HB1777 HD2

SECTION 1. The legislature finds that the State is facing an affordable housing crisis. Although significant efforts have been made to facilitate the production of more housing and remove barriers to the development of affordable housing, these developments have had the unintended consequence of displacing and dislocating the tenants who were living in rental housing marked for redevelopment.

The legislature further finds that displacement, whether due to redevelopment, rising rents, or other factors, has profound impacts on individuals, families, and communities. Tenants forced out of their housing due to redevelopment face the loss of social networks and economic stability in addition to their loss of housing. These disruptions are most keenly felt by vulnerable populations, who face the loss of critical support systems that buffer the effects of economic and social disadvantage.

The legislature additionally finds that residential instability caused by displacement is linked to numerous negative health and social outcomes, particularly for children and youth. Studies show that frequent moves are correlated with decreased academic performance, increased drug and alcohol use, behavioral issues, and diminished health outcome. In addition to harming the individual, these outcomes also erode social support networks and communities, making it harder for families to thrive and neighborhoods to remain resilient. Communities that are able to maintain long-term stability provide vital connections to resources, support systems, a sense of belonging, and access to upward mobility.

The legislature believes that while the State must continue to prioritize the production of affordable housing, it is equally important to ensure that these developments do not result in the unnecessary displacement of the communities meant to benefit from the creation of additional affordable housing.

Accordingly, the purpose of this Act is to:

(1) Require developers of housing projects receiving any development assistance from the Hawaii housing finance and development corporation, including funding, incentives, and waivers, that displace or evict tenants from existing rental properties to:

(A) Grant certain displaced or evicted tenants a right of first offer of a comparable unit in the proposed housing project;

(B) Provide displaced or evicted tenants with replacement housing payment equal to the lesser of three months' rent or three months' rent affordable to a two-person household at sixty per cent of the applicable area median income;

(C) Provide information, directly or through a contracted service, on available assistance and exercise the right of first offer; and

(D) Establish procedures to maintain communication with displaced or evicted tenants; and

(2) Provide that a developer's failure to comply is subject to enforcement actions by the Hawaii housing finance and development corporation.

SECTION 2. Section 201H-38, Hawaii Revised Statutes, is amended to read as follows:

"§201H-38 Housing development; exemption from statutes, [~~ordinances,~~] charter provisions, ordinances, and rules. (a) The corporation may develop on behalf of the State or with an eligible developer, or may assist under a government assistance program in the development of, housing projects that shall be exempt from all statutes, charter provisions, ordinances, and rules of any government agency relating to planning, zoning, construction standards for subdivisions, development and improvement of land, and the construction of dwelling units thereon; provided that:

(1) The housing projects meet the following conditions:

(A) The corporation finds the housing project is consistent with the purpose and intent of this chapter, meets minimum requirements of health and safety, and provides the county an opportunity to comment;

(B) The development of the proposed housing project does not contravene any safety standards, tariffs, or rates and fees approved by the public utilities commission for public utilities or of the various boards of water supply authorized under chapter 54;

(C) The legislative body of the county in which the housing project is to be situated has approved the project with or without modifications:

(i) The legislative body shall approve, approve with modification, or disapprove the project by resolution within forty-five days after the corporation has submitted the preliminary plans and specifications for the project to the legislative body; provided further that the legislative body shall not impose stricter conditions, impose stricter median income requirements, or reduce fee waivers that will increase the cost of the project beyond those approved by the corporation. If, on the forty-sixth day, a project is not disapproved, it shall be deemed approved by the legislative body;

(ii) No action shall be prosecuted or maintained against any county, its officials, or employees on account of actions taken by them in reviewing, approving, modifying, or disapproving the plans and specifications; and

(iii) The final plans and specifications for the project shall be deemed approved by the legislative body if the final plans and specifications do not substantially deviate from the preliminary plans and specifications. The final plans and specifications for the project shall constitute the zoning, building, construction, and subdivision standards for that project. For the purposes of sections 501-85 and 502-17, the executive director of the corporation or the responsible county official may certify maps and plans of lands connected with the project as having complied with applicable laws and ordinances relating to consolidation and subdivision of lands, and the maps and plans shall be accepted for registration or recordation by the land court and registrar; [~~and~~]

(D) The land use commission has approved, approved with modification, or disapproved a boundary change within forty-five days after the corporation has submitted a petition to the commission as provided in section 205-4. If, on the forty-sixth day, the petition is not disapproved, it shall be deemed approved by the commission; [or] and

(E) If the proposed housing project will result in the displacement or eviction of tenant households living in units affordable to families earning one hundred forty per cent or below the applicable area median income, the developer of the proposed housing project shall:

(i) Offer the displaced or evicted tenants the right of first offer for a comparable unit available in the proposed housing project before displacement or eviction, or as soon as practicable thereafter, to be exercised upon availability of the unit;

(ii) Provide a replacement housing payment to the displaced or evicted tenants; provided that the payment shall be the lesser of three months' rent the displaced or evicted tenant was paying before being displaced or evicted or an amount equivalent to three months' rent that is affordable to a two-person household at sixty per cent of the applicable area median income;

(iii) Provide, either directly or through a contracted service, information to the displaced or evicted tenants on how to obtain relocation assistance, and how to exercise their right of first offer when a comparable unit becomes available upon completion of the proposed housing project; and

(iv) Establish procedures to track and maintain communication with the displaced or evicted tenants; provided that communication under this clause shall commence one hundred twenty days before the developer sends the notice to vacate and shall last throughout completion of the proposed housing project, at which time the developer shall implement the right of first offer to the displaced or evicted tenants. Communication required under this clause shall end only when all displaced or evicted tenants have either declined to exercise or have exercised the right of first offer;

provided that for projects developed under federal programs for affordable housing that offer relocation payments and other relocation assistance to displaced and evicted tenants, the federal regulations that offer greater protections to tenants shall control. Nothing in this subparagraph shall be construed to confer less protection to displaced or evicted tenants than that which is currently available under federal or state law, regulations, or rules; or

(2) The housing projects:

(A) Meet the conditions of paragraph (1);

(B) Do not impose stricter income requirements than those adopted or established by the State; and

(C) For the lifetime of the project, require that one hundred per cent of the units in the project be exclusively for qualified residents.

(b) If a developer fails to comply with the requirements in subsection (a)(1)(E), the corporation shall:

(1) Delay or fail threshold review of the developer's application for funding;

(2) Halt relocation until non-compliance is cured;

(3) Withhold disbursements of program funds until non-compliance is cured; or

(4) Deem the developer ineligible to participate in all corporation programs for no less than one year.

(c) Nothing in this section shall require a proposed project to include comparable units to those that previously existed.

[~~(b)~~] (d) For the purposes of this section[~~, "government~~]:

"Comparable unit" means any dwelling that is:

(1) Decent, safe, and sanitary;

(2) Adequate in size to accommodate the occupants;

(3) Within the financial means of the displaced or evicted person;

(4) Functionally equivalent;

(5) In an area not subject to unreasonable adverse environmental conditions; and

(6) In a location generally not less desirable than the location of the displaced or evicted person's dwelling with respect to public utilities, facilities, services, and the displaced or evicted person's place of employment.

"Government assistance program" means a housing program qualified by the corporation and administered or operated by the corporation or the United States or any of their political subdivisions, agencies, or instrumentalities, corporate or otherwise."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 3000.

HOUSE OF REPRESENTATIVES	H.B. NO.	1777
THIRTY-THIRD LEGISLATURE, 2026		H.D. 2
STATE OF HAWAII