THE SENATE	S.B. NO.	2061
THIRTY-THIRD LEGISLATURE, 2026		S.D. 2
STATE OF HAWAII		H.D. 1

A BILL FOR AN ACT

RELATING TO RESIDENTIAL CONDOMINIUMS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Section 206E-281, Hawaii Revised Statutes, is amended by amending the definition of "owner-occupied residential use" to read as follows:

""Owner-occupied residential use" means any use currently permitted in existing residential zones consistent with owner occupancy. ["Owner-occupied residential use" does not include renting or subleasing by the owner of a residential condominium unit to any tenant or sublessee of any kind.]"

SECTION 2. Section 206E-283, Hawaii Revised Statutes, is amended to read as follows:

"[[]§206E-283[]] Rules; guidelines. [(a) Residential condominium units within urban redevelopment sites shall not be advertised for rent, rented, or used for any purpose other than owner-occupied residential use. The authority, by rule, shall establish penalties for violations of this subsection up to and including forced sale of a residential condominium unit within an urban redevelopment site.

(b)] (a) The design [and], development, and construction contracts for residential condominium units within an urban redevelopment site shall not be subject to chapter 103D[.]; provided that every laborer and mechanic performing work on the job site for the construction of residential condominium units shall be paid the prevailing wage established by the director of labor and industrial relations pursuant to section 104-2.

[(c)] (b) Development should be revenue-neutral to the greatest extent possible.

[(d)] (c) Urban redevelopment sites shall maximize walkability."

SECTION 3. Section 206E-284, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) The authority shall adopt rules pursuant to chapter 91 for the sale of the leasehold interest of residential condominium units under its control within urban redevelopment sites; provided that each lease shall be for a term of ninety‑nine years. The authority shall adopt rules to implement an initial sales period during which residential condominium units within the project shall be offered only to eligible buyers pursuant to this subsection for owner-occupied residential use; provided that the durational requirements for owner-occupied residential use shall be determined by the authority. The initial sales period may include additional terms, conditions, or requirements, as determined by the authority. A residential unit that is not subject to an income restriction pursuant to this subsection and was not sold within sixty days from the initial offering for sale of the unit may be sold to other buyers, as determined by the authority, without an owner-occupancy requirement. The rules shall include the following requirements [for an eligible buyer or owner of a residential condominium unit] to be an eligible buyer for purchase of a residential condominium unit within an urban redevelopment site[:] set aside for owner-occupied residential use:

(1) The person shall be a qualified resident of the State, as defined in section 201H-32[;], except as otherwise provided by rule; and

(2) The person shall not use a residential condominium unit within an urban redevelopment site for any purpose other than owner-occupied residential use[; and

(3) The person, the person's spouse, or any other person intending to live with the eligible buyer or owner, shall not own any other real property, including any residential and non-residential property, beneficial ownership of trusts, and co-ownership or fractional ownership, while owning a residential condominium unit within an urban redevelopment site; provided that an eligible buyer may own real property up to six months after closing on the purchase of a residential condominium unit within an urban redevelopment site; provided further that an owner of a residential condominium unit within an urban redevelopment site in the process of selling the residential condominium unit may own other real property up to six months prior to closing on the sale of the residential condominium unit to an eligible buyer;], except as otherwise provided by rule;

provided that the rules adopted pursuant to this subsection [may] shall require at least [fifty] sixty per cent of the residential condominium units be sold to an individual or household with an income of up to one hundred forty per cent of the area median income. The rules shall include strict enforcement of owner‑occupancy, unless otherwise exempted by rule, including a prohibition on renting or subleasing a residential condominium unit within an urban redevelopment site to any tenant or sublessee. The authority may also establish rules for a minimum number of days residents shall be physically present on the premises and a maximum number of days non-residents may have access to the premises."

2. By amending subsection (d) to read:

"(d) An owner of a residential condominium unit within an urban redevelopment site may sell the owner's residential condominium unit; provided that the authority shall have the right of first refusal to purchase the residential condominium unit for a certain period of time and for a buyback price to be determined by the authority[.]; provided further that the authority shall establish rules to require buyback pricing similar to other state agencies' existing pricing formulas. If the authority does not exercise its right to purchase the residential condominium unit, the residential condominium unit may be sold by the owner to an eligible buyer. Upon the death of the owner of a residential condominium unit within an urban redevelopment site, the residential condominium unit may be transferred to the deceased's heir by devise or as any other real property under existing law; provided that the deceased's heir shall meet the requirements listed in subsection (a); provided further that if the deceased's heir does not meet requirements to accept transfer of the residential condominium unit, the deceased's heir shall sell the residential condominium unit to an eligible buyer."

SECTION 4. Section 206E-288, Hawaii Revised Statutes, is repealed.

["[§206E-288] Construction contracts. Construction contracts for residential condominium units within an urban redevelopment site shall be subject to chapter 103D."]

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 3000.

Report Title:

Hawaii Community Development Authority; Affordable Housing; Ninety-Nine Year Leasehold Program; Condominium Units; Owner‑Occupied Residential Use

Description:

Clarifies the Ninety-Nine Year Leasehold Program by: (1) repealing the prohibition against renting, advertising for rent, or using for any other purpose other than owner-occupied residential use a residential condominium unit; (2) exempting the design, development, and construction contracts from procurement requirements, subject to prevailing wage requirements for laborers and mechanics; (3) requiring HCDA to adopt rules to implement an initial sales period during which residential condominium units are offered only to eligible buyers for owner-occupied residential use; (4) authorizing the sale of a residential condominium unit that is not subject to an income restriction and was not sold within a certain period to be sold to other buyers, as determined by rule by HCDA, without an owner-occupancy requirement; (5) requiring HCDA to adopt rules that require at least sixty per cent of residential condominium units to be income restricted; and (6) requiring HCDA to establish rules to require buyback pricing similar to other state agencies' existing pricing formulas. Effective 7/1/3000. (HD1)

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