HI HB1741

County inclusionary mandates requiring below-market-rate units, in-lieu fees, or land dedications would be classified as housing affordability impact fees subject to constitutional "essential nexus" and "rough proportionality" standards under the U.S. Supreme Court's Sheetz v. County of El Dorado (2024) decision

Counties must complete a needs assessment study before adopting or enforcing inclusionary mandates, analyzing feasibility across housing prototypes (single-family, duplex, townhome, condo, apartment) and demonstrating the mandate won't increase market-rate prices or suppress production

Non-luxury, by-right housing projects are protected from inclusionary mandates unless the county proves no price increase will occur or provides full offsetting incentives (infrastructure, tax waivers, fee waivers)

Luxury residential projects—defined as those with prices exceeding 125% of federal conforming loan limits, rents over 200% of HUD fair market rent, density below 10 units per acre, or majority single-family detached—may be subject to proportionate inclusionary mandates supported by nexus studies

Exemptions apply to resort/vacation rental construction, projects on agricultural or conservation land, and developments under the Hawaii Housing Finance and Development Corporation or Hawaii Community Development Authority; effective date set for July 1, 3000