STAND. COM. REP. NO. 1201-26

Honolulu, Hawaii

, 2026

RE: H.B. No. 1741

H.D. 2

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

Your Committee on Judiciary & Hawaiian Affairs, to which was referred H.B. No. 1741, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO HOUSING,"

begs leave to report as follows:

The purpose of this measure is to:

(1) Deem a county inclusionary mandate as a form of development exaction and treat the mandate as a housing affordability impact fee, with certain exemptions;

(2) Prohibit a county from adopting, amending, or enforcing an inclusionary mandate for residential or mixed-use projects, under certain circumstances;

(3) Establish additional requirements for a needs assessment study for a county-imposed inclusionary mandate; and

(4) Establish a criterion that allows luxury residential projects or projects that receive certain discretionary value increases to be subject to inclusionary mandates.

Your Committee received testimony in support of this measure from the Hawaii Appleseed Center for Law & Economic Justice; Housing Hawaiʻi's Future; Grassroot Institute of Hawaii; Democratic Party of Hawaiʻi; Hawaiʻi YIMBY; and one individual. Your Committee received testimony in opposition to this measure from LIMBY Hawaii and three individuals. Your Committee received comments on this measure from the Office of Hawaiian Affairs.

Your Committee finds that inclusionary mandates can be well‑intentioned tools to generate affordable units. However, in practicality, they function as unpredictable cost burdens that reduce overall housing production. This measure creates a targeted framework that allows inclusionary mandates to apply in circumstances where there is a clear policy rational, which will encourage affordability and overall housing production.

Your Committee has amended this measure by making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Judiciary & Hawaiian Affairs that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1741, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 1741, H.D. 2.

Respectfully submitted on behalf of the members of the Committee on Judiciary & Hawaiian Affairs,

____________________________

DAVID A. TARNAS, Chair