Kaua‘i County lawmakers will soon have another chance to ease the island’s critical housing shortage when a bill comes before them that would allow existing Kaua‘i homeowners to build both accessory dwelling units and guest houses on their properties.
The Kaua‘i Planning Commission considered the bill on June 4, and expects to hear the bill again later this summer to make amendments. If all goes well, its members will recommend that it be approved by the Kaua‘i County Council.
Right now, Kaua‘i’s county code limits property owners to only one additional dwelling unit or one guest house per main dwelling on their properties, but not both.
The proposed measure, Bill 2919, would allow residents with a home and an ADU to build a guest house on their properties, which they could rent out for income or perhaps use to house their parents or adult children.
In fact, someone with a home and an ADU could actually add two guest houses, since the bill would allow one guest house “per dwelling.”
In addition, the measure would also expand guest houses to districts outside of residential areas. Current law restricts guest houses to residential zones only, but Bill 2919 would allow their use in Kauai’s commercial, agriculture, open and university zoning districts.
For example, farmers could put up guest houses to rent to their workers. This would provide less expensive housing for the farm workers and income for the farmers that could help cover the costs of running their farms.
As Kaua‘i Planning Commission member Jerry Ornellas said during the commission’s June 4 meeting, the county has “worked very hard at saving agricultural land, but not hard enough at saving the farmers who have to farm that land.”
According to Kaua‘i’s county code, the key differences between ADUs and guest houses are that guest houses cannot be used as homestays or short-term rentals, and they cannot be any larger than 800 square feet.
ADUs, on the other hand, can be used as short-term rentals if built in the proper zoning districts, and they may be larger than 800 square feet.
Under Bill 2919, guest houses still could not be used as short-term rentals, unless they were being used as such prior to August 2019 — when the law prohibiting guest houses from being used as short-term rentals or homestays was passed.
One drawback of the bill is that it doesn’t take into account the property tax consequences for owners who might decide to build guest houses for rent.
Currently, the county offers a tax break to certain affordable rentals, but homeowners who might choose under the proposed law to build a guest house and rent it at higher rates could possibly be moved into the owner-occupied mixed-use tax class, which carries a higher tax rate than the owner-occupied class.
County Council members are aware that long-term rentals on the island could benefit from property tax incentives, but the council has yet to approve legislation that would provide such a tax break for rentals outside the official affordable rentals program.
As the guest house bill moves along, perhaps the council could revisit the issue of long-term rental taxes to encourage more housing.
But even if it doesn’t, allowing guest homes throughout Kaua‘i’s neighborhoods would still help increase the island’s housing supply, help build intergenerational wealth and make it easier for longtime residents to keep living on the island they love.
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Jonathan Helton is a policy researcher at the Grassroot Institute of Hawai‘i.
