New laws aim to turn tide on housing crisis

HONOLULU — Gov. Josh Green signed five “boring” but constructive bills into law Tuesday, along with a highly contentious one, aimed at increasing the affordable housing supply in Hawai‘i.

Green said the new laws will produce incremental, long-term improvements in the state’s housing market where most single-­family homes are priced beyond the reach of working-­class households.

Of the six bills, the one that drew the most public attention at the Legislature, as well as opposition from many lawmakers and community members, will allow at least two accessory dwellings in addition to a main home on lots zoned primarily for single-family housing, subject to some county restrictions.

“This is a very straightforward way to help, in the right place, build some additional capacity for our people so that they don’t have to leave and be in other states,” Green said of the measure, Senate Bill 3202. “We have to take action. We can’t just keep kicking the can down the road.”

U.S. Sen. Brian Schatz, D-­Hawai‘i, participated in Tuesday’s bill-signing ceremony in Green’s office at the state Capitol, and praised SB 3202 for reversing some of what he called one-way ratcheting of regulations restricting housing development statewide over decades.

“It was very difficult to arrive here today because it took courage, tenacity, and it took an unwillingness to give up even under the most difficult political circumstances,” Schatz said.

“We are finally doing something meaningful to make it easier for families, workers and local people to live in Hawai‘i and afford a place of their own,” he continued. “If you really care about the firefighter and the teacher, the construction worker, the elderly, the disabled, the student, you have to allow them to find a place to live. And that’s what this bill does. … Some things matter more than the aesthetics of your neighborhood.”

Schatz and others who participated in the ceremony credited Michael Dahilig, a former Kaua‘i County planning director and managing director who now serves as senior policy counsel for Schatz, for instrumental work helping get SB 3202 through the Legislature earlier this year.

The biggest criticisms of the bill during legislative hearings included a contention that investors will buy up more housing to add rental units that won’t be affordable to most residents, and that higher allowable density will make property more expensive while degrading neighborhoods and the quality of life for community members.

The Honolulu City Council also passed a resolution opposing SB 3202.

Debate over the bill was vigorous, and absent from the final draft was language from earlier versions of SB 3202 that would have allowed residential lots as small as 1,200 or 2,000 square feet, in contrast to existing common minimum lot sizes from 3,500 to 10,000 square feet typically for one house in many neighborhoods.

Final votes to approve the bill were 29-22 in the House of Representatives and 16-9 in the Senate.

The new law gives counties until the end of 2026 to craft ordinances to carry out the mandate to allow at least two accessory dwelling units, also known as ADUs or “granny flats,” on lots primarily zoned for single-family use.

Counties may condition such additional homes on adequate infrastructure and meeting requirements for parking, setbacks from property lines, building coverage limits and other things. Homeowner community associations also will be able to prohibit the law from applying under existing covenants.

Green said it is too difficult to estimate how many ADUs might be developed under the new law but that tens of thousands of properties have the potential.

The governor cited a recent University of Hawai‘i Economic Research Organization report that said high home prices and interest rates made the median-­priced single-family house in 2023 affordable to only 20 percent of Hawai‘i households, down from 30 percent in 2022 and 44 percent in 2021.

“Only 1 in 5 of our households here in Hawai‘i can afford a median (priced) single-family home,” he said. “No normal person can afford a house, basically, without really reaching. It’s just too hard.”

Since 2021 the median sale price for single-family homes has exceeded $1 million on O‘ahu, Maui and Kauai.

State Rep. Luke Evslin, chair of the House Committee on Housing, was the biggest champion of SB 3202 at the Legislature and said during Tuesday’s ceremony that the new law will lead local households to provide housing for family members and other residents.

“SB 3202 will enable three generations of a family to live with dignity on the same property,” he said. “It will enable aging kupuna to age in their home. It’ll enable young homeowners like myself to afford a mortgage by renting out portions of their home.”

Evslin (D, Wailua-­Lihu‘e) also said the six bills enacted Tuesday represent the most important housing and zoning regulation reform passed by the Legislature in probably over 40 years.

The other five signed bills, which Green said are boring but do a lot, are:

• SB 2133, which in part allows the Hawai‘i Housing Finance and Development Corp., a state agency, to issue bonds for housing project infrastructure.

• SB 2066, which broadens criteria for developers to obtain financial and zoning benefits under an HHFDC program promoting moderate-priced housing construction.

• House Bill 1760, which allows HHFDC or a county to establish a “bond recycling program” to help finance affordable rental housing and ensure that such bond debt does not affect the state’s debt limit.

• HB 2090, which as of Jan. 1 will allow residential uses in areas zoned for commercial use to be considered permitted under certain circumstances, and requires counties to allow adaptive reuse of commercial buildings in building codes.

• HB 1925, which furthers an ongoing effort to update the 1978 State Planning Act and its long-range planning objectives for housing and other things.

State Sen. Stanley Chang, chair of the Senate Committee on Housing, said the package of bills signed Tuesday will help expand housing production around the state and address a shortage in the market that for years has helped drive up prices.

Chang (D, Hawai‘i Kai-­Kahala-Diamond Head) said his message to the people of Hawai‘i who are burdened by high housing costs and are being driven out of state is that change is coming.

“The tide is turning,” he said. “And very soon you will see a ton more housing being built just for you local people across the entire state,” he said.