An exploration of the use of accessory dwelling units for senior housing in Honolulu

Introduction

Honolulu County, which consists of the entire island of Oahu, has a high and growing senior population. Residents 65 years and older consist of over 18.2% of the population of Honolulu County compared to 16% nationwide (United States Census Bureau, 2022). This population has grown from 14.5% of the total population for Honolulu County since the last census in 2010 (United States Census Bureau, 2022). Honolulu is the most populated county in the state of Hawai’i by far. Its population of almost one million consists of well over half of Hawai’i’s total population of 1.416 million (United States Census Bureau, 2022).

In addition to having a high percentage of seniors in the community, Hawai’i residents also experience a longer than average life span than their mainland counterparts. According to a study by Wu et al. (2017), “The life expectancy at birth in Hawai’i in 2010 was 82.4 years, 3.7 years higher than the national average for the total US population (78.7 years)”. These factors all play a role in issues of senior housing in Honolulu County.

Hawai’i has a long history of using homes as multigenerational housing. It is not uncommon for two to three generations to live in one house and for the house to be held within the family from generation to generation (Peterkin, 2017). According to Hoff (2020), “Using 2018 data from US Census Bureau’s 1-year American Community Survey estimates, … the share of multigenerational households in each state [was calculated]. Hawai’i had the largest share, where 7.72% of households were multigenerational.” Honolulu County also has the third highest median home cost in the United States only behind New York City and San Francisco (Burrows, 2021).

Despite the strategy of using homes as multigenerational housing, an economic strain still remains on families when an older family member requires extra care. Care homes and assisted-living facilities, although very prevalent, in the Honolulu County area are sometimes a large economic burden on families (Kukaua, 2019). Combined with this, there is also an Asian and Pacific Islander cultural factor in which the desire is for the senior family member to live at home. This desire is often shared by both the senior family member and the rest of the family (Peterkin, 2017). Taking these factors into consideration, it is determined that there is a need for a study that explores various cost reduction options in building ADUs and their application for use in senior housing.

The accessory dwelling unit (ADU) concept

According to the American Planning Association (2022), “an accessory dwelling unit (ADU) is a smaller, independent residential dwelling unit located on the same lot as a stand-alone (i.e., detached) single-family home … Internal, attached, and detached ADUs all have the potential to increase housing affordability (both for homeowners and tenants), create a wider range of housing options within the community, enable seniors to stay near family as they age, and facilitate better use of the existing housing fabric in established neighborhoods.”

This concept has been popular in areas where property values and cost of living are on the higher end of the national average. There have been several awareness campaigns to increase the knowledge of the general public about this option. This includes an ADU being built on the grounds of the state capital in Honolulu (Cerbal, 2017).

Using an ADU as an option for disadvantaged individuals has also been recognized by well-known non-profits such as Habitat for Humanity (Friend, 2020). The American Association of Retired Persons (AARP) has also recognized the potential of ADUs for seniors (Spevak & Stanton, 2019).

In 2015, the ability for homeowners to construct an ADU on their property had easier regulations than building an “Ohana Unit”. An Ohana Unit is another type of smaller, independent residential dwelling unit located on the same lot as a stand-alone (i.e., detached) single-family home however, Ohana units were required to “have a ‘wet bar,’ or an eating area with a sink, refrigerator, and stovetop–not a full oven. They also can only be rented to a family member, which is agreed upon through the signing of a restricted covenant agreement” (Arakaki, 2022). The ADU regulations permitted additional allowances such as the benefit of having a full kitchen (Arakaki, 2022). In 2018, Mayor Kirk Caldwell signed into law a tax break for those wishing to build an ADU on their properties (Pang, 2018).

An exploration of options of the use of ADUs for senior housing in Honolulu

The concept of using ADUs in Honolulu for various disadvantaged populations as well as senior populations has resulted in some interesting ideas and proposals. One that stands out has been the concept of putting ADUs on moveable platforms and then transporting them by truck to various properties in which they can be used either singly or in groups (Olsen, 2017). Although the concept of using ADUs for senior housing in Honolulu is not new, there is a gap in the literature in exploring various cost reduction options.

The remainder of this article shall explore various cost reduction options in using ADUs and applying them for use in senior housing. As detailed in the methods section, a qualitative document review was utilized to examine the existing Honolulu ADU cost reduction that occurred after the 2018 tax break for those wishing to build an ADU on their properties.

It would also be inappropriate to assume that any of these options; alone or in combination would be a solution for every senior in Honolulu that is faced with the financial burden of senior housing. Some of these options would only be cost-effective through a return of finances through equity/home value and would not appropriate for everyone. This notion will also be touched on later in this article.

Methods

A qualitative document review was utilized to examine the existing literature on Honolulu ADU cost reduction that occurred after the 2018 tax break for those wishing to build an ADU on their properties.

