How Hawaii Can Make the Most of its ADU Law

An analysis from the Niskanen Cetner by George Ashford, Andrew Justus, Alex Armlovich reveals lessons for Hawaii based on California’s legalization of accessory dwelling units (ADUs), which Hawaii legalized earlier this year.

More states and cities are encouraging the construction of ADUs as one way to boost the housing supply, gently increase density in residential areas, and offer an avenue for homeowners to earn extra income. In Hawaii, SB3203 requires the creation of new zoning districts that permit at least two ADUs on single-family lots.

“Unlike in California, where pro-housing legislators have spent nearly a decade easing ADU restrictions, Hawaii law allows local governments to set restrictive development standards for ADUs. This is not uncommon; most states making their first effort to allow ADUs leave exploitable loopholes, which result in underwhelming initial outcomes.” The authors suggest that Hawaii should follow California’s lead to ensure that local governments don’t impose undue burdens on potential ADU builders.

The article highlights California’s successes, noting that “California saw nearly 28,000 ADU permits in 2023, constituting 21% of total housing permits for that year.” To address restrictions that hold back ADU development like minimum lot sizes, floor-area ratio, street frontage, and setback requirements, California passed a ‘statewide exemption ADU’ that sets standards for ADUs that override local regulations. “In other words, it requires local governments to waive requirements that would make a reasonably sized ADU infeasible.”

The analysis addresses other hurdles including unnecessary fees, parking requirements, and owner-occupancy requirements, which can also limit the effectiveness of ADU legalization. To further streamline the development process, California also requires cities to create a set of pre-approved building plans that homeowners can choose from to avoid lengthy permitting processes. This type of policy can both reduce costs for homeowners and let cities have more influence over aesthetics and design.