In an effort to clear out my brain, I am compelled to think it through, and put down my thoughts in writing.

If you’re someone who likes to get into the weeds, you might enjoy the reading – Others maybe not so much 😉

A huge part of the problem with Act 39 is the complexity and its many moving parts. My guess is as this moves through the various County Council processes toward implementation, different lawyers will weigh in over time with different opinions.

Act 39’s primary author has stated that (the additional ADU component of) Act 39 does not impact Kauaʻi County because Kauaʻi has in place an ARU ordinance.

In Kauaʻi County, additional Rental Units (ARU’s) are permitted on residential lots in addition to the single ADU or Additional Dwelling Unit that’s also now allowed.

However Kauaʻi ARU’s by ordinance are limited in size to 800 square feet, may not be “CPR’d” and sold separately, may not be used as a short-term vacation rental, and must be for family use or rented long-term.

Why similar provisions were not placed on the proposed new density contained in Act 39 I do not know. But apparently because Kauaʻi has the ARU law in place, that’s sufficient to satisfy the requirements of Act 39 which says, “each county shall adopt or amend ordinances defining reasonable standards that allow for the construction of at least two accessory dwelling units, or the reasonable equivalent,”.

Again, I’ve been told by Act 39’s primary author that the Kauaʻi ARU ordinance (described briefly above) satisfies the requirements of Act 39 and that Kauaʻi will not be impacted by the specific requirement requiring the addition of one additional ADU.

I suppose the Kauaʻi Council could allow property owners to “opt out” of accepting ARU’s and instead “opt in” to building the second ADU that can be a larger “proper” home and not include the restrictions that control/limit ARU’s. But for the moment, according to Act 39’s main proponent, Kauaʻi residents will not be granted the additional ADU as described in Act 39.

And/or the courts could rule that ARU’s because of their restrictions are not “reasonably equivalent” to an ADU. In that case, Kauaʻi property owners could possibly receive both an additional ADU AND the ARU’s permitted by Kauaʻi ordinance. FYI that would = 6 total units on one lot (3 ADU’s and 3 ARU’s). That would certainly open still yet another can of worms.

Whew. Head spinning stuff.

So…(caveat – I am not a lawyer)…if it’s true that ARU’s as implemented in Kauaʻi County are “reasonably equivalent” then other County Councils can if they choose, comply with Act 39 by implementing a similar ARU law with similar restrictions and limitations.

Some have asked me to clarify how I came to the conclusion that the passage of Act 39 is a windfall for property owners and developers, and how it is that they make money instantly without doing anything at all.

Here it is in a nutshell:

Government, via Act 39, is giving property owners and developers the right to build an additional home on their property above and beyond what they were able to build prior to the law passing. This additional density has significant financial value, yet (unlike the ARU law cited above) there’s no assurance or requirement there will be a reciprocal public benefit in return.

NOTE: Because of the Kauai “ARU” twist and if in fact Act 39’s additional ADU provision does not apply to Kauaʻi County – then the below example does not apply in the same way to Kauaʻi County as it may in other County’s.

But here goes:

Take a fictional 1/4 acre lot valued at $400,000. That pre Act 39 lot was allowed to have two homes (primary dwelling and an additional dwelling unit). After the passage of Act 39 that same 1/4 acre lot is now allowed three homes, and consequently now automatically worth more money. It may be worth $100,000 to $200,000 more.

The owner of that property has done nothing to “earn” that extra money and it is in fact a financial windfall. The owner could immediately sell the lot and pocket the extra money, land bank it for his children, or develop the property with three homes and sell those 3 individual homes at market rates – making even more money. The owner is required to do absolutely nothing in return for the $100,000 to $200,000 in immediate profits that come with the passage of Act 39.

The legislature could have required that same lot owner to do certain things in return for the extra $100,000 to $200,000. They could have required the owner to actually build within a certain time frame, and to target a specific use or price point.

Provisions could have included for example: Only property owners who agree to build an additional dwelling unit within X years, and dedicate the use of that unit for either family occupancy or long term rental for at least X years – then and only then would that owner can gain the benefit of extra density valued at $100,000 to $200,000.

There are infinite variations of this theme including prohibitions against short-term vacation rentals, immediate “flipping” and selling the property, etc etc

However – Act 39 contains no requirements whatsoever while the property owners receive an immediate and significant financial benefit.

In my opinion, lawmakers should never give away tangible and monetary public benefits without a promise of something of tangible value being received by the public.

More clarifying thoughts on the Act 39 component that takes away the Kauaʻi Planning Commission’s authority to approve subdivisions in the urban district:

Supporters of Act 39 have attempted to emphasize the Kauaʻi Planning Commission’s apparent failure to deny subdivision applications in the past.

Whether or not this is true, I do not know. But I do know the Kauaʻi Subdivision ordinance clearly grants to the Commission the power and the legal authority to significantly influence a subdivisions character and physical design/map.

The Commission is further empowered by the Kauaʻi Subdivision Ordinance to require subdivisions to provide public access, and they have the power to influence the subdivision map and ultimate design of the subdivision relating to roadway access.

According to the Kauaʻi Subdivision ordinance, the Commission “…may deny any subdivision if a traffic problem would be created due to the inadequacy of existing public streets…”.

Further, the community process that’s required now by law helps ensure that public access to public lands mauka and makai, and to protect historical and cultural resources.

With the passage of Act 30 the Kauaʻi Planning Commission will lose its authority to approve subdivisions in the urban district (with some caveats), and the community likewise will lose its power to influence the process via public Commission meetings. They will also lose the right to file a “contested case hearing” which allows closer examination of the facts and process.

Bottom line: The Kauaʻi County Charter (unlike all other County Charters) grants the power of Subdivision to the Planning Commission and Act 39 takes away that power. While some individual commissioners may have been aware of SB3202, the Commission itself was never appropriately informed.

The Sunshine Law requires public notice and a public meeting in order for more than two members of the Commission to meet on issues pertaining to their actions and authority. No public meetings occurred, and thus unless the Sunshine law was violated, a majority of the Commission was not consulted nor informed of the pending change.

As I’ve stated in prior reviews of SB3202 – discussing and debating the plusses and minuses of the Planning Commission process is a valid and necessary conversation that should have been had. But because the Commission was not appropriately notified, that conversation was never able to occur.

Finally, if the primary motivation to enact Act 39 was the desire to speed and simplify the process for local families seeking to simply divide their existing homestead into two lots for their children or parents or grandparents to use – the proponents behind SB3202 could have limited the subdivision approval changes only to proposals of that nature. But they did not.

And…as I’ve stated over and over again during my past 20 years working in the arena of policy and politics:

Good people can look at the same facts and circumstances, and come to different conclusions.

https://www.capitol.hawaii.gov/sessions/session2024/bills/SB3202_CD1_.htm