2012 Kalaeloa Reserved Housing Rules – HAR Ch. 216

DEPARTMENTOF BUSINESS, 	ECONOMICDEVELOPMENT, AND
TOURISM
Repeal 	of 	Chapter 	15-200 	and 	Adoption 	of
Chapter 	15-216
Hawaii 	Administrative 	Rules
September 	11, 	2012
SUMMARY
Chapter 	200 	of 	Title 	15, 	Hawaii 	Administrative
Rules, 	entitled 	"Rules 	for 	Health 	and 	Safety 	within
the 	Kalaeloa 	Community 	Development 	District" 	is
repealed.
30 5 3

HAWAII ADMINISTRATIVE 	RULES
TITLE 	15
DEPARTMENT OF BUSINESS, 	ECONOMIC DEVELOPMENT, AND
TOURISM
SUBTITLE 	15
BARBERS POINT 	NAVAL AIR 	STATION REDEVELOPMENT
COMMISSION
CHAPTER 200
RULES FOR HEALTH AND SAFETY WITHIN 	THE KALAELOA
COMMUNITYDEVELOPMENT DISTRICT
Repealed
§§15 - 200 - 1 	to 	15-200-7 	Repealed. 	[ 	OCT2 7 2U12
3n 5 3

DEPARTMENTOF BUSINESS, 	ECONOMICDEVELOPMENT, AND
TOURISM
Repeal 	of 	Chapter 	15-200 	and 	Adoption 	of
Chapter 	15-216
Hawaii 	Administrative 	Rules
September 	11, 	2012
SUMMARY
Chapter 	216 	of 	Title 	15, 	Hawaii 	Administrative
Rules, 	entitled 	"Kalaeloa 	Reserved 	Housing 	Rules" 	is
adopted.
30 5,3

HAWAII ADMINISTRATIVE RULES
TITLE 	15
DEPARTMENTOF BUSINESS, 	ECONOMIC DEVELOPMENT, AND
TOURISM
SUBTITLE 	4
HAWAII COMMUNITYDEVELOPMENTAUTHORITY
CHAPTER 216
KALAELOA RESERVED HOUSING RULES
Subchapter 	1
§15-216-1
§15-216-2
§15-216-3
§15-216-4
General 	Provisions
Purpose 	and 	intent
Administration
Severability
Interpretation 	by 	the 	executive
director
§15-216-5 	Definition 	of 	terms
§§15-216-6 	to 	15-216-16 	Reserved
Subchapter 	2 	Reserved 	Housing 	Requirements
§15-216-17 	Requirement 	for 	reserved 	housing
units
§15-216-18 	Adjustments 	to 	height, 	density, 	and
general 	development 	requirements
for 	reserved 	. housing 	units
§§15-216-19 	to 	15-216-28 	Reserved
Subchapter 	3
§15-216-29
§15-216-30
Sale 	and 	Rental 	of 	Reserved
Housing 	Units
Purpose
Qualifications 	for 	reserved 	housing
216-1

