RELATING TO RESIDENTIAL CONDOMINIUMS.
SB2061 amends Hawaii’s statutes governing the Hawaii Community Development Authority’s Ninety-Nine Year Leasehold Program for residential condominiums in urban redevelopment sites. The bill clarifies that these units are intended for owner-occupied residential use and authorizes HCDA, by rule, to prohibit renting, advertising units for rent, or using the units for non-owner-occupied purposes. It also requires an initial 60-day sales period in which units must be offered only to eligible buyers for owner occupancy, while allowing certain unsold, non-income-restricted units to later be sold without an owner-occupancy requirement as determined by HCDA rule.
The bill further changes eligibility and program administration rules. It requires buyers to be qualified Hawaii residents, limits ownership to buyers and spouses who do not own other real property (subject to a six-month divestiture process if other property is acquired), and directs HCDA to require at least 60 percent of units to be sold to households earning up to 140 percent of area median income. It also authorizes HCDA to set additional occupancy enforcement rules, including physical presence requirements and limits on non-resident access, and preserves transferability of leasehold interests to heirs only if the heir meets program requirements.
SB2061 also revises procurement and construction provisions for these projects. It removes the statutory requirement that construction contracts be subject to chapter 103D procurement rules, while still requiring prevailing wages for laborers and mechanics. In addition, it repeals the prior statutory section governing construction contracts and directs HCDA to establish buyback pricing rules similar to those used by other state agencies when exercising its right of first refusal on leasehold interests.
The bill’s impact on state law is to shift several program details from statute to HCDA rulemaking, giving the authority more flexibility to administer the leasehold condominium program while tightening owner-occupancy and affordability requirements. It affects HCDA, developers, eligible resident buyers, leasehold owners, heirs, and construction contractors working on urban redevelopment site condominium projects.
The overall sentiment appears strongly favorable and largely noncontroversial. The bill passed multiple committees and conference committees unanimously or near-unanimously, and it ultimately became Act 121. The main points of policy emphasis were affordability, preventing investor or rental use of the units, and ensuring the program serves local owner-occupants rather than absentee owners.
SB2061 amends Hawaii Revised Statutes sections 206E-281, 206E-283, and 206E-284 and repeals section 206E-288. The practical effect is to expand HCDA’s rulemaking authority over the Ninety-Nine Year Leasehold Program, strengthen owner-occupancy and income-eligibility requirements, and remove a statutory procurement mandate for construction contracts in favor of prevailing wage protections. It also establishes a statutory framework for leasehold transfers, resale, and HCDA buyback rights within urban redevelopment site condominium projects.
The bill appears to have been received positively throughout the legislative process. It passed the Senate committees on Housing, Water, Land and Agriculture, and Commerce and Consumer Protection with unanimous votes, and later passed House and Senate conference committees without opposition. The absence of recorded dissent and the bill’s final enactment as Act 121 suggest broad support for the bill’s affordable housing and owner-occupancy goals.
The main policy tensions in SB2061 involve how tightly the state should control use of these condominium units and how much discretion HCDA should have. One side of the bill favors strict owner-occupancy rules, limits on renting and subleasing, and income restrictions to preserve affordability and local residency. Another aspect relaxes some statutory constraints by moving details into HCDA rules and exempting construction contracts from chapter 103D procurement requirements, which could be viewed as reducing oversight. The bill also touches on potential concerns for buyers and owners who acquire other property, as well as the balance between affordability goals and flexibility for unsold units.