The 2026 Legislative Session in Review
May 26, 2026 — Two of Housing Hawai‘i’s Future’s big ideas, the re-establishment of the Individual Housing Account (SB2552) and Inclusionary Zoning reform (HB1740) have made it across the finish line and are now set for consideration by the Governor’s office.
While the Individual Housing Account program has existed for over four decades, no financial institution presently offers the program. This year, a bipartisan effort facilitated by Housing Hawai‘i’s Future resulted in the successful passage of this measure. Post-session, financial institutions will need to step forward to get this program off the ground this program. We’ll be working with those institutions to educate them about this program.
HB1740 makes it easier for qualified residents to navigate Hawai‘i’s housing ladder. Under existing law, residents who own property may struggle to qualify to live in a qualified affordable unit. The result is discrimination against residents navigating Hawai‘i’s limited housing options. It also lays the groundwork for policies that promote the preservation of housing stock for only qualified residents, such as perpetual deed restrictions. Instead of making life harder for residents, lifting these restrictions will make it easier for residents to qualify for homes.
Parking reform was a missed opportunity this session. In a recent column, former State Representative Beth Fukumoto noted that the House’s failure to advance parking reform looked like a missed opportunity. In spite of successful legislation in California, Oregon, and Montana, the House did not look ready to advance the idea here, with a historic 25-25 split vote. As this idea is further considered, debate over the future of arbitrary parking mandates will continue.
To be clear, parking reform inspired a great deal of debate and discussion about what drives-up home costs for residents. HB1919 ultimately became one of the most contentious measures in the entire Legislative Session. Pushing such hard conversations takes time and patience, and we look forward to working with legislative leaders to remove the arbitrary parking mandates that waste space and money in Hawai‘i’s urban spaces. In that spirit, the Senate has established the Summer Streets Pilot Program (SB3029) to mandate that the counties, through the HCDA, create plans to open up certain streets to non-vehicular use. The city of Malmo in Sweden inspires the model.
With all this said, what other big bills passed this year? The Legislature advanced some big ideas, including:
Helping County Partners
Streamlined GET exemptions for affordable housing. Several proponents of the Bill 7 (known also as Chapter 32) housing program in the City and County of Honolulu have also supported HB2385. It is a technical bill which grants the HHFDC the authority to approve and certify General Excise Tax (GET) exemptions for qualified housing development projects constructed “under county housing incentive programs.” Providing the HHFDC with this authority, in lieu of county departments like the Department of Planning and Permitting, is viewed as a tactic to keep housing costs down by decreasing bureaucratic delays.
Adding power to public-private housing partnerships. While the state is working to hold county governments accountable, they are also looking for ways to make it easier for county governments to expand housing supply. HB1718 grants the counties the authority “to share in facilitating the development, construction, financing, refinancing, or other provision of mixed-use developments, including low- and moderate-income housing projects.” For active housing agencies like the re-emerging Department of Housing and Land Management (DHLM) with the City and County of Honolulu, this is a critical development. DHLM is presently collaborating with qualified homebuilders to partner with the county to build homes on county-owned land. Having this authority provides the county with greater financial certainty and inspires confidence in private-public partnerships.
Reducing the regulatory cost of inclusionary zoning.HB1741, on the heels of a U.S. Supreme Court decision that bans inclusionary zoning (IZ) policies that prove disproportionate, mandates that the counties adapt their policies through demonstrable metrics to be fair and proportional. IZ policies already drive up housing costs; this measure will ensure that the counties that require excessive IZ policies match the cost with county provided incentives.
Expanding Housing Construction Tools
Prioritising housing that puts local affordability first. In the meantime, the Legislature is also poised to expand the scope of the Rental Housing Revolving Fund (SB2060) to give preference to projects “with perpetual affordability commitments, that are revenue neutral, and to applicants with a demonstrated history of early repayment to the RHRF.” It remains to be seen, but such requirements may assist projects with a true commitment to generating units for qualified residents with housing needs.
Experimenting with the pace of residential home construction. Another exploratory program would establish the Hawai‘i Builds pilot program (SB2544) modelled on a similar program that exists in the Canadian province of British Columbia. According to the Legislature, the BC Builds program has successfully reduced the timeline for housing project delivery from five years (sixty months) to between twelve to eighteen months. For now, the program will designate at least one project in every county that will receive special attention through this program with such matters as financing challenges, land acquisition, and permitting delays.
Making the Ninety-nine Year Leasehold Program work. In the past, Housing Hawai‘i’s Future has also weighed in on the future of the Ninety-Nine Leasehold Program. In order to make projects that pursue this route financially feasible, SB2061 will modify the program’s rules under the HCDA to mandate that at least sixty percent of residential condominium units be income restricted. In the meantime, the program has also been clarified to bar such units from becoming rentals; they must be owner-occupied. Time will tell if this helps the program get off the ground.
