They say making law is like making sausage, and after considerable grinding and debate, the Additional Rental Unit (ARU) law was signed into law in March of 2018 under Chapter 8-30.1 of the County Code.
The law allows any property with Residential Zoning (except west of Hanalei River and SPA-D zoned property in the Rice Street district) to build an attached or detached rental unit on their property (up to 800 square feet) for every residential unit. It can get confusing, but the basics of the entitlement are that if a residential property has the density for two homes, then it can do two ARUs. If it has the density for three homes, then it can do three ARUs, and so on.
These units cannot be CPR’d and sold as separate homes and cannot be used as Transient Vacation Rentals (TVR), even if the property is in a Vacation Destination Area (VDA).
I believe that the County Council’s intent was to encourage homeowners to add legal rentals to their properties to help increase the stock of rental housing and help alleviate the housing crisis. Many of these units are likely going to be used for aging parents or kids who can’t afford to build a place of their own.
Even for new ARUs that are rented on the open market, there is such a rental-unit shortage that every single one will help with our housing crisis.
What the council didn’t realize at the time was that the cost to build one of these units is significantly increased by the cost of county fees. The fees can add up to around $19,000 before you even put a stick in the ground. Yikes! That may be why only 12 have been permitted so far.
But wait, the council is making new sausage, I mean laws, intended to further encourage the construction of ARUs. Draft Bills No. 2740, 2741, 2742, 2743, 2744, and 2745 are all under consideration by the County Council, and unless TGI wants me to use a whole page, I can’t get into the details of each bill.
Suffice it to say that the cumulative goal of the first five of those bills is to get those county fees down to zero dollars! The final bill, Draft Bill No. 2745, would simply remove the prohibition of ARUs in the Rice Street district so that if these bills pass, property owners in the Lihue town core can take advantage of the same incentives as the rest of the island.
So what’s the catch? If you build an ARU and rent it as “affordable” for five years, you don’t have to pay the county back for the subsidies. As all things government-related, there are hoops to jump through to make sure people don’t take advantage of the county, and there is some debate about the ideal length of time for the affordable compliance period. But the basics of the idea are mostly agreed upon.
The five bills relating to fee waivers were up for reading Wednesday and the bill to allow ARUs in the Rice Street district will be deliberated on at the Dec. 11 committee meeting.
I am very hopeful to see our small-but-strong county doing all that it can to help ease the housing crisis here on Kauai by giving homeowners the tools they need to provide affordable housing.
If you have family or friends who can’t move home or are being forced to leave because of the cost of housing, I strongly encourage you to support the council and the mayor in passing these bills and getting them signed into law!
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Milo Spindt is a resident of Kalaheo.
Hi Milo,
Thank you for your efforts, as misguided as they may be.
“Many of these units are likely going to be used for aging parents or kids who can’t afford to build a place of their own.” …or pay rent. And that is a problem. How, as a homeowner or business-minded property owner, do I recover my $19k in fees to the planning department in addition to the cost to build when my renter won’t/can’t pay?
If it really costs KOC $19k to process an application, that cost won’t just disappear with new rules. If anything, the cost will go up because it will require more KOC employee hours to implement and enforce the new rules! Who is going to pay the $19k? The cost will likely be passed on to ALL property owners in the form of higher property taxes. Interesting that no one in government ever proposes that the department of planning employees work for free to defer the cost of processing an application…no salary, no pension, no benefits…I guess that’s less palatable than raising property taxes. Do you think any of them would agree to work for free? All with good intent to “alleviate the housing crisis”? Likewise do you think that any business minded person will supply more housing to the island…for free?
Just like food, clothing and smartphones, housing is a market. All of these markets have a happy place where supply is balanced with demand. The problem with housing is that government, through taxes, permit fees and building regulations, limits the supply of housing. What would the demand for smartphones be if the government said a cell phone could only cost $100? The demand would be high, and unmet, because nobody can make money selling cell phones for only $100 so they will chose not to make them. The housing market follows the same rules. “…by giving homeowners the tools they need to provide affordable housing”. Milo, homeowners don’t provide housing, business-minded people do. And every well intentioned law you pass interferes with the market forces. Putting a cap on rent makes it unprofitable for new housing to come to market. Business minded people won’t supply new housing if they can’t profit from it any more than the department of planning employees will work for free out of the goodness of their hearts.
The answer to the ‘housing crisis’ is not more government interference (unequal levying of property taxes, inflated building/permit fees, dictating who and for how long a landlord can rent to, and how much they can charge, strictly limiting where new housing can be built, etc.)
Lastly, Milo, if “It can get confusing”, it probably isn’t a “fair” or “good” law to begin with.
Everythingisawesome . – You are so correct on why affordable housing does not exist in Kauai. It’s impossible to build an affordable rental unit for multiple reasons. 1) The cost of building is much higher than most places in the US. 2) The county wins with the extreme fees for a building permit, then one has to deal with an unfriendly staff who enjoy taking their time processing paperwork sometimes up to a year when it takes a week or less in most places. 3) At the end the homeowner gets stuck with paying taxes in the highest possible tax bracket for the county. Most places treat everyone the same and everyone pays the same tax rate on their real estate. Unless these three areas are not addressed, there will never be affordable housing in Kauai.
Prices will still rise, look to Oahu. Plenty dense, plenty traffic jam, still high prices.