S.B. NO.



S.D. 1
















SECTION 1. The legislature finds that the United States Department of Housing and Urban Development encourages authorities undertaking redevelopment efforts to create financially viable and socially stable communities through mixed-income development. Accordingly, the Hawaii community development authority has strived to create a dynamic urban neighborhood in Kakaako, where a mix of people with a wide range of socio-economic statuses, live, work, and play in the mixed‑income, mixed-use neighborhood.

The legislature has for several years acknowledged that there exists a need for housing statewide. Given the acute lack of housing, a multi-pronged approach is necessary to meet current and future housing demands in the State. Development of housing units of various ownership types (rental, for‑sale leasehold, for‑sale fee simple) that are affordable at all levels of income must be explored to meet these current and future demands.

Leasehold housing units tend to be more affordable than fee simple housing units if the land on which the housing is developed is owned by the State and leased to a developer for housing development. Developing multi-family housing units on a lot lowers the cost of land for the development, which in turn will lower the sales price of the housing units. Because the cost of leasehold land is lower than fee simple land and paid over a longer period, it further reduces the land cost and makes the housing units even more affordable. Because the land will be in leasehold, the State will continue to be the fee owner of the land. Therefore, encouraging development of for‑sale leasehold housing units is a viable strategy in meeting housing demand. However, the term of the lease needs to be long enough to make for‑sale leasehold housing units attractive to buyers and lenders. Typically, a ninety-nine-year lease is considered to be adequate to attract both lenders and buyers.

Given its experience and expertise in developing affordable housing in Kakaako, the Hawaii community development authority is ideally suited for developing for‑sale leasehold housing units in community development districts. Therefore, the purpose of this Act is to provide additional means to increase the supply of housing in Hawaii by allowing the Hawaii community development authority to lease real property for a term of ninety-nine years.

SECTION 2. Section 206E-14, Hawaii Revised Statutes, is amended to read as follows:

"206E-14 Sale or lease of redevelopment projects. (a) The authority [may], without recourse to public auction, may sell, or lease for a term not exceeding [sixty-five] ninety-nine years, all or any portion of the real or personal property constituting a redevelopment project to any person, upon [such] terms and conditions as may be approved by the authority, if the authority finds that the sale or lease is in conformity with the community development plan[.]; provided that the lease of lands that were classed as crown or government lands prior to August 15, 1895, shall have a term not to exceed sixty-five years.

For the stadium development district, leases shall not exceed a term of ninety-nine years.

(b) In the case of residential projects or redevelopment projects, the terms of the sale shall provide for the repurchase of the property by the authority at its option, in the event that the purchaser, if other than a state agency, desires to sell the property within ten years[,]; provided that this requirement may be waived by the authority if the authority determines that a waiver will not be contrary to the community development plan. The authority shall establish at the time of original sale a formula setting forth a basis for a repurchase price based on market considerations, including but not [being] limited to interest rates, land values, construction costs, and federal tax laws.

If the purchaser in a residential project is a state agency, the authority may include as a term of the sale a provision for the repurchase of the property in conformance with this section.

(c) The Hawaii community development authority may adopt rules under chapter 91 relating to sales by unit purchasers in a residential leasehold project."

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, 2050.


Report Title:

Affordable Housing; HCDA; Lease of State Land



Increases options to build affordable housing in Hawaii Community Development Authority districts by increasing the permissible lease term to 99 years. Prohibits the Hawaii Community Development Authority from encumbering lands that were classed as crown or government lands prior to 8/15/1895, in leases longer than 65 years. Effective 7/1/2050. (SD1)




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