New Bipartisan Bill Aims to Boost Transit Oriented Affordable Housing in Hawai

Housing affordability remains one of the most pressing challenges facing working families across Hawaiʻi. Because our island state deals with unique geographical constraints, higher material shipping costs, and inflated land values, building deeply affordable housing often leaves developers facing massive financing gaps.

To help bridge that divide, U.S. Representative Ed Case (HI-01) teamed up with Guam Delegate James Moylan to introduce the bipartisan Transit Oriented Development (TOD) Act of 2026.

The legislation takes aim at a long-standing federal funding bottleneck, offering a smart mechanism to channel more equity into affordable housing projects located near public transit hubs statewide.

Fixing a Flawed Federal Formula

At the heart of the bill is an enhancement to the Low-Income Housing Tax Credit (LIHTC)—the primary federal tool used to finance affordable rental housing nationwide.

Currently, federal LIHTC allocations are distributed to states principally based on population. This system inherently disadvantages non-contiguous, high-cost jurisdictions like Hawaiʻi, Alaska, and U.S. territories. While our population is smaller, our construction and development costs are among the highest in the nation.

“Housing costs consume an outsized share of household income, forcing working families to make impossible choices between rent, groceries, and health care,” Representative Case highlighted upon introducing the bill. “To truly address affordability, we must build housing that is attainable, well-located, and connected to jobs and services.”

How the TOD Act Works: The 25% "Basis Boost"

The proposed legislation establishes a targeted 25% basis boost in tax credit allocations for affordable housing developments built within designated transit-oriented development areas.

What qualifies as a Transit-Oriented Area?

The bill defines these zones as locations served by rail, bus, harbor, or waterway transportation that are zoned for higher-density development.

While much of the media attention centers on Oʻahu’s Skyline rail corridor, the bill’s criteria are explicitly written to extend beyond rail. Because the framework includes bus routes and harbor networks paired with dense zoning, the financial incentive could unlock new project feasibility on Maui, Kauaʻi, and Hawaiʻi Island.

What does a 25% boost mean in real dollars?

According to Kali Watson, Director of the Department of Hawaiian Home Lands (DHHL), an extra 25% basis boost generates roughly $38,000 to $58,000 in additional equity per housing unit.

For a typical 100-unit affordable housing development, that equates to $3.8 million to $5.8 million in direct equity. That extra funding significantly shrinks the gap developers face when trying to pencil out a project, making stalled proposals financially viable.

Why Pairing Housing with Transit Matters

Beyond just funding building construction, the strategy behind transit-oriented development addresses the total cost of living for island residents:

• Lower Transportation Costs: Housing and transportation are typically a household's two largest monthly expenses. Building dense, affordable housing along established bus routes or multi-modal transit corridors reduces reliance on personal vehicles, cutting gas, insurance, and maintenance bills.
• Efficient Infrastructure Use: Instead of expanding outward into rural or agricultural lands, TOD focuses density where public utility infrastructure—water, sewer, and roads—already exists.
• Better Access to Jobs: Placing workforce housing along central transit corridors ensures local residents have reliable, direct commutes to commercial centers, healthcare facilities, and schools.

Your Maui Real Estate Partners

Federal policy shifts like the Transit Oriented Development Act play a vital role in setting the stage for local housing supply. As county leaders work to expand local infrastructure, zoning rules, and density incentives across Central, South, and West Maui, watching these legislative tools take shape gives us a clearer vision of our island's growth.

Whether you are looking to navigate local real estate options, track community development plans, or buy or sell a property on Maui, we are here to support you. The Smith Team is dedicated to bringing you clear regulatory insights, honest market data, and trusted guidance every step of the way.

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