity to address the housing shortfall more quickly and at lower cost than relying on new construction alone.

The legislature additionally finds that although the State can provide funding, financing tools, and regulatory relief, the counties control most of the levers that determine whether and where homes are actually built: county infrastructure planning and investment, land use and zoning decisions, and the speed and predictability of permitting. The study assumes that the needed 77,961 units can and should be accommodated primarily by building new housing in appropriate growth areas and through the conversion of existing housing stock that is currently unavailable to residents; however, as long as counties under‑invest in backbone infrastructure and maintain slow, discretionary, or unpredictable permitting processes in the urban state land use district, Hawaii will not produce enough homes in the right places to meet demand or to shift growth away from agricultural lands and back into existing urban areas.

Accordingly, the purpose of this Act is to:

(1) Establish a pro-housing score program to evaluate each county's performance in expanding housing opportunities and reducing regulatory barriers;

(2) Require the counties to publish their respective pro-housing scores online and Hawaii housing finance and development corporation to publish certain related information and data on a public dashboard;

(3) Establish criteria for deeming a county noncompliant;

(4) Establish builder's remedies for certain housing projects in transit-oriented development areas;

(5) Specify that under certain circumstances, the planning director or an equivalent county officer responsible for land use approvals is responsible for approving or denying certain affordable housing development applications;

(6) Establish procedures for certain transit-oriented development housing project appeals; and

(7) Appropriate funds.

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

"Part . pro-housing score program

§201H-A Definitions. As used in this part:

"Program year" means a twelve-month calendar year beginning January 1 of each year and ending December 31.

"Pro-housing score" means the percentage computed pursuant to section 201H-B that reflects a county's performance in expanding resident-occupied housing opportunities and producing housing across income levels.

"Resident-occupied housing unit" means a dwelling unit used as a primary residence by the occupant, including:

(1) Newly constructed dwelling units permitted for residential occupancy; and

(2) Existing dwelling units converted from vacant status or from a transient accommodation or other visitor unit to long-term resident occupancy, as evidenced by a recorded covenant, change in property tax classification, or other documentation accepted by the corporation.

"Resident-occupied housing unit" does not include a transient accommodation or other visitor unit.

"Transient accommodation" has the same meaning as in section 237D-1.

"Visitor unit" means an accommodation in a hotel or resort condominium or other accommodation located in a county-designated hotel, resort, resort commercial, resort mixed use, or resort-hotel district.

§201H-B Pro-housing score program; established. (a) There is established within the corporation the pro-housing score program to annually evaluate each county's performance in expanding housing opportunities and reducing regulatory barriers.

(b) For each county and for each five-year housing planning period identified in the most recent Hawaii housing planning study, the corporation shall calculate the:

(1) Overall housing production percentage, which shall be the quotient, expressed as a percentage that may exceed one hundred per cent of the total number of resident-occupied housing units created in the county during that five-year period, including newly constructed dwelling units and conversions of vacant or visitor units to resident-occupied housing units divided by the county's total five-year projected housing needs, as determined by the corporation based on the most recent Hawaii housing planning study, including any updates or addenda to that study;

(2) Affordable housing production percentage, which shall be the arithmetic mean of the following three band‑specific percentages of the county's total five-year projected demand of the income-specific unit, as determined by the corporation based on the most recent Hawaii housing planning study, including any updates or addenda to that study, each expressed as a percentage that may exceed one hundred per cent:

(A) The percentage of the county's total five-year projected demand for very low-income units for households with incomes at or below thirty per cent of the area median income that is met by new units created during the five-year period for households in that income band;

(B) The percentage of the county's total five-year projected demand for low-income units for households with incomes greater than thirty per cent but not more than sixty per cent of the area median income that is met by new units created during the five-year period for households in that income band; and

(C) The percentage of the county's total five-year projected demand for workforce-income units for households with incomes greater than sixty per cent but not more than one hundred forty per cent of the area median income that is met by new units created during the five-year period for households in that income band; and

(3) The county's pro-housing score, which shall be the arithmetic mean of:

(A) The overall housing production percentage calculated pursuant to paragraph (1); and

(B) The affordable housing production percentage calculated pursuant to paragraph (2).

