§15-22-180  Purpose.  The rules set forth in this subchapter are designed to govern the sale, rental or transfer of reserved housing units under the planned development provisions of subchapter 4 of this chapter.  [Eff 9/8/86, comp 1/28/88, comp 2/24/90] (Auth:  HRS §§206E-4, 206E-5, 206E-7) (Imp:  HRS §§206E-4, 206E-5, 206E-7)

Historical note:  §15-22-180 is based substantially upon §15-17-300.  [Eff 4/6/85; R 9/8/86]
 

 §15-22-181  Definitions.  Whenever used in this subchapter, unless the context otherwise requires:
 "Land trust" means a recorded instrument as defined in chapter 558, HRS.  [Eff 9/8/86, comp 1/28/88, comp 2/24/90] (Auth:  HRS §§206E-4, 206E-5, 206E-7) (Imp:  HRS §§206E-4, 206E-5, 206E-7)

Historical note:  §15-22-181 is based substantially upon §15-17-301.  [Eff 4/6/85; R 9/8/86]
 

 §15-22-182  Qualifications for reserved housing.  (a)  The following shall be qualifications for the purchasing or leasing of reserved housing units:
(1) Is a citizen of the United States or a resident alien;
(2) Is a bona fide resident of the State;
(3) Is at least of legal age;
(4) Does 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;
(5) If married, whose spouse does 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;
(6) Shall be the owner or lessee and occupant of the reserved housing unit; and
(7) Has never before purchased a reserved housing unit under this chapter.
 (b) In addition to the qualifications set forth in subsection (a) above, the following shall apply to the leasing of reserved housing units:
(1) Does not have an outstanding debt owed to the authority; and
(2) Does not have a record or history of conduct or behavior, including past rent payments, which may prove detrimental to other tenants or the authority.
 (c) Subject to the approval of the executive director, a current owner of a reserved housing unit may apply to purchase a larger reserved unit provided that:
(1) The applicant's current household size, determined by the number of individuals on title and their dependents, has increased and exceeds the occupancy guidelines established in §15-22-185;
(2) The applicant has resided in the current reserved unit for at least one year; and
(3) The applicant qualifies to purchase a reserved unit in accordance with §15-22-182(a), except that the applicant's current ownership of a reserved unit shall not disqualify the applicant under §15-22-182(a) (4), (5), and (7).  [Eff 9/8/86, comp 1/28/88, comp 2/24/90, am 12/15/94, am 8/4/95] (Auth:  HRS §§206E-4, 206E-5, 206E-7) (Imp:  HRS §§206E-4, 206E-5, 206E-7)

Historical note:  §15-22-182 is based substantially upon §15-17-302.  [Eff 4/6/85; R 9/8/86]
 

 §15-22-183  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 units or may 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 lottery basis as determined by the authority provided that the applications shall be submitted in person and provided further that only substantially completed applications shall be accepted.  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:
(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 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 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 14 days.  The period shall be computed from the first day of publication of the notice.
 (d) Applications shall be processed and applicants shall be selected in the order in which the applications were accepted or determined by lottery, provided that priority shall be given to applicants who have been displaced from housing as a result of development in the mauka area.  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.
 (e) In the event the developer, or the developer's designated representative, as the case may be, shall 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 on a first-come, first-served or 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.  Furthermore, together with the certification of process compliance, 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.  [Eff 9/8/86, comp 1/28/88, am and comp 2/24/90, am 12/15/94, am 8/4/95] (Auth:  HRS §§206E-4, 206E-5, 206E-7) (Imp:  HRS §§206E-4, 206E-5, 206E-7)

Historical note:  §15-22-183 is based substantially upon §15-17-303.  [Eff 4/6/85; R 9/8/86]
 

