Report Title:

School Impact Fees; New Schools or Facilities

 

Description:

Establishes a new part for determining school impact fees for financing new or expanding existing department of education schools or facilities by utilizing the student generation rates developed in the Ewa case study in establishing a uniform statewide approach for school land dedication or construction impact fee requirements.

 

 


HOUSE OF REPRESENTATIVES

H.B. NO.

1506

TWENTY-FOURTH LEGISLATURE, 2007

 

STATE OF HAWAII

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to school impact fees.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


     SECTION 1.  The legislature finds that, pursuant to Act 246, Session Laws of Hawaii 2005, the school impact fee working group was tasked with analyzing salient issues, including "fair share" practices and enrollment projections by the department of education, alternative funding mechanisms and best practices utilized by other jurisdictions nationwide, and different infrastructure needs imposed by different types of development, including infill.  The working group was also asked to submit proposed legislation or procedures for implementing its recommendations on determining school impact fees within identified school impact districts.

     In its report to the legislature entitled Hawaii School Impact Fee Study (December 2006), the working group recommended utilizing the student generation rates developed in the Ewa case study in establishing a uniform statewide approach for school land dedication or construction impact fee requirements.

     The purpose of this Act is to implement the working group's recommendation for implementing a new method for financing new or expanding existing department of education educational facilities.

     SECTION 2.  Chapter 302A, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part   .  school impact fees

     §302A-A  Findings.  New residential subdivisions within identified school impact districts create additional demand for public school facilities and a need for more land on which to construct school facilities.  New residential subdivisions should provide land or pay fees in lieu of land dedication prior to the subdivisions' approvals proportionate to their impacts.  New residential developments should pay a school impact fee that is proportionate to their impact on the need to construct additional facilities prior to issuance of building permits.  A study commissioned by the State has identified the land dedication requirement that is consistent with proportionate fair-share principles and the net capital cost of school facilities, excluding land costs, that is consistent with proportionate fair-share principles.

     The State determines that new residential subdivisions within designated school impact districts shall provide land for schools or pay a fee in lieu of land proportionate to their impacts.  The State also determines that new residential developments within designated school impact districts shall pay school impact fees proportionate to their impacts.

     §302A-B  Definitions.  As used in this part, the following terms shall have the following meanings unless the context indicates otherwise:

     "County" means the city and county of Honolulu, the county of Hawaii, the county of Kauai, and the county of Maui.

     "Developer" means a person, corporation, organization, partnership, association, or other legal entity constructing, erecting, enlarging, altering, or engaging in any development activity.

     "Dwelling unit" means a room or rooms connected together, constituting an independent housekeeping unit for a family containing a single kitchen.

     "Fee in lieu" means the fee determined pursuant to section 302A-F.

     "Greenfield school impact district" means a largely undeveloped, formerly agricultural area where anticipated growth will create the need for new schools within the next ten years that will be located within the area and will primarily serve new housing units within the area.

     "Hawaii school impact fee study" means the study prepared by Group 701 International and Duncan Associates for the school impact fee working group in 2006, or a subsequent similar report.

     "Multi-family" means any dwelling unit other than a single‑family unit.

     "Owner" means the owner of record of real property or the owner's agent.

     "Plat" means the map or drawing on which the subdivider's plan of subdivision is presented and that the subdivider submits for approval.

     "School facilities" means the facilities owned or operated by the department, or the facilities included in the department of education capital budget or capital facilities plan.

     "School impact district" means a geographic area designated by the board as either a greenfield school impact district or a non-greenfield school impact district.

     "Single-family" means a detached dwelling unit not connected to any other dwelling unit, or a detached building containing two dwelling units.

     §302A-C  Applicability and exemptions.  (a)  Except as provided in subsection (c), any person who seeks to develop residential land by applying to a county for the issuance of a subdivision approval within a designated school impact district shall be required to dedicate land suitable for school facilities or pay a fee in lieu of dedicating that land to the department before final subdivision approval.

     (b)  Except as provided in subsection (c), any person who seeks to develop residential land within a designated school impact district by applying to any county for a building permit shall be required to pay a school impact fee.  Assessment of impact fees shall be a condition precedent to the issuance of a building permit and shall be paid in full to the department before issuance of the permit.

     (c)  The following shall be exempt from this section:

     (1)  Any form of housing permanently dedicated exclusively for senior citizens, defined as fifty-five years of age or over, with the necessary covenants or declarations of restrictions recorded on the property;

     (2)  All nonresidential developments; and

     (3)  Any development with an executed developer agreement with the department for the contribution of school sites or payment of fees for school land or school construction.

