STAND. COM. REP. NO. 3208

Honolulu, Hawaii

RE: H.B. No. 1740

H.D. 2

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir:

Your Committee on Housing, to which was referred H.B. No. 1740, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO THE HAWAII HOUSING FINANCE AND DEVELOPMENT CORPORATION,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Remove the prohibition against qualified residents for Hawaii Housing Finance and Development Corporation-approved projects holding a majority interest in land and remove the requirement that qualified residents demonstrate financial viability or ability to pay rent; and

(2) Amend exemptions from statutes, ordinances, charter provisions, and rules for certain housing projects developed by the Corporation that satisfy certain conditions, including requirements related to employment, owner-occupancy, and deed restrictions.

Your Committee received testimony in support of this measure from the Hawaii Housing Finance and Development Corporation; two members of the Kauaʻi County Council; AARP Hawaii; Aloha Independent Living Hawaii; Church of the Crossroads; Holomua Collaborative; Title Guaranty Hawaii; HMP Building Supply; Mana Up; Tori Richard, Ltd.; aio Hawaii; Hawaiʻi Community Foundation; Housing Hawaiʻi's Future; Hawaiʻi YIMBY; Kobayashi Group LLC; and three individuals.

Your Committee received comments on this measure from one individual.

Your Committee finds that residents of the State face significant challenges obtaining housing and that it is essential for homes developed with public support to remain affordable to these residents in perpetuity. However, existing restrictions on Hawaii Housing Finance and Development Corporation-approved projects are no longer adequate to meet the housing needs of the State's residents. Notably, these existing restrictions include financial screenings and prohibitions on other property ownership, both of which present challenges to many state residents. Existing restrictions are also insufficient to ensure that affordable housing units serve state residents in perpetuity. Accordingly, changes to these existing restrictions are necessary to ensure that Corporation-approved projects continue to serve the interests of the State's residents. This measure updates existing restrictions by removing financial screenings and prohibitions on property ownership, while also establishing perpetual deed restrictions requiring the occupant of a unit to reside in the State at all times.

Your Committee notes the concern raised in testimony requesting clarification regarding disability-related temporary absences and the requirement proposed in this measure that Hawaii Housing Finance and Development Corporation-approved units be occupied by a person domiciled in the State "at all times". Your Committee further notes that section 201H-49, Hawaii Revised Statutes, expressly includes "serious illness of the person" as a hardship circumstance exception to the occupancy requirement established by this measure.

Your Committee has amended this measure by:

(1) Clarifying that certain units shall be available to qualified residents and shall remain owner-occupied for a minimum of one year following the initial sale of the unit, notwithstanding sections 201H-47 and 201H-49, Hawaii Revised Statutes; and

(2) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1740, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1740, H.D. 2, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Housing,

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STANLEY CHANG, Chair