Senate committees pass amended SB534 easing OHA residential development in Kakaʻako Makai with environmental and affordability conditions

The Senate Committee on Water and Land and the Committee on Hawaiian Affairs voted Feb. 3 to pass SB534 with amendments that set environmental-review, remediation, height and affordability conditions for proposed residential development on Office of Hawaiian Affairs (OHA) parcels in Kakaʻako Makai.

The measure, as amended by the committees, lets the Hawaii Community Development Authority (HCDA) approve residential projects on OHA-owned parcels within Kakaʻako Makai provided an applicant completes an environmental impact statement (EIS) and obtains Department of Health documentation verifying hazardous-substance remediation. The amendments also limit eligible parcels to those owned by OHA, set a maximum building height of 400 feet, cap maximum floor area ratio (FAR) at 10 and require that a majority — ‘‘50% plus 1’’ unit — be reserved as affordable to households at or below 140% of area median income (AMI) in perpetuity.

The committees said their changes also clarify HCDA hearing requirements and preserve public hearings and community feedback on any OHA proposal. The measure adds language directing that OHA establish and deposit any Kakaʻako Makai association fees into an OHA special fund; the attorney general warned that such a fee could be construed as a tax and asked the Judiciary and Ways and Means committees to review the provision.

Why this matters: Kakaʻako Makai is privately and publicly owned waterfront land near Honolulu’s urban core. The amendments aim to enable development of hundreds to thousands of housing units on OHA parcels while adding explicit environmental and affordability safeguards. Supporters say the package balances development, remediation and Native Hawaiian beneficiary benefits; some lawmakers cautioned about eligibility thresholds and enforcement.

Key amendments and requirements - Environmental review: Applicants must complete an EIS before submitting a proposal to HCDA; the EIS must address climate adaptation and mitigation (including sea-level rise), effects on water resources and the aquifer, and mitigation of noise and other nuisances (including aircraft-related issues). - Hazardous-substance remediation: Applicants must obtain Department of Health documentation confirming hazardous substances, pollutants or contaminants on a parcel have been removed or contained to Health and U.S. EPA standards. - Eligibility and zoning: Only parcels owned by OHA are eligible under the amended language. The committees noted HCDA’s transit-oriented development (TOD) zoning already allows residential construction up to 400 feet and amended the bill to codify a 400-foot maximum for OHA parcels. - Density and affordability: Maximum FAR for residential development is limited to 10. A majority (50% plus 1) of residential units developed on the specified parcels must be affordable to households at or below 140% AMI, and those units are to remain affordable in perpetuity. - Ownership and occupancy: The committees noted the measure’s owner-occupant requirement will be enforced through loan and mortgage processes (i.e., lenders’ occupancy requirements) and through program loan terms. - Fees and special fund: The bill authorizes OHA to set a Kakaʻako Makai association fee to be deposited into an OHA special fund; HCDA and OHA must adopt procedures for disbursement. The attorney general raised concerns that the fee could be considered a tax.

What lawmakers debated Lawmakers pressed on the affordability threshold and the ‘‘in perpetuity’’ requirement. Senator Craig (HCDA representative) described the bill’s affordability target as allowing purchasers earning up to 140% AMI and said that number gives some flexibility to make development economically feasible: "I think for the Kakaʻako, reserve housing rules, we target buyers of up to 140 AMI," he told the committee.

Senator McKelvey asked that the record flag consideration of a higher AMI threshold (160%) for committee reports and later review by other committees; the chairs agreed to note that request in the committee report. Senator Ihara said he remained undecided but called the ‘‘in perpetuity’’ affordability requirement ‘‘the whole game’’ for protecting long-term local ownership, adding he would support the measure for now with reservations.

Other deliberations and next steps Committee members said they will incorporate Attorney General and member-suggested edits into a second draft (SD2) and distribute it to members; the chair’s staff said the research office was preparing the revised draft. The chairs also directed the matter to the Judiciary and Ways and Means committees for further review of the fee and other legal issues.

Votes at a glance - SB534 (Kakaʻako Makai residential development, OHA parcels) — Committee on Water and Land: passed with amendments (chair recommendation adopted; one no vote recorded). Committee on Hawaiian Affairs: passed with amendments (recommendation adopted; one no vote recorded). Measure advances to Judiciary and Ways and Means with amendments noted. - SB3 (Commission on Water Resource Management/CBWRM changes) — Passed in committee with amendments. - SB130 (Search and rescue reimbursement) — Passed in committee as introduced. - SB223 (Fire prevention; fuels reduction program) — Passed in committee with amendments; DLNR comments to be incorporated. - SB1296 (Lahaina disaster recovery; SMA exemptions) — Passed with amendments; part 2 (SMA minor permit threshold expansion) removed by committee. - SB364 (Ala Wai small boat harbor leasing) — Deferred for further consideration after extensive public testimony. - SB366 (Stream maintenance) — Deferred. - SB386 (West Maui water systems / state acquisition) — Deferred. - SB841 (Marine life conservation district carrying-capacity program) — Passed with amendments; effective-date changes to be made. - SB848 (Desalination planning task force) — Passed with amendments. - SB1017 (DLNR adoption of federal rules) — Deferred.

What the committees decided The chair’s recommendation to pass SB534 with amendments was adopted by the Committee on Water and Land and the Committee on Hawaiian Affairs; both committees recorded at least one member voting no and some members noting reservations. The committees instructed staff to prepare an updated draft (SD2) that incorporates the Attorney General’s and members’ amendments and to include a committee-report note about the AMI discussion for consideration by subsequent committees.

The measure’s sponsors and committee chairs said the bill will proceed to additional committees for legal and fiscal review; no final floor action was recorded in the committee session.

For context and related materials The committees cited existing HCDA TOD zoning and noted OHA has prepared environmental-hazards management plans for its Kakaʻako Makai parcels and will update them as projects progress. The committees also acknowledged the Department of Health and U.S. Environmental Protection Agency remediation standards would guide cleanup requirements.

Looking ahead Committee members requested that the committee report note a request to consider a 160% AMI threshold as the bill moves to Judiciary and Ways and Means; chairs said the record will reflect that request. The committees will release a second draft of the bill incorporating the amendments described above.