     §302A-D  Designation of school impact districts and greenfield school impact districts.  (a)  The board shall designate a school impact district for school impact fees only after holding a public hearing.  A written analysis prepared by the department supporting the designation of the school impact district, as required herein, shall be made available to the public at least thirty days prior to the public hearing.  Notice of the public hearing shall be posted in a newspaper of general circulation in the area proposed for designation at least two weeks prior to the public hearing.  The notice shall include a map of the proposed school impact district and the date, time, and place of the public hearing.

     (b)  Prior to the designation of a greenfield school impact district, the department shall prepare a written analysis that contains the following:

     (1)  A map and legend description of the boundaries of the area;

     (2)  A finding that existing residential development in the area is insignificant, and in no event greater than one per cent of the anticipated number of dwelling units at build-out of the area;

     (3)  Analysis to support the need for the construction of an elementary school in the area within the next ten years, based on anticipated development in the area.  Analysis to support the ultimate need for a high school to be located within the area to primarily serve the anticipated housing in the area; and

     (4)  Analysis to determine the average value per acre of improved land in the area suitable for school construction, after typical subdivision improvements such as roads, drainage, and utilities.

     (c)  Prior to the designation of a non-greenfield school impact district, the department shall prepare a written analysis that contains the following:

     (1)  A map and legal description of the boundaries of the area, which will include one or more high school complexes;

     (2)  Analysis to support the need to construct or expand school facilities in the area within the next ten years to accommodate projected growth in the area;

     (3)  Analysis to support the conclusion that sixty-five per cent of the student generation rates by housing type derived for the Ewa area in the Hawaii School Impact Fee Study does not over-estimate the impact of the type of development anticipated in the area.  If the analysis determines that student generation rates are falling for existing housing units in the area, the analysis of student generation rates for new housing should reflect the net effect of growth, after accounting for capacity likely to be freed up by declining enrollment from existing housing; and

     (4)  Analysis to determine the average value per acre of improved land in the area suitable for school construction, after typical subdivision improvements such as roads, drainage, and utilities.

     §302A-E  School land or fee in lieu required.  The procedure for determining whether the dedication of land is required or a payment of a fee in lieu is required for a new school facility shall be as follows:

     (1)  At the time of filing an application for any residential subdivision containing fifty or more acres of land, the owner or developer of the property, as a part of the filing, shall designate the area proposed to be dedicated for a school on the plat submitted;

     (2)  When land is proposed to be dedicated for the purpose of providing a school site, it shall be land that is usable by the department for that purpose.  The department shall have the final determination as to whether a particular piece of land is usable;

     (3)  Within sixty days of the completion of an application for a residential subdivision containing fifty or more acres, the department, as part of the approval, shall determine whether to require dedication of land, the payment of a fee in lieu thereof, or a combination of both.  Only payment of a fee in lieu shall be required in subdivisions containing less than fifty acres;

     (4)  When dedication is required, the land shall be conveyed to the State prior to final subdivision approval;

     (5)  When the payment of a fee in lieu is required, the fee in lieu shall be paid prior to final subdivision approval;

     (6)  Whether the department determines to require land dedication or the payment of a fee in lieu, or a combination of both, shall be guided by the following criteria:

         (A)  The topography, geology, access, and location of the land in the development available for dedication;

         (B)  The size and shape of the development and the land available for dedication; and

         (C)  The location of existing or proposed schooling facilities; and

     (7)  The determination of the department as to whether land shall be dedicated or whether a fee in lieu shall be paid, or a combination of both, shall be final and exclusive.

     §302A-F  Determination of the amount of land or the fee in lieu.  (a)  The size of the tract of land to be dedicated by the developer shall be determined based on the following ratios, which represent just over eighty-two per cent of the requirements calculated for the Ewa area in the Hawaii School Impact Fee Study:

     (1)  0.01086 acres per single-family detached dwelling unit; and

     (2)  0.00714 acres per multi-family dwelling unit.

     (b)  The dollar amount of the fee in lieu shall be determined using the following formula:

Acres of land calculated according to subsection (a) times the average cost per acre of land of the subdivision determined pursuant to subsection (c).

