August 11, 2018

Accessory Dwelling Unit (ADU) Status Update

Questor Lau, AIA

Purpose: Provide updated information on the economic impacts of ADUs in Honolulu.

To continue to encourage new ADUs, Honolulu extended fee waivers for ADUs to June 30, 2020. 1 Table
1 summarizes actual building permits issued for ADUs. Currently only Q1 2018 is available but if the rate
of new ADUs created in Q1 is consistent throughout 2018, then the total number of estimated ADUs
created in 2018 could be slightly higher than 2017. Total 2018 values were estimated by multiplying Q1
2018 values x 4. The economic contribution of ADUs were then calculated using the state’s Input-Output
model – see Table 2.

Table 1: ADU permits in Honolulu 2

Year
No. of Permits Construction Value 3
Issued
2016 99 $ 10,481,450
2017 217 $ 17,286,526
2018 4 (Est) 228 (Est) $ 31,250,488
(Est) 544 (Est) $ 59,018,464

Table 2: Estimated economic contribution5 of ADUs (2016-2018)

Estimated Direct Indirect or Income
State Tax
Project Development Construction jobs induced jobs Generated
Cost 6 2.77 2.52 0.6 0.122
ADUs
$ 59,018,464 163 412 $ 35,411,078 $ 7,200,253
(est. 500 units)

City Fees Waived (assuming 500 ADUs created):

$ 3,308,000. Wastewater System Facility Charge (WSFC) at $6,616/dwelling unit
$ 269,886. Building Permit Fee (based on $59,018,464 construction valuation)
$ 25,000. Plan Review Fee (based on $59,018,464 construction valuation)
$ 3,602,886. Total Fees Waived (estimated)

If the Total Fees Waived is considered a form of government subsidy or “cost” to incentivize the
production of new housing units that will be primarily be offered for rent. ADUs are a form of public-
private partnership. At a cost of about $3.6MM, the City helped create about 500 new rental units, but
more than recouped that cost in private spending, jobs and income generated, and state tax revenue.

1
Ordinance 15-41 allowing ADUs, passed September 14, 2015. Ordinance 16-19 waived permit fees for ADUs,
expired 6/30/2018. Ordinance 17-30, extends the period of fee waivers to 6/30/2020.
2
Data provided by the City and County of Honolulu: data.honolulu.gov
3
Construction valuation as reported on each building permit.
4
Currently, only Q1 2018 data available: 57 ADU permits issued; $7,812,622 Construction Valuation.
5
Based on DBEDT’s Input-Output model, 2012.
6
Sum of construction valuation from ADU building permit data (2016, 2017, and 2018 estimated); excludes land
development and acquisition costs.

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