"Is my site-control instrument -- and my Chapter 343 exposure -- actually locked down the way HHFDC's threshold expects, whether this parcel is fee simple or a land lease?"
Site control: a land lease is not a lesser instrument here
HHFDC's Minimum Threshold for Site Control requires the Applicant or an affiliated entity to "have control of the site in a form acceptable to HHFDC" and to submit "an executed lease or sales option agreement, fee simple deed, executed land lease, or any other documentation acceptable to HHFDC." Those four options are listed side by side, with no separate or heightened showing demanded of a leasehold site relative to a fee-simple one. The one leasehold-specific rule in the threshold is a term-length requirement: "All lease terms must extend a minimum of five (5) years past the affordability commitment period."
That rule has real teeth given HHFDC's affordability terms. LIHTC awards under the 2026 QAP carry a minimum affordability period of 45 years, and "all owners will waive their right to request a qualified contract" -- meaning there is no early-exit mechanism at year 14 or 15 the way there can be in some other states. A land lease therefore needs on the order of 50 years of remaining term (45-year affordability commitment plus the 5-year cushion) measured from the relevant start point to satisfy the threshold outright, which is a real, checkable constraint on any ground lease that is decades into its own term already.
| Tenure type | What a screen needs to confirm |
|---|---|
| Fee simple | Standard deed and title review; no lease-term math required |
| Private ground lease (e.g., from a large landholding estate) | Remaining term against the ~50-year floor described above; assignment/subletting rights; any use restrictions tied to the ground lessor's own trust or charter documents |
| Department of Hawaiian Home Lands (DHHL) trust land | DHHL's standard homestead lease is a 99-year lease to a Native Hawaiian beneficiary at $1 per year (extendable to a 199-year aggregate term) under the Hawaiian Homes Commission Act of 1920. This pass could not independently confirm the specific lease vehicle DHHL uses when it partners with a developer on a non-homestead LIHTC rental project (as opposed to a homestead lease to an individual beneficiary) -- that structure should be confirmed directly with DHHL rather than assumed to be the standard 99-year homestead lease. |
| State or County government-owned land | A lease from a State or County agency (including HHFDC) on land the agency already owned before the application date can itself be worth up to 5 points under Criterion 8 -- but land the agency acquires after the application date does not qualify. |
HRS chapter 343 is Hawaii's own environmental review law, and it runs independently of zoning
Hawaii Revised Statutes chapter 343 -- often described as Hawaii's own "mini-NEPA" -- requires an environmental assessment for actions that fall into any of nine statutory categories. The most likely trigger for an affordable housing deal is the first one: proposing "the use of state or county lands or the use of state or county funds," with carve-outs for feasibility/planning studies the agency has not yet approved or funded and for the use of state or county funds solely to acquire unimproved real property. The other eight triggers are independent of funding source and turn entirely on where the site sits: land in a conservation district, a shoreline area (as defined in HRS Sec. 205A-41), a designated historic site, the Waikiki Special District on Oahu, certain county general-plan amendments, reclassification of conservation-district land, new or expanded helicopter facilities affecting any of the above, and a short list of heavy infrastructure uses (wastewater treatment, waste-to-energy, landfill, oil refinery, or power-generating facilities).
| Trigger | Practical read for a LIHTC deal |
|---|---|
| Use of state or county lands or funds | Applies if the site is state- or county-owned (including DHHL trust land, discussed above) or if the deal draws an HHFDC loan such as the Rental Housing Revolving Fund (RHRF) -- a genuinely common fact pattern in Hawaii given how much land the State, counties, and DHHL hold. A purely privately financed deal on privately held fee-simple land may fall outside this trigger, but that has to be confirmed fact-by-fact rather than assumed. |
| Shoreline area (HRS Sec. 205A-41) | Triggers regardless of funding source. "Shoreline area" is defined as the land between the shoreline and the shoreline setback line, so any coastal-adjacent site should assume this trigger applies until a shoreline determination says otherwise. |
| Conservation district land / reclassification | Triggers regardless of funding source; also independently affects the entitlement pathway (see Phase 3). |
| Historic site (National or Hawaii Register) | Triggers regardless of funding source; relevant to acquisition/rehabilitation of older buildings in particular. |
When chapter 343 does apply, the process runs roughly parallel to NEPA's: a draft Environmental Assessment goes out for 30 days of public comment, the agency responds in writing and issues a Finding of No Significant Impact or determines an Environmental Impact Statement is required, and a required draft EIS gets 45 days of public comment before a final statement is prepared. Final acceptance authority rests with the Governor (or a designee) for actions involving state land or funds, or the Mayor (or a designee) of the relevant county for actions involving only county land or funds -- and acceptance of a required final statement is "a condition precedent to implementation of the proposed action." This is a genuinely separate approval track from zoning, and -- as covered in Phase 3 -- it is not exempted by HHFDC's Chapter 201H fast-track process.
Coastal and floodplain due diligence: NFIP plus a county-administered Special Management Area permit
All four of Hawaii's counties participate in the National Flood Insurance Program, with DLNR's Engineering Division acting as the state's NFIP coordinating agency and liaison to FEMA; each county separately adopts and enforces its own floodplain development ordinance consistent with 44 C.F.R. Sec. 60.3, and county floodplain administrators are the right first call for current Flood Insurance Rate Map status and any local standards stricter than the federal minimum.