§15-216-1
§15-216-31
§15-216-32
§15-216-33
§15-216-34
§15-216-35
§15-216-36
§15-216 	"-37
§15-216-38
§15-216-39
§15-216-40
§15-216-41
§15-216-42
§15-216-43
§§15-216-44
Sale 	and 	rental 	of 	reserved 	housing
units
Income
Occupancy 	requirements
Affordability 	criteria
Term 	of 	reserved 	housing 	requirements
First 	option 	to 	purchase
Sale 	or 	transfer 	of 	reserved 	housing
units
Foreclosure
Transfers 	of 	title 	pursuant 	to 	a
mortgage 	foreclosure
Incorporation 	in 	deed
Equity 	sharing 	requirements
Deferral 	of 	equity 	sharing
Effects 	of 	subsequent 	rule 	amendments
to 	15-216-54 	Reserved
SUBCHAPTER1
GENERAL PROVISIONS
§15-216-1 	Purpose 	and 	intent. 	The 	purpose 	of
these 	rules 	is 	to 	establish 	an 	increased 	supply 	of
housing 	for 	residents 	of 	low- 	or 	moderate-income
within 	the 	Kalaeloa 	community 	development 	district.
Such 	reserved 	housing 	shall 	be 	required 	as 	a 	condition
of 	new 	resid 	e ntial 	development 	or 	redevelopment 	within
the 	Kalaeloa 	c ommunity 	development 	district.
[Eff 	OCT2 7 fffl 	] 	(Auth: 	HRS §§206E-4, 	206E-5,
2 06E-7) 	(Imp: 	HRS § §2 06E-4, 	206E-5, 	206E-7)
§15-216-2 	Administration. 	The 	authority,
through 	its 	executive 	director, 	sh~lt 	~dminister 	the
provisions 	of 	this 	chapter. 	[Eff 	UC l 	7 2012, ] 	(Auth:
HRS §§206E-4, 	206E-5, 	206E-7) 	(Imp: 	HRS -§§20°6E-4,
206E-5, 	206E-7)
216-2
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§15-216-5
§15-216-3 	Severability. 	If 	a 	court 	of 	competent
jurisdiction 	finds 	any 	provision 	or 	provisions 	of 	this
chapter 	to 	be 	invalid 	or 	ineffective 	in 	whole 	or 	in
part, 	the 	effect 	of 	that 	decision 	shall 	be 	limited 	to
those 	provisions 	which 	are 	expressly 	stated 	in 	the
decision 	to 	be 	invalid 	or 	ineffective, 	and 	all 	other
provisions 	of 	these 	rules 	shall 	continue 	to 	be
separately 	and 	fully 	effective. 	[Eff 	_ 9CT2 7 201l]
(Auth: 	HRS §§206E-4, 	206E-5, 	206E-7) 	(Imp: 	HRS
§§206E-4, 	206E-5, 	206E-7)
§15-216-4 	Interpretation 	by 	the 	executive
director. 	(a) 	In 	administering 	this 	chapter, 	the
executive 	director 	may, 	when 	deemed 	necessary, 	render
written 	interpretations 	to 	clarify 	or 	elaborate 	upon
the 	meaning 	of 	specific 	provisions 	of 	this 	chapter 	for
intent, 	clarity 	and 	applicability 	to 	a 	particular
situation.
(b) 	A written 	interpretation 	shall 	be 	signed 	by
the 	executive 	director 	and 	include 	the 	following:
( 1) 	Identification 	of 	the 	section 	of 	this
chapter 	in 	question;
(2) 	A statement 	of 	the 	problem;
(3) 	A statement 	of 	interpretation; 	and
(4) 	A justification 	statement.
(c) 	A written 	interpretation 	issued 	by 	the
executive 	director 	shall 	be 	the 	basis 	for
administering 	and 	enforcing 	the 	pertinent 	section 	of
this 	chapter. 	All 	written 	interpretations 	rendered
pursuant 	to 	these 	rules 	shall 	be 	public 	record, 	and
shall 	be 	effectiv(fcf~ 7~1
fate 	signed 	by 	the 	executive
director. 	[Ef f 	_ _ _ 	. 	] 	(Auth: 	HRS § §206E"-4,
206E-5, 	206E-7) 	(Imp: 	HRS §§206E-4, 	206E-5, 	206E-7)
§15-216-5 	Definition 	of 	terms. 	As 	used 	in 	this
chapter, 	the 	following 	words 	and 	terms 	shall 	have 	the
following 	meanings 	unless 	the 	context 	shall 	indicate
another 	or 	different 	meaning 	or 	intent:
216-3
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30 5 3
§15-216-5
"Area 	median 	income" 	or 	"AMI" means 	area 	median
income 	for 	Honolulu 	that 	is 	provided 	to 	Fannie 	Mae by
the 	Federal 	Housing 	Finance 	Agency;
"Authority" 	or 	"HCDA" means 	the 	Hawaii 	community
development 	authority 	established 	by 	section 	206E-3,
HRS;
"Developer" 	.means 	a private 	person 	or 	an 	entity
who has 	legal 	rights 	to 	perform 	or 	cause 	to 	be
performed 	any 	man-made 	change 	over, 	upon, 	under, 	or
across 	improved 	or 	unimproved 	real 	property 	within 	the
Kalaeloa 	CDD;
"Eligible 	borrower" 	means 	any 	person 	or 	family,
irrespective 	of 	race, 	creed, 	national 	origin, 	or 	sex,
who:
(1) 	Has 	never 	before 	obtained 	a 	loan 	under 	this
part; 	and
(2) 	Meets 	other 	qualifications 	as 	established 	by
rules 	adopted 	by 	the 	authority;
"Executive 	director" 	means 	the 	executive 	director
of 	the 	authority;
"Gross 	household 	income" 	means 	the 	total 	income,
before 	taxes 	and 	personal 	deductions, 	received 	by 	all
members 	of 	the 	applicant's 	household, 	including, 	but
not 	limited 	to, 	wages, 	social 	security 	payments,
retirement 	benefits, 	unemployment 	benefits, 	welfare
benefits, 	interest 	and 	dividend 	payments;
"HRS" means 	the 	Hawaii 	Revised 	Statutes;
"Land 	trust" 	means 	a 	recorded 	instrument 	as
defined 	in 	chapter 	558, 	HRS;
"Licensed 	life 	care 	facilities" 	means 	licensed
assisted 	living 	facilities 	as 	defined 	in 	section
321-15.1, 	HRS;
"Multi-family 	dwelling" 	means 	a 	residential
building 	consisting 	of 	more 	than 	one 	residential 	unit;
"Net 	appreciation" 	means 	the 	resale 	fair 	market
value 	of 	a 	reserved 	housing 	unit 	less 	the 	original
contract 	price 	of 	the 	same 	and 	actual 	sales 	costs
incurred, 	if 	any;
"Reserved 	housing" 	means 	housing 	designated 	for
residents 	in 	the 	low-income 	or 	moderate-income 	range 	s
who meet 	such 	eligibility 	requirements 	as 	the
authority 	may adopt 	by 	rule;
216-4

