Honolulu Mayor Kirk Caldwell wants to make it cheaper for homeowners to build a second unit on their property after a law that was expected to create thousands of rental units island-wide produced just a handful of permits in its first six months.

When Caldwell signed the bill last September, he told KHON that owners of 20,000 lots were eligible to build second units that could be used as rentals — known as accessory dwelling units — and he thought 5,000 people would apply for permits.

But in the six months since the measure became law, the city only granted permits for seven units.

Mayor Kirk Caldwell signs Bill 20, allowing for the creation of accessory dwelling units.

Mayor Kirk Caldwell signs Bill 20 last September, allowing for the creation of accessory dwelling units.

Courtesy of Mayor Kirk Caldwell

That’s a far cry from the estimated 22,000 units that the administration suggested the law could produce when it floated the idea in 2014.

Accessory dwelling units are a central part of Caldwell’s strategy to address Honolulu’s housing shortage, which has driven up home prices, compounded homelessness and forced some residents to move away.

Now a new proposal, Bill 27 would “waive all building permit, grading, and inspection fees, and wastewater facility charges, for a two-year period,” according to a press release emailed Monday by city Department of Planning and Permitting spokesman Curtis Lum.

If the bill passes, homeowners who construct accessory units wouldn’t have to pay park dedication fees, and could save up to $10,000 in total fee waivers, the press release said.

“I think our building industry can use this opportunity to ramp up production with a few more incentives for homeowners,” Caldwell said in a press release. “It should work just like the incentives we provided a few years ago to get the solar PV industry kicked off.”

Homeowners who have already received permits to build accessory dwelling units will be refunded fees if the bill passes, Lum said.

Gavin Thornton, an attorney at the Hawaii Appleseed Center for Law and Economic Justice, a non-profit that lobbied for the legalization of accessory dwelling units, said that he supports the idea of fee waivers but thinks they should be applied selectively.

“I’d really like to see fee waivers used as an incentive to ensure that these (units) are rented to low-income folks,” he said. “I’m not quite sure why you would want to do just a straight-up fee waiver for anybody.”

A report by the Appleseed Center noted that fee waivers for rentals that help low-income households is standard practice in Santa Cruz, California.

From Thornton’s perspective, a bigger impediment to permitting accessory dwelling units than homeowner interest is the city’s lengthy approval process.

In addition to the seven units that have been permitted, 63 additional applications are pending, and more than 400 homeowners have filled out “pre-check” forms inquiring about building accessory units. Dozens have been turned away because of infrastructure constraints, including lack of sewer capacity.

The time it takes the city to permit accessory dwelling units varies. One application submitted in December was approved in January; another submitted in October wasn’t permitted until February.

Lum said the city has implemented several changes to quicken the process. For example, homeowners were initially required to fill out “pre-check” forms to see if their property qualified for a unit, but now that’s voluntary.

Applications to build the accessory dwelling units were originally lumped in with the rest of permit applications but the Department of Planning and Permitting recently assigned a dedicated plan checker to help speed up processing times.

The department also implemented a policy in which planners review applications for accessory units only once, unless homeowners choose to opt out.

Meanwhile, homeowners remain interested in building ohana units, secondary units that can only be leased to relatives. Since September, the city has received 10 applications to build ohana units, and just one has been approved so far.

Thornton said he’s hopeful that the city’s permitting process for accessory units will speed up and said the Appleseed Center has been developing a manual to educate homeowners who are interested in building extra units.

The non-profit is also hosting a workshop for homeowners Wednesday in conjunction with Hawaiian Community Development and Hawaiian Community Assets.

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