Amends part VIII of chapter 46 relating to impact fees to require uniform assessment of affordable housing exactions.

A BILL FOR AN ACT

SECTION 1. The senate and house of representatives of the twenty-third legislature of the State of Hawaii, regular session of 2005, enacted Act 196, Relating to Housing, and section 35 of that act established the joint legislative housing and homeless task force to further identify near-term solutions to Hawaii's affordable housing and homeless problem. The task force issued its report with findings and recommendations in January 2006. The task force recommended in general that the State: (1) leverage more sources of financing for affordable housing; (2) make available more public land for the development of affordable housing; (3) streamline government approvals and permitting of affordable housing projects; (4) build more offsite infrastructure to serve affordable housing; (5) appropriate additional funds for transitional housing, shelters, and services for the homeless population; and (6) preserve and maintain the existing public housing stock.

The specific recommendations of the task force for land availability for affordable housing include enacting an inclusionary zoning enabling statute for ordinances that may be adopted by the counties, applicable to all residential and nonresidential development, requiring uniform assessment of affordable housing unit percentages or in-lieu fees. The task force found that mandatory housing unit dedications (inclusionary zoning) or linkage fees (impact fees) for affordable housing will pass constitutional muster if there is an essential nexus between the exaction, the impact of the development, and the public purpose to be served by the imposition. However, Hawaii lacks legislated standards by which the burden of providing affordable housing can be uniformly and fairly distributed among private developers.

The purpose of this Act is to implement the recommendations of the task force with regard to requiring uniform assessment of affordable housing exactions.

SECTION 2. Section 46-141, Hawaii Revised Statutes, is amended to read as follows:

"§46-141 Definitions. As used in this part, unless the context requires otherwise:

"Affordable housing capital improvement costs" means costs of land acquisition, construction, planning and engineering, administration, and legal and financial consulting fees associated with construction, expansion, or improvement of affordable housing as defined by any county.

"Board" means the board of water supply or water board of any county.

"Capital improvements" means the acquisition of real property, improvements to expand capacity and serviceability of existing public facilities and affordable housing, and the development of new public facilities and affordable housing.

"Comprehensive plan" means a coordinated land use plan for the development of public facilities or affordable housing within the jurisdiction of a county based on existing and anticipated needs, showing existing and proposed developments, stating principles to which future development should conform, such as the county's general plans, development plans, or community plans, and the manner in which development should be controlled. In the case of the city and county of Honolulu, public facility maps shall be equivalent to the comprehensive plan required in this part.

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

"Credits" means the present value of past or future payments or contributions, including, but not limited to, the dedication of land or construction of a public facility or affordable housing made by a developer toward the cost of existing or future public facility or affordable housing capital improvements, except for contributions or payments made under a development agreement pursuant to section 46-123.

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

"Development" means any artificial change to real property that requires a grading or building permit as appropriate, including, but not limited to, construction, expansion, enlargement, alteration, or erection of buildings or structures.

"Discount rate" means the interest rate, expressed in terms of an annual percentage, that is used to adjust past or future financial or monetary payments to present value.

"Impact fees" means the charges imposed upon a developer by a county or board to fund all or a portion of the public facility or affordable housing capital improvement costs required by the development from which it is collected, or to recoup the cost of existing public facility or affordable housing capital improvements made in anticipation of the needs of a development.

"Needs assessment study" means a study required under an impact fee ordinance that determines the need for a public facility or affordable housing, the cost of development, and the level of service standards, and that projects future public facility or affordable housing capital improvement needs; provided that the study shall take into consideration and incorporate any relevant county general plan, development plan, or community plan.

"Non-site related improvements" means land dedications or the provision of public facility or affordable housing capital improvements that are not for the exclusive use or benefit of a development and are not site-related improvements.

"Offset" means a reduction in impact fees designed to fairly reflect the value of non-site related public facility or affordable housing capital improvements provided by a developer pursuant to county land use provisions.

"Present value" means the value of past or future payments adjusted to a base period by a discount rate.

"Proportionate share" means the portion of total public facility or affordable housing capital improvement costs that is reasonably attributable to a development, less:

"Public facility capital improvement costs" means costs of land acquisition, construction, planning and engineering, administration, and legal and financial consulting fees associated with construction, expansion, or improvement of a public facility. Public facility capital improvement costs do not include expenditures for [required affordable housing,] routine and periodic maintenance, personnel, training, or other operating costs.

"Reasonable benefit" means a benefit received by a development from a public facility capital improvement or affordable housing that is greater than the benefit afforded the general public in the jurisdiction imposing the impact fees. Incidental benefit to other developments shall not negate a "reasonable" benefit to a development.

"Recoupment" means the proportionate share of the public facility or affordable housing capital improvement costs of excess capacity in existing capital facilities or affordable housing where excess capacity has been provided in anticipation of the needs of a development.

"Site-related improvements" means land dedications or the provision of public facility or affordable housing capital improvements for the exclusive use or benefit of a development or for the provision of safe and adequate public facilities or affordable housing related to a particular development."

SECTION 3. Section 46-142, Hawaii Revised Statutes, is amended to read as follows:

"§46-142 Authority to impose impact fees; enactment of ordinances required. (a) Impact fees may be assessed, imposed, levied, and collected by:

provided that the county enacts appropriate impact fee ordinances or the board adopts rules to effectuate the imposition and collection of the fees within their respective jurisdictions.

(b) Except for any ordinance governing impact fees enacted before [July 1, 1993,] the effective date of this Act, impact fees may be imposed only for those types of public facility or affordable housing capital improvements specifically identified in a county comprehensive plan or a facility needs assessment study. The plan or study shall specify the service standards for each type of facility or affordable housing subject to an impact fee; provided that the standards shall apply equally to existing and new public facilities or affordable housing."

SECTION 4. Section 46-143, Hawaii Revised Statutes, is amended to read as follows:

"§46-143 Impact fee calculation. (a) A county council or board considering the enactment or adoption of impact fees shall first approve a needs assessment study that shall identify the kinds of public facilities or affordable housing for which the fees shall be imposed. The study shall be prepared by [an] a planner, engineer, architect, or other qualified professional and shall identify service standard levels, project public facility or affordable housing capital improvement needs, and differentiate between existing and future needs.

(b) The data sources and methodology upon which needs assessments and impact fees are based shall be set forth in the needs assessment study.

(c) The pro rata amount of each impact fee shall be based upon the development and actual capital cost of public facility or affordable housing expansion, or a reasonable estimate thereof, to be incurred.

(d) An impact fee for public facilities shall be substantially related to the needs arising from the development and shall not exceed a proportionate share of the costs incurred or to be incurred in accommodating the development. The following seven factors shall be considered in determining a proportionate share of public facility capital improvement costs:

(e) An impact fee for affordable housing shall be substantially related to the needs arising from the development and shall not exceed a proportionate share of the costs incurred or to be incurred in accommodating the development. The following four factors shall be considered in the process of determining a proportionate share of affordable housing capital improvement costs:

[(e)] (f) The impact fee ordinance shall contain a provision setting forth the process by which a developer may contest the amount of the impact fee assessed."

SECTION 5. Section 46-144, Hawaii Revised Statutes, is amended to read as follows:

"§46-144 Collection and expenditure of impact fees. Collection and expenditure of impact fees assessed, imposed, levied, and collected for development shall be reasonably related to the benefits accruing to the development. To determine whether the fees are reasonably related, the impact fee ordinance or board rule shall provide that:

SECTION 6. Section 46-148, Hawaii Revised Statutes, is amended to read as follows:

"[[]§46-148[]] Transitions. Any county requiring impact fees or imposing development exactions, in order to fund public facilities or affordable housing, shall incorporate fee requirements into their broader system of development and land use regulations in such a manner that developments, either collectively or individually, are not required to pay or otherwise contribute more than a proportionate share of public facility or affordable housing capital improvements. Development contributions or payments made under a development agreement, pursuant to section 46-123, are exempted from this requirement."

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect upon its approval.