Bill > HB516

This bill repeals a previous law that required counties to allow at least two accessory dwelling units (ADUs) on all residentially zoned lots and instead establishes a new voluntary incentive program to encourage ADU construction. The Hawaii Community Development Authority will create an ADU housing development program that provides matching funds to homeowners who build accessory dwelling units, with funds available up to a specific maximum amount (though the exact dollar amount is not specified in the text). Additionally, the bill creates a special fund to support the program and offers a general excise tax exemption for rental income from these units for the first three years after construction, with the requirement that the tax savings be passed on to renters through no rent increases. The legislation aims to provide a more flexible approach to addressing housing shortages by offering financial incentives rather than mandating ADU construction, recognizing that the previous statewide mandate might create overly dense neighborhoods and prevent counties from tailoring housing solutions to their specific island's needs. The bill will take effect on July 1, 2025, and includes appropriations to fund the new ADU housing development program.

Housing and Urban Affairs

https://www.capitol.hawaii.gov/session/measure_indiv.aspx?billtype=HB&billnumber=516&year=2026