When the city passed a measure in the fall allowing homeowners to build an accessory dwelling unit (ADU) on their properties, the hope was that it would stimulate growth in the rental housing stock. But so far, only seven ADU permits have been issued since September.
The sluggish start has prompted Mayor Kirk Caldwell to propose waiving as much as about $10,000 in sewer charges and other fees to spur interest — a move he hopes could boost construction of the much-needed rental units.
That would be a good development: The only way to address Oahu’s tight rental market is to increase stock through a multi-pronged effort that includes creating ADUs. These are second, smaller housing units that are attached or detached and can be rented out to either family members or outside parties.
It’s understandable that homeowners and those in the building industry are discouraged by the fees: The sewer hookup alone costs $6,624 each time a new dwelling is built.
Additionally, a building permit, the cost of which is based on the value of work, and other fees could add $2,000 to $4,000 more — an amount tacked on to the actual cost of the work, which often is in the high five figures.
Caldwell said those fees make building an ADU a lot less attractive. So Bill 27, sent to the City Council last week, would waive the sewer hookup charges, building permit fees and other charges for any homeowner seeking an ADU permit through June 30, 2018.
While the city would collect fewer revenues under Bill 27, broadening the shrinking rental market would be more beneficial to the city in the long run. Honolulu is grappling with the highest per-capita rate of homelessness in the nation, a shameful condition that can be blamed in part on a shortage of affordable housing.
Waiving fees to jumpstart certain city programs has worked in the past. From 2008 to 2013, the city waived permit fees as an incentive for homeowners to install photovoltaic solar electric power systems. The permit fee was $740 on a typical residential PV system valued at $40,000. The number of permits began tripling annually and the waivers eventually were stopped.
As a temporary incentive, Bill 27 could work, and should get a full and fair review by the Council. But it’s not the only issue.
The city acknowledged that it takes up to four months to receive an ADU permit because review of ADU applications is not separate from the queue for other building-related permits.
An estimated 20,000 Oahu homeowners would be eligible to build ADUs, but the city, while eager to persuade them to build, certainly hasn’t made the process appealing.
If the city hopes to generate further interest, it must find ways to streamline the permit process for building an ADU.
For starters, the city is hoping that handing over responsibility for ADU reviews to one plan checker will speed up processing time. Preapproval of standardized ADU models also could help.
Oahu’s lack of affordable housing has reached crisis mode, and proof of that is the island’s growing homeless population.
Providing homeowners with a more affordable and efficient path to building rental units on their properties is one way to effect change.