§15-216-17
"Reserved 	housing 	unit" 	means 	a 	room 	or 	rooms
connected 	together, 	constituting 	an 	independent
dwelling 	that 	is 	designated 	for 	reserved 	housing; 	and
"Residential 	floor 	area" 	means 	the 	gross 	total
residential 	floor 	area 	including 	the 	dwelling 	unit(s)
and 	limited 	common areas 	such 	as 	lobby, 	hallways,
storage, 	covered 	recreation 	area, 	a.Jld similar 	areas
set 	aside 	for 	the 	residents. 	[Ef f 	UCT2 7 2012]
(Auth: 	HRS §§206E-4, 	206E-5, 	206E-7) 	(Imp: 	HRS
§§206E-4, 	206E-5, 	206E-7)
§§15-216-6 	to 	15-216-16 	(Reserved).
SUBCHAPTER 2
RESERVED HOUSING REQUIREMENTS
§15-216-17 	Requirement 	for 	reserved 	housing
units. 	(a) 	Every 	developer 	applying 	for 	a
development 	permit 	for 	approval 	to 	construct
multi-family 	dwelling 	units 	on 	a 	lot 	greater 	than
40,000 	gross 	square 	feet 	shall 	construct 	and 	reserve
at 	least 	twenty 	per 	cent 	of 	the 	total 	residential
floor 	area 	as 	reserved 	housing 	units. 	The 	percentage
of 	residential 	floor 	area 	developed 	as 	reserved
housing 	shall 	be 	fifteen 	per 	cent 	if 	the 	units 	are
developed 	as 	rental 	units.
(b) 	Such 	reserved 	housing 	units 	shall 	be 	sold 	or
rented 	to 	persons 	qualifying 	under 	the 	terms 	and
conditions 	set 	forth 	under 	subchapter 	3. 	The
developer 	shall 	execute 	agreements 	with 	the 	authority
as 	are 	appropriate 	to 	conform 	to 	this 	requirement 	and
subject 	to 	the 	authority's 	approval, 	and 	such
agreements 	shall 	be 	binding 	upon 	the 	developer 	and 	any
successors 	in 	interest, 	and 	shall 	run 	with 	the 	land.
The 	agreement 	shall 	provide 	that 	the 	developer 	must
provide 	certification 	to 	the 	authority 	as 	to 	the
compliance 	of 	the 	requirements 	herein 	to 	qualify 	for 	a
216-5
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3053
§15-216-17
certificate 	of 	occupancy 	for 	the 	project 	for 	which
provisions 	of 	this 	chapter 	are 	applicable.
(c) 	Occupants 	of 	reserved 	housing 	units 	shall
have 	access 	to 	and 	use 	privileges 	for 	the 	same
amenities 	as 	all 	other 	occupants 	of 	the 	development.
Reserved 	housing 	units 	shall 	be 	distributed 	in 	the
building 	in 	such 	a 	manner 	that 	they 	do 	not 	form 	an
isolated 	section 	of 	the 	project.
(d) 	If 	the 	authority 	so 	determines, 	it 	may 	allow
the 	developer 	to 	meet 	the 	requirement 	of 	subsection
(a) 	above 	through 	the 	following 	alternatives 	instead
of 	providing 	reserved 	housing 	units 	within 	the
development:
(1) 	By providing 	such 	reserved 	housing 	units
elsewhere 	within 	the 	Kalaeloa 	CDD; or
(2) 	By providing 	such 	reserved 	housing 	units
elsewhere 	on 	the 	island 	of 	Oahu. 	The
authority 	may 	impose 	additional 	reserved
housing 	requirements 	in 	approving 	transfer
of 	reserved 	housing 	from 	the 	Kalaeloa 	CDD to
other 	locations 	within 	the 	island 	of 	Oahu.
Such 	additional 	reserved 	housing
requirements 	shall 	be 	determined 	on 	a 	case-
by-case 	basis 	by 	the 	authority 	at 	the 	time
of 	approval 	of 	the 	development 	permit.
(e) 	No certificate 	of 	occupancy 	shall 	be
approved 	by 	the 	authority 	for 	any 	project 	subject 	to
this 	chapter 	unless 	the 	developer 	delivers 	the
required 	reserved 	housing 	units.
(f) 	The 	delivery 	of 	the 	required 	reserved
housing 	units 	shall 	be 	secured 	by 	the 	developer 	with 	a
financial 	guaranty 	bond 	from 	a 	surety 	company
authorized 	to 	do 	business 	in 	Hawaii, 	an 	acceptable
construction 	set-aside 	letter, 	or 	other 	financial
instruments 	acceptable 	to 	the 	authority 	prior 	to 	the
approval 	of 	the 	building 	permit 	by 	the 	authority.
(g) 	Licensed 	life 	care 	facilities 	shall 	be
exempt 	from 	the 	reserved 	housing 	requirement. 	In 	a
proposed 	development 	that 	includes 	licensed 	life 	care
facilities 	as 	well 	as 	residential 	dwelling 	units, 	the
reserved 	housing 	requirements 	shall 	apply 	only 	to 	the
residential 	dwelling 	portion 	of 	the 	development.
216-6
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§15-216-18
(h) 	No construction 	shall 	commence 	for 	any
development 	within 	the 	Kalaeloa 	CDD on 	a 	lot 	greater
than 	40,000 	square 	feet 	unless 	the 	development
conforms 	to 	the 	provisions 	of 	this 	chapter 	and 	the
authority 	has 	certified 	that 	the 	development 	complies
with 	the 	requirements 	of 	this 	chapter.
(i) 	The 	authority 	may require 	guarantees, 	may
enter 	into 	recorded 	agreements 	with 	developers 	and
with 	purchasers 	and 	tenants 	of 	the 	reserved 	housing
units, 	and 	may 	take 	other 	appropriate 	steps 	necessary
to 	assure 	that 	these 	housing 	units 	are 	prov~ded 	and
that 	they 	are 	occupied 	by 	qualified 	persons 	for 	the
required 	duration.
(j) 	The 	authority 	may 	suspend 	these 	requirements
for 	reserved 	housing 	for 	a 	limited 	duration, 	if, 	in
its 	sole 	judgment, 	it 	determines 	that 	these
requirements 	may unduly 	impede, 	preclude, 	or 	otherwise
negatively 	impact 	the 	primary 	objective 	of 	the
authority 	toQ~~o~ot~gJ;,edevelopment 	within 	the 	Kalaeloa
CDD. 	[Eff 	l~I 	l 	7 £ lt] 	(Auth: 	HRS §§206E-4, 	206E-5,
206E-7) 	(Imp: 	HRS §§206E-4, 	206E-5, 	206E-7)
§15-216-18 	Adjustments 	to 	height, 	density, 	and
general 	development 	requirements 	for 	reserved 	housing
units. 	(a) 	Except 	as 	otherwise 	provided, 	any
developer 	who applies 	for 	a 	permit 	proposing 	a
multi-family 	residential 	project 	on 	a 	lot 	greater 	than
40,000 	square 	feet 	who meets 	applicable 	provisions 	of
this 	chapter 	shall 	be 	entitled 	to 	adjustments 	in
allowable 	floor 	area 	and 	general 	development
requirements 	as 	follows:
(1) 	Residential 	floor 	area 	for 	reserved 	housing
shall 	be 	excluded 	from 	calculations 	of
allowable 	floor 	area;
(2) 	Residential 	floor 	area 	for 	reserved 	housing
shall 	be 	exempt 	from 	the 	provisions 	of
Hawaii 	administrative 	rules, 	section
15-215-64 	(dedication 	of 	public 	facilities);
and
216-7
3053.

