Hawaii-2019-HB543-Introduced

SECTION 1. The legislature finds that the Front Street Apartments project on the island of Maui provides affordable housing to more than two hundred fifty low-income residents. The project was developed using state financing and state tax credits in 2001 as an affordable rental housing project with one hundred forty-two units, and was expected to remain affordable to low-income tenants for fifty years. However, the owners of the project have exercised an option to remove the project from the affordability requirements tied to the development of the project, and this change will allow them to begin renting available apartments at market rates and to raise rents for existing tenants by October 2019.

The legislature further finds that many tenants of the Front Street Apartments project were not previously aware of this threat to their housing and are now worried that the removal of affordability requirements could leave them homeless. There is a severe shortage of affordable housing on the island of Maui, especially in west Maui, and this shortage will be exacerbated by the conversion of the Front Street Apartments project to market-rate housing.

The legislature took steps to condemn the ground lease for the Front Street Apartments project by enacting Act 150, Session Laws of Hawaii 2018. However, the legislature believes that the tenants, surrounding community, and the island of Maui would further benefit if the State were to acquire the leased fee and fee simple interests in the Front Street Apartments project.

The legislature declares that it is in the public interest and is required for public use to preserve the affordable rental housing project at the Front Street Apartments by exercising the power of eminent domain if an agreement to transfer the property to the State is not reached within a reasonable time. If the State exercises eminent domain powers, the legislature further declares that it is necessary to provide public financing for the acquisition of any property interest in the Front Street Apartments by condemnation through the expenditure of general funds, revenue bonds, dwelling unit revolving funds, rental housing revolving funds, or any other funds at the disposal of the State.

The legislature finds that, by enacting Act 288, Session Laws of Hawaii 2006, the State intervened to preserve affordable housing at the Kukui gardens affordable rental housing project on the island of Oahu, and this action provides precedent for this Act and for Act 150, Session Laws of Hawaii 2018.

Accordingly, the purpose of this Act is to preserve the Front Street Apartments project as an affordable rental housing project.

SECTION 2. (a) The Hawaii housing finance and development corporation shall immediately initiate negotiations with:

(1) 3900 Corporation, leasehold fee owner of the parcel designated as tax map key (2) 4-5-003-013, or its successor in interest; and

(2) Front Street Affordable Housing Partners, fee owner of the parcel designated as tax map key (2) 4-5-003-014, or its successor in interest,

to acquire each respective parcel.

(b) The Hawaii housing finance and development corporation may partner with private for-profit or nonprofit developers for the acquisition of the Front Street Apartments project; provided that:

(1) Seventy rental units shall be retained at affordable rents for households whose incomes do not exceed fifty per cent of the median family income for the area as determined by the United States Department of Housing and Urban Development; and

(2) Seventy-one rental units shall be retained at affordable rents for households whose incomes do not exceed sixty per cent of the median family income for the area as determined by the United States Department of Housing and Urban Development.

SECTION 3. The Hawaii housing finance and development corporation shall submit a report to the legislature no later than twenty days prior to the convening of the regular session of 2020 regarding its efforts to acquire the leased fee and fee simple interests in the Front Street Apartments project.

SECTION 4. The Hawaii housing finance and development corporation shall exercise its power of eminent domain to acquire any leased fee or fee simple interest in the Front Street Apartments project for which an agreement to acquire the leased fee or fee simple interest is not reached within a reasonable time, as determined by the corporation. For the purposes of this Act, and notwithstanding any provision of section 201H-13, Hawaii Revised Statutes, to the contrary, condemnation of any leased fee or fee simple interest in the Front Street Apartments project shall not be subject to legislative disapproval.

SECTION 5. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2019-2020 for the purposes of this Act.

The sum appropriated shall be expended by the Hawaii housing finance and development corporation for the purposes of this Act.

SECTION 6. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 7. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 8. This Act shall take effect on July 1, 2019.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	543
THIRTIETH LEGISLATURE, 2019
STATE OF HAWAII