HB 1713: School Impact Fees; Residential Development; Land Dedication Exemptions

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 Hawaii faces a severe housing shortage and that reducing regulatory barriers and development costs is essential to increasing the supply of homes.  Impact fees imposed on smaller residential projects can add substantial costs to housing and may discourage the development of infill units needed within existing communities.

     The legislature further finds that the school impact fee program was designed to ensure that new developments contribute their fair share toward school facilities needed to support enrollment growth.  While the program may be appropriate for large master-planned communities that create significant, concentrated increases in enrollment, applying the same fee structure to smaller projects places a disproportionate burden on developments that have minimal impact on school capacity.

     The legislature also finds that residential developments of fewer than five hundred units typically generate a small number of students who can be accommodated within existing school facilities or through minor adjustments that do not require new school construction.  Applying substantial impact fees to these smaller projects increases housing costs without producing a corresponding benefit to public school infrastructure.

     The purpose of this Act is to:

     (1)  Expand exemptions from school impact fee requirements for certain housing developments;

     (2)  Clarify procedures and timing for land dedication or fee in lieu agreements for new residential developments;

     (3)  Repeal the sunset and reporting requirement under Act 268, Session Laws of Hawaii 2025, relating to school impact fees;

     (4)  Restructure certain school impact fee accounts; and

     (5)  Preserve existing educational contribution agreements.

     SECTION 2.  Section 302A-1603, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  The following shall be exempt from this section:

     (1)  Any form of housing permanently excluding school-aged children, with the necessary covenants or declarations of restrictions recorded on the property;

     (2)  Any form of housing that is or will be paying the transient accommodations tax under chapter 237D;

     (3)  All nonresidential development;

     (4)  Any development with an executed education contribution agreement or other like document with the agency for the contribution of school sites or payment of fees for school land or school construction;

     (5)  Any housing project developed by the government;

     (6)  Any dwelling units in a housing project processed pursuant to sections 46-15.1 and 201H-38[;] that are reserved for low- or moderate-income households;

     (7)  Any dwelling units in a housing project that [meets] meet the definition of affordable housing in sections 46-15.25 or 201H-57[;] and are reserved for households meeting the income requirements of those sections;

     (8)  Any housing that is a single-room dwelling;

     (9)  Any form of housing developed by the department of Hawaiian home lands for use by beneficiaries of the Hawaiian Homes Commission Act, 1920, as amended; and

    (10)  Any form of development by the Hawaii community development authority pursuant to part XII of chapter 206E; [and

  [](11)[]]  Any form of development by the Hawaii housing finance and development corporation pursuant to part V of chapter 201H[.];

    (12)  Any housing project consisting of fewer than five hundred dwelling units; provided that subdivisions or phases of a development or master plan shall be considered parts of the same housing project; provided further that no developer shall artificially subdivide a project or phase the development of a project to avoid the requirements of this subpart;

    (13)  Any dwelling unit in a housing project that is reserved for residents earning at or below one hundred forty per cent of the area median income as set by the county where the dwelling unit is located; and

    (14)  Any studio apartment or dwelling unit that does not contain a separate bedroom and has a total floor area of less than four hundred square feet."

     SECTION 3.  Section 302A-1606, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

     "(c)  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 or to satisfy the land component impact fee shall be as follows:

     (1)  A new residential development with one hundred or more units shall include a written agreement between the owner or developer of the property and the authority, executed [prior to] before issuance of a building permit, under which the owner or developer has:

          (A)  Agreed to designate an area to be dedicated for one or more schools for the development, subject to approval by the authority; or

          (B)  Agreed to pay to the authority, at a time specified in the agreement, a fee in lieu of land dedication;

     (2)  [Prior to] Before approval of any change of zoning, subdivision, or any other approval for a:

          (A)  Residential development with one hundred or more units; or

          (B)  Condominium property regime development of one hundred or more units,

          the authority shall notify the approving entity of its determination on whether it will require the development to dedicate land, pay a fee in lieu thereof, or a combination of both for the provision of new school facilities;