§15-216-18
(3) 	For 	reserved 	housing 	units, 	the 	off-street
parking 	space 	requirement 	shall 	be 	one 	stall
per 	unit.
(b) 	The 	authority 	may 	also 	consider 	modifying
the 	following 	requirements 	of 	the 	Kalaeloa 	CDD as 	an
incentive 	to 	providing 	additional 	reserved 	housing 	by
a 	developer:
(1) 	Building 	height;
(2) 	Street 	setbacks; 	and
(3) 	Loading 	space. 	[Eff 	OCT2 7 2842] 	(Auth:
HRS §§206E-4, 	206E-5, 	206E-7) 	(Imp: 	HRS
§§206E-4, 	206E-5, 	206E-7)
§§15-216-19 	to 	15-216-28 	(Reserved).
SUBCHAPTER 3
SALE AND RENTAL OF RESERVED HOUSING UNITS
§15-216-29 	Purpose. 	The 	rules 	set 	forth 	in 	this
subchapter 	shall 	govern 	the 	sale, 	rental 	or 	transfer
of 	reserved 	housing 	provisions 	of 	subchapter 	2.
[Eff 	OCT	2 7~orz] 	(Auth: 	HRS §§206E-4, 	206E-5,
206E-7} 	(Imp: 	HRS §§206E-4, 	206E-5, 	206E-7)
§15-216-30 	Qualifications 	for 	reserved 	housing.
The 	following 	shall 	be 	qualifications 	for 	purchasing
or 	leasing 	of 	reserved 	housing 	units 	by 	a 	buyer 	or 	a
tenant. 	The 	buyer 	or 	the 	tenant:
30 5 3 	I j
(1) 	Shall 	be 	at 	least 	the 	age 	of 	majority;
(2) 	Shall 	not 	have 	a 	majority 	interest 	in 	a
principal 	residence 	or 	a 	beneficial 	interest
in 	a 	land 	trust 	on 	a 	principal 	residence
within 	or 	without 	the 	State 	for 	a 	period 	of
three 	years 	immediately 	prior 	to 	the 	date 	of
application 	for 	a 	reserved 	housing 	unit
under 	this 	section;
216-8

§15-216-31
(3) 	Shall 	not 	have 	a 	spouse 	or 	dependent 	child
who has 	a 	majority 	interest, 	in 	a 	principal
residence 	or 	a 	beneficial 	interest 	in 	a 	land
trust 	on 	a 	principal 	residence 	for 	a 	period
of 	three 	years 	immediately 	prior 	to 	the 	date
of 	application 	for 	a 	reserved 	housing 	unit
under 	this 	section;
(4) 	Shall 	be 	the 	owner 	or 	lessee 	and 	occupant 	of
the 	reserved 	housing 	unit; 	and
(5) 	Shali'not 	have 	a 	record 	or 	history 	of
conduct 	or 	behavior, 	including 	past 	rent
payments, 	which 	may prove 	detrimental 	to
other 	tenants 	or 	the 	authority. 	This
criterion 	shall 	be 	applied 	within 	parameters
set 	by 	federal 	laws 	on 	discrimination,
including 	the 	Americans 	with 	Disabilities
Act. 	[Eff 	OCT2 7 2012] 	(Auth: 	HRS
§§206E-4, 	206E-5, 	206E-7) 	(Imp: 	HRS
§§206E-4, 	206E-5, 	206E-7)
§15-216-31 	Sale 	and 	rental 	of 	reserved 	housing
units. 	(a) 	The 	authority 	may advertise 	the 	sale 	or
rental 	of 	reserved 	housing 	units 	and 	qualify 	and
select 	persons 	for 	reserved 	housing 	uniq;r 	It 	may
also 	permit 	the 	developer 	of 	such 	units, 	or 	the
developer's 	designated 	representative, 	to 	be
responsible 	for 	advertising, 	qualifying, 	and 	selecting
persons 	subject 	to 	the 	provisions 	of 	this 	chapter.
(b) 	Applications 	for 	the 	purchase 	or 	rental 	of
reserved 	housing 	units 	shall 	be 	accepted 	on 	a 	first-
come, 	first-served 	or 	on 	a 	lottery 	basis. 	The
applications 	shall 	be 	submitted 	in 	person 	by 	the
applicant. 	Only 	completed 	applications 	shall 	be
acceptable. 	Applicants 	shall 	not 	be 	required 	to
submit 	a 	deposit 	amount 	exceeding 	$500.
(c) 	Notice 	of 	the 	proposed 	sale 	or 	rental 	of
reserved 	housing 	units 	shall 	be 	published 	in 	a
newspaper 	of 	general 	circulation 	on 	two 	separate 	days.
The 	notice 	shall 	include, 	but 	not 	be 	limited 	to, 	the
following:
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30 5 3
§15-216-31
(1) 	General 	description 	of 	the 	project 	in 	which
the 	reserved 	housing 	units 	are 	located
including 	its 	location, 	number 	of 	reserved
housing 	units, 	size 	of 	the 	reserved 	housing
units 	by 	number 	of 	bedrooms, 	and 	sales
prices 	or 	rental 	rates;
(2) 	Qualification 	requirements 	for 	purchase 	of
reserved 	housing 	units 	including 	maximum
income 	limits, 	restrictions 	on 	ownership 	of
property, 	the 	authority's 	first 	option 	to
purchase 	and 	shared 	equity 	requirements 	for
reserved 	housing 	units 	for 	sale, 	and
permissible 	household 	sizes;
(3) 	A statement 	that 	buyers 	or 	renters 	shall 	be
selected 	on 	a 	first-come, 	first-served 	or 	on
a 	lottery 	basis, 	whichever 	is 	applicable;
(4) 	Where 	and 	when 	applications 	may be 	obtained
and 	the 	first 	date, 	including 	time 	and
place, 	when 	applications 	will 	be 	accepted,
and 	subsequent 	dates, 	times, 	and 	places 	for
submission 	of 	applications;
(5) 	Deadline 	for 	submission 	of 	applications; 	and
(6) 	In 	the 	case 	of 	a 	reserved 	housing 	unit 	for
sale, 	the 	deposit 	amount 	and 	mode 	of
acceptable 	payment.
The 	time 	period 	between 	publication 	of 	the 	notice 	and
the 	first 	acceptance 	of 	applications 	shall 	not 	be 	less
than 	fourteen 	business 	days. 	The 	period 	shall 	be
computed 	from 	the 	first 	day 	of 	publication 	of 	the
notice.
(d) 	Priority 	shall 	be 	given 	to 	applicants 	who
have 	been 	displaced 	from 	housing 	as 	a 	result 	of
development 	in 	the 	Kalaeloa 	CDD.
(e) 	Applicants 	shall 	be 	allowed 	to 	select 	a
reserved 	housing 	unit 	based 	on 	maximum income 	limits,
qualifying 	income, 	preference, 	permissible 	household
sizes, 	and 	availability 	of 	the 	reserved 	housing 	unit.
(f) 	In 	the 	event 	the 	developer, 	or 	the
developer's 	designated 	representatives 	have 	accepted
and 	processed 	applications 	and 	selected 	applicants 	for
reserved 	housing 	units, 	a 	certification 	shall 	be
submitted 	to 	the 	authority 	that 	the 	selection 	was 	made
216-10
I •.

