After more than 30 years of trying to successfully redevelop Kaka'ako to create a vibrant, well-planned community, you'd think government would get better at it.

But the Legislature's latest effort to boost affordable housing in the district — Senate Bill 1350 — clearly misses the mark.

The bill mandates that improvements for both commercial and residential property 20,000 square feet or larger must include a certain number of "reserved housing" units — available to those with moderate incomes also known as workforce housing — based on the square footage of the lot.

In short, a pool-supply company would be bound by the same rules as an apartment-building owner.

And before the business owner can upgrade or develop the property, that landowner would have to build reserve housing — or be forced to purchase pricey "housing credits" from a affordable housing developer.

The bill places an unrealistic burden on small-business owners in the area, particularly on those not involved in the housing business, and stifles property development at a time when the economy needs the boost.

SB 1350's overly broad requirements will discourage small landowners from improving their properties, potentially creating more blight that runs counter to redevelopment efforts.

The winners here would arguably be large housing developers, who could benefit by building excess units and cashing in on selling the credits.

Another downside: The bill imposes a moratorium on all applications for building permits for the affected properties until the Hawaii Community Development Authority adopts rules to implement the new policy — that could take more than a year. That's hardly the economic policy to set in these difficult times; Hawai'i's small businesses don't need more roadblocks. They need incentives to thrive.

Gov. Lingle rightly vetoed SB 1350 on Monday. The Legislature should sustain the veto when it meets in special session today.

In principle, encouraging the construction of more housing in Kaka'ako is a good idea. The area's prime urban location makes it well suited for high-density, profitable development that can subsidize much-needed lower-cost housing.

And shaping a healthy mixed-use community, which includes commercial/industrial development, has been the elusive goal for Kaka'ako since HCDA took the regulatory reins in 1976.

Proponents of SB 1350 argue that smaller businesses in the district have benefited from infrastructure improvements and rising property values. That may be; it's certainly reflected in their higher property taxes.

But legislation to increase affordable housing in Kaka'ako needs to be better than this.

It needs to effective, timely and fair.

SB 1350 is not.