May 2, 2010

What is an Existing Use Permit?

"The purpose of [an Existing Use Permit] is to recognize the hardship imposed upon uses which were legally established.... In the event of destruction, uses may be continued and structures may be rebuilt under the approved existing use plan, provided that such restoration is permitted by the building code and flood hazard regulations and is started within two years...." (Excerpts from the City and County of Honolulu Land Use Ordinance (Sec 21-2.100(a)) http://www.co.honolulu.hi.us/refs/roh/21_990.pdf 

Existing Use (EU's) Permits are particularly useful for older residential developments where the # of existing homes exceeds the number allowed under today's Zoning Code. In such cases, the City considers these older homes (that were built with a building permit) as "Nonconforming Dwellings" also known as "grandfathered" homes.

The Zoning Code states, "If a nonconforming dwelling unit is destroyed by any means to an extent of more than 50 percent of its replacement cost at the time of destruction, it shall not be reconstructed." ROH 21-4.110 (d)(2). This heart-wrenching condition happens when a house is lost to a fire or hurricane. More commonly, this provision limits the amount of work an Owner can do to repair extensive termite damage or simply decades worth of wear-and-tear. The Zoning code is very explicit in limiting the amount of work that can be done. This is why an Existing Use (EU) Permit is so valuable.

The City regards an EU as an alternative to Nonconforming Dwelling status. Thus, having an EU would allow an Owner to completely demolish and rebuild the existing home(s), without that 50% limitation.

Another major benefit is that once the process is complete, the Property Owner will have all of the approved homes on record. The Zoning Code states, "Developments existing on the site shall be considered as an approved plan after review by the director." (ROH 21-2.100(b)(4)

Most Lenders/Bankers/Appraisers understand that without an EU, the collateral of their investment could potentially be destroyed and cannot be rebuilt. Thus, they will very likely not include the value of a Nonconforming Dwelling (ie. Nonconforming Dwelling = No Equity). That is why most Lenders will not include the value of Nonconforming Dwellings in an appraisal, unless there is an EU Permit.

Without an EU, the Owner bears the burden of proof to establish that the structures were built with a permit. Meaning, if you cannot provide documentation to satisfy the Dept of Planning and Permitting, then your house loses its Nonconforming Dwelling status and may be considered an illegal structure – equivalent to being built without a permit.

EU CONDITIONS (The Zoning Code giveth and taketh away):
EU's often come with conditions to ensure safety. This may include a requirement to install Automatic Fire Sprinklers or to install an all-weather surface (ie. concrete slab) for on-site parking and access. This is commonly done to provide fire fighters with an adequate means of access to and within the property in case of fire.

Another common conditions imposed with an EU, is a limitation on the amount of total lot coverage and floor area of dwelling units. These requirements are meant to discourage and reduce the impacts of redevelopment on the character of the neighborhood.

For example: Because an Existing Use Permit allows complete demolition and rebuilding of an existing dwelling, without those EU conditions, an Owner could potentially completely replace the older 1-story 600 sq ft plantation-style home with a 4,000 sq ft 2-story stucco and glass, modern-style home.

If the lot will be subjected to a Condominium Property Regime (CPR) and each house sold to separate Owners, the Dept of Planning & Permitting may impose additional conditions. However, these conditions are very similar to what you would have in a newer home in Mililani or Ewa. For example, the City may require a fence master plan, so that all new walls and fences conform to a uniform design scheme and appearance. This requirement may actually improve property values as it reduces the likelihood of varying heights and types of oddball improvements.

The Dept of Planning & Permitting has proposed Bill 24 (2010) that would allow by-right up to 8 dwelling units on a single property. If this Bill passes, it would eliminate the need for many owners to obtain EU’s. However, you must still prove that the homes were built with a building permit.