The Rise of Accessory Dwelling Units (ADUs) in California
In recent years, Accessory Dwelling Units (ADUs), also known as “granny flats” or “in-law apartments,” have emerged as a promising solution to the housing crisis plaguing many states across the United States. California, in particular, has been at the forefront of this movement, experiencing a veritable “ADU boom” that has transformed the state’s housing landscape.
The key to California’s success lies in its persistent effort to remove the burdensome regulations that had previously stifled ADU development. In 2016, the state passed a landmark law requiring local governments to allow ADUs in all single-family residential zones. This initial victory was just the beginning, as legislators in the Golden State continued to build upon their success with a steady stream of reforms aimed at expanding state protections for ADUs.
As local governments attempted to impose new standards and restrictions to limit ADU growth, the state responded by creating exemptions from those standards. The result has been a remarkable surge in ADU production, with the state seeing nearly 28,000 ADU permits issued in 2023 – a staggering 21% of all housing permits for that year. Even as overall housing construction remains stagnant in California, the ADU sector shows no signs of slowing down.
Lessons for Hawaii from California’s ADU Journey
Hawaii’s lawmakers have taken notice of California’s success and have made their own efforts to unlock the potential of ADUs. In 2024, the state enacted SB3202, a law that requires Hawaii’s five counties to create new zoning districts allowing for at least two ADUs on single-family lots. However, as the Niskanen Center’s analysts point out, SB3202 has a critical weakness: it grants local governments broad discretion to impose development standards that can render ADUs infeasible.
This is a common pitfall observed in states making their first foray into ADU reform, as “most states making their first effort to allow ADUs leave exploitable loopholes, which result in underwhelming initial outcomes.” California’s experience provides a roadmap for how Hawaii can avoid this trap and replicate the state’s ADU success.
1. Establish Reasonable Size, Height, and Setback Standards
One of the key challenges faced in California was the imposition of overly restrictive local regulations targeting the size, placement, and aesthetics of ADUs. Minimum lot size, floor-area ratio, street frontage, and lot line setback requirements quickly became prohibitive, stifling ADU development.
To address this, California legislators introduced the “statewide exemption ADU” in 2019, which sets height, size, setback, or other spatial standards that override local standards if they are more restrictive. This approach allows local governments to maintain some control over neighborhood aesthetics while ensuring that they do not set unreasonable standards that undermine state ADU laws.
Hawaii lawmakers should consider a similar strategy, establishing reasonable size, height, and setback standards that supersede more restrictive local regulations. This will ensure that homeowners have the flexibility to develop ADUs that are both feasible and in harmony with their communities.
2. Limit Unnecessary Fees and Charges
Excessive local government fees, such as water and utility connection fees and “impact fees” for schools and infrastructure, can also pose a significant barrier to ADU development. In California, some localities charged ADU fees as high as $50,000 per unit, which amounted to roughly one-third of the median ADU construction cost in the state.
To prevent this from happening in Hawaii, legislators should follow California’s lead and limit the fees that counties can charge for ADUs. Specifically, they should prevent counties from charging sewer and utility connection fees for internal ADUs and require that ADU impact fees be proportional to those for traditional single-family homes.
3. Eliminate Burdensome Parking Requirements
Another obstacle faced in California was the imposition of restrictive parking requirements for ADUs, which can significantly increase development costs and make them infeasible for many homeowners. To address this, California lawmakers took the step of eliminating parking requirements for ADUs located near transit.
Hawaii’s SB3202 currently grants local governments unlimited authority to impose parking requirements on ADUs. To ensure that these requirements do not become a barrier to ADU construction, Hawaii legislators should consider following California’s example and limiting or eliminating parking requirements, particularly for ADUs located in transit-accessible areas.
4. Remove Owner-Occupancy Requirements
Some local governments in California initially required property owners to live on the same lot as their ADU, known as an “owner-occupancy requirement.” This restriction kept traditional builders out of the ADU development landscape, as they typically lack the capital and resources needed to meet such a requirement.
After recognizing the detrimental impact of these requirements, California lawmakers moved to ban them three years after their initial ADU reform efforts. Hawaii should consider a similar approach, eliminating owner-occupancy requirements to allow a wider range of developers, including professional builders, to participate in the ADU market.
5. Provide Pre-Approved ADU Plans
To further encourage ADU development, Hawaii can take a page from California’s playbook by requiring all cities to create pre-approved building plans for ADUs. These pre-approved plans can make the construction process more economical for homeowners while giving communities more influence over the aesthetics of new ADUs.
Reducing the “soft costs” associated with ADU design and permitting, which often come with confusing regulatory processes, will help make the development process more accessible to a broader range of Hawaii homeowners.
Ongoing Vigilance and Proactive Reforms
The history of ADU reform in California demonstrates that building ADUs at scale is an ongoing, iterative process. As local governments continue to find creative ways to limit ADU development, state legislators must remain vigilant and remove pernicious barriers as they arise.
By closely monitoring the implementation of SB3202 and proactively addressing any exploitable loopholes, Hawaii’s lawmakers can ensure that the state’s ADU ambitions are fully realized. The success of California’s ADU boom shows that with the right state-level protections in place, Hawaii can achieve similar, if not greater, results in the years to come.
Ultimately, the lessons from California’s long and bumpy road to ADU stardom provide a valuable blueprint for Hawaii as it seeks to tackle its own housing crisis. By shielding ADUs from burdensome local restrictions and empowering homeowners to build these affordable units, Hawaii can unlock the transformative potential of ADUs and provide much-needed relief to its housing-strapped communities.
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