When the city allowed construction of small rental units on single-family house lots in 2015 to help ease Oahu’s housing crunch, homeowners were expected to build these accessory dwelling units.

But one unexpected participant also has been delivering ADUs under the city program.

D.R. Horton, one of Hawaii’s biggest housing developers, has supplied a little over 10% of all ADUs built.

The Texas-based company has built and sold 35 ADUs attached to new homes at its master-planned Ewa community Ho‘opili.

So far, homes with ADUs at Ho‘opili represent about 10% of the product mix in the community. These units also represent 13% of all 262 ADUs built on Oahu.

Kathy Sokugawa, acting director of the City Department of Planning and Permitting, said Horton’s participation in the program has been welcomed, in part because ADU production hasn’t been as high as city officials envisioned.

“He would like to see a lot more done,” Sokugawa said of Mayor Kirk Caldwell, who endorsed the idea of ADUs as a tool to help produce more affordable housing.

Sokugawa encourages other developers to consider producing new homes with ADUs, and said they can benefit from incentives.

“That’s a great potential for them,” she said.

The city’s ADU program allows a second dwelling on lots between 3,500 and 20,000 square feet zoned for single-family use provided that adequate sewer capacity exists. For lots under 5,000 square feet, the ADU can be up to 400 square feet, and ADUs up to 800 square feet can be on larger lots.

ADUs must have their own kitchen and bathroom. One parking stall is also required unless a city rail station is planned within a half-mile.

Also under city rules, ADUs must have a separate entrance from the main home, can be attached or detached, and cannot be used for short-term transient accommodations. A minimum six-month occupancy term is required, and evidence of an ADU being advertised as a transient accommodation is enough to impose daily fines of $1,000.

City officials conservatively estimated that up to 20,000 ADUs can be added on Oahu. However, participation in the program has been weaker than desired.

To help increase production, the city in 2016 waived fees for building permits, grading permits, inspections, sewer connections and park dedications for ADUs at an estimated savings of up to $11,000.

Caldwell also sought to give ADU owners a five-year property tax reduction of about $200 a year, but that proposal stalled at the City Council last year.

Lee Tokuhara, marketing and community relations director for Horton in Hawaii, said the creation of Honolulu’s ADU ordinance a year before the developer began building its 11,750-home Ho‘opili project in late 2016 made offering ADUs attractive.

“The timing was really good for us when the law passed,” she said. “It all kind of aligned for us.”

Horton has built 23 ADUs for the 151 homes in the first two sold-out neighborhoods, Haakea and Lehua. At a third single-family home phase, Iliahi, 12 of 84 homes had ADUs.

“The response overall has been really good,” Tokuhara said.

A fourth phase of Ho‘opili single-family homes called Aulu with 84 homes, including six with ADUs, is planned for sale in June.

Overall, Horton expects 10% of Ho‘opili homes will feature ADUs. That number could be larger but is limited in part because of sewer infrastructure.

The developer designs and builds a set number of homes in each phase with ADUs, as opposed to offering an ADU as an option that buyers can add to a standard home. Homes with ADUs are essentially modified versions of some standard home plans.

One ADU model at Iliahi featured three bedrooms and 2-1/2 bathrooms plus a 341-square-foot ADU. This home with 2,004 square feet of living space was priced at $807,340.

This model is based off a slightly smaller four-bedroom home with 3-1/2 bathrooms and 1,817 square feet of living space priced at $777,265. To create the ADU, Horton mainly converted a ground-floor master bedroom and bathroom into the attached ADU.

Danelle Miyamoto bought one of the homes with an ADU in September. She said her parents, who are in their 60s, are using the ADU mostly for the bedroom now, but decades from now she expects to leave the home to her now 3-year-old son, who could rent it out for supplemental income.

“It was mainly planning for the future,” Miyamoto said. “This is going to be a home that we keep forever.”

Based on some real estate listings in Ewa Beach and Kapolei, monthly rent for an apartment between 300 and 400 square feet is around $1,300.

Vickie Regala expects to move into one of Ho‘opili’s ADUs in late summer. Her son bought the home in October and convinced her to move from North Carolina to be with him and his wife and young son.

“I kind of want my own space,” Regala said. “It’s not really large, but in Hawaii things aren’t cheap.”

Sokugawa said it’d be nice if other large developers embraced ADUs, but so far she’s not aware of another new subdivision planned with ADUs.

Castle &Cooke Hawaii, which plans to deliver the first residences at its 5,000-home Koa Ridge project between Waipio and Mililani next year, has no plans for ADUs because it prefers to offer models designed with dual master bedrooms where two adult generations can live together.

“It makes it very comfortable, but we’re not blocking it off (with a separate entrance),” said Bruce Barrett, executive vice president of residential operations for Castle &Cooke Hawaii.

One factor for Castle &Cooke is that only about 20% of the residences at Koa Ridge are slated to be single- family homes, with the rest being condominiums. Historically, Castle &Cooke projects, including Mililani, featured 60% to 70% single- family homes.

In the coming years, individual homeowners are expected to build considerably more ADUs. Besides the 262 already completed, DPP has approved another 640 permits for ADUs that have yet to be completed.

Incentives tied to the ADU program expire in June 2020.