Progress Report: Lawmakers Fund More Housing, Not Special Treatment for Locals

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In 2021, Nolan Hong and his wife were trying to buy their first home on Oʻahu. They kept getting outbid with cash offers above the asking price. 

“It became clear that many of the buyers we were competing against were not in the same boat as us — a local family simply trying to put down roots,” the couple wrote in legislative testimony supporting the Kama’aina Homes Program bill.

It was one of two bills proposed in this year’s legislative session that aimed to address the housing crisis by setting aside certain properties for residents. But lawmakers couldn’t hash out their differences, and both bills died.

Instead, the Legislature passed bills meant to boost the supply of housing overall. While those bills could address the shortage behind rising home prices, they are likely to take longer — in some cases, years — to have an impact.

Although advocates were disappointed by the failure of the Kama’aina Homes bill, they said the session shows that the state is making progress to increase the housing supply and bring down costs.

“We’ve had a chronic housing crisis here in Hawai‘i for decades, and so we’re not going to solve it with a simple cure-all,” said Perry Arrasmith, director of policy at Housing Hawaiʻi’s Future, a group that advocates for workforce housing. “Our housing shortage is 1,001 different pieces of a constantly shifting puzzle.” 

No Homes Reserved For Locals

The bill that Hong and his wife, Jamie Yamagata, testified in favor of would have funded county programs that give homeowners or homebuyers grants in exchange for agreeing to deed restrictions that limit ownership to people who work in Hawaiʻi. 

A similar bill would have allocated funds so counties could provide grants to homeowners to construct accessory dwelling units — separate living quarters on the property — in exchange for deed restrictions. 

The bills were based on a program in the ski town of Vail, Colorado. Since 2018, about 1,000 homes have been taken off the market in Vail for people who don’t live or work there, according to the text of one bill. 

Advocates said the bills’ failures set back efforts to offer immediate help to residents in a state where the median single-family home price is now just over $1 million, more than half of renters pay upwards of 30% of their income in rent, and a quarter of homebuyers in the last quarter of 2024 lived elsewhere.

“We missed a huge opportunity to give counties power to say, you know what, we’re going to give residents money so that right now, when they sell it or when they rent out that property, we can 100% guarantee it’s going to another resident,” said Arjuna Heim, director of housing policy at Hawaiʻi Appleseed, a social justice policy research and advocacy organization.

State Sen. Stanley Chang, chair of the Senate Housing Committee, said he supports deed restrictions in theory but believes giving grants to a small number of people is an inefficient use of taxpayer money. He argued that low-interest loans would be better because as they’re paid off, that money can be used to assist others.

Chang said lawmakers negotiated the terms of both bills but couldn’t get to yes before the session ended. 

“We got closer and closer to common ground,” he said. “We just ran out of time.”

$200 Million To Lend To Developers

Lawmakers appropriated $200 million to a program offering low-interest loans to developers to build affordable rental housing. That’s on top of $300 million provided three years ago. More than 2,000 below-market-value units built with the assistance of the 2022 allocation are expected to come on line this year. 

The fund has $186 million available for other projects, said Gordon Pang, a spokesperson with the state’s Housing Finance & Development Corporation.

Under another bill that passed and that advocates lauded, the fund would also be used to encourage higher density development in neighborhoods around transit stations, like those for Honolulu’s Skyline rail system. 

Under the bill, counties that want the state to fund mixed-income rental housing in those neighborhoods would have to meet density standards established in the bill. It requires those projects to be approved by planning officials based on objective standards rather than by elected officials.

The Legislature has not yet funded that program, said Rep. Luke Evslin, chair of the House Housing Committee, but he said he hopes it will next year.

“Now we have the definition of density in statute, and we should over time be tying more and more funding sources to that definition,” Evslin said.

Housing advocates acknowledged the impacts of the high-density development program won’t be felt for some time, but they said the bill lays the foundation to pursue such housing in urban areas. 

“It’s a very forward-thinking bill,” Arrasmith said.

Speeding Up Project Approvals

Lawmakers also passed bills that aim to break up bureaucratic logjams blamed for holding up projects.

Several bills tackle delays at the state’s Historic Preservation Division, which reviews development proposals to determine their impact on historic and cultural properties. 

The division serves a critical purpose in a state with thousands of Native Hawaiian historic and sacred sites threatened by tourism and development. But housing advocates and developers say those reviews can slow construction because under state law, any structure older than 50 years is potentially historic.

A study by the libertarian group Grassroot Institute of Hawaiʻi found that the Historic Preservation Division handled 2,300 projects between 2021 to 2024 and took an average of 94 days to review each one.

One bill tightened the state’s definition of a historic structure, adding that it must be eligible for the state’s register of historic places. The bill also excluded certain projects from historic review, including some on existing residential property. 

Another bill allows the understaffed office to hire outside consultants to conduct reviews.

“Obviously there are a lot of things here that need historical review,” said Ted Kefalas, director of strategic campaigns at the Grassroot Institute. But “not everything over 50 years is historical,” he said, and if the preservation division “needs a long time to look at these things, it’s OK to ask for help.”

Self-Permitting Bill Weakened

Another bill that aims to cut red tape would have allowed architects to sign off on building permits for certain projects themselves if a county doesn’t do so within 60 days. The bill cited a study that found it took Hawaiʻi three times as long to issue building permits than the nationwide average.

Justin Tyndall, a University of Hawaiʻi economics professor who co-authored the 2022 study, said the bill had been watered down as it made its way through the Legislature.

As introduced, the bill would have required counties to issue a building permit within 60 days if a project met certain conditions. By the time the bill was forwarded to the governor’s desk, it simply said that after 60 days, applicants can apply for an expedited permit that they could sign themselves if certain conditions were met — including that the building is under three stories tall and that the architect is adequately insured and absolves the county of liability.

The bill “might result in shorter permitting times, which is probably helpful,” Tyndall said. But it’s “probably not a game changer.”

Housing advocates across the ideological spectrum were more hopeful than Tyndall, but they said any impact of the bill would depend on whether counties embrace the process. “It’s a question of whether they play by the spirit of the law or slow-walk it,” Kefalas said.

One Honolulu architect whose firm handles multi-family, affordable and workforce housing said he is concerned about the liability that might come with signing permits for the firm’s own projects.

“The permitting process is so slow and onerous here, and time is money,” said Grant Chang, a principal at Lowney Architecture. “And something like this could really help. But I think we’re very cautious about it.”

Last week, a similar self-certification program developed by the Honolulu City Council was launched, 18 months after it was created. The program’s start was delayed by the same staffing issues that had led to a backlog in building permits, officials said.

Hawaiʻi’s Changing Economy” is supported by a grant from the Hawaiʻi Community Foundation as part of its work to build equity for all through the CHANGE Framework.