HCDA says 99‑year leasehold bill aims to enable pre‑sales while members warn investor sales could undercut owner‑occupancy

The House Committee on Consumer Protection & Commerce advanced SB 2061 SD2 HD1 after extended testimony and public comment on April 9. Craig Nakamura, Executive Director of the Hawaii Community Development Authority (HCDA), told the committee the draft would permit pre‑sales for a 99‑year leasehold pilot and requires HCDA rules so that at least 60% of residential condominium units are subject to income restrictions, with a mix of market and restricted units.

Nakamura said the measure strikes a balance between statutory goals and market feasibility, explaining HCDA’s capital plan and expected equity: “HCDA’s equity…is 15 million. So, for that 15 million, we are in essence going to own the parking garage and the commercial spaces,” a revenue stream HCDA expects to use for future development funds.

Several members of the public and committee raised concerns that permitting investor purchases after an initial owner‑offer period could undermine the project’s original intent of long‑term owner occupancy. Public commenter Greg Masica said the bill “doesn’t provide enough specifics for the sale of condominiums to low‑income buyers,” urging clearer protections and longer exclusive sales periods for owner‑occupants.

Committee members questioned whether a perpetual owner‑occupancy requirement would make the project economically infeasible. One member pressed HCDA on alternatives; staff replied that an owner‑occupancy period modeled on existing programs (for example, a 10‑year occupancy restriction used by other state programs) is more marketable than a perpetual restriction and that a 60/40 split (60% income‑restricted units at up to 140% AMI; 40% market units) is the working assumption.

The committee ultimately adopted amendments to reinsert eligibility and resale timing provisions (including a six‑month sell‑off window if a lessee or household member acquires other real property) and advanced the bill. During decision making the measure passed with amendments; the committee recorded no votes from Representatives Iwamoto and Kong, and Chair’s recommendation was adopted.

Why it matters: The bill aims to make leasehold housing projects workable while preserving affordability for local buyers. Opponents warned the proposed pathway for investor purchases risks converting intended owner‑occupied units into rental or speculative holdings, which some members said would undercut the policy’s housing‑access goals.

What’s next: SB 2061 moves forward with the committee’s amendments; HCDA was asked to clarify in the committee report the proposed occupancy terms, buyback pricing rules, and how commercial income will be used to fund future affordable development.