The inclusion criteria for review consisted of documents written about possible strategies and cost saving measures when building or purchasing a home with an ADU in Honolulu County. Documents published before 2018 or published by a potentially biased party such as a real estate company, contractor, architect, or any party that would benefit directly from the sale of a specific brand of product or service provider within the ADU market were excluded from the study.

The methods used to collect data/information is as follows. A Google search was used with the keywords “ADU”, “Honolulu”, “saving”, “financing”, “cost savings” and “building” with no filters or limits. Of the 40 results, four articles from the publications: Pacific Business News, Civil Beat – Hawai’i, Hawai’i Life, and Hawai’i Business Magazine were found to meet the content requirements, detailed in the inclusion and exclusion criteria above, and specifically spoke to the use of an ADU as a senior housing option in Honolulu and/or Hawaii. These articles were used as the primary source of information for the review.

It was determined that after the 40 results from the keyword search were reviewed, four articles were enough as a sample size. This conclusion was drawn due to the specificity of the topic and that this was a preliminary study. These articles were searched for and selected during the time frame of July to October 2022. A protocol for the review was not prepared.

Document analysis was used as an appropriate method as this is an initial exploration study focused on giving meaning to the assessment topic of ADU cost reduction options when the ADU is used for senior housing. Document analysis is a method of qualitative research where documents are interpreted by the researcher to give meaning on an assessment topic (Bowen, 2009).

The process and methods used to synthesize the results were those commonly used in qualitative document analysis (Rasch, 2020). This included: 1) forming the research question (examine the existing Honolulu ADU cost reduction for those wishing to build an ADU on their properties for the purposes of senior housing), 2) Collecting the data (using the google keyword search) and 3) Analyzing and comparing patterns (identifying the four themes).

For purposes of methods duplication, Step 3 involved: a) Analyzing the data from the google keyword search to isolate findings that had a focus on possible strategies and cost saving measures when building or purchasing a home with an ADU in Honolulu County, b) Disqualifying data published by a potentially biased party such as a real estate company, contractor, architect, or any party that would benefit directly from the sale of a specific brand of product or service provider within the ADU market, and c) Disqualifying data published before the 2018 ADU tax break in Honolulu County went into effect.

The remainder of this paper will 4) Interpret and present the findings.

Results

From the articles, four major themes emerged: tax breaks, financing options, green building, and sharing of utilities. The theme of tax breaks included the 2018 City and County of Honolulu tax break as well as other associated tax breaks concerning new constructions of ADUs and senior housing construction. The financing options theme centered on various incentives involved in constructing an ADU. The green building and sharing of utilities themes focused on solar electricity and hot water construction and sharing various utilities with the main house.

These themes led to a secondary level document review in which several organization websites were found to have relevant ADU sections and information. These websites and brief descriptions of their characteristics are as follows: AARP (general resources for seniors), U.S. Department of Agriculture (information of loans), Hawaiian Electric (information on local electric usage and costs), American Planning Association (ADU definitions and resources), and the California Department of Housing and Community Development (2020) (a resource of ADU information from a state with the longest history of use).

Several other sources were referenced to support and clarify information that was referenced in the four primary articles and the websites (benefits.gov, 2022; Chai & Wesley, 2022; Fujii-Oride, 2022; Gregory, 2022; G. Udagawa, personal communication, June 8, 2018; HECO, 2021; LaPonsie, 2022; Nagle, 2020; Pang, 2018; Robinson, 2019; Shelton, et al., 2022). The rest of this article expands on these themes and their relevance to strategies and cost saving measures when building or purchasing a home with an ADU in Honolulu County for senior housing purposes.

ADU cost reduction options

Discussion

The various subsidized loans, tax breaks, green construction, and shared utility options may provide cost relief to the family seeking out ADU construction as a possible senior housing option. These cost saving options provide cost relief both during and after construction.

To reiterate, these options may not be for everyone. Various factors must be considered in choosing which options should be pursued and whether the ADU option for senior housing is the most feasible option overall; not just cost-wise but for the overall goals of the senior family members being housed and the rest of the family.

Other factors that should come into consideration is if the house (along with the ADU) is intended to be sold after the death of the senior family members. Within this consideration is the likelihood of whether caretakers will be needed or if a hospice facility will be used as another residence for the senior family members.

All of these considerations tie into the overall cost of the ADU. If the entire property is to be sold after the death/hospice of the senior family member, the increase in home value that the ADU adds to the predicted sale price should be considered in the decision to build the ADU. Also, if the family does not want to sell the property after the death/hospice of the senior family member, the ADU may be used as a source of passive rental income. (Note that this is different from the ohana units allowed by Hawai’i law, as ohana units may only be used/rented by family members [Robinson, 2019].)

The relatively simple and straightforward approach in the review process of finding articles and gathering information and evidence from them on the topic was appropriate for a preliminary study such as this one. However, this simple and preliminary approach should be noted to have limitations to the review process (primarily sample size and lack of interviews and other sources aside from the published sources used in this study) and evidence in comparison to a more in-depth study that used interviews with members of the ADU building and senior care industries.