At a time when housing is a priority for the island state, some lawmakers are pushing back against a law that eases development.

As Gov. Josh Green embarks on a stated mission to foster development of new homes for Hawaii residents, a battle is brewing at the State Capitol that could have a dramatic impact on where new housing is built across the islands.

At issue is a relatively obscure law designed to promote the development of affordable housing. Known as Section 201H-38 of the Hawaii Revised Statutes, the law allows developers of affordable housing to sidestep most state and local laws that control things like the size and type of project that can be built in a certain place.

The 2006 law says projects that meet standards approved by a state housing entity are “exempt from all statutes, ordinances, charter provisions, and rules of any government agency relating to planning, zoning, construction standards for subdivisions, development and improvement of land, and the construction of dwelling units thereon.”`

Capitol building.
Lawmakers are taking up bills that could have an impact on where and how quickly affordable housing can be developed across the state. (Cory Lum/Civil Beat/2022)

Local lawmaking bodies like the Honolulu City Council have the power to approve, modify or reject proposals – but must do so within 45 days of receiving preliminary project plans approved by the Hawaii Housing Finance and Development Corp. If the county councils don’t reject the proposal within 45 days, the proposal is deemed approved by default.

State legislators have introduced several bills to amend the statute. Some would rein in the broad power developers have to sidestep land use laws; others would give developers even broader power. People who follow housing and environmental law are watching closely.

“There’s a ton of bills in the Legislature that everyone is up in arms over,” said Deja Ostrowski, a lecturer in affordable housing law at the University of Hawaii’s William S. Richardson School of Law.

Donna Wong is executive director of Hawaii’s Thousand Friends, one of the state’s oldest environmental organizations. She said it’s important for people to understand the statute and possible effects of current legislative efforts. Wong said one problem is that people generally have no idea that a nearby parcel zoned as, say, preservation land, could be used for an apartment complex that normally wouldn’t be allowed.

“Basically, they don’t know about it until it comes to their community,” she said. “It’s absolutely crucial for every resident on the island to be aware of these laws that usurp their rights as members of their communities.”

Gordan Pang, a spokesman for the state development corporation, which determines which projects are available for the sweeping exemptions, said in a written statement that the agency notifies the public about projects it is considering approving in multiple ways.

For example, he said, a project recommended for approval by corporation staff appears on the agenda of the corpoartion’s board meeting before a decision is made. in addition, Pang said, before a project is brought before the board, it must be presented to the neighborhood board where it is located.

Stanley Chang
Hawaii Sen. Stanley Chang, chairman of the Senate Committee on Housing, has introduced a measure to tweak a controversial law designed to promote development of affordable housing. (Stewart Yerton/Civil Beat/2022)

The debate comes as Hawaii faces a housing crisis. The median home price for a single-family home on Oahu is more than $1 million. And the rental market isn’t much more affordable: a study by Forbes published last week found Hawaii renters were on average spending 42.1% of their income on rent, the highest of any state.

Developers and economists often argue that state and local regulations slow down development and drive up prices. But environmentalists say such arguments are self-serving. 

“Yes, it a crisis. But what’s at the root of that?” said Isaac Moriwake, an attorney with Earthjustice in Honolulu. “Let’s look at real solutions rather than trying to declare open season on environmental laws.”

Two recent projects illustrate the tensions created by projects being developed under 201H.

A proposed affordable rental project for older adults called Manoa Banyan Court would replace undeveloped land zoned for preservation next to a historic cemetery with four, three-story buildings with 288 one-bedroom apartment units. They would be rented to people who are at least 55 years old for between $708 and $1,412 per month.

Another project called Kuilei Place will redevelop more than a dozen parcels containing low-rise walk-up apartment buildings into a mixed-use project consisting of a 12-story mid-rise tower, a 43-story high-rise tower and a 13-story parking structure on 3.2 acres on Kapiolani Boulevard in Moiliili.

The project, which was recently approved by the Honolulu City Council, will include 1,005 for-sale residential units, 603 of which will be offered to households earning between 80% and 140% or below Honolulu’s median income. Pang said the project meets the state development corporation’s criteria for affordable housing and a development plan for urban Honolulu.

“In this particular case, the developer is taking steps to mitigate hardships to affected residents by providing them two months of free rent and relocation assistance” Pang said.

Affordable Housing Kuilei Place Apartments
Under a state law that has come under fire from some lawmakers, a developer has received state and city approval to remove more than a dozen low-rise apartment buildings on Kapiolani Boulevard in Moiliili to make way for a new complex. (Ku‘u Kauanoe/Civil Beat/2023)

Kuilei Place will be one of the few for-sale housing projects currently in the construction pipeline that is designed to meet the needs of our workforce,” he said. “Those who qualify include nurses, teachers, police officers, engineers and accountants who may otherwise not have an opportunity to own a home.”

Meanwhile, lawmakers have responded to Banyan Court with a bill that would amend 201H-38 to require an environmental impact statement be conducted for affordable housing developments proposed on land zoned for preservation. State Rep. Andrew Garrett, who introduced the House measure requiring the EIS, said 201H-38 should have limits. 

“I don’t think it gives developers the ability to do anything they want,” he said of the statute.

Sen. Stanley Chang, chairman of the Senate Committee on Housing, agrees 201H-38 could be improved.

“The fundamental provisions of 201H can inherently be a source of public concern,” said Chang.

He has proposed a measure to change the law to ensure the housing is sold to Hawaii residents who do not own other real property and remains in local hands in perpetuity.

Bill Would Eliminate Chance For Public Comment

Other bills take the opposite approach, expanding the power of developers to sidestep zoning laws.

A bill sponsored by Sen. Dru Kanuha, for example, would remove the requirement that a county council approve proposals, saying simply that the county must do so. Wong said this means a county bureaucrat in a planning department could grant approval without the public ever having a chance to comment. Kanuha was not available for comment.

“This totally ignores any public component, any public involvement, and that is scary as hell,” Wong said.

UH law school’s Ostrowski stressed that the opposition is often more complex than people simply not wanting affordable housing in their backyards. Many people now living in apartments in Moiliili that will be replaced by Kuilei Place will lose their homes and might not be able to afford a condo in the new tower, she said. 

“We can’t act like community outcry over what they’re seeing built in their neighborhoods is unfounded, or that it’s only based on people not wanting poor people in their neighborhood,” she said.

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