Hawaii lawmakers have given a state agency new power to accelerate affordable rental housing development under a five-year pilot project modeled on a successful program in Canada.
The “Hawaii Builds” initiative established under a bill Gov. Josh Green signed into law July 8 is described as an innovative way to cut affordable-housing project timetables at least in half, though it also has been criticized as cutting out public input and county council oversight.
Under Senate Bill 2544, which legislators passed almost unanimously on May 6, the Hawaii Housing Finance and Development Corp. is being directed to help private developers produce at least one affordable-housing project on Oahu, Hawaii island, Kauai and in Maui County under the new program in part by sidestepping county council reviews.
Instead, an “expedited review team” will be formed by state and county officials with permitting roles to prioritize decisions on Hawaii Builds projects.
In addition, regulatory exemptions to zoning and other county regulations are to be decided by a county’s planning director within 45 days in place of a county council, and state Department of Health determinations pertaining to water safety would have to happen within 60 days unless a written justification for additional time is made.
Project sites for Hawaii Builds projects must have adequate infrastructure capacity, and preferably should be zoned for residential use.
Another program requirement is that more than half the units produced per project be affordable to households with incomes at or below 140% of the median income for the county in which the project is developed.
For Oahu, such maximum monthly rent this year equates to $3,773 for a studio, $4,042 for one-bedroom units, $4,851 for two-bedroom units and $5,607 for three-bedroom units, and are tied to annual income limits of $150,920 for a single person, $172,480 for a couple and $215,600 for a family of four.
HHFDC also may provide up to $20 million in each of the five years from an existing revolving loan fund to help finance construction or pre-development work, which can include land acquisition, architectural and engineering services and environmental studies.
Powerful tools
“This is an attempt to streamline the planning, design and entitlement process by convening all stakeholders at the outset of a project,” Dean Minakami, HHFDC executive director, said in an interview. “The intent is to force collaboration to help projects move quicker. That’s the real benefit of the bill.”
There also could be significant benefit if HHFDC puts funding toward pre-development work for projects proposed by private developers, which is something the agency has not typically done in the past because projects are more likely to fail before construction begins and that puts loans for pre-development work at a higher risk of loss.
Martin Nguyen, principal of Centre Urban Real Estate working on two workforce housing projects in Waikiki, said in written testimony on SB 2544 that the combination of quicker approvals and early-stage financing would be powerful.
“From a practitioner’s perspective, this is exactly the kind of tool we need,” he said. “It allows HHFDC to act as a full-cycle partner, advancing projects through the most fragile phases. … Most existing programs provide some combination of long-term gap financing or tax incentives; very few address the earliest, riskiest dollars needed to get a project to ‘shovel-ready’ status or to close construction.”
The bill had a few detractors, including Hawaii island resident Cindy Freitas, who criticized the legislation for preempting county authority and eliminating community input.
UNITE HERE Local 5, a union representing Hawaii hotel workers, also opposed the bill, saying in written testimony, “Speeding up permitting processes should not be done at the cost of taking away counties’ discretionary control, or meaningful public input.”
Canadian model
The Hawaii Builds program is modeled on one in British Columbia called BC Builds, and according to SB 2544 is geared to cut a three-to-five-year traditional timeframe needed to produce affordable housing down to between 12 and 18 months under what BC Builds describes as a “rocketship” project timeline.
Several lawmakers along with and county planning officials visited BC Builds leaders last year to understand how they ran their program.
“Their focus was really on cutting down on time through concurrent processes, so we wanted to see if we could try and replicate their successes,” said Sen. Troy Hashimoto, the lead introducer of SB 2544.
BC Builds was established in 2024 by the Province of British Columbia, and has completed 103 homes among four projects and also has 11 projects in pre-development and 28 under construction.
A 2025 Simon Fraser University Renewable Cities case study noted that some of the program’s potential is the ability of BC Builds to act as project developer in addition to coordinating approvals and contributing financing to produce rental housing mainly for middle-income households.
“Unlike private developers, BC Builds would not need to generate profits for shareholders, so any surplus from land development could be reinvested into building more housing or increasing the number of below-market homes in a building,” the report said.
The report also noted that BC Builds has about $5 billion in available financing, including $950 million in grant funding for projects where 20% of units have 20% below-market rental rates.
Hashimoto (D, Wailuku-Kahului-Waihee) said the Hawaii Builds program is set up to have private developers lead projects with some private financing, and that risk for developers is intended to be reduced by an expedited approvals process.
Limited funding
Minakami noted that $20 million available each year from HHFDC doesn’t amount to much, given that the cost to produce large-scale affordable rental housing projects is about $700,000 to $800,000 per apartment. But he also said the agency can award other forms of financing to eligible projects.
The $100 million over five years for Hawaii Builds projects is to come from HHFDC’s dwelling unit revolving fund, also known as DURF, which the agency typically uses to make low-interest loans to developers. The agency has $71 million of such funding available, and $241 million already committed to planned or ongoing projects.
HHFDC also can award developers other financing in the form of bonds, low-income housing tax credits and loans from a rental housing revolving fund. Under the new law, DURF loan awards will be prioritized for Hawaii Builds projects.
Developers often seek and receive a mix of financing from HHFDC for affordable-housing projects. For instance, the nonprofit development firm Ikaika Ohana received a $2.5 million DURF grant on top of roughly $155 million in other HHFDC financing to complete the 200-unit Kaiaulu o Kuku‘ia rental housing complex on Maui in 2024. This project, reserved for low-income households, stemmed from a request for proposals HHFDC issued in 2018 to develop state-owned land.
Last fiscal year, HHFDC awarded about $31 million in DURF financing to three projects. One $12 million loan was to rebuild half of a 48-unit rental complex for low-income households on Kauai called Kai Olino destroyed by fire in early 2024 just before construction was completed.
HHFDC also lent $14 million to help the state Department of Hawaiian Home Lands acquire and renovate the 82-unit Courtyards at Waipouli rental housing complex on Kauai, and committed to a $5 million DURF loan to help Waikiki Community Center develop 135 to 200 rental units in a project that could be years away from being finalized.
Hawaii Builds is not expected to result in more affordable housing because HHFDC must prioritize existing DURF funds for Hawaii Builds projects, that will reduce funding for other affordable-housing projects and not result in any increase in supply unless additional funding is provided during the five-year pilot program.
But if the program succeeds, some affordable rental housing would be developed more quickly.
HHFDC, which said it helped deliver 1,460 affordable-housing units last fiscal year, expects to help finance another 10,875 units over the next five fiscal years through June 2030.
