Auditor’s report slams city agency on ‘monster houses’

A just-completed audit of the city Department of Planning and Permitting’s handling of the explosion in the number of large, detached dwellings in recent years concluded the agency has been lax, inconsistent and ineffective in dealing with the “monster house” issue.

“We found that the Department of Planning and Permitting does not effectively manage building permits and inspections related to large, detached dwellings,” said Acting City Auditor Troy Shimasaki in a cover letter of the audit sent to Honolulu City Council members last week.

The audit said it could not confirm allegations of fraud, abuse or conflicts of interest on the part of city employees.

HI Good Neighbor, a group formed by Honolulu residents who found themselves showing up at the same meetings voicing similar concerns about monster houses, said the audit confirmed many of their key points.

Mayor Kirk Caldwell and DPP Acting Director Kathy Sokugawa declined to comment on the specifics of the audit, stating that they stand by city Managing Director Roy Amemiya’s four-page response to the audit’s findings. Amemiya acknowledged much of the findings and recommendations but disagreed with others.

Largely as a consequence of a tight and increasingly expensive housing market, a small number of unscrupulous developers exploited building and land use laws and took advantage of lax DPP enforcement to modify or build new large-scale dwellings and/or cheated the system by flouting occupancy laws in order to pack as many tenants under one roof as possible.

Most of the abuse occurred in older urban Honolulu neighborhoods such as Palolo, Kaimuki and Kalihi where the new and often significantly larger houses seemed most out of place with the character of the communities.

The Honolulu City Council last year passed several new bills aimed at closing the loopholes that were quickly signed by Caldwell. One placed a two-year moratorium on the acceptance of building permit applications for large, detached dwellings. Earlier this year the city adopted an ordinance that disallows a detached dwelling from having a floor area greater than 70% of a lot’s size. The bill also restricted the number of bathrooms, wet bars and laundry rooms.

But the problems persist, even with the new laws, the audit concluded.

The audit divided the initial resident concerns into two categories: issues dealing with the sheer size of the houses, parking congestion, elevated property values and other “physical impacts,” and those issues dealing with illegal occupancy issues such as unpermitted long-term rentals, vacation rentals, group-living homes and dormitories.

The audit said DPP information that’s been collected about the improper structures is so disorganized that it cannot be assembled properly, leading to “administrative difficulties and delays in researching, reviewing, and monitoring properties systematically or individually.”

As a result, DPP is “only able to discover issues with qualifying, large detached dwellings based on complaints only,” the report said.

The disorganization was a key reason DPP did not properly assess in a more global context the risks of the complaints and the violations that it issued. “There was no effort to understand the implications of these issues, particularly in the context of the area, community involved, or for residential development in general.”

The department is lax and inconsistent in how it applies existing controls over monster house projects, “creating unwarranted authorization and difficulties in administration and enforcement,” the audit said.

There is also a lack of accountability for violators and only limited deterrent effect because “the department does not effectively or efficiently manage its overdue violations,” the report said. DPP is ineffective in collecting current fees and fines and also underassesses violations. “Furthermore, the department does not pursue all enforcement methods available,” the audit said.

“Revocation of untimely or non-progressing projects and temporary certificates of occupancy are two controls that the department should enforce consistently,” the report said.

“The report validates what we’ve been saying for years: the monster home phenomenon was enabled by the department’s ineffective processes,” said HI Good Neighbor member Tyler Dos Santos-Tam. “It’s so sad that neighbors now have to suffer because of how DPP handled these permits.”

Additionally, Dos Santos- Tam said, “the audit shows this wasn’t a handful of cases slipping through the cracks but rather was a systematic issue at DPP. Major changes are needed immediately and we will be pushing the mayor and Council to take serious action.”

Dos Santos-Tam also warned that 2020 mayoral candidates should come up with a plan to deal with monster houses.

Amemiya, in his response, said he agreed with many of the findings and recommendations, including the need for a software upgrade and a change in the agency’s approach on missed deadlines — both of which are now underway.

“Converting to a web-based permit review software is expected to make a big difference,” he said.

The audit’s findings support an underlying assertion by DPP that “it is chronically faced with high staff turnover in the building permit review process,” Amemiya said. This leads to “spillover impacts” including reduced time for training, the continued use of supervisors as substitute staff, persistent use of overtime, a lack of “journeyman” staff to handle complex processing and drawings quickly and teach younger staff, and the need to address daily workloads as “a crisis management process.”

The administration is considering a plan to triple the fee of applicants found to have begun work after permit applications are submitted, up from the current “double-fee penalty,” he said.

But Amemiya disagreed with the conclusion that DPP inspectors were unaware the phenomenon was happening. “Supervisors noticed the increase in dwelling applications involving eight or more bedrooms months before the City Council raised the issue,” Amemiya said.

Amemiya said the administration disagrees that DPP should pursue criminal prosecution against violators, because “the civil fine process was established precisely because of the ineffectiveness of depending on the criminal prosecution process.”

‘MONSTER HOMES’

An audit said the city Department of Planning and Permitting was lax in its efforts to deal with the surge of large, detached dwellings, also known as monster houses. Among the key findings:

>> Information was not organized in a way that supported regulation of “at-risk” properties, which created delays and other difficulties in the researching, reviewing, monitoring and reporting of monster houses.

>> Inconsistent enforcement of existing covenants, rules and laws led to unwarranted approvals and difficulties in administration and enforcement.

>> Ineffective management of violations led to a lack of violator accountability and too little deterrence.