     (3)  The authority's determination 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, value, and location of the land available for dedication;

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

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

          (D)  The availability of infrastructure;

     (4)  The determination of the authority as to whether lands shall be dedicated or whether a fee in lieu shall be paid, or a combination of both, shall be final;

     (5)  When land 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; provided that:

          (A)  Notwithstanding any law to the contrary, when a developer is required to dedicate land pursuant to an educational contribution agreement or this subpart, the board, in coordination with the authority, or the appropriate state agency determined by the governor, shall formally accept the transfer of the land title no later than five years after the subdivision improvements and any offsite infrastructure are completed.  If the board or the appropriate state agency fails to accept the transfer within the five-year period, the developer's land dedication requirement shall be deemed fully satisfied by operation of law, and the subject land shall permanently revert to, and remain the property of, the developer without further obligation; and

          (B)  If the board or the appropriate state agency formally accepts the transfer of the land title pursuant to subparagraph (A), the State shall commence construction of school facilities on the dedicated land no later than seven years after the date of acceptance.  If the State fails to commence construction within the seven-year period, the subject land shall permanently revert to, and remain the property of, the developer; and

     (6)  When the payment of a fee in lieu is required, the fee in lieu shall be paid based on the terms contained in the written agreement."

     SECTION 4.  Act 268, Session Laws of Hawaii 2025, is amended as follows:

     1.  By amending section 11 to read:

     "SECTION 11. [No later than December 15, 2026, the school facilities authority shall submit a report to the legislature on its findings, recommendations, and evaluation of the benefits and impacts of subpart B of part VI of chapter 302A, Hawaii Revised Statutes, as amended by this Act.  The report shall include:

     (1)  The authority's efforts and progress in addressing the recommendations set forth in auditor's report no. 19‑13;

     (2)  A thorough review of the currently established impact fee districts; and

     (3)  An assessment of the need for new school construction based on demographic projections over the next twenty‑five years, as provided by the state land use commission.] Repealed."

     2.  By amending section 14 to read:

     "SECTION 14.  This Act shall take effect upon its approval, and shall apply to new residential developments permitted or approved on or before June 30, 2029[; provided that this Act shall be repealed on July 1, 2029, and sections 302A-1601, 302A-1602, 302A-1603, 302A-1606, 302A‑1607, 302A-1608, 302A-1609, 302A-1611, and 302A-1612, Hawaii Revised Statutes, shall be reenacted in the form in which they read prior to the effective date of this Act]."

     SECTION 5.  The following impact fee accounts within the donations – facilities trust (EDN 400), are abolished and any unencumbered balance remaining shall lapse to the appropriate school facilities subaccounts within the school facilities special fund under section 302A-1706, Hawaii Revised Statutes; provided that the lapsed school impact fees shall be administered in section 302A-1608:

     (1)  Kalihi to Ala Moana (construction) (account number:  10811);

     (2)  Kalihi to Ala Moana land (account number:  10812);

     (3)  Leeward construction (account number:  10813);

     (4)  Leeward land (account number:  10814);

     (5)  Central Maui construction (account number:  10815);

     (6)  Central Maui land (account number:  10816);

     (7)  West Maui construction (account number:  18817); and

     (8)  West Maui land (account number:  10818).

     SECTION 6.  All deeds, leases, contracts, loans, agreements, permits, or other documents relating to educational contribution agreements executed or entered into by or on behalf of the department of education, pursuant to conditions of approval or other decisions made by the land use commission pursuant to section 205-4, Hawaii Revised Statutes, and colloquially known as fair share contributions, shall remain in full force and effect.

     SECTION 7.  Notwithstanding any provision of this Act to the contrary, any existing educational contribution agreement or agreement that has been executed with the department of education or the school facilities authority pursuant to subpart B of part VI of chapter 302A, Hawaii Revised Statutes, prior to the effective date of this Act shall remain in effect unless the parties to the agreement mutually agree to terminate or renegotiate the agreement.