§15-216-32
on 	a 	first-come, 	first-served 	or 	a 	lottery 	basis.
Applicants 	shall 	be 	listed 	in 	the 	order 	in 	which 	the
applications 	were 	accepted 	and 	the 	list 	shall 	be
available 	for 	inspection 	by 	the 	authority. 	The 	final
applications 	for 	those 	persons 	selected 	shall 	be 	made
available 	to 	the 	authority 	and 	the 	authority 	shall
review 	the 	applications 	to 	ensure 	that 	the 	applicants
meet 	the 	eligibility 	requirements 	established 	under
this 	chapter.
(g) 	Reserved 	housing 	applicants 	shall 	provide
financial 	and 	family 	information 	with 	the 	reserved
housing 	application.
(h) 	The 	authority 	may 	also 	require 	applicants 	to
provide 	documentation 	to 	verify 	information 	submitted
to 	the 	authority, 	including 	but 	not 	limited 	to:
(1) 	Asset 	verification;
(2) 	Verification 	of 	deposit;
(3) 	Verification 	of 	employment; 	and
(4) 	Credit 	bureau 	report.
(i) 	An applicant 	found 	to 	have 	willfully
submitted 	false 	information, 	made 	misstatements, 	or
withheld 	important 	information 	shall 	be 	disqualified
from 	purchasing 	or 	renting 	a 	reserved 	housing 	unit
under 	this 	chapter. 	The 	authority 	retains 	its 	right
to 	recover 	any 	money 	wrongfully 	gained 	by 	the
applicR~f 	or 	to 	any 	other 	recourse 	provided 	by 	law.
[Eff 	U~ 	2 7 2012] 	(Auth: 	HRS §§206E-4, 	206E-5,
206E-7) 	(Imp: 	HRS §§206E-4, 	206E-5, 	206E-7)
§15-216-32 	Income. 	(a) 	The 	gross 	household
income 	of 	the 	applicant 	shall 	not 	exceed 	one 	hundred
forty 	per 	cent 	of 	the 	AMI as 	determined 	by 	the 	United
States 	Department 	of 	Housing 	and 	Urban 	Development.
(b) 	The 	gross 	household 	income 	shall 	be 	the
income 	earned 	during 	the 	most 	current 	calendar 	year
preceding 	the 	date 	of 	application 	to 	purchase 	or 	rent
a 	reserved 	housing 	unit 	and 	shall 	be 	verified 	by
submittal 	of 	most 	current 	State 	or 	Federal 	tax
returns.
(c) 	The 	assets 	of 	the 	applicant 	shall 	not 	exceed
one 	hundred 	thirty-five 	per 	cent 	of 	the 	applicable
216-11
30 5 3

§15-216-32
income 	limit 	set 	forth 	in 	subsection 	{a) 	above. 	As
used 	herein, 	assets 	include, 	all 	cash, 	securities 	and
real 	and 	personal 	property 	at 	current 	fair 	market
value, 	less 	any 	outstanding 	liabilities 	secured 	by
such 	assets. 	[Eff 	OCT	2 7 20121 	{Auth: 	HRS §§206E-4,
206E-5, 	206E-7) 	{Imp: 	HRS §§206E-4, 	206E-5, 	206E-7)
§15-216-33 	Occupancy 	requirements. 	{a) 	The
following 	are 	occupancy 	requirements 	for 	reserved
housing 	units:
(1) 	Applicants 	for 	reserved 	housing 	shall
certify 	that, 	if 	selected, 	all 	applicants
will 	be 	occupants 	of 	the 	reserved 	unit;
(2) 	The 	purchaser 	or 	lessee 	shall 	physically
occupy 	the 	reserved 	unit; 	and
(3) 	The 	city 	and 	county 	of 	Honolulu 	maximum
occupancy 	limits 	for 	a 	residential 	dwelling
unit 	shall 	apply.
{b) 	Violation 	of 	subsection 	{a) 	shall 	be
sufficient 	reason 	for 	the 	authority, 	at 	its 	option, 	to
purchase 	the 	unit 	as 	provided 	in 	section 	15-216-36
{first 	option 	to 	purchase) 	or 	evict 	the 	renter 	from
the 	unit, 	as 	applicable.
{c) 	Any deed, 	lease, 	agreement 	of 	sale,
mortgage, 	or 	other 	instrument 	of 	conveyance 	issued 	for
the 	reserved 	housing 	unit 	shall 	expressly 	contain 	the
restrictions 	on 	use 	prescribed 	in 	this 	section.
{d) 	The 	restriction 	prescribed 	in 	subsection 	{a)
above 	shall 	not 	apply 	if 	the 	authority 	waives 	its
option 	to 	purchase 	the 	reserved 	housing 	unit 	or
subsequent 	to 	the 	expiration 	of 	the 	option 	to 	purchase
period. 	[Ef f 	OCT2 7 20f2 1 	{Auth: 	HRS § §2 06E-4,
206E-5, 	206E-7) 	{Imp: 	HRS §§206E-4, 	206E-5, 	206E-7)
§15-216-34 	Affordability 	criteria. 	{a) 	The
following 	criteria 	shall 	be 	used 	in 	determining 	price
and 	income 	equivalencies 	of 	units 	for 	sale:
3U53 1·'
(1) 	Down payment 	amount 	shall 	not 	exceed 	ten 	per
cent 	of 	the 	purchase 	price;
216-12