     (c)  In determining the average cost per acre, the following shall apply:

     (1)  The fee in lieu of land dedication for residential subdivisions of fifty acres or more shall be based on the value of the improved land, after typical subdivision improvements such as roads, drainage, and utilities.  A M.A.I. appraiser who is selected and paid for by the developer shall determine the value of the land.  If the department does not agree with the developer's appraisal, the department may engage another M.A.I. appraiser at its own expense, and the value shall be an amount equal to the average of the two appraisals.  If either party does not accept the average of the two appraisals, a third appraisal shall be obtained, with the cost of the third appraisal being shared equally by the department and the developer.  The first two appraisers shall select the third appraiser, and the third appraisal shall be binding on both parties; and

     (2)  Residential subdivisions of less than fifty acres shall pay a standard fee in lieu based on an average land value determined for the area pursuant to section 302A-D(b)(6) and subsection (b).  At least every three years, the department shall prepare an analysis to update the appropriate average land value and shall submit the analysis to the board with a recommendation to update the average cost per acre.

     §302A-G  Impact fee calculation.  (a)  The State shall be divided into the following twenty-six geographically limited cost districts:

     Cost District      School District         Cost Factor

     Honolulu           Honolulu                1.00

     Ewa                Leeward/Central         1.00

     Wahiawa            Central                 1.05

     Waialua            Central                 1.10

     Koolaupoko         Windward                1.00

     Koolauloa          Windward                1.10

     Waianae            Leeward                 1.10

     Hilo               Hawaii                  1.15

     Puna               Hawaii                  1.20

     Kona               Hawaii                  1.20

     Hamakua            Hawaii                  1.20

     South Kohala       Hawaii                  1.20

     North Kohala       Hawaii                  1.25

     Pohakuloa          Hawaii                  1.25

     Kau                Hawaii                  1.30

     Wailuku            Maui                    1.15

     Makawao            Maui                    1.25

     Lahaina            Maui                    1.30

     Hana               Maui                    1.35

     Molokai            Molokai                 1.30

     Lanai              Lanai                   1.35

     Lihue              Kauai                   1.15

     Koloa              Kauai                   1.20

     Kawaihau           Kauai                   1.20

     Waimea             Kauai                   1.25

     Hanalei            Kauai                   1.25

     (b)  In every school impact district where school impact fees are imposed pursuant to section 302A-D, fees shall be assessed at       percentage of the base fee amounts set for the in subsection (c).

     (c)  Phasing schedule:

     (1)  For building permits issued within the first six months of the designation of a school impact district, the fees shall be assessed at twenty-five per cent of the ultimate amount;

     (2)  For building permits issued within the second six months of the designation of a school impact district, the fees shall be assessed at fifty per cent of the ultimate amount;

     (3)  For building permits issued within the second year of the designation of a school impact district, the fees shall be assessed at seventy-five per cent of the ultimate amount; and

     (4)  For building permits issued more than two years after the designation of a school impact district, the fees shall be assessed at one hundred per cent of the ultimate amount.

     (d)  The impact fees shall be the percentage specified in subsection (b) times the percentage specified in subsection (c) times the following base fees per dwelling unit for the cost district in which the school impact district is located:

Cost District      Cost Factor   Single-Family Multi-Family

  Honolulu           1.00          $20,683        $14,230

  Ewa                1.00          $20,683        $14,230

  Wahiawa            1.05          $21,717        $14,942

  Waialua            1.10          $22,751        $15,653

  Koolaupoko         1.00          $20,683        $14,230

  Koolauloa          1.10          $22,751        $15,653

  Waianae            1.10          $22,751        $15,653

  Hilo               1.15          $23,785        $16,364

  Puna               1.20          $24,820        $17,076

  Kona               1.20          $24,820        $17,076

  Hamakua            1.20          $24,820        $17,076

  South Kohala       1.20          $24,820        $17,076

  North Kohala       1.25          $25,854        $17,778

  Pohakuloa          1.25          $25,854        $17,778

  Kau                1.30          $26,888        $18,499

  Wailuku            1.15          23,785         $16,364

  Makawao            1.25          $25,854        $17,788

  Lahaina            1.30          $26,888        $18,499

  Hana               1.35          $27,922        $19,211

  Molokai            1.30          $26,888        $18,499

  Lanai              1.35          $27,922        $19,211

  Lihue              1.15          $23,785        $16,364

  Koloa              1.20          $24,820        $17,076

  Kawaihau           1.20          $24,820        $17,076

  Waimea             1.25          $25,854        $17,788

  Hanalei            1.25          $25,854        $17,788

     §302A-H  Accounting and expenditure requirements.  (a)  Each designated school impact district shall be a separate benefit district.  Fees in lieu of school land dedication collected within each school impact district shall be spent only for the acquisition of school sites within the same school impact district.  School impact fees collected within each school impact district shall be spent only for the expansion of existing school or construction or new schools located within the same school impact district.

     (b)  Land dedicated by the developer shall be used only as a site for the construction of a new school or for the expansion of existing school facilities.  If the land is sold, the proceeds shall be used to acquire land for school facilities in the same school impact district.

