In Honolulu, some people have dealt with the housing crisis by building “monster homes.” As one prominent real estate company has described them, they are large houses built in land zoned for single-family homes. They “tend to take up more than 75 percent of the lot space on which they stand, can have as many as 20+ bedrooms and often stand at 3 or more stories tall, built in residential districts.”
The current penalty for building one of these, in violation of building codes, is $250 per day of violation, up to $2,000. Some say that this amount is far too small to be an effective deterrent. Thus, Bill 52 was introduced at the request of the Department of Planning and Permitting. That bill says that an initial fine of $25,000, plus $10,000 per day without an upper limit, may be imposed for a violation of the development standards in Revised Ordinances of Honolulu section 21-3.70-1(c) (which relate to maximum height; height setbacks; maximum floor area ratio; maximum numbers of wet bars, laundry rooms, and bathrooms; minimum sizes of yards, among other things) as a result of incorrect information supplied by the applicant or design team, or if the house is converted or constructed so as to violate any of those development standards.
It seems that the bill as written does not work as advertised. It allows the City to levy huge fines against home builders not only for building monster homes, but also for technical violations such as a required side yard that is in places 1 inch too narrow. That is not the problem that the bill needs to address, and it instead allows city authorities to swing a sledgehammer at technical violations found in a house that is nowhere close to what anyone would consider a monster home.
Instead, the enhanced fines should kick in only if there is a material difference between the approved plans for the building (which, if the permitting inspectors are doing their job, will not allow for building a monster home) and what is actually built. If there is such a material difference, that means either that the design team supplied significantly false information when applying for a building permit, or the construction team built something significantly different from the approved plans.
But, some critics would say, how does one define a “material” difference? It’s certainly tough to define in legal terms, but historically juries and judges haven’t had much of a problem with it.
Business disputes often center around contracts, and judges normally don’t step in unless they find a material breach of the contract, especially if the relief sought by the suing party is extensive. Stockholders who feel they have been duped into buying or selling a security need to prove that the company behind the security has omitted a material fact. Just like beauty, materiality is hard to define but it is in the eye of the beholder.
Using a materiality standard instead of a technical one should allow judges and juries to bring some sense and sensibility to enforcing the prohibition of monster homes. That kind of sensibility needs to be a part of any decision to impose the huge penalties that the City officials are seeking.
And, last but not least, a material difference between the approved plans and the building built doesn’t mean the result is a monster home. But it does mean that either the design team or the building team did something to disrespect the permitting process. If we are going to have a permitting process and building codes, they do need to be respected. This may result in the ordinance being overly inclusive, but in an understandable way.
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Tom Yamachika is president of the Tax Foundation of Hawai‘i.
