Navigating HHFDC vs. HCDA: Understanding Hawaii’s Different Regulatory Bodies

If you are new to development in Hawaii, you will eventually hit a wall of acronyms. The two biggest ones—HHFDC and HCDA—are often used interchangeably, but they are completely different animals.

Mistaking one for the other is a rookie move that can kill your project’s timeline.

• HHFDC is the “Bank.”
• HCDA is the “Mayor” (but only for specific neighborhoods).

At Hawaii Affordable Properties, Inc. (HAPI), we manage compliance for both. The rules for a tenant in Kaka’ako (HCDA) are totally different from a tenant in Kapolei (HHFDC). Here is the insider breakdown of who does what, and how to use them to your advantage.

Key Takeaways

• Jurisdiction: HHFDC is statewide; HCDA is strictly district-based (Kaka’ako, Kalaeloa).
• The Power: HHFDC offers financing (LIHTC); HCDA offers zoning density.
• The Loophole: You can use 201H exemptions to override zoning rules, sometimes even within HCDA districts.
• The “Fast Track”: HHFDC projects have a statutory 45-day approval clock at City Council; HCDA projects face indefinite public hearings.

The “Bank”: HHFDC (Hawaii Housing Finance & Development Corp)

The Statewide Financier.

Think of HHFDC as the state’s mortgage banker. Their primary job is to hand out money and tax credits to incentivize affordable housing anywhere in the state, from Kauai to the Big Island.

• Their Superpower: Chapter 201H Exemptions.
  • This is the “Nuclear Option” for developers. If your project is at least 50% affordable, HHFDC can grant you exemptions from “statutes, ordinances, and rules” of county planning departments.
  • Translation: You can bypass City Council zoning, park dedication fees, and height limits if HHFDC approves your project.
• The Program: They manage “Affordable Housing” (statutory term).
• The Strings Attached: If you take their money (LIHTC, HMMF Bonds, or DURF loans), you sign a regulatory agreement that HAPI manages for 15, 30, or 61 years.

The “Mayor”: HCDA (Hawaii Community Development Authority)

The Place-Based Zoning Cop.

HCDA doesn’t care about Ewa Beach or Hilo. They care about three specific places: Kaka’ako, Kalaeloa, and He’eia. Within these districts, HCDA is the government. They replace the City & County of Honolulu Department of Planning (DPP).

• Their Role: They control the zoning and design guidelines. They decide if your building is “pedestrian-friendly” enough or if your tower needs to be rotated to preserve view planes.
• The Program: They manage “Reserved Housing” (not “Affordable Housing”).
  • If you build a luxury tower in Ward Village, HCDA rules say you must set aside 20% of units for workforce income levels (typically 100-140% AMI).
• The Strings Attached: They don’t typically give you money. They give you permission to build density.

The Timeline War: Fast Track vs. Public Hearings

If time is money, know the difference.

• HHFDC (The “45-Day” Clock): Under Chapter 201H-38, once your project hits the City Council for zoning exemptions, they have 45 days to approve or deny it. If they do nothing? It is automatically approved. This statutory “shot clock” provides certainty that standard zoning changes don’t offer.
• HCDA (The “Public Hearing” Gauntlet): HCDA requires two public hearings for a Development Permit. These can be grueling. Community opposition in Kaka’ako is well-organized, and the Authority has broad discretion to delay approvals for design tweaks.

The “AMI” Math: It’s Not the Same

Warning: 100% AMI for HHFDC is not always 100% AMI for HCDA.

• HHFDC typically relies on HUD income limits, which are updated annually.
• HCDA has its own formula for “Workforce Housing” in the Mauka Area Rules.
• The Trap: If you are layering HHFDC financing on an HCDA project, you must satisfy the most restrictive rule. We often see developers pro-forma rents at HCDA levels, only to realize the LIHTC rules force them 20% lower.

Consumer Confusion: “SAE” vs. “Shared Equity”

Why your buyers get confused.

If you are selling units, you need to explain the “Golden Handcuffs” correctly, or you will face angry homeowners later.

1. HHFDC (SAE): The Shared Appreciation Equity program is a “Soft Second” mortgage. When the owner sells in Year 10, they owe the state a percentage of the profit (appreciation).
2. HCDA (Shared Equity): This is often a fixed dollar amount calculated at purchase (Fair Market Value minus Affordable Price). It sits as a lien on the property until paid.

HAPI’s Role: We act as the “bad guy” so you don’t have to. We educate buyers on these restrictions during the lottery process so they don’t claim they “didn’t know” when they try to sell 5 years later.