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SB3202 still most important housing measure this year

The following testimony was submitted by the Grassroot Institute of Hawaii for consideration on April 1, 2024, by the House Committee on Housing, House Committee on Water and Land, and House Committee on Judiciary and Hawaiian Affairs.
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April 1, 2024, 2 p.m.
Hawaii State Capitol
Conference Room 325 and Videoconference

To: House Committee on Housing
      Rep. Luke A. Evslin, Chair
      Rep. Micah P.K. Aiu, Vice Chair

      House Committee on Water & Land
      Rep. Linda Ichiyama, Chair
      Rep. Mahina Poepoe, Vice Chair

      House Committee on Judiciary & Hawaiian Affairs
      Rep. David A. Tarnas, Chair
      Rep. Gregg Takayama, Vice Chair

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

RE: TESTIMONY IN SUPPORT OF SB3202 SD2 — RELATING TO URBAN DEVELOPMENT

Aloha Chairs, Vice-Chairs and other members of the committees,

The Grassroot Institute of Hawaii would like to offer its strong support for SB3202 SD2, which seeks to increase Hawaii’s supply of housing by facilitating the construction of accessory dwelling units.

The aim of this bill is to boost the construction of smaller, more affordable housing units which would help to bring down the cost of housing statewide.

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

Specifically, SB3202 SD2 would 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 SD2 is its embrace of smaller lot sizes.

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 multifamily 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 should be accompanied by adjustments to rules regarding setbacks and floor area ratios, which this bill addresses with respect to county rulemaking.

It must be noted that the bill allows for subdivision to lots of 2,000 square feet, but provides a path for counties to allow smaller lots if they wish to do so.

Finally, SB3202 SD2 takes a sensible approach to impact fees, which are just one more element that can add to the cost of construction.

Specifically, this bill would allow impact fees to be calculated based on a development’s square footage. In addition, it would minimize additional fees on the conversion of existing structures and allow for the calculation of water/sewage fees based on the number of fixtures in the development.

We at Grassroot do have one concern, namely that the intent of the bill could be frustrated through the creation of unnecessary regulations on ADU construction at the local level. This has happened with similar ADU laws in other states, necessitating additional legislation to allow ADUs to become more effective as a housing solution.[3] We urge the Legislature to put a priority on removing regulatory barriers and streamlining permitting for this and all other housing bills.

Nonetheless, this bill has the potential to increase Hawaii’s housing supply and bring down the cost to rent or buy a home in Hawaii. We strongly urge you to pass SB3202 SD2.

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] Emily Hamilton and Abigail Houseal, “A Taxonomy of State Accessory Dwelling Unit Laws,” Mercatus Center, March 30, 2023.

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