§15-216-35
(2) 	Monthly 	payments, 	which 	consist 	of 	principal
and 	interest, 	real 	property 	taxes,
insurance, 	and 	fees 	and 	costs 	required 	by
the 	bylaws 	of 	a 	condominium 	property 	regime,
shall 	not 	exceed 	thirty-three 	per 	cent 	of
gross 	monthly 	income 	or 	some 	other
percentage 	approved 	by 	the 	United 	States
Department 	of 	Housing 	and 	Urban 	Development;
and
(3) 	Interest 	rate 	shall 	be 	derived 	by 	taking 	the
average 	of 	the 	interest 	rate 	on 	thirty 	year
fixed 	rate 	mortgages 	posted 	for 	major
Honolulu 	banks 	in 	the 	first 	week 	of 	each 	of
the 	preceding 	six 	months.
(b) 	The 	fol.lowing 	criteria 	shall 	be 	used 	in
determining 	price 	and 	income 	equivalencies 	of 	units
for 	rent: 	monthly 	rent 	and 	all 	utilities 	and 	other
building 	operating 	costs 	(excluding 	telephone, 	cable
television 	and 	internet 	service) 	shall 	not 	exceed
thirty-three 	per 	cent 	of 	the 	renter's 	gross 	monthly
income. 	[Eff 	OCT2] 	2012] 	(Auth: 	HRS §§206E-4,
206E-5, 	206E-7) 	(Imp: 	HRS §§206E-4, 	206E-5, 	206E-7)
§15-216-35 	Term 	of 	reserved 	housing
requirements. 	(a) 	The 	regulated 	term 	for 	reserved
housing 	units 	that 	are 	for 	sale 	shall 	be 	five 	years
from 	the 	date 	of 	issuance 	of 	certificate 	of 	occupancy.
Reserved 	housing 	rental 	units 	shall 	be 	regulated 	for
fifteen 	years. 	The 	authority 	may 	suspend 	or 	modify
regulated 	term 	and 	qualifying 	income 	requirements 	on 	a
project 	by 	project 	basis, 	if, 	in 	its 	sole 	judgment, 	it
determines 	that 	these 	requirements 	are 	negatively
impacting 	the 	sale 	or 	rental 	of 	reserved 	housing 	units
as 	the 	primary 	objective 	of 	the 	authority 	to 	promote
redevelopment 	within 	the 	Kalaeloa 	CDD.
(b) 	During 	the 	regulated 	term, 	a 	reserved 	unit
owner 	shall 	not 	purchase 	additional 	limited 	common
elements 	or 	personal 	property.
(c) 	During 	the 	regulated 	term, 	the 	executive
director 	shall 	approve 	any 	initial 	or 	subsequent
mortgage 	placed 	on 	a 	reserved 	unit 	which 	does 	not
216-13
30 5 3

30 5 3
§15-216-35
exceed 	eighty 	per 	cent 	of 	the 	original 	purchase 	price
of 	the 	unit.
(d) 	After 	the 	end 	of 	the 	regulated 	term, 	the
owner 	may 	sell 	the 	unit 	or 	assign 	the 	property 	free
from 	any 	transfer 	or 	price 	restrictions 	except 	for
applicable 	equity 	sharing 	requirements 	set 	forth 	in
section 	15-216-41 	(equity 	sharing 	requirements).
[Eff 	OCT2 7 2012] 	(Auth: 	HRS §§206E-4, 	206E-5,
206E-7) 	(Imp: 	HRS §§206E-4, 	206E-5, 	206E-7)
§15-216-36 	First 	option 	to 	purchase. 	If 	the
owner 	of 	a 	reserved 	housing 	unit 	wishes 	to 	sell 	the
unit 	during 	the 	regulated 	term, 	the 	authority 	or 	an
entity 	approved 	by 	the 	authority 	shall 	have 	the 	first
option 	to 	purchase 	the 	unit. 	The 	purchase 	price 	shall
be 	based 	on 	the 	lower 	of:
(1) 	The 	current 	fair 	market 	price 	of 	the
reserved 	housing 	unit 	as 	determined 	by 	the
authority 	less 	the 	authority's 	share 	of
equity 	in 	the 	unit 	as 	determined 	by 	section
15-216-41 	(equity 	sharing 	requirements); 	or
(2) 	The 	reserved 	housing 	unit 	price 	calculated
based 	on 	the 	RU 2
at 	the 	time 	of 	sale 	of 	the
unit. 	[Eff 	'!~I 	] ·'2012] 	(Auth: 	HRS
§§206E-4, 	206E-5, 	206E-7) 	(Imp: 	HRS
§§206E-4, 	206E-5, 	206E-7)
§15-216-37 	Sale 	or 	transfer 	of 	reserved 	housing
units. 	Sale 	or 	transfer 	of 	reserved 	housing 	units
during 	the 	regulated 	term 	shall 	be 	as 	follows:
(1) 	The 	authority 	or 	an 	entity 	approved 	by 	the
authority 	shall 	have 	the 	first 	option 	to
purchase 	the 	unit 	in 	the 	manner 	indicated 	in
section 	15-216-36 	(first 	option 	to
(2)
( 3)
purchase);
The 	owner 	shall 	notify 	the 	authority 	in
writing 	of 	the 	intent 	to 	sell 	the 	reserved
housing 	unit;
The 	authority 	shall 	notify 	the 	owner 	of 	its
decision 	within 	sixty 	days 	of 	receipt 	of 	the
216-14

