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SB3202 one of ‘most important’ housing bills of 2024 session

The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Senate Committee on Housing on Feb. 6, 2024.
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Feb. 6,  2024, 1:15 p.m.
Hawaii State Capitol
Conference Room 225 and Videoconference

To: Senate Committee on Housing
      Sen. Stanley Chang, Chair
      Sen. Troy N. Hashimoto, Vice-Chair

  From: Grassroot Institute of Hawaii
             Ted Kefalas, Director of Strategic Campaigns

RE: TESTIMONY IN SUPPORT OF SB3202 — RELATING TO URBAN DEVELOPMENT

Aloha Chair Chang, Vice-Chair Hashimoto and Committee Members,

The Grassroot Institute of Hawaii would like to offer its strong support for SB3202, a far-reaching bill that seeks to grow housing by removing many of the barriers to the construction of smaller and more economical units.

The aim of this bill is to boost the construction of smaller, more affordable “starter homes” across the state, thereby incentivizing homebuilders to build smaller houses and bring down the cost of housing statewide.

Every element of this bill reflects the growing consensus among housing experts that zoning reform is essential to increasing housing supply.

In a recent Grassroot Institute report, “How to facilitate more homebuilding in Hawaii,” policy researcher Jonathan Helton specifically addressed many of the provisions found in this bill.[1]

Specifically, SB3202 would permit the construction of more than one home per residential lot in urban districts; remove barriers to accessory dwelling units; provide for the subdivision of lots; and reform impact fees to prevent them from being a barrier to development.

One of the most significant elements of SB3202 is its embrace of smaller lots as a way to promote the construction of smaller, more affordable homes, or “starter homes.”

Currently, minimum lot sizes for homes in Hawaii range from 3,500 square feet for a single family-home to 10,000 square feet for a duplex or multi-family unit. These large lot requirements are intended to guarantee a certain amount of yard space. However, they inadvertently incentivize the creation of larger, more expensive homes.

“Faced with having to provide a certain amount of land for each home, it makes logical sense that many homebuilders would build the largest houses allowable to maximize their profitability,” wrote Helton in the Grassroot report.. “If smaller lots were allowed, thus reducing project costs, homebuilders would find it financially feasible to build smaller, less expensive homes”[2]

In order to be feasible, subdivision of lots must be accompanied by adjustments to rules regarding setbacks and floor area ratios, which this bill includes.

It must be noted that the bill allows for subdivision to lots of 1,200 square feet, but it does not require it, thereby allowing lot size to be determined by the project and available space.[3]

Finally, SB3202 takes a sensible approach to impact fees in light of the goals of the bill. Impact fees are just one more element that can add to the cost of construction.

By changing the way that impact fees are calculated so as to minimize additional fees on the conversion of an existing structure and base water/sewage fees on the number of fixtures rather than square footage, this bill would help reduce the cost of homebuilding in our state.

In short, SB3202 has the potential to increase Hawaii’s housing supply and bring down the cost to rent or buy a home in Hawaii. That alone makes it one of the most important pieces of legislation you will consider this year.

We strongly urge you to pass SB3202.

Thank you for the opportunity to testify.

Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
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[1] Jonathan Helton, “How to facilitate more homebuilding in Hawaii,” Grassroot Institute of Hawaii, December 2023, p. 6.
[2] Ibid, p. 6.
[3] Ibid, p. 16.

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