DOE reduces proposed fee on housing along rail line

The Department of Education has come up with a lower proposed fee that it would charge homebuilders to help pay for new schools along the rail line in urban Honolulu.

Citing concerns about hindering affordable-housing developments, a Board of Education committee in November tabled the department’s proposal to impose a fee of $9,374 per unit to help offset construction costs.

The board’s Finance and Infrastructure Committee voted to defer action on creating a so-called school impact fee district along a 4-mile stretch of the city’s rail line, from Kalihi through downtown Honolulu and Kakaako to Ala Moana. The committee is scheduled to again consider establishing the impact fee district at its meeting Tuesday, where the department will seek approval of either its original fee amount or a revised fee of $5,858 per unit.

The department says the fees are its only taxing power to generate funds to build new facilities.

Residential development in the proposed area is expected to bring with it as many as 10,000 students over the next two to three decades. The 13 existing schools serving the area can handle only about 1,500 more students. The DOE anticipates needing up to six new elementary schools and 1-1/2 middle and 1-1/2 high schools to accommodate the growth, at a cost of about $750 million.

To help pay for the new schools, the department is looking to a 2007 state law that authorizes the DOE to collect fees from developers in high-growth areas of the state. The Board of Education in 2009 approved a West Hawaii school impact fee district on Hawaii island; a Central Maui and West Maui district in 2010; and a Leeward Oahu district in 2012.

Under the original impact fee proposed, the department expects it could collect $365 million over the next 20 to 30 years. Under the reduced fee, that would drop to $228 million, according to a DOE spokeswoman.

The school impact fee law requires both a construction fee and either a contribution of land or a fee in lieu of land for every new unit. The land or fees charged are based on each new development’s proportionate share of the additional demand on public-school facilities.

There are no exemptions under the law for affordable-housing developments; the fee applies to all new residential developments within an established impact district, including accessory dwellings or ohana units and government housing projects. There are several bills at the Legislature to change that.

In addition to concerns about penalizing affordable-housing developments, groups representing landowners and developers had criticized the department’s calculation of its original fee because it factored in traditional campus sizes when schools in the urban core will likely need to be built vertically due to limited vacant land.

Lawmakers last year amended the school impact fee law to give the Department of Education more flexibility in how it spends collected fees. The law now allows the department to use fees to lease space or purchase finished space in a building.

After receiving feedback, the DOE’s facilities development branch performed a study to determine capacity at existing urban campuses that could accommodate new facilities, according to a memorandum last week from schools Superintendent Kathryn Matayoshi to the BOE’s Finance and Infrastructure Committee.

“This exercise suggested that between 30 to 40 percent of the new facilities could be built on existing campuses, further reducing the need for new school sites. A reduction of 40 percent of the land requirement is reflected in an adjusted impact fee of $5,858,” Matayoshi wrote.

The memo asks the committee to endorse either of the fee amounts to the full board. The impact fees, which would take effect upon the board’s approval, are supposed to be paid before a project receives a building permit.

Meanwhile, pending bills at the Capitol should help alleviate concerns about the impact such fees would have on developers of affordable housing. The DOE estimates affordable-housing projects will make up 20 percent of future residential development in the Kalihi-to-Ala Moana area.

At least five bills are moving through the Legislature that would exempt low-income and affordable housing from school impact fees.

One bill would exempt housing developments reserved for families earning up to 80 percent of the area median income (SB 1146); another would exempt affordable housing units, accessory dwelling units and ohana units (HB 884); and another would exempt county and state housing projects for low- and moderate-income individuals (HB 656).

If the proposed exemptions are enacted, a DOE spokeswoman said the department estimates it would see a drop of about $73 million in collected fees under the higher impact fee, or $46 million less under the reduced impact fee.