§15-216-38
owner's 	notification 	required 	in 	subsection
(2) 	above. 	The 	authority 	may:
(A) 	Wave its 	option 	to 	purchase 	the 	unit,
(B) 	Agree 	to 	purchase 	the 	unit, 	or
(C) 	Designate 	another 	buyer 	for 	the 	unit;
(4) 	If 	the 	authority 	fails 	to 	notify 	the 	owner
of 	a 	decision 	in 	the 	manner 	prescribed 	in
subsection 	(3), 	the 	authority 	shall 	have
waived 	its 	first 	option 	to 	purchase 	the
unit;
(5) 	The 	authority 	may purchase 	the 	unit 	either
outright, 	free 	and 	clear 	of 	all 	liens 	and
encumbrances; 	or 	by 	transfer 	subject 	to 	an
existing 	mortgage. 	If 	by 	outright 	purchase,
the 	owner 	shall 	ensure 	that 	all 	existing
mortgages, 	liens, 	and 	encumbrances 	have 	been
satisfactorily 	paid; 	and
(6) 	In 	any 	purchase 	by 	transfer 	subject 	to 	an
existing 	mortgage, 	the 	authority 	shall 	agree
to 	assume 	and 	to 	pay 	the 	balance 	on 	any
first 	mortgage 	created 	for 	the 	purpose 	of
enabling 	the 	owner 	to 	obtain 	funds 	for 	the
purchase 	of 	the 	unit 	and 	any 	other 	mortgages
which 	were 	created 	with 	the 	approval 	and
consent 	of 	the 	authority. 	In 	these 	cases,
the 	amount 	to 	be 	paid 	to 	the 	owner 	by 	the
authority 	shall 	be 	the 	difference 	between
the 	price 	as 	determined 	in 	section 	15-216-36
(first 	option 	to 	purchase) 	(1) 	or 	(2) 	and
the 	principal 	balance 	of 	all 	mortgages
outstanding 	and 	assumed 	at 	the 	time 	of
transf~~ 	Rf 	tit.le 	to 	the 	authority.
[Eff 	Ul,I 	t. 7 ZUlZ ] 	(Auth: 	HRS §§206E-4,
206E-5, 	206E-7) 	(Imp: 	HRS §§206E-4, 	2 06E-5,
206E-7)
§15-216-38 	Foreclosure. 	In 	the 	event 	of 	a
foreclosure, 	any 	law 	to 	the 	contrary 	notwithstanding,
a 	mortgagee 	under 	a 	mortgage 	covering 	a 	reserved
housing 	unit 	and 	land 	or 	leasehold 	interest 	subject 	to
the 	restrictions 	of 	sections 	15-216-35 	(term 	of
216-15
30 5 3

30 5 3
§15-216-38
reserved 	housing 	requirements), 	15-216-36 	(first
option 	to 	purchase), 	and 	15-216-37 	(sale 	of 	transfer
of 	reserved 	housing 	units), 	shall, 	prior 	to . commencing
mortgage 	foreclosure 	proceedings, 	notify 	the 	authority
of:
(1) 	Any 	default 	of 	the 	mortgagor 	under 	the
mortgage 	within 	ninety 	days 	after 	the
occurrence 	of 	the 	default; 	and
(2) 	Any 	intention 	of 	the 	mortgagee 	to 	foreclose
the 	mortgage 	under 	chapter 	667, 	HRS.
The 	authority 	shall 	be 	a 	party 	to 	any 	foreclosure
action, 	and 	shall 	be 	entitled 	to 	all 	proceeds
remaining 	in 	excess 	of 	all 	customary 	and 	actual 	costs
and 	expenses 	of 	transfer 	pursuant 	to 	default,
including 	liens 	and 	encumbrances 	of 	record. 	The
person 	in 	default 	shall 	be 	entitleq 	to 	any 	amount
remaining 	provided 	the 	amount 	shall 	not 	exceed 	the
lower 	of 	the 	amounts 	computed 	in 	section 	15-216-35
(term 	of 	reserved 	housing 	requirements).
[Eff 	OCT2 7 2012 J 	(Auth: 	HRS §§206E-4, 	206E-5,
206E-7) 	(Imp: 	HRS §§206E-4, 	206E-5, 	206E-7)
§15-216-39 	Transfers 	of 	title 	pursuant 	to 	a
mortgage 	foreclosure. 	The 	conditions 	prescribed 	in
sections 	15-216-35 	(term 	of 	reserved 	housing
requirements), 	15-216-36 	(first 	option 	to 	purchase),
and 	15-216-37 	(sale 	of 	transfer 	of 	reserved 	housing
units) 	shall 	be 	automatically 	extinguished 	and 	shall
not 	attach 	to 	subsequent 	transfers 	of 	title 	pursuant
to 	a 	mortgage 	foreclosure, 	foreclosure 	under 	power 	of
sale, 	or 	a 	conveyance 	in 	lieu 	of 	foreclosure 	after 	a
foreclosure 	action 	is 	commenced. 	[Eff 	OCT2 7 2012 ]
(Auth: 	HRS §§206E-4, 	206E-5, 	206E-7) 	(Imp: 	HRS
§§206E-4, 	206E-5, 	206E-7)
§15-216-40 	Incorporation 	in 	deed. 	The
provisions 	of 	sections 	15-216-33 	(occupancy
requirements), 	15-216-35 	throu~h 	15-216-37, 	15-216-40
(incorporation 	in 	deed) 	and 	section 	15-216-41 	(equity
sharing 	requirements) 	shall 	be 	incorporated 	in 	any
I • 216-16

