A small group of developers continue to build monster homes on the watch of Honolulu planning and permitting officials who are disorganized, inconsistently apply rules and fail to manage and enforce violations, according to a city audit released last week.

“We found that the Department of Planning and Permitting does not effectively manage building permits and inspections related to large detached dwelling units,” Acting City Auditor Troy Shimasaki wrote in a letter to the Honolulu City Council.

Shimasaki’s office reviewed 200 building permits for 170 monster homes from 2017 through June 2019.

The report states that a handful of developers build the “vast majority” of monster homes that impact neighborhoods by taking up parking spots and renting rooms to tourists. One unnamed builder submitted 55 – or 28% – of the monster home plans the auditor reviewed. The top ten monster home developers were behind 78% of the plans reviewed by the auditor’s office.

Some of these projects are currently under construction, the audit found.

DPP and Managing Director Roy Amemiya “broadly accepted” the findings and a list of 15 recommendations, although they disagreed with the auditor on several points.

Amemiya noted that DPP is “chronically faced with high staff turnover” which means day-to-day workloads are a “crisis management process,” there is reduced time for training and there is the persistent use of overtime, which leads to fatigue, among other issues.

It’s been difficult for DPP staff to adapt to changes in the land-use ordinance, Amemiya wrote in a letter to the auditor.

“This constant change without time to ingest them makes it challenging to produce high level results that are accurate, consistent and timely,” he said. “In spite of these challenges, we are proud of the staff that remain, who take pride in doing their jobs to the best of their abilities.”

Acting DPP Director Kathy Sokugawa declined to comment.

“We’re standing by our written response that was included in the audit,” said DPP spokesman Curtis Lum.

Tyler Dos Santos Tam, who has advocated for city action against monster homes, said the auditor’s report validates what the community, including his group HI Good Neighbor, has been saying for years.

“The monster home phenomenon has been enabled by the ineffective processes of the department,” he said. “This wasn’t a handful of cases slipping through the cracks. These are real systemic issues and we expect the mayor and city council to take this seriously and take corrective action.” 

‘Complaints Only’

The auditor found that DPP is “not organized to identify at-risk properties,” so it largely relies on community complaints only.

Ordinance 19-3, which Mayor Kirk Caldwell allowed to become law in May, limited floor-area ratios, wet bars, laundry rooms and bathrooms in an effort to crack down on monster homes.

DPP is supposed to consider these criteria when making decisions about permits, but the auditor found the department’s data system, called POSSE, is so difficult to operate as to render it almost useless.

“The information is somewhere, but not intentionally assembled for ease of review use,” the auditor wrote.

DPP has used POSSE for at least 20 years, the auditor said. Department workers have tried to come up with manual workarounds, the auditor found, but those have “fallen short.”

“As a result, there is no accurate inventory of large detached dwellings under the department’s jurisdiction at any given time,” the audit states.

Sharon Schneider, chair of the Kaimuki neighborhood board, said the department needs to improve its technology. 

“I’m astounded that a place as important as DPP doesn’t have the software to track these things,” she said.  

The auditor also found that DPP operated in silos: personnel in the areas of permitting, inspection and residential use enforcement areas were not communicating.

There were cases when a neighborhood would complain about the construction of a monster home, and there was a “hindsight sense within the community and policy makers that something was amiss in the process,” the auditor wrote.

“At that later point, there is very little that can be practically done, despite continuing complaints or public dissatisfaction,” the audit states.

The audit also found DPP to be “generally dismissive” of community concerns – except when a complaint came from a political representative. Those concerns were given higher priority and were resolved faster, the audit states.

“Neighbors are always asking, ‘How did they get a house with 29 bedrooms and 20 bathrooms permitted?'” Schneider said. “Some of these guys get fined and they keep getting new permits for new developments.”

More Monster Homes Under Construction

Some monster home developers’ permit applications were approved when they should have been considered expired and resubmitted, according to the audit. By doing this, the department forfeited a new plan review fee, the audit states.

“More importantly, the applicants did not resubmit a revised application, which would allow the department to re-examine these large dwelling unit plans from the beginning and take necessary action.”

DPP can require an affidavit from property owners it suspects may convert their building into multiple residences, the audit states. Making a false statement in pursuit of a building permit is punishable by law.

But DPP hasn’t consistently taken advantage of this, and the auditor “could not determine the rationale” for the records it was able to locate.

“DPP has not effectively or efficiently managed fines assessment or collection of these overdue fines…” – Acting City Auditor Troy Shimasaki

Similarly, DPP can revoke building permits when builders don’t complete construction within three years. But the auditor found 18 cases where permits for large detached dwelling units exceeded that window and continued to hold a permit.

Two of those projects were built and passed inspections despite holding invalid permits, the auditor found. The other 16 properties are currently under construction. For the most part, the audit states, those buildings have not passed some or all of their inspections.

“If the department moved to revoke these permits, it could effectively apply current regulations to these large dwelling units that may be causing distress in various neighborhoods,” the audit states.

“Furthermore, if the department decided to revoke these permits, it would serve notice that DPP is serious about the diligent pursuit of construction that is code-compliant.”

Schneider said the community is frustrated to see more monster homes being built.

“We thought we had a moratorium,” she said. “And to them, it doesn’t seem like there is a moratorium.”

During the auditor’s review, citizens expressed concern that uneven treatment by DPP may be a result of fraud, abuse or conflicts of interest. The auditor was not able to confirm those allegations but acknowledged it was “highly unlikely” to find blatant evidence of those kinds of activities in the department’s own files.

To increase public confidence in its processes, DPP could rotate its permitting, inspection and enforcement staff to minimize opportunities or appearances of wrongdoing, the audit states.

Even when owners of monster homes are hit with violations, the city auditors found that fees and fines are under-assessed and ineffective at deterring bad actors.

In its review, the auditor found that 26, or 41%, of the violations it reviewed were out of compliance for more than six months after being notified.

DPP is also leaving some enforcement options “on the table,” the audit states.

“DPP has not effectively or efficiently managed fines assessment or collection of these overdue fines,” the audit states, “and long-term violators are not held accountable for circumventing their building permit or building process.”