University of Hawai‘i Economic Research Organization
Since 1997 UHERO has established itself as the premier source for forecasts and analysis in Hawai‘i. For over twenty years UHERO has conducted research that benefits the local community, publicized that research both locally and outside Hawai‘i, and expanded funded research on the Hawai‘i economy.
Hawai‘i Appleseed Center for Law & Economic Justice
A nonprofit committed to a more socially and economically just Hawaiʻi, where everyone has genuine opportunities to achieve economic security. Its work focuses on research, policy development, education, coalition building and advocacy.
Holomua Collective
A a 501(c)(3) nonprofit organization committed to making Hawai‘i more affordable for all working families through cross-sector relationships, providing public education and advancing public policies.
Hawai‘i wants to try a new approach to address its high housing costs and lack of available homes for residents by creating a dedicated stock of locals-only housing.
The idea is to fund the counties to buy deed restrictions from willing homeowners and forever limit occupancy of those properties to local workers. A set of legislative proposals would create two, state-funded programs—the Kama‘āina Homes Program (HB 739) and another to encourage the construction of accessory dwelling units (HB 740/SB 491).
If they pass, Hawai‘i would join communities in Colorado, California, Idaho, Massachusetts, Wyoming and New York that have replicated Vail, Colorado’s successful InDEED program.
Supporters of the Hawai‘i bills say deed restriction purchases are one of many tools that could keep working families from leaving the Islands because they would help buffer local homes from speculation, thus reducing demand. They’d also provide a meaningful way for more residents to actively contribute to a solution.
Many homes, especially those on the neighbor islands, are owned by non-residents or used as vacation rentals, according to the University of Hawai‘i Economic Research Organization’s 2024 Housing Factbook. Maui has the highest proportion of out-of-state resident owners at 32%, and Kaua‘i has the highest proportion of housing units used for vacation rentals at 18%. Statewide, only one in five local households can afford the median single-family home, and the state has the highest rents in the country.
Rep. Luke Evslin, who co-introduced the House version of the bills, said that they would ensure that homes in the programs remain in a locals-only market for perpetuity, even after the homeowner dies or sells their home.
“The value is ensuring that these things never leave that sort of locals-only market, which is why it needs to be perpetual,” he said.
This was just another way to provide housing and build a stronger fabric of the community by providing a different type of deed restriction.
How the Deed Restriction Purchases Would Work
Under the proposed bills, willing Hawai‘i resident homeowners and homebuyers would sell deed restrictions on their properties to a county. Those homeowners cannot own other deed-restricted properties, though the counties could require additional qualifications when they set up their programs.
The participants would then agree to permanently deed restrict their properties so they can only be owned or rented by individuals who work an average of 30 hours or more per week for a local employer. Individuals who are retired, involuntarily unemployed or have a disability could also live in those homes so long as they previously met that requirement.
This deed restriction would remain in place even if the property is sold or transferred to another, thus creating a perpetual source of locals-only housing.
Under the Kama‘āina Homes Program, participants could use the proceeds for anything, like to renovate their home, put towards a down payment or to pay for a child’s education. But under the ADU program, their proceeds must be used to help them build an ADU.
The counties would determine how much they’d pay for the deed restriction purchases, though Evslin expects they would negotiate with each participating property owner to determine the specific amount. Participating homes would be exempt from the state conveyance tax when sold.
In Colorado, the ski resort town of Vail pays up to 20% of fair market value for its deed restriction purchases, Jason Dietz, housing director of the Town of Vail. He previously helped neighboring Summit County launch its own version of the program, called Housing Helps, in partnership with its most populous town, Breckenridge, in 2020. Housing Helps pays up to 15% of fair market value up to a total of $150,000, he said. Both programs negotiate with applicants on the specific price of the deed restriction.
Arjuna Heim, director of housing policy at Hawai‘i Appleseed Center for Law and Economic Justice, said that the Hawai‘i proposals would empower residents to directly contribute to addressing Hawai‘i’s housing challenges and prioritize housing as a place for people to live and grow, rather than as a means for speculation.
“I want local homeowners to get involved in solving this crisis,” she said. “You say housing affordability is one of the biggest issues on your mind. We’re losing our younger generation to the mainland for better opportunity, cheaper lifestyle. Here’s your chance.”
If created, the Kama‘āina Homes and ADU Financing and Deed Restriction programs would be housed under the Hawai‘i Housing Finance and Development Corporation. Shown above are houses and condos in Makiki. | Credit: Ryan Tishken via Adobe Stock.
Modeled After a Successful Program
Evslin, who represents part of Kaua‘i and serves as the chairman of the House Committee on Housing, said the Hawai‘i bills were developed through cross-sector convenings organized by local nonprofit Holomua Collective in 2024. The gatherings brought together affordable housing advocates, developers, government officials, policymakers and financial institutions. (Holomua’s related 501(c)(4) organization, Holomua Collaborative, helped create a website to explain the Kama‘āina Homes bill.)
Hawai‘i’s proposals were inspired by Vail’s InDEED program, which began in 2017 and has since enabled the town to preserve 176 housing units for locals. The program was recognized by the Urban Land Institute, a nonprofit research and education organization, in 2020 as an innovative way the public sector is addressing the nation’s affordable housing crisis.
Like Hawai‘i, Vail has faced difficulties retaining its local workforce amid high housing prices. Vail has used various deed restrictions to help stabilize its housing and community since the 1990s and turned to deed restriction purchases as an additional tool.