     (c)  Fee in lieu funds shall only be used for the acquisition of land for school purposes.  Funds may be used for expenses related to acquiring a piece of land, including but not limited to surveying, appraisals, and legal fees.  Fee in lieu funds shall not be used for the maintenance or operation of existing schools in the district, construction costs, including architectural, permitting, or financing costs, or administrative expenses.

     (d)  Impact fees shall be used only for the costs of school construction that expands the student capacity of existing schools or adds student capacity in new schools.  School impact fees may not be used to replace an existing school located within the same school impact district, either on the same site or on a different site.  In the event of closure, demolition, or conversion of an existing permanent department facility within a school impact district that has the effect of reducing student capacity, an amount of new student capacity in permanent buildings equivalent to the lost capacity shall be funded with non-school impact fee revenue.  Eligible construction costs include but are not limited to planning, engineering, architectural, permitting, financing, and administrative expenses, and any other capital equipment expenses pertaining to educational facilities.  Impact fee funds shall not be expended for:

     (1)  Any costs related to the acquisition of land;

     (2)  The maintenance or operation of existing schools in the district; or

     (3)  On portable buildings.

     (e)  Impact fee and fees in lieu shall be expended or encumbered within ten years of the date of collection.  Fees shall be considered spent or encumbered on a first-in, first-out basis.

     §302A-I  Refunds.  If the fee in lieu or impact fee is not expended within ten years of the date of collection, the department shall refund to the developer, or the developer's successor in the title, the amount of fees in lieu paid and any interest accrued thereon.  Application for a refund shall be submitted to the department within one year of the date on which the right to claim arises.  Any unclaimed refund shall be retained and expended as provided in this part.

     §302A-J  Credits for land dedication or fees in lieu.  (a)  Any person subject to the land dedication or fee in lieu requirements pursuant to this part may apply for credit for any similar dedication or payment accepted and received by the department for the same subdivision subject to this section.

     (b)  Any credit provided for under this section shall be based on the present value of the dedication or payment.

     (c)  Credits for contributions prior to the effective date of this Act shall be based on the present value; provided that the credit amount shall not exceed the value of the dedication or fee in lieu required under this part.

     (d)  If a dedication is proposed by a developer after the effective date of this section, is acceptable to the department, and exceeds the dedication requirements for the subdivision, the department shall execute with the developer an agreement to provide reimbursement for the excess land dedication from the fees in lieu collected from other developers within the same benefit district.

     §302A-K  Credits for impact fees.  (a)  Any applicant subject to the school impact fee requirements pursuant to this part may apply for credit for any similar contribution, payment, or construction of public school facilities accepted and received by the department for the same subdivision subject to this part.  No credit shall be authorized against the impact fees for dedication of land or payment of a fee in lieu of land dedication.

     (b)  Credits for contributions, payments, or construction made prior to the effective date of this Act shall be provided if the subdivision for which the contribution, payment, or construction was made has not been completed.  The current owner of the property for which the contribution, payment, or construction was made as a condition of development approval shall file an application for credit within one year of the effective date of this Act.  If the application is not made within one year of the effective date of this Act, no credit shall be provided.  The application for credit shall be submitted and reviewed as provided in this part.  The amount of the credit for a contribution, payment, or construction made prior to the effective date of this Act shall be the current value of the contribution, payment, or construction, less the total amount of school impact fees that would have been owed for the building permits already issued for the project had those permits been subject to the fees specified in section 302A-G.  The current value shall be determined using the Engineering News-Record Construction Cost Index, or an equivalent index if that index is discontinued.  Credits for payments or contributions prior to the effective date of this Act shall not exceed the value of the impact fee required under this section.

     (c)  A credit may be applied only against school impact fees that would otherwise be due for building permits issued within the subdivision for which the payment or contribution was required as a condition of development approval.  The department shall maintain an accounting of the amount of the credit applicable to the subdivision and shall reduce the amount of the credit by the amount of the school impact fees that would otherwise be due for each building permit issued in the subdivision.  After the credit balance is exhausted, no additional credits shall be applied to subsequent building permits issued within the subdivision.

     (d)  If private construction of school facilities is proposed by a developer after the effective date of this Act, the proposed construction is acceptable to the department, and the value of the proposed construction exceeds the total impact fees that would be due from the development, the department shall execute with the developer an agreement to provide reimbursement for the excess credit from the impact fees collected from other developers within the same benefit district."

     SECTION 3.  In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

     SECTION 4.  This Act shall take effect upon its approval.

 

INTRODUCED BY:

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