Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Finance, to which was referred S.B. No. 1814, S.D. 2, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this bill is to authorize the Department of Education (DOE) to assess and collect impact fees as fair share contributions of developers for the construction of new, or expansion of existing, state public school facilities that are necessary due to new housing developments.

The Land Use Research Foundation (LURF) of Hawaii supported this bill, with amendments. DOE and City & County of Honolulu's (C&C) Department of Planning and Permitting (DPP) supported the intent of this measure.

LURF expressed its concern that additional amendments would be needed to properly reference the State Educational Facilities Improvement Special Fund and to avoid conflict with Act 155, Session Laws of Hawaii of 2004. They also suggested several issues the Legislature should consider, including DOE's statutory and administrative authority to collect and assess fair share contributions, the methodology for calculating fees commensurate with the development's impacts, the nexus between the fees generated by a particular development and that development's

impacts, and the equity that must be exercised in allowing the development community to assist DOE in providing more classrooms and school facilities in high demand areas.

DPP raised several concerns about the process and procedures that C&C would have to follow. DPP explained that an ordinance is necessary rather than an intergovernmental agreement to allow C&C to charge developers the impact fee. DPP also suggested that impact fees must be levied fairly and equally across the board, which includes affordable housing projects. DPP further noted that amending Chapter 46, Hawaii Revised Statutes, will create confusion by placing a state agency in a chapter that deals with the counties, and is unnecessary because C&C has successfully arranged similar actions with the State in the past.

This bill has been amended by:

As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1814, S.D. 2, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1814, S.D. 2, H.D. 2.