§201H-C Annual reports; pro-housing scores; public dashboard. (a) Each county shall submit a report to the corporation by January 31 of each program year that includes:

(1) The total number of housing units created during the preceding program year that were permitted for residential occupancy, including a breakdown of new housing units by type as reported by the county;

(2) The net change during the preceding program year in the number of dwelling units that are classified, licensed, or approved as transient accommodations or visitor units under state law or county ordinance, including:

(A) The number of dwelling units newly classified, licensed, or approved as transient accommodations or visitor units during the preceding program year; and

(B) The number of dwelling units that ceased to be classified, licensed, or approved as transient accommodations or visitor units during the preceding program year;

(3) The total number of housing units created during the preceding program year that are restricted to households within each income band described in section 201H-B(b)(2);

(4) The county's:

(A) Overall housing production percentage;

(B) Affordable housing production percentage, including a breakdown of the three band-specific percentages described in section 201H-B(b)(2); and

(5) The denominators used when determining the percentages described in paragraph (4), based on the county's total five-year projected housing needs and band-specific affordable housing needs as determined by the corporation based on the most recent Hawaii housing planning study, including any updates or addenda to that study; and

(6) Any additional information requested by the corporation that is necessary to verify the calculations made pursuant to section 201H-B(b).

(b) The corporation shall publish verified county pro-housing scores by March 1 of each program year.

(c) The corporation shall compile the information received pursuant to subsection (a) into a statewide dashboard that is accessible to the public and shall update the dashboard at least annually to reflect the most recent available data for each county's overall housing production percentage, affordable housing production percentage, and pro-housing score. Annual updates to the dashboard may reflect interim progress within a five-year housing planning period; provided that for purposes of determining whether to deem a county noncompliant under section 201H‑D and for applying any preferences or weighting based on a county's pro-housing score under sections 201H-191 and 264- , the corporation shall use the percentages calculated for the full five-year housing planning period pursuant to section 201H‑B(b).

§201H-D Noncompliant counties. (a) A county shall be deemed noncompliant for a five-year housing planning period if, for that period, either:

(1) The county's overall housing production percentage is less than fifty per cent; or

(2) The county's affordable housing production percentage is less than fifty per cent.

(b) The corporation shall publish, at least once every five years following the final year of the Hawaii housing planning study's five-year planning period, a report identifying for each county:

(1) The overall housing production percentage;

(2) The affordable housing production percentage;

(3) The county's pro-housing score; and

(4) Whether the county is deemed noncompliant for the ensuing five-year period.

§201H-E Rules. The corporation shall adopt rules pursuant to chapter 91 for the purposes of this part, including rules to clarify the methodology for determining the numerators and denominators used in the percentages described in section 201H‑B(b), the treatment of partial years and interim estimates within each five-year housing planning period, and any other matter necessary to implement and administer the pro-housing score program."

SECTION 3. Chapter 46, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§46- Transit-supportive density; housing projects; builder's remedies in transit-oriented development areas. (a) This section shall apply to a housing development project that:

(1) Is located within a county-designated transit-oriented development area delineated pursuant to section 226-63 or other applicable law;

(2) Is located within the urban district of the state land use classification established pursuant to chapter 205;

(3) Is located outside of any area designated as a special flood hazard area, tsunami evacuation zone, sea level rise exposure area, or other hazard area under applicable state law or county ordinance;

(4) Is situated in a county that has been deemed noncompliant under section 201H-D; and

(5) Reserves for a term of no less than thirty years, pursuant to covenants or other restrictions approved by the corporation, at least:

(A) Twenty per cent of its dwelling units for households with incomes at or below eighty per cent of the area median income; or

(B) Fifty per cent of its dwelling units for households with incomes at or below one hundred forty per cent of the area median income.

(b) Each county shall process all permits and approvals for a housing development project described in subsection (a) on a ministerial basis, using only objective standards. Each county shall allow the project to be developed at no less than the applicable transit-supportive density floor area ratios established by law, and shall not apply any zoning, development plan, or other local development standards that would preclude the project from achieving those floor area ratios.

(c) Each county may apply objective design standards of general applicability to a housing development project described in subsection (a), including standards relating to building form, frontage, and site design, only if those standards:

(1) Are written and verifiable;

(2) Were in effect when the developer's application was deemed complete; and

(3) Do not preclude the project from achieving the applicable transit-supportive density floor area ratios.

(d) No county shall impose any discretionary procedures or subjective design review that apply solely or primarily to projects described in this section, unless expressly authorized by state law.

(e) No county shall deny approval of, nor condition approval of, a housing development project described in subsection (a), nor require a reduction in the number of dwelling units, building height, residential floor area, or floor area ratio of the project below the applicable transit‑supportive density, except upon adoption of written findings, supported by substantial evidence in the record, that one or more of the following applies:

(1) The project would have a specific, adverse impact upon public health or safety that is based on objective, quantifiable, written public health or safety standards, policies, or conditions that were in effect at the time the application for the project was deemed complete, and there is no feasible condition of approval or mitigation measure that would satisfactorily mitigate or avoid that adverse impact;

(2) Water, wastewater, or other essential public infrastructure capacity necessary to serve the project is not and will not be available within a reasonable period of time, and there is no feasible condition of approval, including phasing, alternative service arrangements, or mitigation, that can provide the necessary capacity; or

(3) Approval of the project would result in a violation of federal or state law, and there is no feasible condition of approval that would bring the project into compliance with the applicable law.

