HB422 SD1

SECTION 1. The legislature finds that school impact fees add to the cost of residential housing development, potentially adding thousands of dollars to each new unit of housing constructed in affected districts. These costs are passed on to renters and buyers, leading to higher rental and for-sale prices. In some cases, high impact fees can result in a project becoming financially untenable and the units are never built. This contributes to a scarce housing market, driving up the market price of housing.

The legislature further finds that auditor report no. 19-13 is the most comprehensive analysis of school impact fees to date. The report's summary of findings are as follows:

(1) The department of education's designation of school impact districts lacks well-defined policies and procedures and the district boundaries designated to date raise concerns as to whether constitutional "nexus" requirements have been adequately addressed;

(2) The department of education's calculation of fees has been inconsistent and at times based on questionable assumptions, and updates to formula factors as well as other requirements of the school impact fee law have not been met;

(3) Gaps, that is delays, between designation of school impact districts and collection of fees have resulted in loss of fee revenue; and

(4) The department of education cannot adequately account for fair share and school impact fee cash and land contributions.

In its report, the auditor also found that in twelve years following the enactment of the school impact fee law, the department of education collected only $5,342,886 in school impact fees. The auditor further found that this collection would not have been enough to build a single elementary school. For example, the auditor found that Hookele elementary school cost $55,000,000 to build and further found that the department estimated it would cost approximately $80,000,000 to build a single new elementary school. The auditor found that none of the school impact fees collected had been used for the construction of new schools and $17,600,340 of collected fees remain unused in a special fund.

The legislature further finds that school impact fees are a burden on aspiring homeowners and renters and the collection of these fees does not provide a clear benefit to the community.

The purpose of this Act is to reduce the cost of housing by:

(1) Eliminating school impact fees; and

(2) Abolishing certain fair share contribution accounts and lapsing the unencumbered balances to the school facilities special fund.

SECTION 2. Section 302A-1706, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) There is established within the state treasury a special fund to be known as the school facilities special fund into which shall be deposited:

(1) All moneys the authority receives, including funds appropriated or transferred by the legislature for deposit into the special fund;

[~~(2)~~ ~~Funds collected pursuant to section 302A-1608(a); provided that these moneys shall be deposited into the appropriate subaccount established pursuant to subsection (b);~~

~~(3)~~] (2) Any moneys received by the department in the form of a grant, gift, endowment, or donation for the development, planning, or construction of new school facilities or major renovations of school facilities; and

[~~(4)~~] (3) All other moneys received by the authority and not deposited into a trust fund or trust account, including unrestricted grants, gifts, and donations; proceeds from sales of property; rents and other receipts from leases, rights of entry, and the like; and interest, refunds, and other receipts and payments.

(b) The authority shall establish and appropriately name subaccounts within the school facilities special fund to accept deposits of revenues [~~from school impact fees that are required to be expended within a specific school impact district pursuant to section 302A-1608(a) or~~] restricted for a specified purpose pursuant to part V, subpart B of this chapter."

SECTION 3. Section 46-142.5, Hawaii Revised Statutes, is repealed.

["[~~§46-142.5 School impact districts; new building permit requirements.]~~ No new residential development in a designated school impact district under chapter 302A shall be issued a residential building permit or condominium property regime building permit until the department of education provides written confirmation that the permit applicant has fulfilled its school impact fee requirements. This section shall only apply to new dwelling units."]

SECTION 4. Chapter 302A, part VI, subpart B, Hawaii Revised Statutes, is repealed.

SECTION 5. The school impact fees subaccounts within the school facilities special fund under section 302A-1706, Hawaii Revised Statutes, are abolished and any unencumbered balance remaining shall lapse to the school facilities special fund; provided that the funds shall be:

(1) Used within the school impact district for which it was collected; or

(2) Refunded to the developer if collected as a fee in lieu or a construction cost component impact fee after twenty years of the date of collection.

SECTION 6. The following fair share contribution accounts within the donations – facilities trust (EDN 400), are abolished and any unencumbered balance remaining shall lapse to the school facilities special fund under section 302A-1706, Hawaii Revised Statutes; provided that the lapsed contributions shall only be used within the same complex in which the contributions were originally collected:

(1) Pearl City complex (account number: 10800);

(2) Aiea complex (account number: 10801);

(3) Kaimuki complex (account number: 10802);

(4) Kaiser complex (account number: 10803);

(5) Kapolei complex (account number: 10804);

(6) Maili Kai – Maili elementary trust (account number: 10805);

(7) Maili Kai – Waianae trust (account number: 10806);

(8) Baldwin complex (account number: 10807);

(9) Lahainaluna complex (account number: 10808);

(10) Maui high school complex (account number: 10809); and

(11) Kealakehe complex (account number: 10810).

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

SECTION 8. This Act shall take effect on July 1, 2050.

HOUSE OF REPRESENTATIVES	H.B. NO.	422
THIRTY-THIRD LEGISLATURE, 2025		H.D. 1
STATE OF HAWAII		S.D. 1