Committee advances ADU financing and deed restriction program to help local residents afford housing

The House Judiciary & Hawaiian Affairs Committee voted Feb. 6 to advance House Bill 740, which would establish an accessory dwelling unit (ADU) financing and deed-restriction program. The program would provide county grants to eligible homeowners or buyers to cover construction and development costs and allow counties to purchase deed restrictions that preserve affordability.

Supporters and policy rationale: Witnesses representing housing and advocacy groups, including Hawaii Appleseed, Holomua Collaborative and Housing Hawaii’s Future, testified in favor of the bill. They said the program creates a legal mechanism used in other high-cost communities for generating a local-only affordable housing stock that is not tied to income thresholds but remains restricted to residents. "This is a unique innovation to help our affordable housing crisis ... it essentially creates its own locals only market," a Hawaii Appleseed representative said.

Committee amendments: The Attorney General recommended inserting appropriate standards for the counties’ award of grants; committee members accepted AG guidance to add written standards or criteria for grant awards. The Department of Taxation asked for clarifying language to ensure transfers of deed restrictions are not treated as conveyances for tax purposes; the committee adopted language to reflect that intent. The Realtors association asked that deed restrictions not be perpetual; they recommended amortized restrictions (for example, 10 years) to avoid long-term land-use constraints, but the housing committee chair did not concur with that proposed change at the time of the meeting.

Equity and eligibility questions: One member, Representative Shimizu, asked whether the program should prioritize lower-income residents rather than being income blind; he recorded a reservation during the roll call. Housing proponents argued the design intentionally creates a broad locals-only pool to preserve entry opportunities across a range of incomes and to enable workforce retention.

Next steps: Staff will prepare amended bill text incorporating the AG and taxation recommendations. The bill will proceed to subsequent committee stages with the adopted clarifications.

Lede: The committee advanced HB740 to create a county-administered ADU financing and deed-restriction program designed to preserve locally restricted housing units.

Nut graf: The program aims to expand attainable housing options through grants for ADU construction and by enabling counties to buy deed restrictions that keep units affordable to local residents; the committee added AG and tax clarifications and asked about prioritization of lower-income residents.

Ending: Stakeholders will continue negotiating prioritization and deed-restriction duration before the bill reaches subsequent committees.