Feds intervene to stop two new Hawaii bills

The Department of Housing and Urban Development (HUD) has stepped into stop two new Hawaii bills that involve how the state handles its housing procurement processes. HUD has instructed the State and counties to stop applying the two laws to procurement contracts that use HUD Community Planning and Development (CPD) funds. The bills were originally vetoed by Governor Lingle but the legislature managed to override the vetoes.

The bills require that 80% of the workforce on public construction projects be local residents and favor bidders who have apprenticeship programs. The bills also contained local residency requirements for contractors. HUD stepped in citing that the agency’s procurement requirements prohibit “the use of statutorily or administratively imposed in-state or local geographically preferences in the evaluation of bids or proposals.”

In a September 16, 2010 HUD Region IX information bulletin, Mark Chandler, director of HUD’s Office of Community Planning and Development, announced that Act 17 of 2009 and Act 68 of 2010 impose “preferences in violation of HUD procurement regulations.”

The HUD Information Bulletin also stated that, “due to the seriousness of the matter and the impact on all HUD funded projects in Hawai‘i, the Office of CPD in Honolulu has referred this matter to their federal Office of General Counsel” in Washington, D.C.

While the bills are under review, HUD instructed the state and all counties as well as local contractors that these two laws may not be applied to construction projects or other procurement projects using federal funds. Hawaii is asking for a federal ruling on the bills and the Governor is pressing the state legislature to repeal the bills when they reconvene in January.