     SECTION 8.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 9.  This Act shall take effect upon its approval; provided that section 3 shall apply only to any land dedication obligation arising from a subdivision, development, or project for which an application for approval is submitted on or after the effective date of this Act.

Report Title:

School Impact Fees; Residential Development; Land Dedication Exemptions

Description:

Expands exemptions from school impact fee requirement for certain housing developments.  Clarifies procedures and timing for land dedication or fee‑in‑lieu agreements for new residential developments.  Repeals the sunset and reporting requirements under Act 268, SLH 2025.  Restructures certain school impact fee accounts.  Preserves existing educational contribution agreements.  (CD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

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 Hawaii faces a severe housing shortage and that reducing regulatory barriers and development costs is essential to increasing the supply of homes.  Impact fees can add substantial costs to housing and may discourage the development of infill units needed within existing communities.

     The legislature further finds that the school impact fee program was designed to ensure that new developments contribute their fair share toward school facilities needed to support enrollment growth.  The legislature believes 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:

     (1)  Prohibit the land use commission from imposing exactions from a residential development for educational purposes;

     (2)  Repeal school impact fees;

     (3)  Repeal a requirement for the school facilities authority to report to the legislature;

     (4)  Abolish school impact fee subaccounts within the school facilities special fund and transfer unencumbered balances to the school facilities special fund, and establish certain conditions with regard to the transferred funds;

     (5)  Abolish the fair share contribution and impact fee accounts within the department of education donations – facilities trust and transfer unencumbered balances to the school facilities special fund;

     (6)  Provide that any existing educational contribution agreements executed with the department of education or school facilities authority before the repeal of school impact fees shall remain in effect unless mutually terminated;

     (7)  Transfer existing educational contribution agreements from the department of education to the school facilities authority; and

     (8)  Appropriate funds out of the school facilities special fund for priority education facilities projects, including the expansion of pre-kindergarten facilities.

     SECTION 2.  Section 205-4, Hawaii Revised Statutes, is amended to read as follows:

     "§205-4  Amendments to district boundaries involving land areas greater than fifteen acres.  (a)  Any department or agency of the State, any department or agency of the county in which the land is situated, or any person with a property interest in the land sought to be reclassified, may petition the land use commission for a change in the boundary of a district.  This section applies to all petitions for changes in district boundaries of lands within conservation districts, lands designated or sought to be designated as important agricultural lands, and lands greater than fifteen acres in the agricultural, rural, and urban districts, except as provided in section 201H‑38.  The land use commission shall adopt rules pursuant to chapter 91 to implement section 201H-38.

     (b)  Upon proper filing of a petition pursuant to subsection (a) the commission shall, within not less than sixty and not more than one hundred and eighty days, conduct a hearing on the appropriate island in accordance with the provisions of sections 91-9, 91-10, 91-11, 91-12, and 91-13, as applicable.

     (c)  Any other provision of law to the contrary notwithstanding, notice of the hearing together with a copy of the petition shall be served on the county planning commission and the county planning department of the county in which the land is located and all persons with a property interest in the land as recorded in the county's real property tax records.  In addition, notice of the hearing shall be mailed to all persons who have made a timely written request for advance notice of boundary amendment proceedings, and public notice shall be given at least once in the county in which the land sought to be redistricted is situated as well as once statewide at least thirty days in advance of the hearing.  The notice shall comply with section 91-9, shall indicate the time and place that maps showing the proposed district boundary may be inspected, and further shall inform all interested persons of their rights under subsection (e).

     (d)  Any other provisions of law to the contrary notwithstanding, [prior to] before hearing [of] a petition, the commission and its staff may view and inspect any land [which] that is the subject of the petition.

     (e)  Any other provisions of law to the contrary notwithstanding, agencies and persons may intervene in the proceedings in accordance with this subsection.