Homeownership Opportunities
Extending DURF gives runway for workforce housing allocations, for now. While the Dwelling Unit Revolving Fund (DURF) Equity Pilot Program has not been made permanent, it has been extended (SB2069). The debate over whether to make this program permanent will continue to evolve over the coming years. This program presently permits qualified residents to purchase homes, under the condition that some of the home’s value shall be retained by the Hawai‘i Housing Finance and Development Corporation (HHFDC). HHFDC, in turn, lowers the cost of these units. The law, as now framed, will limit the reach of this program to transit-oriented development zones.
Easing down payment assistance for residents. At the request of the Green Administration, the state has also loosened the terms of the Down Payment Loan Assistance program (HB2270) to make it easier for residents to qualify for the program. As part of these amendments, a qualifying applicant (and resident) will now only be required to provide up to three percent of a down payment (compared to the earlier figure of five percent).
Small changes to update Rent-to-Own programs. A similar effort played out with the State’s Rent-to-Own Program (HB1711). The state agency charged with administering the program, the HHFDC, supported this measure because it will give the agency more flexibility when it comes to helping residents qualify to stay in their rented units. In their eyes, option periods need to be fixed “to better adjust to changing economic circumstances that affect the timing of conversion from rental tenure to ownership.” We support technical changes that make it easier for the HHFDC to serve residents.
Infrastructure Needs
Building key (financial) progress for cesspool conversions. The Legislature is also moving to support housing in rural communities through the establishment of the Cesspool Conversion Revolving Loan Fund (HB1618) and another measure that preempts county permitting for rainwater catchment systems (HB1728). Counties must allow the “installation and operation of rainwater catchment systems for potable and nonpotable uses on all properties.” Functionally, the CCRLF has no funding, as the Legislature has only provided $203,750 for the hiring of a single staff person within the Hawai‘i Green Infrastructure Authority.
Pushing the discussion about RISE (aka TIF). The debate over the establishment of Tax-Increment Financing (TIF) has also come to a head with the passage of a bill authorizing a constitutional amendment (SB3219) to permit TIF and accompanying enabling legislation (SB3218) that makes technical fixes to existing state law. These measures frame TIF bonds as Resilient Infrastructure for Shelter and Equity (RISE) Bonds.
Expanding geographic authority for the HDCA. The Hawai‘i Community Development Authority (HCDA) has also expanded their authority over two new areas: (1) the Banyan Court Community Development District (SB2001) and (2) the Halawa Community Development District (SB2599). Creating these new districts will enable the state to service the unique infrastructure needs of these communities in the coming decades.
With infrastructure for DHHL, there was limited progress this year. Very few measures relating to the Department of Hawaiian Home Lands have advanced this year. A major push by the DHHL was a conveyance tax measure (SB3028) that would have established a permanent revenue source in the form of the Hawaiian Home Lands Infrastructure and Housing Special Fund. No consensus could emerge on this measure in the final hours of the session, and so it stalled this year. Another measure, HB2309, will permit the children of a sibling to qualify as a potential successor in the same manner “currently allowed for spouses, children, grandchildren, and siblings.” That measure advanced.
Permitting & Zoning Reform
Permitting also continues to attract legislative attention. The lack of qualified permitting staff is getting addressed through the establishment of a pilot program designed to incentivize permitting recruitment.
Ending permitting workforce shortages. Through SB2671, each mayor would have the power to establish this program for the purpose of improving “the speed, accountability, and quality of permit processing within that county through targeted staffing, performance incentives, and interdepartmental competition.” Another measure will mandate the establishment of a statewide permitting data standard (SB2673) to track building and civil engineering permit applications under the Office of Planning and Sustainable Development (OPSD). County permitting and building departments will be required to provide data on a monthly basis. The measure lays out a specific format for how this data shall be provided by the counties, down to the file format.
Other measures build on zoning reforms pursued in the 2025 Legislative Session. A housekeeping measure will prevent the School Impact Fee from being used to increase housing costs (HB1713) for smaller projects, while another measure (HB1710) targets the State Historic Preservation Division (SHPD).
With permitting reform, there were missed opportunities.HB2606 was another measure that stalled in the final hour. If it passed, it would have provided for a working group within the State Building Code Council (SBCC) to develop an off-site construction program. As was the case for a broader effort to reform the SBCC from a three-year to six-year cycle (HB1725), this means that more work will need to be invested in re-thinking the future purpose of the SBCC.
What’s Ahead? The measures that passed out of both chambers of the Legislature must now head to the Governor for consideration. In the meantime, the debate over TIF will head to voters for consideration in the November 2026 elections. Several ideas that stalled will be re-tooled by legislators off-session, while many enacted pieces of legislation will be subject to implementation by state and county partners.