 §15-22-184  Income.  (a)  The adjusted household income of a qualified person:
(1) Purchasing a reserved housing unit shall not exceed one hundred forty per cent of median income; and
(2) Renting a reserved housing unit shall not exceed one hundred per cent of median income.
The adjusted household income shall be the income earned during the most recent calendar year preceding the date of application to purchase a reserved housing unit for which copies of filed state or federal tax returns are available.
 (b) As used in this section, "adjusted household income" means the total income, before taxes and personal deductions, received by all members of the eligible borrower's household, including, but not limited to, wages, social security payments, retirement benefits, unemployment benefits, welfare benefits, interest and dividend payments but not including business deductions.
 (c) The assets of a qualified person shall not exceed one hundred twenty-five per cent of the applicable income limit set forth in subsection (a) above.  As used herein, assets include, but are not limited to, all cash, securities, and real and personal property at current fair market value, less any outstanding liabilities secured by such assets, and any retirement accounts and gifts to assist in unit down payments.  [Eff 9/8/86, comp 1/28/88, comp 2/24/90, am 12/15/94, am 8/4/95] (Auth:  HRS §§206E-4, 206E-5, 206E-7) (Imp:  HRS §§206E-4, 206E-5, 206E-7)

Historical note:  §15-22-184 is based substantially upon §15-17-304.  [Eff 4/6/85; R 9/8/86]
  §15-22-185  Occupancy guidelines.  The following are occupancy guidelines for reserved housing units:

  Permissible Standard
 Unit Size   Household Size   Household Size

0 bedroom 1 - 2 persons   1 person
1 bedroom 1 - 3 persons   2 persons
2 bedrooms 2 - 5 persons   4 persons
3 bedrooms 3 - 7 persons   5 persons
4 bedrooms 4 - 9 persons   6 persons

[Eff 9/8/86, comp 1/28/88, comp 2/24/90, am 8/4/95] (Auth:  HRS §§206E-4, 206E-5, 206E-7) (Imp:  HRS §§206E-4, 206E-5, 206E-7)

Historical note:  §15-22-185 is based substantially upon §15-17-305.  [Eff 4/6/85; R 9/8/86]
 

 §15-22-185.1  Affordability criteria.  (a) The following criteria shall be utilized in determining price and income equivalencies of units for sale:
(1) Down payment amount shall not exceed ten per cent;
(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; and
(3) Interest rate shall be derived by taking the past six-months average of the interest rate on thirty year fixed rate mortgages less one-half of one per cent.
 (b) The following criteria shall be utilized in determining price and income equivalencies of units for rent:  monthly payments, which consist of rent, all utilities and other building operating costs, excluding telephone and cable television service, shall not exceed thirty per cent of the renter's gross monthly income.
 (c) Monthly payment and qualification requirements set forth in this chapter for the rental of reserved housing shall be regulated for a minimum period of fifteen years.  [Eff 8/4/95] (Auth:  HRS §§206E-4, 206E-5, 206E-7) (Imp:  HRS §§206E-4, 206E-5, 206E-7)]
 