     (1)  The petitioner, the office of planning and sustainable development, and the county planning department shall in every case appear as parties and make recommendations relative to the proposed boundary change;

     (2)  All departments and agencies of the State and of the county in which the land is situated shall be admitted as parties upon timely application for intervention;

     (3)  All persons who have some property interest in the land, who lawfully reside on the land, or who otherwise can demonstrate that they will be so directly and immediately affected by the proposed change that their interest in the proceeding is clearly distinguishable from that of the general public shall be admitted as parties upon timely application for intervention;

     (4)  All other persons may apply to the commission for leave to intervene as parties.  Leave to intervene shall be freely granted; provided that the commission or its hearing officer, if one is appointed, may deny an application to intervene when in the commission's or hearing officer's sound discretion it appears that:

          (A)  The position of the applicant for intervention concerning the proposed change is substantially the same as the position of a party already admitted to the proceeding; and

          (B)  The admission of additional parties will render the proceedings inefficient and unmanageable.

          A person whose application to intervene is denied may appeal the denial to the circuit court pursuant to section 91-14; and

     (5)  The commission, pursuant to chapter 91, shall adopt rules governing the intervention of agencies and persons under this subsection.  The rules shall without limitation establish:

          (A)  The information to be set forth in any application for intervention;

          (B)  The limits within which applications shall be filed; and

          (C)  Reasonable filing fees to accompany applications.

     (f)  Together with other witnesses that the commission may desire to hear at the hearing, it shall allow a representative of a citizen or a community group to testify who indicates a desire to express the view of [such] the citizen or community group concerning the proposed boundary change.

     (g)  Within a period of not more than three hundred sixty-five days after the proper filing of a petition, unless otherwise ordered by a court, or unless a time extension, which shall not exceed ninety days, is established by a two-thirds vote of the members of the commission, the commission, by filing findings of fact and conclusions of law, shall act to approve the petition, deny the petition, or to modify the petition by imposing conditions necessary to uphold the intent and spirit of this chapter or the policies and criteria established pursuant to section 205-17 or to assure substantial compliance with representations made by the petitioner in seeking a boundary change.  The commission may provide by condition that absent substantial commencement of use of the land in accordance with such representations, the commission shall issue and serve upon the party bound by the condition an order to show cause why the property should not revert to its former land use classification or be changed to a more appropriate classification.  Such conditions, if any, shall run with the land and be recorded in the bureau of conveyances.

     (h)  No amendment of a land use district boundary shall be approved unless the commission finds upon the clear preponderance of the evidence that the proposed boundary is reasonable, not violative of section 205-2 and part III of this chapter, and consistent with the policies and criteria established pursuant to sections 205-16 and 205-17.  Six affirmative votes of the commission shall be necessary for any boundary amendment under this section.

     (i)  Parties to proceedings to amend land use district boundaries may obtain judicial review thereof in the manner set forth in section 91-14, provided that the court may also reverse or modify a finding of the commission if such finding appears to be contrary to the clear preponderance of the evidence.

     (j)  At the hearing, all parties may enter into appropriate stipulations as to findings of fact, conclusions of law, and conditions of reclassification concerning the proposed boundary change.  The commission may but shall not be required to approve such stipulations based on the evidence adduced.

     (k)  Notwithstanding any law to the contrary, no petition or condition imposed by the commission pursuant to this chapter shall require exactions from a residential development for educational purposes."

     SECTION 3.  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 4.  Chapter 302A, part VI, subpart B, Hawaii Revised Statutes, is repealed.

     SECTION 5.  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 6.  Act 268, Session Laws of Hawaii 2025, is amended as follows:

     1.  By amending section 11 to read:

     "SECTION 11. [No later than December 15, 2026, the school facilities authority shall submit a report to the legislature on its findings, recommendations, and evaluation of the benefits and impacts of subpart B of part VI of chapter 302A, Hawaii Revised Statutes, as amended by this Act. The report shall include: (1) The authority’s efforts and progress in addressing the recommendations set forth in auditor’s report no. 19-13; (2) A thorough review of the currently established impact fee districts; and (3) An assessment of the need for new school construction based on demographic projections over the next twenty-five years, as provided by the state land use commission.] Repealed."

     2.  By amending section 14 to read:

     "SECTION 14.  This Act shall take effect upon its approval, and shall apply to new residential developments permitted or approved on or before June 30, 2029[; provided that this Act shall be repealed on July 1, 2029, and sections 302A-1601, 302A-1602, 302A-1603, 302A-1606, 302A‑1607, 302A-1608, 302A-1609, 302A-1611, and 302A-1612, Hawaii Revised Statutes, shall be reenacted in the form in which they read prior to the effective date of this Act]."

     SECTION 7.  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 the funds were collected to provide new or expanded school facilities serving students residing within that school impact district; or

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

The school facilities authority shall administer these funds in accordance with applicable law and ensure that expenditures remain reasonably proportionate to the impacts generated within the district.

     SECTION 8.  The following fair share contribution and impact fee 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);

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

    (12)  Kalihi to Ala Moana construction (account number:  10811);

    (13)  Kalihi to Ala Moana land (account number:  10812);

    (14)  Leeward construction (account number:  10813);

    (15)  Leeward land (account number:  10814);

    (16)  Central Maui construction (account number:  10815);

    (17)  Central Maui land (account number:  10816);

    (18)  West Maui construction (account number:  18817); and

    (19)  West Maui land (account number:  10818).

     SECTION 9.  There is appropriated out of the school facilities special fund the sum of $           or so much thereof as may be necessary for fiscal year 2026-2027 for priority education facilities projects, including the expansion of pre-kindergarten facilities.

     The sum appropriated shall be expended by the school facilities authority for the purposes of this Act.

     SECTION 10.  Notwithstanding any law to the contrary, any existing educational contribution agreements or written agreements executed with the department of education or the school facilities authority pursuant to chapter 302A, part VI, subpart B, Hawaii Revised Statutes, before its repeal by this Act shall remain in effect unless the parties to such an agreement mutually agree to terminate the agreement.

     SECTION 11.  All deeds, leases, contracts, loans, agreements, permits, or other documents relating to educational contribution agreements executed or entered into by or on behalf of the department of education, pursuant to conditions of approval or other decisions made by the land use commission pursuant to section 205-4, Hawaii Revised Statutes, and colloquially known as fair share contributions, shall remain in full force and effect.  Effective July 1, 2026, every reference to the department of education, board of education, chairperson of the board of education, or superintendent of education relating to the fair share contributions in those deeds, leases, contracts, loans, agreements, permits, or other documents shall be construed as a reference to the school facilities authority, executive director of the school facilities authority, school facilities board, or chairperson of the school facilities board, as appropriate; provided that any land dedication part of the fair share contributions that has not yet been conveyed to the department of education shall be conveyed to the school facilities authority; provided further that any parcels of land already conveyed to the department of education as part of the fair share contributions shall be transferred to the school facilities authority by operation of law.

     SECTION 12.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 13.  This Act shall take effect on July 1, 3000.

Report Title:

DOE; LUC; School Facilities Authority; School Impact Fees; Repeal; Fair Share Contribution Accounts; Impact Fee Accounts; Educational Contribution Agreements; Transfer; School Facilities Special Fund; Appropriation

Description:

Prohibits the Land Use Commission from imposing exactions from a residential development for educational purposes.  Repeals school impact fees.  Abolishes school impact fee subaccounts within the School Facilities Special Fund and transfers unencumbered balances to the School Facilities Special Fund.  Abolishes fair share contribution and impact fee accounts within the DOE Donations – Facilities Trust and transfers unencumbered balances to the School Facilities Special Fund.  Provides that any existing educational contribution agreements executed with the Department of Education or School Facilities Authority before the repeal of school impact fees shall remain in effect.  Transfers existing educational contribution agreements from the Department of Education to the School Facilities Authority.  Repeals a requirement for the School Facilities Authority to report to the Legislature.  Appropriates funds from the School Facilities Special Fund.  Effective 7/1/3000.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

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 Hawaii faces a severe housing shortage and that reducing regulatory barriers and development costs is essential to increasing the supply of homes.  Impact fees can add substantial costs to housing and may discourage the development of infill units needed within existing communities.

     The legislature further finds that the school impact fee program was designed to ensure that new developments contribute their fair share toward school facilities needed to support enrollment growth.  The legislature believes 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:

     (1)  Repeal school impact fees; and

     (2)  Abolish certain fair share contribution accounts and lapse 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.  Chapter 302A, part VI, subpart B, Hawaii Revised Statutes, is repealed.

     SECTION 4.  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 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.  Act 268, Session Laws of Hawaii 2025, is amended by amending section 14 to read as follows:

     "SECTION 14.  This Act shall take effect upon its approval, and shall apply to new residential developments permitted or approved on or before June 30, 2029[; provided that this Act shall be repealed on July 1, 2029, and sections 302A-1601, 302A-1602, 302A-1603, 302A-1606, 302A‑1607, 302A-1608, 302A-1609, 302A-1611, and 302A-1612, Hawaii Revised Statutes, shall be reenacted in the form in which they read prior to the effective date of this Act]."

     SECTION 8.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 9.  This Act shall take effect on July 1, 3000.

Report Title:

School Impact Fees; Repeal; Fair Share Contribution Accounts; School Facilities Special Fund

Description:

Repeals school impact fees.  Abolishes and transfers unencumbered balances of the school impact fee subaccounts and certain fair share contribution accounts to School Facilities Special Fund.  Effective 7/1/3000.  (HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

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 Hawaii faces a severe housing shortage and that reducing regulatory barriers and development costs is essential to increasing the supply of homes.  Impact fees imposed on smaller residential projects can add substantial costs to housing and may discourage the development of infill units needed within existing communities.

     The legislature further finds that the school impact fee program, established in subpart B of part VI of chapter 302A, Hawaii Revised Statutes, was designed to ensure that new developments contribute their fair share toward school facilities needed to support enrollment growth.  While the program may be appropriate for large master-planned communities that create significant, concentrated increases in enrollment, applying the same fee structure to smaller projects places a disproportionate burden on developments that have minimal impact on school capacity.

     The legislature also finds that residential developments of fewer than one hundred units typically generate a small number of students who can be accommodated within existing school facilities or through minor adjustments that do not require new school construction.  Applying substantial impact fees to these smaller projects increases housing costs without producing a corresponding benefit to public school infrastructure.

     The purpose of this Act is to encourage housing production and ensure that school impact fees are applied equitably by exempting new residential developments of fewer than one hundred units from the school impact fee requirements.

     SECTION 2.  Section 302A-1603, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  The following shall be exempt from this section:

     (1)  Any form of housing permanently excluding school-aged children, with the necessary covenants or declarations of restrictions recorded on the property;

     (2)  Any form of housing that is or will be paying the transient accommodations tax under chapter 237D;

     (3)  All nonresidential development;

     (4)  Any development with an executed education contribution agreement or other like document with the agency for the contribution of school sites or payment of fees for school land or school construction;

     (5)  Any housing project developed by the government;

     (6)  Any [housing project] dwelling units in a housing project processed pursuant to sections 46-15.1 and 201H-38[;] that are reserved for low- or moderate-income households;

     (7)  Any [housing] dwelling units in a housing project that [meets] meet the definition of affordable housing in sections 46-15.25 or 201H-57[;] and are reserved for households meeting the income requirements of those sections;

     (8)  Any housing that is a single-room dwelling;

     (9)  Any form of housing developed by the department of Hawaiian home lands for use by beneficiaries of the Hawaiian Homes Commission Act, 1920, as amended; and

    (10)  Any form of development by the Hawaii community development authority pursuant to part XII of chapter 206E; [and

  [](11)[]]  Any form of development by the Hawaii housing finance and development corporation pursuant to part V of chapter 201H[.]; and

    (12)  Any housing project consisting of fewer than one hundred dwelling units; provided that subdivisions or phases of a development or master plan shall be considered parts of the same housing project; provided further that no developer shall artificially subdivide a project or phase the development of a project to avoid the requirements of this subpart."

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect upon its approval; provided that:

     (1)  Notwithstanding any provision of this Act to the contrary, any existing educational contribution agreement or agreement that has been executed with the department of education or the school facilities authority pursuant to subpart B of part VI of chapter 302A, Hawaii Revised Statutes, prior to the effective date of this Act shall remain effective unless the parties to the agreement mutually agree to terminate or renegotiate the agreement; and

     (2)  This Act shall be repealed on July 1, 2029, and section 302A-1603, Hawaii Revised Statutes, shall be reenacted in the form in which it read prior to the effective date of Act 268, Session Laws of Hawaii 2025.

Report Title:

School Impact Fees; Residential Development; Housing; Exemption

Description:

Clarifies the application of exemptions for certain affordable housing projects, including exempting new residential developments of fewer than one hundred dwelling units, from school impact fee requirements.  Repeals 7/1/2029.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO.  864-26

Honolulu, Hawaii

                , 2026

RE:   H.B. No. 1713

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

     Your Committee on Finance, to which was referred H.B. No. 1713, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO SCHOOL IMPACT FEES,"

begs leave to report as follows:

     The purpose of this measure is to:

     (1)  Repeal school impact fees; and

     (2)  Abolish certain fair share contribution accounts and lapse the unencumbered balances to the School Facilities Special Fund.

     Your Committee received testimony in support of this measure from the Department of Hawaiian Home Lands; Hawaii Housing Finance and Development Corporation; Housing Hawaiʻi's Future; and Grassroot Institute of Hawaii.  Your Committee received comments on this measure from the Department of the Attorney General; Hawaiʻi School Facilities Authority; Tax Foundation of Hawaii; and NAIOP Hawaii Chapter.

     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 H.B. No. 1713, H.D. 1, and recommends that it pass Third Reading.

Respectfully submitted on behalf of the members of the Committee on Finance,

STAND. COM. REP. NO.  558-26

Honolulu, Hawaii

                , 2026

RE:   H.B. No. 1713

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

     Your Committee on Housing, to which was referred H.B. No. 1713 entitled:

"A BILL FOR AN ACT RELATING TO SCHOOL IMPACT FEES,"

begs leave to report as follows:

     The purpose of this measure is to clarify the application of exemptions for certain affordable housing projects, including exempting new residential developments of fewer than one hundred dwelling units, from school impact fee requirements.

     Your Committee received testimony in support of this measure from the Hawaii Housing Finance and Development Corporation; Hawaiʻi School Facilities Authority; Housing Hawaiʻi's Future; and Grassroot Institute of Hawaii.  Your Committee received comments on this measure from the Department of the Attorney General and Tax Foundation of Hawaii.

     Your Committee finds that applying school impact fees to small residential projects can significantly increase development costs without producing a meaningful benefit to school facility planning.  Your Committee further finds that rather than being used to help support schools, school impact fees have only added costs to housing developments, which in some cases have resulted in a housing project becoming financially untenable.  Your Committee believes that the State must reduce the cost of developing housing and that the imposition of school impact fees no longer achieve its original intent and now only increases the cost of developing housing in the State.

     Your Committee notes that the Land Use Commission currently has the authority to impose certain land conditions to ensure that there is land available for all schools in the State.

     Accordingly, your Committee has amended this measure by:

     (1)  Repealing the School Impact Fees program, rather than only exempting certain small developments from the school impact fee requirements;

     (2)  Abolishing and transferring unencumbered balances of the School Impact Fee Subaccount and certain fair share contribution accounts into the School Facilities Special Fund;

     (3)  Repealing the sunset date of Act 268, Session Laws of Hawaii 2025;

     (4)  Changing the effective date to July 1, 3000, to encourage further discussion; and

     (5)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1713, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1713, H.D. 1, and be referred to your Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Housing,