“This was just another way to provide housing and build a stronger fabric of the community by providing a different type of deed restriction,” Dietz said.
The town spent a total $12.7 million on deed restriction purchases, with the average cost per restriction being $72,340 and the average cost per square foot being $86. That’s much less than the $600 to $800 per square foot construction cost and significantly faster than building a new development, he said. (To view a summary of Vail InDEED’s 176 deed restriction acquisitions as of Feb. 5, 2025, click here.)
In addition to Vail and Summit County, the Colorado towns of Aspen, Avon, Park City, Fraser and Mountain Village; Colorado’s Eagle County; California’s Truckee town and Placer County; Idaho’s Ketchum town; Massachusetts’ Nantucket town; Wyoming’s Teton County; and New York’s Old Forge town have their own deed restriction purchase programs.
Dietz said there are many ways Hawai‘i can create a similar program. Some programs have additional requirements, like mandating that homeowner participants can’t own other real estate or requiring appreciation, rental or income caps. And some, like Vail, allow businesses, rather than only natural persons, to participate as homeowners.
Dietz acknowledges there can be loopholes with allowing investors to participate. Someone could create a local LLC that gets most of its money from investments somewhere else. Vail InDEED requires that 75% of an eligible homeowner’s income must be made locally to ensure that doesn’t happen.
“The more you try to restrict it, then the more enforcement, the more application, due diligence you have to do on the program to make sure that the people you’re targeting are actually the people that are getting into it,” he said.
Dietz said Vail’s InDEED program has slowed down since 2022 due to higher interest rates, insurance, homeowner association fees and overall housing costs. In addition, many of the units ripe for deed restriction purchases have already been converted. The program acquired deed restrictions on dozens of units in each of its first four years. The program acquired restrictions on four units each in 2022 and 2023 and then one unit in 2024.
“It has slowed down, but it preserved 176 units that otherwise wouldn’t have been preserved and there’s a high probability they would be a vacation home or short-term rental or generally not utilized by a local,” he said.
I think that if people were offered, it could be $100,000 or $150,000 to build an ADU, I think it would have significant buy in, and then the value for the public is that you get a deed restriction on the main house and on the ADU forever.
Counties Already Looking at Deed Restriction Purchases
Locally, some counties have already begun looking at this model. Maui County last year launched its ‘Ohana Assistance Program to provide grants of up to $100,000 for Maui County homeowners to design and build attached or detached ʻohana units. A 10-year deed restriction will be placed on their properties, requiring that recipients be full-time residents and owner-occupants and rent the ‘ohana unit to full-time residents for at least 10 years at affordable prices.
The program was initiated by Maui Council chairwoman Alice Lee. Michele McLean, an executive assistant in Lee’s office, wrote in an email that the idea came from constituents.
ADUs have been allowed on Maui for decades and their smaller size makes them more affordable options. Making funds available to build more ADUs is on par—and often less costly—than the subsidies given to larger projects, she added.
She said the program has received applications, but no awards have been made yet while contracting issues are being worked out.
Kaua‘i County has also been exploring deed restriction purchases for some time and is developing administrative rules for a program like the proposed Kama‘āina Homes, though Kaua‘i’s may or may not have income limitations, wrote Adam Roversi, the county’s housing director, in an email.
One of Many Tools
The Kama‘āina Homes and ADU bills have received overwhelming support. Many testifiers said that the voluntary deed restrictions are needed to perpetually safeguard local homes and enable residents to compete with non-resident buyers. Evslin expects that demand for the programs will exceed available funding.
“I think that if people were offered, it could be $100,000 or $150,000 to build an ADU, I think it would have significant buy in, and then the value for the public is that you get a deed restriction on the main house and on the ADU forever,” he said.
The proposed ADU program builds on highly debated reforms enacted last year that allow at least two ADUs per residential lot statewide.
It’ll be up to the counties to decide how they’ll target their funding, but Evslin believes they’ll likely have to come up with geographic or other priorities. Dietz said when he worked in Summit County, the Housing Helps program gave higher priority to local neighborhoods where homes were rapidly being converted to short-term rentals.
Evslin emphasizes that the deed restrictions should be perpetual: “The point here is to, over time, build up a dedicated source of local housing and so perpetual, I think, is an important component of it.”
The Hawai‘i Association of Realtors wrote in testimony that perpetual deed restrictions can be problematic in land use planning as communities and property uses change. The organization suggested that the deed restrictions be amortized over 10 years but were open to alternative timeframes. The association declined to comment for this story.
Heim from Hawai‘i Appleseed said the Kama‘āina Homes and ADU programs should leverage existing county initiatives to build on administrative capacity. Purchasing deed restrictions in exchange for building an ADU could also be used alongside existing ADU incentive programs, she said. For example, Kaua‘i County already waives building permit, sewer and other fees. There are 1,980 ADUs on Kaua‘i—an increase of about 50 from 2022, said Roversi.
He added that that there are other ways to create locals-only and perpetually affordable homes, such as the county’s 99-year, limited appreciation leasehold program for Kaua‘i residents earning up to 120% of the area median income.
Others also said that Hawai‘i needs as many tools in its toolbox as possible to address its housing shortage. In Maui County, McLean said the biggest challenge is overall inventory, not just pricing.
“Until we have enough inventory, those types of voluntary deed restrictions (where the municipality purchases the encumbrance) would not accomplish what we need the most,” she wrote. “Our taxpayer funds need to be used to subsidize the building of new units today; in the future, it may make sense to use taxpayer funds to deed restrict units when we have enough inventory.”
