Developers might have to set aside a larger ratio of affordable housing when building new residential towers in Kakaako in the future.

Currently, all residential projects, regardless of size, must set aside 20 percent of units as below-market housing.

With Senate Bill 1350, projects on midsize lots between 20,000 and 79,999 square feet must set aside 20 percent, while projects larger than 80,000 square feet—or 1.8 acres—must set aside 30 percent.

Commercial projects larger than 20,000 square feet, meanwhile, must set aside 10 to 20 percent of their floor area for affordable projects.

In five years these set-aside amounts are scheduled to increase 5 percent- age points, unless the state Legislature decides there is adequate affordable housing in Kakaako at that time.

The state Hawaii Community Development Authority, which oversees redevelopment in Kakaako, will enforce the new rules.

General Growth Properties, which plans more than 4,000 residential units on the 60 acres it owns at Ward, says the bill places unrealistic economic burdens on developers in today's economic climate, particularly when funding is limited.

Kakaako landowners JN Group Inc., Waterhouse Inc. and Cuna Mutual Group also testified against the bill.

Kamehameha Schools, which has a 29-acre master plan under consideration by HCDA, called the bill damaging.

Market-rate units have to be priced higher in order to foot the costs of the reserved units, and homebuyers also might have to wait two to three years to move in while required reserved housing is being completed.

But commercial tenants planning to remodel also will be affected.

“;The way we read this bill, it imposes new exactions on purely commercial businesses that take effect if they renovate, expand or change their use,”; said Kamehameha Schools spokeswoman Ann Botticelli.

Initially, the bill proposed setting aside 50 percent of units as reserved housing, but HCDA Director Anthony Ching said that would have been problematic, prompting developers to subdivide larger parcels or driving them away.

The Kakaako district has about two dozen developable lots larger than 1.8 acres, with General Growth and Kamehameha Schools being the largest private landowners. Most recent projects have been mixed use, offering a mix of residential and commercial uses.

Ching said developers of the larger lots also can offset the requirements by transferring land to HCDA or offering affordable rentals for 20 years.

A reserved unit must be priced to target a family making up to 140 percent of the median income, or $112,420 in Honolulu, or rented to a family making up to 100 percent of the median income, or $80,300.

Developers no longer can offer cash payments instead of delivering affordable units, following the passage last month of House Bill 1186, which became law without the governor's signature.