§15-216-41
deed, 	lease, 	mortgage, 	agreement 	of 	sale, 	or 	other
instrument 	of 	conveyance 	for 	reserved 	housing 	units.
[Eff 	OCT2 -72012] 	(Auth: 	HRS §§206E-4, 	206E-5,
206E-7) 	(Imp: 	HRS §§206E-4, 	206E-5, 	206E-7)
§15-216-41 	Equity 	sharing 	requirements.
(a) 	The 	authority's 	share 	of 	the 	equity 	in 	the
reserved 	housing 	unit 	shall 	become 	due 	upon 	resale 	of
the 	reserved 	housing 	unit.
(b) 	The 	authority's 	share 	of 	the 	equity 	in 	the
reserved 	housing 	unit 	shall 	be 	the 	higher 	of:
(1) 	An amount 	equal 	to 	the 	difference 	between
the 	original 	fair 	market 	price 	of 	the 	unit
as 	determined 	by 	the 	authority 	and 	its
original 	sales 	contract 	price; 	or
(2) 	An amount 	equivalent 	to 	the 	percentage 	of
net 	appreciation 	calculated 	as 	the
difference 	between 	the 	original 	fair 	market
price 	of 	the 	unit 	as 	determined 	by 	the
authority 	and 	its 	original 	contract 	price
divided 	by 	the 	original 	fair 	market 	price 	of
the 	unit.
(c) 	At 	its 	sole 	discretion, 	the 	authority 	may
allow 	the 	project 	developer 	to 	buy 	out 	the 	shared
appreciation 	provisions 	for 	all 	or 	a 	portion 	of 	the
reserved 	housing 	units 	by 	making 	a 	cash 	payment 	to 	the
authority 	of 	an 	amount 	equal 	to 	the 	amount 	for 	equity
sharing 	calculated 	in 	subsection 	(b) 	above.
(d) 	The 	owner 	of 	the 	reserved 	housing 	unit 	shall
provide 	financial 	documents 	acceptable 	to 	the
authority 	before 	the 	cost 	of 	improvements 	made 	by 	the
owner 	can 	be 	de~ucted 	from 	the 	sale 	price.
(e) 	The 	authority, 	in 	its 	sole 	discretion, 	shall
determine 	the 	fair 	market 	value 	of 	the 	reserved
housing 	unit 	at 	the 	time 	of 	original 	sale 	and 	also 	at
the 	time 	of 	resale.
(f) 	The 	resale 	pricacfT7tftjff-s	shall 	be 	approved
by 	the 	authority. 	[Eff 	] 	(Auth: 	HRS
§§206E-4, 	206E-5, 	206E-7) 	(Imp: 	HRS §§206E-4, 	206E-5,
206E-7)
216-17
Jo 5 J

§15-216-42
§15-216-42 	Deferral 	of 	equity 	sharing. 	The
authority 	may 	consider 	deferring 	the 	equity 	sharing 	in
case 	an 	owner 	of 	a 	reserved 	housing 	unit 	wishes 	to
transfer 	title 	to 	the 	unit 	by 	devise 	or 	through 	the
laws 	of 	descent 	to 	a 	family 	member 	who would 	otherwise
qualify 	for 	purchase 	of 	a 	reserved 	housing 	unit 	under
this 	chapter. 	[Eff 	nrT2 	,n121 	(Auth: 	HRS
§§206E-4, 	206E-5, 	206~Y7) 	fitrrr,: 	HRS §§206E-4, 	206E-5,
206E-7)
§15-216-43 	Effects 	of 	subsequent 	rule
amendments. 	(a) 	In 	the 	case 	of 	subsequent 	rule
amendments, 	reserved 	housing 	owners 	shall 	be 	permitted
at 	their 	election 	to:
(1) 	R,emain 	subject 	to 	the 	rules 	in 	effect 	at 	the
time 	of 	the 	purchase 	of 	the 	unit, 	or
(2) 	Be governed 	by 	the 	amended 	rules.
· (b) 	The-authority, 	or 	any 	other 	entity 	that 	the
authority 	transfers 	the 	reserved 	housing 	to 	shall
notify 	all 	reserved 	housing 	owners 	of 	any 	change 	made
by 	law, 	ordinance, 	rule 	or 	regulation 	within 	one
hundred 	eighty 	days 	of 	such 	changes. 	Such 	notice
shall 	clearly 	state 	the 	enacted 	or 	proposed 	new
provisions, 	the 	date 	upon 	which 	they 	are 	to 	be
effective 	and 	offer 	to 	each 	owner 	of 	reserved 	housing
units 	constructed 	and 	sold 	prior 	to 	the 	effective
date, 	an 	opportunity 	to 	be 	governed 	by 	such 	new
provision.
(c) 	No reserved 	housing 	unit 	owner 	shall 	be
entitled 	to 	modify 	the 	restrictions 	or 	conditions 	on
use, 	transfer, 	or 	sale 	of 	the 	reserved 	housing 	unit,
without 	the 	written 	permission 	of 	the 	holder 	of 	a
duly-recorded 	first 	mortgage 	on 	the 	unit 	and 	the 	owner
of 	the 	fee 	simple 	or 	leasehold 	interest 	in 	the 	land
underlying 	the 	unit.
(d) 	This 	section 	shall 	apply 	to 	all 	reserved
housing 	units 	developed, 	constructed 	and 	sold 	pursuant
to 	this 	chapter. 	[Eff 	OCT	2 7 2012J 	(Auth: 	HRS
§§206E-4, 	206E-5, 	206E-7) 	(Imp: 	HRS §§206E-4, 	206E-5,
206E-7)
§§15-216-44 	to 	15-216-54 	(Reserved).
216-18

liJ
DEPARTMENTOF BUSINESS, 	ECONOMICDEVELOPMENT,AND
TOURISM
Repeal 	of 	chapter 	15-200 	and 	adoption 	of 	chapter
15-216, 	Hawaii 	Administrative 	Rules, 	on 	the 	Summary
Page 	dated 	September 	11, 	2012, 	were 	adopted 	on
September 	11, 	2012, 	following 	public 	hearings 	held 	on
May 18, 	2011, 	August 	16, 	2012, 	and 	September 	11, 	2012,
after 	public 	hearing 	notices 	were 	given 	in 	the
Honolulu 	Star 	Advertiser, 	Hawaii 	Tribune-Herald, 	The
Maui 	News, 	West 	Hawaii 	Today, 	and 	The 	Garden 	Island,
on 	April 	16, 	2011 	and 	July 	16, 	2012.
These 	rules 	shall 	take 	effect 	ten 	days 	after
filing 	with 	the 	Office 	of 	the 	Lieutenant 	Governor.
1--
Ll
CJ
N
.-.
AS TO FORM:
Executive 	Dire 	r
Hawaii 	Community 	Development
Authority
Qv	~ ::b	~';?~ 	~
G 	Di.r e ctor
Department 	of 	Business,
Economic 	Deve lopment, 	and
Tourism
ey 	General
~~	NEILABRCR.0MBI E
Governor
State 	of 	Hawaii
Date:
Filed
216-19
30 5 3