  §15-22-186  Conditions on transfer of reserved housing units.  (a)  The transfer of reserved housing units shall be regulated in accordance with the conditions set forth in subsection (c) of this section for a minimum number of years following the original sale of the unit as prescribed in subsection (b) below.  The authority may elect to extend the period on a case-by-case basis.
 (b) The regulated term for reserved housing units shall be established based on unit affordability.  Unit affordability, expressed as a percentage of median income, shall be determined based on the standard household sizes established in §15-22-185 and affordability criteria set forth in §15-22-185.1.  Reserved housing units affordable to qualified persons with adjusted household incomes:
(1) Less than one hundred per cent of median income shall be regulated for ten years;
(2) One hundred to one hundred nineteen per cent of median income shall be regulated for five years; and
(3) One hundred twenty to one hundred forty per cent of median income shall be regulated for two years.
 (c) The conditions for transferring reserved housing units during the regulated term are as follows:
(1) If an owner wishes to transfer title to the reserved housing unit, the authority or a governmental agency approved by the authority shall have the first option to purchase the unit at a sales price based on the lower of:
(A) The current fair market value of the reserved housing unit less the authority's share of the equity in the unit as determined by section 15-22-187 of this chapter; or
(B) The original sales price of the reserved housing unit adjusted proportionately to the change in median income computed from the date of the purchase to the date of the sale.
(2) If the owner is purchasing another reserved housing unit as provided in section 15-22-182(c), the owner shall sell the reserved unit to the authority, prior to or upon the closing of the sale of the larger reserved unit, at a sales price based on the lower of:
(A) The current fair market value of the reserved housing unit less the authority's share of the equity in the unit as determined by section 15-22-187 of this chapter; or
 (B) The original sales price of the reserved unit plus one per cent simple interest per year of said sales price computed from the date of the purchase to the date of sale.
(3) The owner shall notify the authority in writing of the intent to transfer title to the reserved housing unit and the property or the lease.  The authority shall respond to the owner's notification by either waiving its option to purchase the unit, or by agreeing to buy the unit or providing a substitute buyer for the unit at the price calculated in subsection (c)(1) or (2).  The authority shall notify the owner of its decision within sixty days of receipt of the owner's notification.
(4) 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 authority shall ensure that all existing mortgages, liens, and encumbrances are satisfactorily paid by the owner.
(5) 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 herein and the principal balance of all mortgages outstanding and assumed at the time of transfer of title to the authority.
 (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 §15-22-187 of this chapter.
 (e) The conditions prescribed in subsection (c) above shall be automatically extinguished and shall not attach in subsequent transfers of title when a mortgage holder becomes the owner of a reserved housing unit and the land or leasehold interest pursuant to a mortgage foreclosure, foreclosure under power of sale, or a conveyance in lieu of foreclosure after a foreclosure action is commenced.  Any law to the contrary notwithstanding, a mortgagee under a mortgage covering a reserved housing unit and land or leasehold interest subject to the transfer restrictions of the authority 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 entitled to any amount remaining provided the amount shall not exceed the lower of the amounts computed in subsection (c)(1) above.
 (f) The provisions of this section shall be incorporated in any deed, lease, mortgage, agreement of sale, or other instrument of conveyance for reserved housing units.  [Eff 9/8/86, comp 1/28/88, comp 2/24/90, am 8/4/95, am 1/13/00] (Auth:  HRS §§206E-4, 206E-5, 206E-7) (Imp:  HRS §§206E-4, 206E-5, 206E-7)

Historical note:  §15-22-186 is based substantially upon §15-17-306.  [Eff 4/6/85; R 9/8/86]
 

 §15-22-187  Equity sharing requirements.  (a)  The authority's share of the equity in the reserved housing unit shall become due upon:
(1) Waiver of the authority's first option to purchase the reserved housing unit; or
(2) Resale of the reserved housing unit after the expiration of the period during which the authority has the first option to purchase the unit.
 (b) The authority's share of the equity in the reserved housing unit shall be the higher of:
(1) An amount equivalent to the difference between the original fair market value of the unit and its original sales contract price, not to exceed the difference between the resale fair market value and the original sales contract price; or
(2) An amount equivalent to the authority's percentage share of net appreciation calculated as the difference between the original fair market value of the unit and its original sales contract price, divided by the original fair market value of the unit.  As used herein, "net appreciation" means resale fair market value less original sales contract price and actual sales costs incurred, if any.
The authority shall determine the fair market value of the unit at the time of the initial sale and at the time of resale.
 (c) The price and terms on the resale of units shall be approved by the authority.  [Eff 9/8/86, comp 1/28/88, comp 2/24/90, am 8/4/95] (Auth:  HRS §§206E-4, 206E-5, 206E-7) (Imp:  HRS §§206E-4, 206E-5, 206E-7)

Historical note:  §15-22-187 is based substantially upon §15-17-307.  [Eff 4/6/85; R 9/8/86]
 