Coastal sites carry an additional, Hawaii-specific layer: the Special Management Area (SMA) created by HRS chapter 205A (the state Coastal Zone Management Act). "Development" within a county's mapped SMA -- a broadly defined term covering grading, density or intensity changes, and construction or alteration of structures, with narrow carve-outs like small single-family additions -- requires an SMA permit before any other permitting agency may authorize the project. The statute splits SMA permits into two tiers by dollar valuation: an SMA minor permit for development valued at $500,000 or less with no substantial adverse environmental effect, and a full SMA use permit -- a public-hearing process -- for anything valued above $500,000 or with a potential substantial adverse effect. Because almost any LIHTC new-construction project will price well above $500,000, a coastal LIHTC site should be assumed to need the full SMA use permit, not the faster minor permit, until proven otherwise.
Shoreline setback is a separate number from the SMA boundary itself. HRS Sec. 205A-43 sets a statutory floor and ceiling of "not less than twenty feet and not more than forty feet inland from the shoreline," but counties have been authorized (and have generally moved) to extend that further with their own erosion-rate-based formulas since Act 16, Session Laws of Hawaii 2020 -- Maui's ordinance, for example, ties its required setback to a projected erosion rate over a 50-year horizon rather than the flat 20-to-40-foot state default. A screen should pull the specific county's current shoreline-setback ordinance rather than rely on the state statutory range as the operative number.
The threshold due-diligence package, item by item
| Requirement | Detail |
|---|---|
| Site Control | Executed lease/sales option agreement, fee simple deed, executed land lease, or other HHFDC-acceptable documentation, for every proposed site; lease terms must run at least 5 years past the affordability commitment period |
| Phase I Environmental Assessment | Required for all applications, dated within one year of the application deadline; acquisition/rehabilitation deals must additionally address lead-based paint and asbestos |
| Preliminary Engineering Report (new construction) | Completed within one year of the application date; must cover water, sewer, drainage, electrical, and roadway needs, plus cost estimates and a project timeline |
| Capital Needs Assessment (acquisition) | Third-party assessment identifying deferred maintenance, code violations, and health/safety issues; all units must be reviewed |
| Zoning Approval/Compliance and SMA (as applicable) | Expected at the time of application under Project Readiness, with documentation satisfactory to HHFDC |
None of these five items are scored criteria in themselves -- they sit in the Minimum Thresholds section, where failing even one results in immediate rejection of the application. Whatever entitlement or environmental-review work remains genuinely open after this package is assembled is what then gets scored, sometimes heavily, under Criterion 4, Applicant's Readiness (covered in Phase 1 and Phase 3).
Where this goes wrong
- Assuming a land lease is a weaker or disfavored form of site control under HHFDC's threshold -- the QAP lists an executed lease/sales option agreement, a fee simple deed, and an executed land lease side by side as equally acceptable; the only leasehold-specific rule is that lease terms must run at least five years past the affordability commitment period.
- Not checking a ground lease's remaining term against the 45-year minimum affordability period (plus the 5-year cushion, plus the qualified-contract waiver, which removes any early-exit option) -- roughly 50 years of remaining term is the real floor, a genuine constraint on older or partially elapsed leases.
- Assuming HRS chapter 201H's zoning/planning exemption (covered in Phase 3) also reaches Hawaii's own environmental review law -- HRS Sec. 201H-38 exempts a project only from statutes, ordinances, and rules 'relating to planning, zoning, construction standards for subdivisions, development and improvement of land, and the construction of dwelling units'; chapter 343 is a separate statute the exemption never mentions, and the QAP itself scores the two as separate outstanding-approval items.
- Assuming chapter 343 review is triggered by the federal LIHTC allocation itself -- its triggers run to the use of state or county lands or funds (with carve-outs for feasibility studies and unimproved-land purchases), conservation-district land, shoreline areas, historic sites, the Waikiki Special District, and a short list of other named actions; a privately financed, privately held fee-simple site outside those categories may not trigger it at all, while a project touching state/county land (including DHHL trust land) or an HHFDC RHRF loan very likely will -- this has to be checked fact-by-fact.
- Assuming a coastal-adjacent site's SMA review will be the faster minor permit -- any development valued over $500,000, which covers essentially all LIHTC new construction, requires the full SMA use permit once the site falls within a county's mapped Special Management Area.
- Relying on the statutory 20-to-40-foot shoreline setback as the number that actually governs -- Act 16 (2020) authorized counties to adopt their own erosion-rate-based setback formulas that extend well past the state floor, so the operative setback has to come from the specific county's current ordinance.
- Treating 'leasehold' in Hawaii as one uniform tenure type -- a DHHL Hawaiian Home Lands parcel (trust land restricted to Native Hawaiian beneficiaries, ordinarily held under a 99-year homestead lease) is a fundamentally different instrument from a private ground lease from a landholding estate, and the specific mechanism DHHL uses for a non-homestead LIHTC rental partnership was not confirmed in this pass -- verify directly with DHHL rather than assume.
- Treating the Phase I Environmental Assessment as satisfying HRS chapter 343 (or vice versa) -- they are two entirely separate regimes: the Phase I is a private, ASTM-style environmental liability screen required by HHFDC's own threshold, while chapter 343 is a public, state-law environmental review process with its own triggers, comment periods, and approving authority.
- Assuming the state's NFIP coordinating role means DLNR itself administers floodplain permitting -- each of Hawaii's four counties adopts and enforces its own floodplain ordinance; DLNR's Engineering Division is the state liaison to FEMA, not the local permitting authority.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies