SB696 HD1

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 used 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.

The purpose of this Act is to implement the working group's recommendation for implementing a new method for financing, in part, new or expanding existing department of education educational facilities in partnership with developers of residential properties.

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:

(1) Provide land or pay fees in lieu of land dedication proportionate to their impacts; and

(2) Pay upon issuance of building permits a school impact fee that is proportionate to their impact on the need to construct additional facilities.

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 also pay school impact fees proportionate to their impacts. This part shall require developers to provide some of the land for new schools and a portion of the cost of building new classrooms needed to serve new residential developments, as determined in section 302A-G.

§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 residential 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 a fee determined pursuant to section 302A‑F.

"Greenfield school impact district" means a largely undeveloped area where anticipated growth will create the need for one or more new schools that will be located within the area and will primarily serve new housing units within the area.

"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's 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 projects by applying to a county for the issuance of a subdivision approval or by recording a condominium property regime for other than a conversion of existing residential units within a designated school impact district shall be required to agree before final subdivision approval or before recordation of a condominium property regime for other than a conversion of existing residential units to dedicate land suitable for school facilities or pay a fee in lieu of dedicating that land to the department.

(b) Except as provided in subsection (c), any person who seeks to build a residential unit within a designated school impact district by applying to any county for a building permit shall be required to pay a school impact fee to the department before issuance of the building permit.

(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;

(3) Any development with a developer agreement with the department executed prior to the effective date of this part for the contribution of school sites or payment of fees for school land or school construction; and

(4) A single residence to be built on a single lot created prior to the effective date of this part.

§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 made as provided in section 1‑28.5. 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 describing the boundaries of the area;

(2) A finding that existing residential development in the area is insignificant relative to the anticipated number of dwelling units at build-out of the area;

(3) Analysis to support the need for the construction of one or more schools in the area, based on anticipated development in the area;

(4) Analysis to identify the percentages of existing student enrollment at the elementary school, middle or intermediate school, and high school levels that are located in permanent structures, and the percentages that are located in portable buildings, in immediately adjacent high school complexes;

(5) Analysis to support appropriate student generation rates (the expected average number of students per dwelling unit) by school level (elementary, middle, intermediate, or high school) that are representative of the type of development anticipated in the area; and

(6) Analysis to determine the average value per acre of improved land in the area zoned for residential development and sized and 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 of the boundaries of the area;

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

(3) Analysis to determine appropriate student generation rates by school level that are representative of the type of development anticipated in the proposed school impact district. If the analysis determines that student generation rates are falling for existing housing units in the proposed school impact district, the 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;

(5) Analysis to determine the average value per acre of improved land in the area zoned for residential use and sized and 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) The filing of an application for any residential subdivision or recording of a condominium property regime shall include an agreement between the owner or developer of the property and the department, under which the owner or developer has:

(A) Agreed to designate an area to be dedicated for one or more schools; or

(B) Agreed to pay to the department a fee in lieu of land dedication;

(2) When land is proposed to be dedicated for the purpose of providing a school site, it shall meet the requirements of the department and the department of land and natural resources.

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 or recording a condominium property regime, the department 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 upon completion of the subdivision improvements and any offsite infrastructure necessary to serve the land;

(5) When the payment of a fee in lieu is required, the fee in lieu shall be paid upon final subdivision approval or recording a condominium property regime, and the amount of the fee in lieu shall be escalated from the date it was determined to the date it is paid using the Engineering News-Record Construction Cost Index, or an equivalent index if that index is discontinued;

(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

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 using the following formula:

(Elementary school student generation rate per unit x 0.0218 acres/student + x middle or intermediate school student generation rate per unit x 0.0300 acres/student + high school student generation rate per unit x 0.0500 acres/student) x the number of dwelling units provided for on the subdivision plat.

(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 value per acre of land of the subdivision determined pursuant to subsection (c).

(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, as if contained in a single parcel, zoned for residential use, suitable for school construction, and serviced by roads, utilities, and drainage. An appraiser, licensed pursuant to chapter 466K, 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 licensed 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 subsection (b) but using an average land value determined for the area pursuant to section 302A-D(b)(6). 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 value per acre.

(d) If the department desires a parcel larger than the size the developer is required to dedicate, the department shall pay the developer, upon conveyance of the parcel, a per-acre amount for the excess acreage at the per acre value determined in subsection (c).

§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) School impact fees shall be based on the following cost per student of:

(1) New permanent classroom construction; and

(2) New portable classroom construction,

both in the Honolulu assessment district in 2006, as determined by the department based on the most recent school construction undertaken by the department. The cost per student in other assessment districts shall be the cost per student in the Honolulu assessment district multiplied by the appropriate cost factor in subsection (a). At least every three years, the department shall update the cost per student of new permanent classroom and new portable classroom construction, assuming twenty-five students per classroom in an eight-classroom building with appurtenant restrooms for permanent classrooms and twenty-five students per portable classroom, in the Honolulu assessment district and present the written analysis to the board for review. Upon approval by the board, the updated costs per student shall replace the costs applicable to permanent and portable classroom buildings built in 2006.

(c) At least every three years, the department shall update the student generation rates for housing within the school impact fee district and present the written analysis to the board for review. Upon approval by the board, the updated student generation rates shall replace the initially established student generation rates for each district.

(d) The school impact fee per dwelling unit for single family detached and multi-family housing in each designated school impact district shall be calculated according to the following formula, where the costs per student for permanent and portable classrooms are determined in subsection (b) and the student generation rates and percentages of students located in permanent and portable buildings are determined in section 302A‑D(b) and (c):

(1) Cost per student for permanent classrooms x percentage of elementary students in permanent classrooms x elementary student generation rate;

Plus

Cost per student for portable classrooms x percentage of elementary students in portable classrooms x elementary student generation rate; plus

(2) Cost per student for permanent classrooms x percentage of middle or intermediate students in permanent classrooms x middle or intermediate student generation rate;

Plus

Cost per student for portable classrooms x percentage of middle or intermediate students in portable classrooms x middle or intermediate student generation rate; plus

(3) Cost per student for permanent classrooms x percentage of high school students in permanent classrooms x high school student generation rate;

Plus

Cost per student for portable classrooms x percentage of high school students in portable classrooms x high school student generation rate.

§302A-H Revenue credit. The revenue credit in this section shall be used on the effective date of this Act. At least every three years, and concurrent with any update of the costs per student, the department shall update the revenue credits and present the written analysis to the board for review. The calculation of revenue credits shall be made in the manner used to determine revenue credits in the Hawaii school impact fee study. Upon approval by the board, the updated revenue credits shall replace the following:

(1) Single-family detached dwelling unit: $2,786; and

(2) Multi family dwelling unit: $1,428.

§302A-I Universal discount credit. The impact fees per dwelling unit shall be per cent of the amounts calculated according to the following formula:

Cost per dwelling unit from subsection 302A-G(d) minus revenue credit per dwelling unit from subsection 302A-H.

§302A-J Written confirmation. No county shall issue a residential building permit in a school impact district until it has received written confirmation from the department that the permit applicant has paid the department the school impact fee for the dwelling unit. The amount of the fee shall be increased from the date it was determined to the date it is paid using the Engineering News-Record Construction Cost Index, or an equivalent index if that index is discontinued.

§302A-K 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 within the same school impact district. School impact fees collected within each school impact district shall be spent within the same school impact district.

(b) Land dedicated by the developer shall be used only as a site for the construction of one or more new schools or for the expansion of existing school facilities.

§302A-L Refunds. If the fee in lieu or impact fee is not expended within twenty years of the date of collection, the department shall refund to the developer, or the developer's successor in the title, the amount of the fee in lieu paid and any interest accrued thereon calculated at the rate paid by the State on a twenty-year bond sold on the date closest to the date the fee in lieu was paid. 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-M 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 current value, determined in the manner provided under section 302A-F(c), of the dedication or the amount of the payment, escalated to the present using the Engineering News-Record Construction Cost Index or an equivalent index if that index is discontinued.

(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.

§302A-N 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 construction costs."

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.

THE SENATE	S.B. NO.	696
TWENTY-FOURTH LEGISLATURE, 2007		S.D. 2
STATE OF HAWAII		H.D. 1