Any reduction in the number of dwelling units, building height, residential floor area, or floor area ratio shall be limited to the minimum necessary to address the specific adverse impact identified in the written findings.

(f) Each county shall approve, approve with conditions consistent with this section, or disapprove a complete application for a housing development project described in subsection (a) within ninety days after the application is deemed complete. Failure to act within that period shall be deemed an approval of the project at the proposed density and floor area ratio, subject only to objective conditions consistent with this section.

(g) For the purposes of this section:

"Ministerial" has the same meaning as in section 206E-246.

"Transit-supportive density has the same meaning as in section 206E-246."

SECTION 4. Chapter 201H, Hawaii Revised Statutes, is amended by adding a new section to part II to be appropriately designated and to read as follows:

"§201H-F Noncompliant counties; delegation to planning director; limited grounds for denial. (a) This section shall apply to any housing project processed under section 201H‑38 that is:

(1) Located within the urban district of the state land use classification established pursuant to chapter 205;

(2) Located outside of any area designated as a special flood hazard area, tsunami evacuation zone, sea level rise exposure area, or other hazard area under applicable state law or county ordinance; and

(3) Situated in a county that has been deemed noncompliant pursuant to section 201H‑D.

(b) Notwithstanding section 201H-38(a)(1)(C) or any other provision of law to the contrary, for a housing project described in subsection (a):

(1) The approval required under section 201H-38(a)(1)(C) shall be exercised by the planning director, or equivalent county officer responsible for land use approvals as designated by county ordinance, rather than by the legislative body of the county; and

(2) References in section 201H-38(a)(1)(C) to the legislative body and to approval by resolution shall be deemed references to the planning director and to a written decision issued by the planning director.

(c) In reviewing a housing project described in subsection (a), the planning director or any other county agency acting pursuant to this section shall not deny or condition approval of the project, nor require a reduction in the number of dwelling units, building height, residential floor area, or residential density of the project, except upon adoption of written findings, supported by substantial evidence in the record, that one or more of the following applies:

(3) Approval of the project would result in a violation of federal or state law, and there is no feasible condition of approval that would bring the project into compliance with the applicable law.

Any reduction in the number of dwelling units, building height, residential floor area, or residential density shall be limited to the minimum necessary to address the specific adverse impact identified in the written findings.

(d) For a housing project described in subsection (a), the failure of the planning director to approve, approve with conditions consistent with subsection (c), or disapprove the project within forty-five days after the corporation has submitted the preliminary plans and specifications pursuant to section 201H-38(a)(1)(C) shall be deemed an approval of the project and its exemptions; provided that any conditions of approval imposed by the county shall comply with subsection (c).

(e) In a county deemed noncompliant pursuant to section 201H-D and for projects described in subsection (a), the county, the planning director, or any other county agency acting pursuant to this section may apply only objective standards and procedures of general applicability that would apply to a comparable project not developed under chapter 201H in the same district. No county shall impose additional discretionary procedures or standards that apply solely to projects processed under this section, unless expressly authorized by state law."

SECTION 5. Chapter 226, Hawaii Revised Statutes, is amended by adding a new section to part II to be appropriately designated and to read as follows:

"§226- Transit-oriented development housing appeals. (a) In addition to its responsibilities under section 226-63, the Hawaii interagency council for transit-oriented development shall serve as the transit-oriented development housing appeals body for purposes of section 46- and may establish a committee or panel of its members to carry out this function.

(b) Any applicant for a housing development project described in section 46- whose project is denied, conditioned, or reduced in density by a county in a manner that the applicant alleges is inconsistent with section 46- may file an appeal with the council within thirty days after the county's final decision.

(c) Upon receipt of a timely appeal, the Hawaii interagency council for transit-oriented development, or its designated committee or panel, shall review the county's decision on the record, may receive additional evidence or testimony as appropriate, and shall, within ninety days:

(1) Affirm the county's decision;

(2) Modify the county's decision and direct the county to approve the project with conditions consistent with section 46- ; or

(3) Reverse the county's decision and direct the county to approve the project at the proposed density and floor area ratio, subject only to objective conditions consistent with section 46- .

(d) A county shall comply with any decision or directive issued by the council or its designated committee or panel under this subsection."

SECTION 6. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2026-2027 to implement the pro-housing score program.

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

SECTION 7. In codifying the new sections added by sections 2 and 4 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 8. This Act shall take effect on July 1, 2026.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2422
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII