HB 422: DOE; School Facilities Authority; School Impact Fees; Construction Cost Component; Exemptions; Rules; Land Component Impact Fee; Report
- Session Year: 2025-2026
- House: House
- Latest Version Date: 2025-04-26
Current Status:
In Progress
(2025-07-02: Act 268, on 07/02/2025 (Gov. Msg. No. 1371).)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Final Decking
Enacted
Repeals the construction cost component of school impact fees. Exempts government housing developments, affordable housing units and projects, and Hawaiian home lands housing from school impact fees. Requires the School Facilities Authority to adopt rules governing fee collection. Increases the minimum number of units in a development to trigger land dedication provisions of the land component impact fee. Requires a report to the Legislature on program efficacy. Sunsets 7/1/2029. (CD1)
Repeals the construction cost component of school impact fees. Exempts government housing developments, affordable housing units and projects, and Hawaiian home lands housing from school impact fees. School Facilities Authority to adopt rules governing fee collection. Requires a report to the Legislature on program efficacy. Effective 7/1/3000. Repeal on 6/30/2029. (SD2)
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. Takes effect 7/1/2050. (SD1)
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)
Repeals school impact fees. Transfers unencumbered balances of the school impact fee subaccounts to School Facilities Special Fund.
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
422 |
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THIRTY-THIRD LEGISLATURE, 2025 |
H.D. 1 |
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STATE OF HAWAII |
S.D. 2 |
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C.D. 1 |
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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 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 also finds that as of January 1, 2025, $21,118,831.74 remains 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 the construction cost component of the school impact fee;
(2) Exempting additional projects from school impact fees, including certain affordable, government, and Hawaiian home lands developments and single-room dwellings;
(3) Requiring the school facilities authority to adopt rules governing the collection of impact fees;
(4) Increasing the minimum number of units in a development to trigger land dedication provisions of the land component impact fee; and
(5) Requiring the school facilities authority to report to the legislature on the benefits and impacts of this Act before its repeal.
SECTION 2. Section 302A-1601, Hawaii Revised Statutes, is amended to read as follows:
"§302A-1601 Findings. New residential developments within
identified school impact districts create additional demand for public school
facilities. As such, once school impact
districts are identified, new residential developments shall be required to
contribute toward the construction of new or expansion of existing public
school facilities through[:
(1) The] the land requirement,
either through an in lieu fee or actual acreage (unless land is not required in
the school impact district), based on each new residential development's
proportionate share of the need to provide additional public school sites[;
and
(2) The construction requirement either through
an in lieu fee or actual construction based on each new residential
development's proportionate share of the need to construct additional school
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 developments within designated school
impact districts shall provide land for schools or pay a fee in lieu of land
proportionate to the impacts of the new residential development on existing
school facilities. [The State also
determines that new residential developments within designated school impact
districts shall also pay school construction cost component impact fees
proportionate to their impacts.]
In determining the amounts of land
component impact fees [and construction cost component impact fees],
the intent of the school impact fee calculations is that new residential
developments should not be charged for a higher level of service than is being
charged to existing developments.
This
subpart establishes the methodology for developers to provide their
proportionate share of the land [and the construction cost of] needed
for new or expanded school facilities [needed] to serve new
residential developments, as determined in [sections] section
302A-1606 [and 302A-1607, respectively]."
SECTION 3. Section 302A-1602, Hawaii Revised Statutes, is amended as follows:
1. By adding a new definition to be appropriately inserted and to read:
""Board" means the school facilities authority board established by section 302A-1704."
2. By deleting the definitions of "construction cost", "construction cost component impact fee", and "cost per student".
[""Construction
cost" means the net cost to construct a school, including without
limitation, planning, design, engineering, grading, permits, construction, and
construction and project management, but not including the cost to acquire
land.
"Construction
cost component impact fee" means ten per cent of the share of the
construction cost for the required new school, the expansion of existing school
facilities that is attributable to a specific new residential development, or
both.
"Cost
per student" means the average of actual school construction costs,
expressed in current dollars, divided by the respective design enrollments, for
schools constructed within approximately the last ten years."]
3. By deleting the definition of "revenue credit".
[""Revenue
credit" means the state general excise tax revenues under chapter 237 that
will be generated by a new dwelling unit and used to fund school capital
facilities and pay for outstanding debt on existing facilities."]
SECTION 4. Section 302A-1603, Hawaii Revised Statutes, is amended to read as follows:
"§302A-1603 Applicability and exemptions. (a) Except as provided in subsection (b), any person who seeks to develop a new residential development within a designated school impact district requiring:
(1) A county subdivision approval;
(2) A county building permit; or
(3) A condominium property regime approval for the project,
shall be required to fulfill the land component impact fee or fee in lieu requirement
[and construction cost
component impact fee requirement]
of the authority[, including all government housing projects and projects
processed pursuant to sections 46-15.1 and 201H-38].
(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; [and]
(5) Any housing project developed by the government;
(6) Any housing project processed pursuant to sections 46‑15.1 and 201H-38;
(7) Any housing that meets the definition of affordable housing in sections 46-15.25 or 201H-57;
(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
[[(5)]] (10)
Any form of development by the Hawaii community development authority
pursuant to part XII of chapter 206E.
(c) The authority shall adopt rules in accordance with chapter 91 governing the collection of school impact fees."
SECTION 5. Section 302A-1606, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (c) to read:
"(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 [fifty]
one hundred or more units shall include a written agreement between the
owner or developer of the property and the authority, executed prior to
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) A new residential development with less
than fifty units shall include a written agreement between the owner or the
developer of the property and the authority, executed prior to the issuance of
the building permit, under which the owner or developer has agreed to a time
specified for payment for the fee in lieu;
(3)] (2)
Prior to approval of any change of zoning, subdivision, or any other
approval for a:
(A) Residential development with [fifty] one
hundred or more units; or
(B) Condominium property regime development of [fifty]
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;
[(4)] (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;
[(5)] (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;
[(6)] (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; and
[(7)] (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."
2. By amending subsection (e) to read:
"(e) The developer or owner of new residential
developments of [fifty] one hundred or more units shall either
pay the fee in lieu based on the land value as determined in subsection (d) or
convey appropriate acreage as determined in subsection (b). [When conveying the fee simple interest
for the new or expanded school facility, the developers shall be credited the
difference between the fair market fee simple value of the property and the
developers' proportionate share of the value of the land as determined in
subsection (d) against any construction cost component impact fee. Any excess may be transferred and used as
credit against any future land or construction cost requirements on any other
development of the State.]"
SECTION 6. Section 302A-1608, Hawaii Revised Statutes, is amended to read as follows:
"§302A-1608 Accounting and expenditure requirements. (a) Each designated school impact district shall be a separate benefit district. Fees collected within each school impact district shall be spent only within the same school impact district for the purposes collected.
(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. If the land is never used for the school facility, it shall be returned to the developer, or the developer's successor in interest. Once used, the land may be sold, with the proceeds used to acquire land for school facilities in the same school impact district.
(c) If the land is not used for a school facility within twenty years of its dedication, it shall be returned to the developer, or the developer's successor in interest.
(d)
Once used for school facilities, all or part of the land may be later
sold. Proceeds from the sale shall be
used [to acquire] for land acquisition for school
facilities in the same school impact district.
(e) Fee in lieu funds may be used for school site
land acquisition and related expenses, including surveying, appraisals, and
legal fees. With the exception of urban
Honolulu, fee in lieu funds shall not be used for the maintenance or operation
of existing schools in the district; [construction costs, including] planning,
design, engineering, grading, construction, construction and project
management, architectural, permitting, or financing costs; or for
administrative expenses.
(f) Notwithstanding any other law to the contrary, fee in lieu funds from projects within a county-designated transit oriented development zone may also be used to purchase completed construction, construct new school facilities in new or existing school sites, improve or renovate existing structures for school use, or lease land or facilities for school use within a county‑designated transit oriented development zone.
[[](g)[]] Notwithstanding subsection (e), in urban
Honolulu, fee in lieu funds may be used to purchase completed construction,
construct new school facilities, improve or renovate existing structures for
school use, or lease land or facilities for school use.
[(h)
Construction cost component impact fees shall be used only:
(1) For the costs
of new school facilities that expand the student capacity of existing schools
or adds student capacity in new schools; or
(2) To improve or
renovate existing structures for school use.
Construction
cost component impact fees shall not be used to replace an existing school
located within the same school impact district, either on the same site or on a
different site.
[(i)] Eligible construction costs include planning,
engineering, architectural, permitting, financing, and administrative expenses,
and any other capital equipment expenses pertaining to educational facilities.
(j) Construction cost component impact fees shall
not be expended for the maintenance or operation of
existing schools in the district.
[(k)] If a closure, demolition, or conversion of an
existing permanent department facility within a school impact district that has
the effect of reducing student capacity occurs, an amount of new student
capacity in permanent buildings equivalent to the lost capacity shall not be
funded with school impact fees.
(l)]
(h) Fees in lieu, proceeds from
the sale of all or part of an existing school site that has been dedicated by a
developer pursuant to the requirements of this subpart[, and construction
cost component impact fees] shall be expended or encumbered within twenty
years of the date of collection. Fees
shall be considered spent or encumbered on a first-in, first-out basis.
[[(m)]] (i) As used in this section, "urban
Honolulu" means the Kalihi to Ala Moana school impact district."
SECTION 7. Section 302A-1609, Hawaii Revised Statutes, is amended to read as follows:
"§302A-1609 Refunds of
fees. If
a fee in lieu [or a construction cost component impact fee] is not
expended within twenty years of the date of collection, the authority shall
either:
(1) Refund to the developer, or the developer's successor in interest, the amount of the fee in lieu paid and any interest accrued thereon; or
(2) Recommit part or all of the fees for another twenty‑year period for construction of new schools in the school impact district, as authorized by the developer or the developer's successor."
SECTION 8. Section 302A-1612, Hawaii Revised Statutes, is amended to read as follows:
"§302A-1612 Use of data reflecting recent conditions in
impact fee calculations. (a) Every three years beginning in 2010, the authority
shall [concurrently] update the [following:
(1) School] school
site area averages, using the total school land requirement for each individual
in a school impact district as calculated pursuant to section 302A-1606(b)[;
(2) Elementary,
middle or intermediate, and high school permanent facility construction costs
per student, as provided under section 302A-1607; and
(3) Revenue credit
per unit figures provided pursuant to section 302A-1607(e)].
(b) Every three years following the initial determinations made pursuant to section 302A-1604, the authority shall update the following:
(1) Student generation rates for each established school impact district; and
(2) The statewide level of service.
[(c) Every three years beginning in 2010, the
authority shall, where appropriate, update the list of cost factors for the
twenty-six geographically limited cost districts, as provided in section
302A-1607(d), by incorporating any changes to the cost factors that have been
made by the department of accounting and general services.
(d)] (c) If any data update required by this section
is not completed within the specified time, the most current data shall be used
until the update is completed."
SECTION 9. Section 302A-1607, Hawaii Revised Statutes, is repealed.
["§302A-1607 Construction
cost component impact fee; determining the amount of the fee. (a)
The construction cost component impact fees shall be calculated using
the following factors:
(1) For new school construction, the cost per
student for each school type (elementary, middle or intermediate, and high
school) shall be based on the ten-year average construction of a new school
facility using the Honolulu assessment district in 2006 as the base. Costs for construction completed earlier than
2006 shall be escalated to 2006 using the engineering news-record construction
cost index;
(2) For expansion of existing school
facilities, the cost per student for each school type (elementary, middle or
intermediate, and high school) is based on the ten-year average construction of
whatever components are required to expand the school using the Honolulu
assessment district in 2006 as the base;
(3) 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 (d). At least every three years, the authority
shall update the cost per student based on the construction of a new permanent
school facility, and present the written analysis to the board for review; and
(4) Student generation rates, as defined in
section 302A-1602.
(b) The student generation rate for each school
type (elementary, middle or intermediate, and high school) shall be multiplied
by the cost per student for each school type (elementary, middle or
intermediate, and high school) to determine the cost per dwelling unit in the
development.
(c) The construction cost component impact fee
shall be based on recent public school construction costs. The 1997 to 2007 period school construction
costs per student, adjusted for both the year 2007 and for the Honolulu
assessment district, are as follows:
(1) Elementary
schools: $35,357 per student;
(2) Middle and
intermediate schools: $36,097 per
student; and
(3) High
schools: $64,780 per student.
The costs per student for other assessment
districts shall be determined by multiplying the Honolulu assessment district
costs per student by the applicable cost factor in subsection (d). These costs per student shall be updated at
least every three years, pursuant to the provisions in section 302A-1612.
(d) The State shall be divided into the following
twenty-six geographically limited cost districts, and the cost
factors listed for each cost district shall be applied to the calculation of
school construction costs per unit pursuant to subsection
(c):
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 1.00
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
(e) At least every three years, and concurrent
with any update of the costs per student, the authority shall update the
revenue credits and present the written analysis to the board for review. The calculation of revenue credits shall be
reviewed and calculated recognizing that the impact fee shall be set at one
hundred per cent of the fair market value of the land and ten per cent of the
total school construction cost.
(f) The construction cost component of the impact
fees per dwelling unit shall be ten per cent of the amounts calculated
according to the following formula:
Cost
per dwelling unit from subsection (b) minus any amount by which the revenue
credit per dwelling unit from subsection (e) exceeds ninety per cent of the per
unit construction cost.
(g) The amount of the fee shall be adjusted
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.
(h) Any new residential development shall be
required to obtain a written agreement executed between the owner or developer
of the property and the authority, prior to the issuance of a building permit,
under which the owner or developer has agreed to a time specified for payment
of its construction cost component impact fee."]
SECTION 10. Section 302A-1611, Hawaii Revised Statutes, is repealed.
["§302A-1611 Credits for
excess contributions or advance payment of required construction cost component
impact fees. (a)
Any owner of a development subject to the construction cost component
impact fee requirements pursuant to this subpart shall receive credit for any
similar contribution, payment, or construction of public school facilities
accepted and received by the authority for the portion of the development that
is in excess of the impact fee required under this subpart for that
development. No credit shall be
authorized against the impact fees in lieu.
(b) A credit may be applied only against school
impact fees that would otherwise be due for new residential developments for
which the payment or contribution was agreed to in a written educational
contribution agreement.
(c) Excess contribution credit may be applied to
the construction cost component impact fee requirement for any future
development by the same owner in the same school impact district, or with the
written approval of the owner of the credit, to any future development by a
different owner in the same school impact district.
(d) In addition to or instead of applying the
credits to future developments, the authority may execute with an owner of the
credits an agreement to provide for partial or full reimbursement from the
impact fee payments collected from other developers within the same school
impact district. The reimbursements shall not exceed the amount of the
impact fee revenues available in the account for that school impact district.
(e) Any owner of a development shall receive
credit for any part of its required construction cost component impact fee
that, with the approval of the authority, is paid in advance of the time
specified in the written agreement executed in accordance with section
302A-1607(h). The
authority shall maintain an accounting of the amount of the credit applicable
to the new residential development and shall reduce the amount of the credit by
the amount of the impact fees that would otherwise be due for each building
permit issued for the new residential development. After the credit balance is exhausted, no
additional credits shall be applied to subsequent building permits issued
within the new residential development.
(f) If private construction of school facilities
is proposed by a developer after July 1, 2010, if the proposed construction is
acceptable to the authority, and if the value of the proposed construction
exceeds the total impact fees that would be due from the development, the
authority shall execute with the developer an agreement to provide
reimbursement for the excess credit from the impact fees collected from other
developers within the same benefit district.
For the purposes of this section, the private construction of school
facilities is a "public work" pursuant to chapter 104."]
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.
SECTION 12. 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.
SECTION 13. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
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.
Report Title:
DOE; School Facilities Authority; School Impact Fees; Construction Cost Component; Exemptions; Rules; Land Component Impact Fee; Report
Description:
Repeals the construction cost component of school impact fees. Exempts government housing developments, affordable housing units and projects, and Hawaiian home lands housing from school impact fees. Requires the School Facilities Authority to adopt rules governing fee collection. Increases the minimum number of units in a development to trigger land dedication provisions of the land component impact fee. Requires a report to the Legislature on program efficacy. Sunsets 7/1/2029. (CD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
422 |
|
THIRTY-THIRD LEGISLATURE, 2025 |
H.D. 1 |
|
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STATE OF HAWAII |
S.D. 2 |
|
|
|
|
|
|
|
||
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||
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 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 also finds that as of January 1, 2025, $21,228,831.74 remains 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 the construction cost component of the school impact fee;
(2) Exempting additional projects from school impact fees, including certain affordable, government, and Hawaiian home lands developments and single-room dwellings;
(3) Increasing the minimum number of units in a development to trigger land dedication provisions of the land component impact fee;
(4) Requiring the school facilities authority to report to the Legislature on the benefits and impacts of this Act prior to its repeal; and
(5) Requiring the school facilities authority to adopt rules governing the collection of impact fees.
SECTION 2. Section 302A-1601, Hawaii Revised Statutes, is amended to read as follows:
"§302A-1601 Findings. New residential developments within
identified school impact districts create additional demand for public school
facilities. As such, once school impact
districts are identified, new residential developments shall be required to
contribute toward the construction of new or expansion of existing public
school facilities through[:
(1) The] the land requirement,
either through an in lieu fee or actual acreage (unless land is not required in
the school impact district), based on each new residential development's
proportionate share of the need to provide additional public school sites[;
and
(2) The construction requirement either through
an in lieu fee or actual construction based on each new residential
development's proportionate share of the need to construct additional school
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 developments within designated school
impact districts shall provide land for schools or pay a fee in lieu of land
proportionate to the impacts of the new residential development on existing
school facilities. [The State also
determines that new residential developments within designated school impact
districts shall also pay school construction cost component impact fees
proportionate to their impacts.]
In determining the amounts of land
component impact fees [and construction cost component impact fees],
the intent of the school impact fee calculations is that new residential
developments should not be charged for a higher level of service than is being
charged to existing developments.
This
subpart establishes the methodology for developers to provide their
proportionate share of the land [and the construction cost of] needed
for new or expanded school facilities [needed] to serve new
residential developments, as determined in sections 302A-1606 [and
302A-1607, respectively]."
SECTION 3. Section 302A-1602, Hawaii Revised Statutes, is amended by deleting the definition of "construction cost component impact fee".
[""Construction
cost component impact fee" means ten per cent of the share of the
construction cost for the required new school, the expansion of existing school
facilities that is attributable to a specific new residential development, or
both."]
SECTION 4. Section 302A-1603, Hawaii Revised Statutes, is amended to read as follows:
"§302A-1603 Applicability and exemptions. (a) Except as provided in subsection (b), any person who seeks to develop a new residential development within a designated school impact district requiring:
(1) A county subdivision approval;
(2) A county building permit; or
(3) A condominium property regime approval for the project,
shall be required to fulfill the land component impact fee or fee in lieu requirement
[and construction cost
component impact fee requirement]
of the authority[, including all government housing projects and projects
processed pursuant to sections 46-15.1 and 201H-38].
(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; [and]
(5) Any housing project developed by the government;
(6) Any housing project processed pursuant to sections 46‑15.1 and 201H-38;
(7) Any housing that meets the definition of affordable housing pursuant to sections 46-15.25 and 201H-57;
(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
[(5)]
(10) Any form of development by
the Hawaii community development authority pursuant to part XII of
chapter 206E.
(c) The authority shall adopt rules in accordance with chapter 91 governing the collecting of school impact fees."
SECTION 5. Section 302A-1606, Hawaii Revised Statutes, is amended to read as follows:
"§302A-1606 Land component impact fee; determining the amount of land or fee in lieu. (a) The school land area requirements for new residential developments in a school impact district shall be based on recent school site area averages, student generation rates, and the number of dwelling units in the new residential development.
(b) The following formula shall be used to determine the total school land area requirement for each individual new residential development in a school impact district:
Elementary school student generation rate per single-family unit (x) number of single‑family units (x) recent school site area average for the land area per elementary school student;
plus (+)
Elementary school student generation rate per multi-family unit (x) number of multi‑family units (x) recent school site area average for the land area per elementary school student;
plus (+)
Middle school student generation rate per single-family unit (x) number of single‑family units (x) recent school site area average for the land area per middle school student;
plus (+)
Middle school student generation rate per multi-family unit (x) number of multi-family units (x) recent school site area average for the land area per middle school student;
plus (+)
High school student generation rate per single-family unit (x) number of single‑family units (x) recent school site area average for the land area per high school student;
plus (+)
High school student generation rate per multi-family unit (x) number of multi-family units (x) recent school site area average for the land area per high school student;
equals (=)
Total school land requirement.
(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 [fifty]
one hundred or more units shall include a written agreement between the
owner or developer of the property and the authority, executed prior to
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) A new residential development with less than [fifty]
one hundred units shall include a written agreement between the owner or
the developer of the property and the authority, executed prior to the issuance
of the building permit, under which the owner or developer has agreed to a time
specified for payment for the fee in lieu;
(3) Prior to approval of any change of zoning, subdivision, or any other approval for a:
(A) Residential development with [fifty] one
hundred or more units; or
(B) Condominium property regime development of [fifty]
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;
(4) 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;
(5) 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;
(6) 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; and
(7) 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.
(d) In determining the value per acre for any new residential development, the fee simple value of the land identified for the new or expanded school facility shall be based on the appraised fair market value of improved, vacant land, zoned for residential use, 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 authority does not agree with the developer's appraisal, the authority may engage another licensed appraiser at its own expense, and resolve, through negotiation between the two appraisers, a fair market value. If neither party agrees, the first two appraisers shall select the third appraiser, with the cost of the third appraisal being shared equally by the authority and the developer, and the third appraisal shall be binding on both parties.
(e) The developer or owner of new residential
developments of [fifty] one hundred or more units shall either
pay the fee in lieu based on the land value as determined in subsection (d) or
convey appropriate acreage as determined in subsection (b). [When conveying the fee simple interest
for the new or expanded school facility, the developers shall be credited the
difference between the fair market fee simple value of the property and the
developers' proportionate share of the value of the land as determined in
subsection (d) against any construction cost component impact fee. Any excess may be transferred and used as
credit against any future land or construction cost requirements on any other
development of the State.]
(f) The dollar amount of the fee in lieu shall be determined using the following formula:
Acres of land subject to the fee in lieu, as determined under subsection (c) multiplied by the value per acre of land determined pursuant to subsection (d)."
SECTION 6. Section 302A-1608, Hawaii Revised Statutes, is amended to read as follows:
"§302A-1608 Accounting and expenditure requirements. (a) Each designated school impact district shall be a separate benefit district. Fees collected within each school impact district shall be spent only within the same school impact district for the purposes collected.
(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. If the land is never used for the school facility, it shall be returned to the developer, or the developer's successor in interest. Once used, the land may be sold, with the proceeds used to acquire land for school facilities in the same school impact district.
(c) If the land is not used for a school facility within twenty years of its dedication, it shall be returned to the developer, or the developer's successor in interest.
(d) Once used for school facilities, all or part of the land may be later sold. Proceeds from the sale shall be used to acquire land for school facilities in the same school impact district.
(e) Fee in lieu funds may be used for school site land acquisition and related expenses, including surveying, appraisals, and legal fees. With the exception of urban Honolulu, fee in lieu funds shall not be used for the maintenance or operation of existing schools in the district; construction costs, including architectural, permitting, or financing costs; or for administrative expenses.
(f) Notwithstanding any other law to the contrary, fee in lieu funds from projects within a county-designated transit oriented development zone may also be used to purchase completed construction, construct new school facilities in new or existing school sites, improve or renovate existing structures for school use, or lease land or facilities for school use within a county‑designated transit oriented development zone.
[[](g)[]] Notwithstanding subsection (e), in urban
Honolulu, fee in lieu funds may be used to purchase completed construction,
construct new school facilities, improve or renovate existing structures for
school use, or lease land or facilities for school use.
[(h)
Construction cost component impact fees shall be used only:
(1) For the costs
of new school facilities that expand the student capacity of existing schools
or adds student capacity in new schools; or
(2) To improve or
renovate existing structures for school use.
Construction
cost component impact fees shall not be used to replace an existing school
located within the same school impact district, either on the same site or on a
different site.
[(i)] Eligible construction costs include planning,
engineering, architectural, permitting, financing, and administrative expenses,
and any other capital equipment expenses pertaining to educational facilities.
(j) Construction cost component impact fees shall
not be expended for the maintenance or operation of
existing schools in the district.
[(k)] If a closure, demolition, or conversion of an
existing permanent department facility within a school impact district that has
the effect of reducing student capacity occurs, an amount of new student
capacity in permanent buildings equivalent to the lost capacity shall not be
funded with school impact fees.
(l)]
(h) Fees in lieu, proceeds from
the sale of all or part of an existing school site that has been dedicated by a
developer pursuant to the requirements of this subpart[, and construction
cost component impact fees] shall be expended or encumbered within twenty
years of the date of collection. Fees
shall be considered spent or encumbered on a first-in, first-out basis.
[(m)] (i) As used in this section, "urban
Honolulu" means the Kalihi to Ala Moana school impact district."
SECTION 7. Section 302A-1609, Hawaii Revised Statutes, is amended to read as follows:
"§302A-1609 Refunds of fees. If a fee in lieu [or a construction cost
component impact fee] is not expended within twenty years of the date of
collection, the authority shall either:
(1) Refund to the developer, or the developer's successor in interest, the amount of the fee in lieu paid and any interest accrued thereon; or
(2) Recommit part or all of the fees for another twenty‑year period for construction of new schools in the school impact district, as authorized by the developer or the developer's successor."
SECTION 8. Section 302A-1612, Hawaii Revised Statutes, is amended to read as follows:
"§302A-1612 Use of
data reflecting recent conditions in impact fee calculations. (a)
Every three years beginning in 2010, the authority shall [concurrently]
update the [following:
(1) School] school
site area averages, using the total school land requirement for each individual
in a school impact district as calculated pursuant to section 302A-1606(b)[;
(2) Elementary,
middle or intermediate, and high school permanent facility construction costs
per student, as provided under section 302A-1607; and
(3) Revenue credit
per unit figures provided pursuant to section 302A-1607(e)].
(b) Every three years following the initial determinations made pursuant to section 302A-1604, the authority shall update the following:
(1) Student generation rates for each established school impact district; and
(2) The statewide level of service.
[(c) Every three years beginning in 2010, the
authority shall, where appropriate, update the list of cost factors for the
twenty-six geographically limited cost districts, as provided in section
302A-1607(d), by incorporating any changes to the cost factors that have been
made by the department of accounting and general services.
(d)]
(c) If any data update required
by this section is not completed within the specified time, the most current
data shall be used until the update is completed."
SECTION 9. Section 302A-1607, Hawaii Revised Statutes, is repealed.
["§302A-1607 Construction
cost component impact fee; determining the amount of the fee. (a)
The construction cost component impact fees shall be calculated using
the following factors:
(1) For new school construction, the cost per
student for each school type (elementary, middle or intermediate, and high
school) shall be based on the ten-year average construction of a new school
facility using the Honolulu assessment district in 2006 as the base. Costs for construction completed earlier than
2006 shall be escalated to 2006 using the engineering news-record construction
cost index;
(2) For expansion of existing school
facilities, the cost per student for each school type (elementary, middle or
intermediate, and high school) is based on the ten-year average construction of
whatever components are required to expand the school using the Honolulu
assessment district in 2006 as the base;
(3) 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 (d). At least every three years, the authority
shall update the cost per student based on the construction of a new permanent
school facility, and present the written analysis to the board for review; and
(4) Student generation rates, as defined in
section 302A-1602.
(b) The student generation rate for each school
type (elementary, middle or intermediate, and high school) shall be multiplied
by the cost per student for each school type (elementary, middle or
intermediate, and high school) to determine the cost per dwelling unit in the
development.
(c) The construction cost component impact fee
shall be based on recent public school construction costs. The 1997 to 2007 period school construction
costs per student, adjusted for both the year 2007 and for the Honolulu
assessment district, are as follows:
(1) Elementary
schools: $35,357 per student;
(2) Middle and
intermediate schools: $36,097 per
student; and
(3) High
schools: $64,780 per student.
The costs per student for other assessment
districts shall be determined by multiplying the Honolulu assessment district
costs per student by the applicable cost factor in subsection (d). These costs per student shall be updated at
least every three years, pursuant to the provisions in section 302A-1612.
(d) The State shall be divided into the following
twenty-six geographically limited cost districts, and the cost
factors listed for each cost district shall be applied to the calculation of
school construction costs per unit pursuant to subsection (c):
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 1.00
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
(e) At least every three years, and concurrent
with any update of the costs per student, the authority shall update the
revenue credits and present the written analysis to the board for review. The calculation of revenue credits shall be
reviewed and calculated recognizing that the impact fee shall be set at one
hundred per cent of the fair market value of the land and ten per cent of the
total school construction cost.
(f) The construction cost component of the impact
fees per dwelling unit shall be ten per cent of the amounts calculated
according to the following formula:
Cost
per dwelling unit from subsection (b) minus any amount by which the revenue
credit per dwelling unit from subsection (e) exceeds ninety per cent of the per
unit construction cost.
(g) The amount of the fee shall be adjusted
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.
(h) Any new residential development shall be
required to obtain a written agreement executed between the owner or developer
of the property and the authority, prior to the issuance of a building permit,
under which the owner or developer has agreed to a time specified for payment
of its construction cost component impact fee."]
SECTION 10. Section 302A-1611, Hawaii Revised Statutes, is repealed.
["§302A-1611 Credits for excess contributions or advance
payment of required construction cost component impact fees. (a)
Any owner of a development subject to the construction cost component
impact fee requirements pursuant to this subpart shall receive credit for any
similar contribution, payment, or construction of public school facilities
accepted and received by the authority for the portion of the development that
is in excess of the impact fee required under this subpart for that
development. No credit shall be
authorized against the impact fees in lieu.
(b) A credit may be applied only against school
impact fees that would otherwise be due for new residential developments for
which the payment or contribution was agreed to in a written educational
contribution agreement.
(c) Excess contribution credit may be applied to
the construction cost component impact fee requirement for any future
development by the same owner in the same school impact district, or with the
written approval of the owner of the credit, to any future development by a
different owner in the same school impact district.
(d) In addition to or instead of applying the
credits to future developments, the authority may execute with an owner of the
credits an agreement to provide for partial or full reimbursement from the
impact fee payments collected from other developers within the same school
impact district. The reimbursements shall not exceed the amount of the
impact fee revenues available in the account for that school impact district.
(e) Any owner of a development shall receive
credit for any part of its required construction cost component impact fee
that, with the approval of the authority, is paid in advance of the time
specified in the written agreement executed in accordance with section
302A-1607(h). The
authority shall maintain an accounting of the amount of the credit applicable
to the new residential development and shall reduce the amount of the credit by
the amount of the impact fees that would otherwise be due for each building
permit issued for the new residential development. After the credit balance is exhausted, no
additional credits shall be applied to subsequent building permits issued
within the new residential development.
(f) If private construction of school facilities
is proposed by a developer after July 1, 2010, if the proposed construction is
acceptable to the authority, and if the value of the proposed construction
exceeds the total impact fees that would be due from the development, the
authority shall execute with the developer an agreement to provide
reimbursement for the excess credit from the impact fees collected from other
developers within the same benefit district.
For the purposes of this section, the private construction of school
facilities is a "public work" pursuant to chapter 104."]
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, pursuant to this Act. The report shall include the authority's efforts and progress in addressing the recommendations set forth in auditor's report 19-13. The report shall also include:
(1) A thorough review of the currently established impact fee districts; and
(2) 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.
SECTION 12. Notwithstanding any provision of this Act to the contrary, any existing educational contribution agreement or agreement 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 the agreement.
SECTION 13. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 14. This Act shall take effect on July 1, 3000, and shall be repealed on June 30, 2029, provided that on July 1, 2029, sections 302A-1601, 302A-1602, 302A-1603, 302A-1606, 302A‑1607, 302A-1608, 302A-1609, 302-1611, and 302A-1612, Hawaii Revised Statutes, shall be reenacted in the form in which they read prior to the effective date of this Act.
Report Title:
DOE; School Facilities Authority; School Impact Fees; Construction Cost Component; Rules; Report
Description:
Repeals the construction cost component of school impact fees. Exempts government housing developments, affordable housing units and projects, and Hawaiian home lands housing from school impact fees. School Facilities Authority to adopt rules governing fee collection. Requires a report to the Legislature on program efficacy. Effective 7/1/3000. Repeal on 6/30/2029. (SD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
422 |
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THIRTY-THIRD LEGISLATURE, 2025 |
H.D. 1 |
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STATE OF HAWAII |
S.D. 1 |
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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 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.
Report Title:
DOE; School Facilities Authority; School Impact Fees; 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. Takes effect 7/1/2050. (SD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
422 |
|
THIRTY-THIRD LEGISLATURE, 2025 |
H.D. 1 |
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STATE OF HAWAII |
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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 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 districts 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. 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. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 8. This Act shall take effect on July 1, 3000.
Report Title:
DOE; School Impact Fees; 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.
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
422 |
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THIRTY-THIRD LEGISLATURE, 2025 |
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STATE OF HAWAII |
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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 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 districts 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 eliminate school impact fees to reduce the cost of housing.
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. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 7. This Act shall take effect on July 1, 2025.
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INTRODUCED BY: |
_____________________________ |
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Report Title:
DOE; School Impact Fees; School Facilities Special Fund
Description:
Repeals school impact fees. Transfers unencumbered balances of the school impact fee subaccounts to School Facilities Special Fund.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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Date
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Status
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| Jul 2, 2025 | Act 268, on 07/02/2025 (Gov. Msg. No. 1371). |
| Jul 2, 2025 | Act 268, 07/02/2025 (Gov. Msg. No. 1371). |
| May 1, 2025 | Transmitted to Governor. |
| May 2, 2025 | Received notice of passage on Final Reading in House (Hse. Com. No. 821). |
| May 1, 2025 | Received notice of Final Reading (Sen. Com. No. 888). |
| Apr 30, 2025 | Passed Final Reading as amended in CD 1 with none voting aye with reservations; Representative(s) Pierick voting no (1) and Representative(s) Cochran excused (1). |
| Apr 30, 2025 | Passed Final Reading, as amended (CD 1). Ayes, 24; Aye(s) with reservations: none. Noes, 1 (Senator(s) DeCorte). Excused, 0 (none). |
| Apr 25, 2025 | 48 Hrs. Notice (as amended CD 1) 04-30-25 |
| Apr 25, 2025 | Reported from Conference Committee as amended CD 1 (Conf. Com. Rep. No. 235). |
| Apr 25, 2025 | Forty-eight (48) hours notice Wednesday, 04-30-25. |
| Apr 25, 2025 | Reported from Conference Committee (Conf Com. Rep. No. 235) as amended in (CD 1). |
| Apr 25, 2025 | The Conference committee recommends that the measure be PASSED, WITH AMENDMENTS. The votes of the Senate Conference Managers were as follows: 4 Aye(s): Senator(s) Chang, Kim, Kidani, Kanuha; Aye(s) with reservations: none ; 0 No(es): none; and 1 Excused: Senator(s) Hashimoto. |
| Apr 25, 2025 | The Conference Committee recommends that the measure be Passed, with Amendments. The votes were as follows: 4 Ayes: Representative(s) Evslin, Miyake, Perruso, Muraoka; Ayes with reservations: none; 0 Noes: none; and 0 Excused: none. |
| Apr 24, 2025 | Conference committee meeting to reconvene on 04-25-25 10:30AM; Conference Room 224. |
| Apr 23, 2025 | Conference committee meeting to reconvene on 04-24-25 10:30AM; Conference Room 224. |
| Apr 22, 2025 | Conference committee meeting to reconvene on 04-23-25 10:30AM; Conference Room 224. |
| Apr 21, 2025 | Conference committee meeting scheduled for 04-22-25 10:25AM; Conference Room 224. |
| Apr 21, 2025 | Received notice of appointment of House conferees (Hse. Com. No. 781). |
| Apr 17, 2025 | Received notice of Senate conferees (Sen. Com. No. 826). |
| Apr 17, 2025 | Senate Conferees Appointed: Chang Chair; Kim, Kidani Co-Chairs; Hashimoto, Kanuha. |
| Apr 17, 2025 | House Conferees Appointed: Evslin, Miyake Co-Chairs; Perruso, Muraoka. |
| Apr 11, 2025 | Received notice of disagreement (Hse. Com. No. 704). |
| Apr 10, 2025 | House disagrees with Senate amendment (s). |
| Apr 8, 2025 | Returned from Senate (Sen. Com. No. 633) in amended form (SD 2). |
| Apr 8, 2025 | Report adopted; Passed Third Reading, as amended (SD 2). Ayes, 25; Aye(s) with reservations: none . Noes, 0 (none). Excused, 0 (none). Transmitted to House. |
| Apr 3, 2025 | 48 Hrs. Notice 04-08-25. |
| Apr 3, 2025 | Reported from WAM/EDU (Stand. Com. Rep. No. 1656) with recommendation of passage on Third Reading, as amended (SD 2). |
| Mar 28, 2025 | The committee(s) on EDU recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in EDU were as follows: 5 Aye(s): Senator(s) Kidani, Kim, Hashimoto, Kanuha, DeCorte; Aye(s) with reservations: none ; 0 No(es): none; and 0 Excused: none. |
| Mar 28, 2025 | The committee(s) on WAM recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in WAM were as follows: 12 Aye(s): Senator(s) Dela Cruz, Moriwaki, Aquino, DeCoite, Elefante, Hashimoto, Inouye, Kanuha, Kidani, Kim, Wakai, Fevella; Aye(s) with reservations: none ; 0 No(es): none; and 1 Excused: Senator(s) Lee, C.. |
| Mar 25, 2025 | The committee(s) on WAM/EDU will hold a public decision making on 03-28-25 10:00AM; Conference Room 211 & Videoconference. |
| Mar 24, 2025 | Re-Referred to HOU, WAM/EDU. |
| Mar 21, 2025 | Report adopted; Passed Second Reading, as amended (SD 1) and referred to WAM. |
| Mar 21, 2025 | Reported from HOU (Stand. Com. Rep. No. 1293) with recommendation of passage on Second Reading, as amended (SD 1) and referral to WAM. |
| Mar 18, 2025 | The committee(s) on HOU recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in HOU were as follows: 4 Aye(s): Senator(s) Chang, Hashimoto, Aquino; Aye(s) with reservations: Senator(s) Fevella ; 0 No(es): none; and 1 Excused: Senator(s) Kanuha. |
| Mar 12, 2025 | The committee(s) on HOU has scheduled a public hearing on 03-18-25 1:10PM; Conference Room 225 & Videoconference. |
| Mar 4, 2025 | Referred to HOU, WAM. |
| Mar 4, 2025 | Passed First Reading. |
| Mar 4, 2025 | Received from House (Hse. Com. No. 101). |
| Feb 28, 2025 | Passed Third Reading with none voting aye with reservations; Representative(s) Perruso voting no (1) and Representative(s) Cochran, Pierick, Templo, Ward excused (4). Transmitted to Senate. |
| Feb 28, 2025 | Reported from FIN (Stand. Com. Rep. No. 938), recommending passage on Third Reading. |
| Feb 24, 2025 | The committee on FIN recommend that the measure be PASSED, UNAMENDED. The votes were as follows: 15 Ayes: Representative(s) Yamashita, Takenouchi, Holt, Keohokapu-Lee Loy, Kitagawa, Kusch, Lamosao, Lee, M., Miyake, Morikawa, Templo, Alcos; Ayes with reservations: Representative(s) Grandinetti, Hussey, Reyes Oda; Noes: none; and 1 Excused: Representative(s) Ward. |
| Feb 21, 2025 | Bill scheduled to be heard by FIN on Monday, 02-24-25 10:00AM in House conference room 308 VIA VIDEOCONFERENCE. |
| Feb 14, 2025 | Passed Second Reading as amended in HD 1 and referred to the committee(s) on FIN with none voting aye with reservations; none voting no (0) and Representative(s) Cochran, Matayoshi, Poepoe, Ward excused (4). |
| Feb 14, 2025 | Reported from HSG (Stand. Com. Rep. No. 763) as amended in HD 1, recommending passage on Second Reading and referral to FIN. |
| Feb 12, 2025 | The committee on HSG recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 8 Ayes: Representative(s) Evslin, Miyake, Grandinetti, Kila, Kitagawa, La Chica, Muraoka, Pierick; Ayes with reservations: none; 0 Noes: none; and 1 Excused: Representative(s) Cochran. |
| Feb 6, 2025 | Bill scheduled to be heard by HSG on Wednesday, 02-12-25 9:00AM in House conference room 430 VIA VIDEOCONFERENCE. |
| Jan 30, 2025 | Re-referred to HSG, FIN, referral sheet 9 |
| Jan 21, 2025 | Referred to EDN, HSG, FIN, referral sheet 1 |
| Jan 17, 2025 | Introduced and Pass First Reading. |
| Jan 16, 2025 | Pending introduction. |
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Date
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Description
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Location
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Votes
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| Apr 30, 2025 | Final Reading | House Floor |
Passed |
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| Apr 30, 2025 | Final Reading | Senate Floor |
Passed |
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| Apr 8, 2025 | Third Reading | Senate Floor |
Passed |
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| Mar 28, 2025 | The committee(s) on EDU recommend(s) that the measure be PASSED, WITH AMENDMENTS | Senate Standing Committee on Education |
Passed |
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| Mar 28, 2025 | The committee(s) on WAM recommend(s) that the measure be PASSED, WITH AMENDMENTS | Senate Standing Committee on Ways and Means |
Passed |
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| Mar 18, 2025 | The committee(s) on HOU recommend(s) that the measure be PASSED, WITH AMENDMENTS | Senate Standing Committee on Housing |
Passed |
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| Feb 28, 2025 | Third Reading | House Floor |
Passed |
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| Feb 24, 2025 | The committee on FIN recommend that the measure be PASSED, UNAMENDED | House Standing Committee on Finance |
Passed |
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| Feb 12, 2025 | The committee on HSG recommend that the measure be PASSED, WITH AMENDMENTS | House Standing Committee on Housing |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
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Organization
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Position
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Date
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| Affordable Housing Connections LLC | ** Support | |
| Department of Education | ** Against | |
| Department of Education | *** Against | Mar 27, 2025 |
| Department of Hawaiian Home Lands | ** Support | |
| EAH Housing | ** Support | |
| Grassroot Institute of Hawaii | *** Support | Mar 27, 2025 |
| Hawaii Public Housing Authority | *** Support | Mar 27, 2025 |
| Hawaiian Homes Commission | *** Support | Feb 24, 2025 |
| Hawai‘i Appleseed Center for Law and Economic Justice | *** Support | Mar 27, 2025 |
| Hawai‘i YIMBY | *** Support | Mar 27, 2025 |
| HI Good Neighbor | ** Against | |
| HI Good Neighbor | *** Against | Feb 24, 2025 |
| Land Use Research Foundation of Hawaii | ** Support | |
| Libertarian Party of Hawaii | *** Support | Mar 27, 2025 |
| LIMBY Hawaii | *** Against | Feb 24, 2025 |
| NAN, Inc. | ** Support | |
| Office of Housing of the City and County of Honolulu | ** Support | |
| Tax Foundation of Hawaii | *** Support | Mar 27, 2025 |
CONFERENCE COMMITTEE REP. NO. 235
Honolulu, Hawaii
, 2025
RE: H.B. No. 422
H.D. 1
S.D. 2
C.D. 1
Honorable Nadine K. Nakamura
Speaker, House of Representatives
Thirty-Third State Legislature
Regular Session of 2025
State of Hawaii
Honorable Ronald D. Kouchi
President of the Senate
Thirty-Third State Legislature
Regular Session of 2025
State of Hawaii
Madam and Sir:
Your Committee on Conference on the disagreeing vote of the House of Representatives to the amendments proposed by the Senate in H.B. No. 422, H.D. 1, S.D. 2, entitled:
"A BILL FOR AN ACT RELATING TO SCHOOL IMPACT FEES,"
having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.
The purpose of this measure is to:
(1) Repeal the construction cost component of school impact fees;
(2) Exempt additional projects from school impact fees, including certain affordable, government, and Hawaiian home lands developments and single-room dwellings;
(3) Increase the minimum number of units in a development to trigger land dedication provisions of the land component impact fee; and
(4) Require the School Facilities Authority to adopt rules governing fee collection and report to the Legislature on the benefits and impacts of this measure.
Your Committee on Conference has amended this measure by:
(1) Making conforming amendments to delete certain definitions no longer used;
(2) Repealing the requirement for new residential units with less than fifty units to include a written agreement relating to a time specified for payment of a fee in lieu;
(3) Expanding prohibited uses of fee in lieu land dedication funds;
(4) Clarifying that any educational contribution agreement executed with the Department of Education or School Facilities Authority before the effective date of this measure shall remain in effect unless mutually terminated or renegotiated;
(5) Clarifying that this measure applies to new residential developments permitted or approved on or before June 30, 2029;
(6) Changing the effective date to upon approval; and
(7) Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.
As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of H.B. No. 422, H.D. 1, S.D. 2, as amended herein, and recommends that it pass Final Reading in the form attached hereto as H.B. No. 422, H.D. 1, S.D. 2, C.D. 1.
Respectfully submitted on behalf of the managers:
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ON THE PART OF THE SENATE |
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ON THE PART OF THE HOUSE |
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____________________________ STANLEY CHANG Chair |
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____________________________ LUKE A. EVSLIN Co-Chair |
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____________________________ DONNA MERCADO KIM Co-Chair |
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____________________________ TYSON K. MIYAKE Co-Chair |
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____________________________ MICHELLE N. KIDANI Co-Chair |
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STAND. COM. REP. NO. 1656
Honolulu, Hawaii
RE: H.B. No. 422
H.D. 1
S.D. 2
Honorable Ronald D. Kouchi
President of the Senate
Thirty-Third State Legislature
Regular Session of 2025
State of Hawaii
Sir:
Your Committees on Ways and Means and Education, to which was referred H.B. No. 422, H.D. 1, S.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO SCHOOL IMPACT FEES,"
beg leave to report as follows:
The purpose and intent of this measure is to address rising housing development costs in school impact zones, which are passed through to renters and homebuyers.
Specifically, this measure:
(1) Eliminates school impact fees; and
(2) Abolishes certain fair share contribution accounts and lapses unencumbered balances to the school facilities special fund.
Your Committees received written comments in support of this measure from the Department of Hawaiian Home Lands, Hawaii Public Housing Authority, Complete Construction Services Corp, Grassroot Institute of Hawaii, Hawaii Appleseed Center for Law and Economic Justice, Hawaii YIMBY, The Libertarian Party of Hawaii, and three individuals.
Your Committees received written comments in opposition to this measure from the Department of Education and seven individuals.
Your Committees received written comments on this measure from the Board of Education, Hawaii School Facilities Authority, LIMBY Hawaii, and Tax Foundation of Hawaii.
Your Committees find that although school impact fees were implemented to support public education needs in areas of the State impacted by new housing developments, school impact fees can add to planning and construction costs and result in even higher housing costs for buyers and renters. Your Committees, however, are concerned that eliminating school impact fees entirely could adversely impact the construction of new schools in areas in need of additional education facilities. Your Committees, therefore, find that further examination of school impact fees is warranted.
Your Committees also find that amendments to this measure are necessary to confirm the efficacy of school impact fees, and to allow the Legislature to consider a repeal of the sunset date of the measure if the report by the School Facilities Authority supports making the contents of this measure permanent.
Accordingly, your Committees have amended this measure by:
(1) Repealing the construction cost component of the school impact fee and making conforming amendments to subpart B of part VI of Chapter 302A, Hawaii Revised Statutes;
(2) Reinserting the provisions regarding the land component impact fee and fee in lieu requirement, and the fair share contribution accounts into which the fees are paid;
(3) Increasing from fifty to one hundred the minimum number of units in a development that triggers land dedication provisions of the land component impact fee;
(4) Exempting additional projects from school impact fees, including certain affordable, government, and Hawaiian home lands developments and single-room dwellings;
(5) Removing the lapse of unencumbered balances in the fair share contribution accounts;
(6) Requiring the School Facilities Authority to adopt rules governing the collection of impact fees;
(7) Requiring the School Facilities Authority to provide a report to the Legislature by December 15, 2026, on the effect of repealing the construction cost component of the school impact fee; and
(8) Inserting a repeal and reenactment date of June 30, 2029.
As affirmed by the records of votes of the members of your Committees on Ways and Means and Education that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 422, H.D. 1, S.D. 1, as amended herein, and recommend that it pass Third Reading in the form attached hereto as H.B. No. 422, H.D. 1, S.D. 2.
Respectfully submitted on behalf of the members of the Committees on Ways and Means and Education,
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________________________________ MICHELLE N. KIDANI, Chair |
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________________________________ DONOVAN M. DELA CRUZ, Chair |
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STAND. COM. REP. NO. 1293
Honolulu, Hawaii
RE: H.B. No. 422
H.D. 1
S.D. 1
Honorable Ronald D. Kouchi
President of the Senate
Thirty-Third State Legislature
Regular Session of 2025
State of Hawaii
Sir:
Your Committee on Housing, to which was referred H.B. No. 422, H.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO SCHOOL IMPACT FEES,"
begs leave to report as follows:
The purpose and intent of this measure is to:
(1) Repeal school impact fees; and
(2) Abolish and transfer unencumbered balances of the school impact fee subaccounts and certain fair share contribution accounts to the School Facilities Special Fund.
Your Committee received testimony in support of this measure from the Department of Hawaiian Home Lands; Hawaii Public Housing Authority; Office of Housing of the City and County of Honolulu; EAH Housing; Affordable Housing Connections LLC; Grassroot Institute of Hawaii; Hawaiʻi YIMBY; Hawaii Appleseed Center for Law and Economic Justice; Nan, Inc.; Libertarian Party of Hawaii; and six individuals.
Your Committee received testimony in opposition to this measure from the Department of Education and two individuals.
Your Committee received comments on this measure from the School Facilities Authority and Tax Foundation of Hawaii.
Your Committee finds that Act 245, Session Laws of Hawaii 2007, authorized the Board of Education to approve school impact districts, in which impact fees may be collected. Presently, the Board of Education has approved four school impact districts to align with concurrent housing development on Oahu and Maui. While school impact fees were implemented to support public education in areas across the State with new housing developments, school impact fees can add to the already high cost of planning and construction. Additionally, school impact fees can result in a project becoming financially untenable. As the State continues to address its chronic housing shortage, this measure alleviates some of the costs associated with development in school impact districts to ensure housing units remain affordable for local working individuals and families.
Your Committee notes concerns raised regarding the construction of new school facilities in the Ewa Beach community. Since September 2013, developers in Leeward Oahu, including Ewa Beach, have been subject to a school impact fee when applying for building permits for any new residential construction. The communities of Hoopili and Ocean Pointe have experienced rapid growth due to growing residential development. However, the population growth in Ewa Beach communities has led to overcrowding in local area schools, necessitating the need for the planning and construction of new school facilities. Your Committee further notes that if school impact fees are repealed, ensuring the availability of land and requisite infrastructure is imperative to address future Department of Education school sites that will not have support from school impact fees.
Your Committee has amended this measure by:
(1) Inserting an effective date of July 1, 2050, to encourage further discussion; and
(2) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.
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. 422, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 422, H.D. 1, S.D. 1, and be referred to your Committee on Ways and Means.
Respectfully submitted on behalf of the members of the Committee on Housing,
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________________________________ STANLEY CHANG, Chair |
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STAND. COM. REP. NO. 938
Honolulu, Hawaii
, 2025
RE: H.B. No. 422
H.D. 1
Honorable Nadine K. Nakamura
Speaker, House of Representatives
Thirty-Third State Legislature
Regular Session of 2025
State of Hawaii
Madame:
Your Committee on Finance, to which was referred H.B. No. 422, 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 and transfer unencumbered balances of the School Impact Fee subaccounts and certain Fair Share Contribution accounts to the School Facilities Special Fund.
Your Committee received testimony in support of this measure from the Department of Hawaiian Home Lands; Hawaii Public Housing Authority; Office of Housing of the City and County of Honolulu; Hawaiʻi YIMBY; Hawaii Appleseed Center for Law & Economic Justice; Grassroot Institute of Hawaii; Libertarian Party of Hawaii; Land Use Research Foundation of Hawaii; and one individual. Your Committee received testimony in opposition to this measure from HI Good Neighbor and numerous individuals. Your Committee received comments on this measure from the Department of Education; School Facilities Authority; Tax Foundation of Hawaii; and LIMBY Hawaiʻi.
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. 422, H.D. 1, and recommends that it pass Third Reading.
Respectfully submitted on behalf of the members of the Committee on Finance,
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____________________________ KYLE T. YAMASHITA, Chair |
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STAND. COM. REP. NO. 763
Honolulu, Hawaii
, 2025
RE: H.B. No. 422
H.D. 1
Honorable Nadine K. Nakamura
Speaker, House of Representatives
Thirty-Third State Legislature
Regular Session of 2025
State of Hawaii
Madame:
Your Committee on Housing, to which was referred H.B. No. 422 entitled:
"A BILL FOR AN ACT RELATING TO SCHOOL IMPACT FEES,"
begs leave to report as follows:
Your Committee received testimony in support of this measure from the Department of Hawaiian Home Lands; Hawaii Public Housing Authority; Office of Housing of the City and County of Honolulu; Libertarian Party of Hawaii; Hawaii Appleseed Center for Law & Economic Justice; Grassroot Institute of Hawaii; Hawaii YIMBY; and numerous individuals. Your Committee received testimony in opposition to this measure from two individuals. Your Committee received comments on this measure from the Department of Education; School Facilities Authority; Tax Foundation of Hawaii; and LIMBY Hawaiʻi.
Your Committee finds that school impact fees were established to address the impact of new residential developments on the surrounding community and potential increase of students in that community. Your Committee notes that between 2007 and 2018, the Department of Education collected slightly more than $5,300,000, far under the $80,000,000 or more needed to build one new school. Rather than being used to help support schools, school impact fees have only added additional costs to housing developments, which in some cases resulted in a housing project becoming financially untenable. Your Committee believes that the State must reduce the cost of housing to address the housing crisis and develop more affordable housing for Hawaii's residents.
Your Committee has amended this measure by:
(1) Abolishing certain fair share contribution accounts within the Donations - Facilities Trust under the Department of Education and lapsing any unencumbered balances to the School Facilities Special Fund;
(2) Changing the effective date to July 1, 3000, to encourage further discussion; and
(3) 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. 422, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 422, H.D. 1, and be referred to your Committee on Finance.
Respectfully submitted on behalf of the members of the Committee on Housing,
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____________________________ LUKE A. EVSLIN, Chair |
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Date
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Testimony PDF
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| Mar 27, 2025 | HB422_SD1_TESTIMONY_WAM-EDU_03-28-25_.PDF |
| Mar 18, 2025 | HB422_HD1_TESTIMONY_HOU_03-18-25_.PDF |
| Feb 24, 2025 | HB422_HD1_TESTIMONY_FIN_02-24-25_.PDF |
| Feb 12, 2025 | HB422_TESTIMONY_HSG_02-12-25_.PDF |
Discussed in Hearing
3MIN
Conference Committee
37SEC
Conference Committee
19MIN
Senate Standing Committee on Housing
19MIN
Senate Standing Committee on Labor and Technology
19MIN
Senate Standing Committee on Water and Land
16MIN
House Standing Committee on Finance
9MIN