 §15-22-188  Deferral or waiver of certain conditions on transfer of reserved housing.  (a)  The conditions prescribed in §15-22-186 of this chapter pertaining to payment to the authority of its share of the equity in the reserved housing unit shall be deferred by the executive director if the owner wishes to transfer title to the unit and the property or lease by devise or through the laws of descent to a family member who would otherwise qualify under rules established by the authority.
 (b) Waivers may be granted by the authority on a case-by-case basis if any of the following are met:
(1) The waiver will not result in speculation;
(2) Where fiscal management will not allow repurchase of the unit; or
(3) Where such waiver will allow permanent financing by other mortgage lenders.  [Eff 9/8/86, comp 1/28/88, comp 2/24/90, am 12/15/94] (Auth:  HRS §§206E-4, 206E-5, 206E-7) (Imp:  HRS §§206E-4, 206E-5, 206E-7)

Historical note:  §15-22-188 is based substantially upon §15-17-308.  [Eff 4/6/85; R 9/8/86]
 

 §15-22-189  Repealed.  [R 8/4/95]
 

 §15-22-190  Occupancy.  (a)  A reserved housing unit purchased or rented under this chapter shall be occupied by the purchaser or renter at all times.
 (b) Violation of subsection (a) shall be sufficient reason for the authority, at its option, to purchase the unit as provided in §15-22-186 of this chapter or evict the renter from the unit, as applicable.
 (c) Any deed, lease, agreement of sale, mortgage, or other instrument of conveyance issued by the authority 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.  [Eff 9/8/86, comp 1/28/88, comp 2/24/90] (Auth:  HRS §§206E-4, 206E-5, 206E-7) (Imp:  HRS §§206E-4, 206E-5, 206E-7)

Historical note:  §15-22-190 is based substantially upon §15-17-310.  [Eff 4/6/85; R 9/8/86]
 

 §15-22-191  Restrictions or conditions on use and sale of a reserved housing unit; effects of amendment or repeal.  (a)  Restrictions or conditions on the use, sale and transfer of reserved housing units shall be made as uniform as possible in application to purchasers of all units, and restrictions shall be conformed with agreement of the owner to reflect change or repeal made by any subsequent legislative act, ordinance, rule or regulation.  Reserved housing unit owners shall be permitted at their election to sell or transfer units subject to restrictions in effect at the time of their sale or transfer.
 (b) The authority, any other department of the State, or any county housing agency maintaining restrictions or conditions, through contract, deed, other instrument, or by rule or regulation, shall notify all owners of any change made by law, ordinance, rule or regulation not more than one hundred eighty (180) days after the change, as the case may be, and 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 modify the existing contract or other instrument to incorporate the most recent provisions.
 (c) No dwelling 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, unless the holder of the first
 mortgage or the owner is an agency of the State or its political subdivisions.
 (d) This section shall apply to all reserved housing units developed, constructed and sold pursuant to this chapter and similar programs in the State or its political subdivisions and which are sold on the condition that the purchaser accepts restrictions on the use, sale or transfer of interest in the reserved housing unit purchased.
 (e) The provisions of this section shall be incorporated in any deed, lease, instrument, rule or regulation relating to restrictions or conditions on use, sale or transfer of reserved housing units.  [Eff 9/8/86, comp 1/28/88, comp 2/24/90] (Auth:  HRS §§206E-4, 206E-5, 206E-7) (Imp:  HRS §§206E-4, 206E-5, 206E-7)

Historical note:  §15-22-191 is based substantially upon §15-17-311.  [Eff 4/6/85; R 9/8/86]
 

 §15-22-192  Information and verification.  (a)  The authority shall require applicants and program participants to provide information relating to the family's income, composition, financial condition and status changes, prior to admission to the program and at any other time as determined by the authority.
 (b) The authority may require applicants and program participants to provide documentation to verify information submitted to the authority, including but not limited to:
(1) Verification of deposit;
(2) Verification of employment; and
(3) Credit bureau report.
 (c) An applicant or program participant 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, provided that the authority shall not waive its right to recover any money wrongfully gained by the participant or to any other recourse provided by law.  [Eff 9/8/86, comp 1/28/88, comp 2/24/90] (Auth:  HRS §§206E-4, 206E-5, 206E-7) (Imp:  HRS §§206E-4, 206E-5, 206E-7)

Historical note:  §15-22-192 is based substantially upon §15-17-312.  [Eff 4/6/85; R 9/8/86]