Property owners seeking building permits in Honolulu face months of delays that hold up residential projects by months and commercial projects even longer, according to a new city audit released on Monday.

Among its problems, the Department of Planning and Permitting has excessive review times and lax controls that allow private companies to “game” its appointment system, disadvantaging others, according to Acting Auditor Troy Shimasaki’s report.

As a result, an average of 2,513 outstanding permit applications roll over every year, the auditor found. That’s despite the fact that permit applications decreased 21% from 2014 to 2018.

“The Department of Planning and Permitting’s processes for reviewing building permit applications are unable to support Hawaii’s building industry demands,” the auditor’s office said in a summary of its report.

Developers hoping to build a house or business need to be patient. In Honolulu, wait times can exceed a year.

Allan Parachini

“DPP has implemented several new policy and program changes to improve the permitting review process, but further improvements are still needed.”

The managing director and DPP broadly accepted the audit’s findings and recommendations, according to the report. A DPP spokesman declined to comment.

Excessive Delays, Uncollected Money

Applicants for residential permits receive the OK from DPP an average of 108 days – or three and a half months – after they apply, the audit found. That time period is 157 days for small commercial projects (below $50,000), 206 days for medium commercial projects ($50,000 to $999,999) and 432 – over a year – for projects from $1 million to just under $10 million.

“According to a former DPP Director, DPP does not have a good enough supervisory system set up, so whether out of intent or negligence, permits often get held up or overlooked,” the audit said without identifying the former director.

The audit also found a new “one-time review” program that is supposed to guarantee one and two-family dwellings an approval or denial within 60 days is not working as intended.

Planning Acting Deputy Director Kathy Sokugawa during Board of Education meeting held at Farrington HS. 2 nov 2016

Kathy Sokugawa is the acting director of the Honolulu Department of Planning and Permitting.

Cory Lum/Civil Beat

Since the program took effect in November 2018, the city received 29 applications. Of those, the auditor found that DPP issued nine permits – but those applications did not meet program criteria or receive expedited processing. In fact, none of the applications met the criteria for expedited processing, according to the audit.

By not enforcing the program requirements and rejecting applications, DPP left money on the table: nearly $14,863 in additional plan review and permit fees, the audit says.

The auditor also found that private, for-profit companies take up more than their fair share of appointments. According to DPP rules, applicants aren’t supposed to get more than two appointment slots per day. But companies routinely “monopolize” the appointments by booking under alternative applicant or company names, the audit found.

“Appointments are advantageous to the applicant because it minimizes the time spent on back and forth discussions and resubmittals which can lengthen the permit approval process,” the audit says.

Between January 2018 and April 2019 alone, three applicants representing a private company booked up to 21% of the total appointment slots during a 13-month period, according to the audit. The auditor did not name the company.

In an effort to expedite its pre-screening process, the city established a third-party reviewing system where private companies do initial plan reviews. The practice is becoming more common and is ripe for abuse, according to the report.

“DPP is neglecting its responsibilities to process applications in a timely manner and is incentivizing the use of private providers to get quicker results,” the audit says. “This practice places an additional burden on the applicant and increases profits of private businesses.”

The city is also letting third-party reviewers off the hook for renewal fees, the audit says. DPP was unable to show that it collected any such fees for the last five years. The audit suggests DPP failed to collect $36,000 from fiscal years 2014 to 2018.

The auditor found DPP plan reviewers are less skilled and receive lower pay than their peers in other jurisdictions. The report recommends the hiring of workers who are licensed or certified in relevant fields. The audit also identified a lack of training opportunities for employees.

“Permit centers are hampered by shortages of staff due to turnover, inability and delays in hiring new staff, and a significant number of staff retirements,” the audit says. “This has resulted in staff morale problems and high work demands upon existing staff.”

Ultimately, quality suffers, the audit found.

“While DPP has been more customer service-oriented in processing building permit applications, this approach has encouraged the submission of inadequate work and plans,” the audit says. “As a result, DPP expends resources to accommodate and correct inadequately prepared applications and plans.”

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