Schools fee for housing near transit nixed amid opposition

Citing concerns about hindering affordable-housing developments, a Board of Education committee Tuesday tabled a proposal that called for charging builders of new homes more than $9,000 per unit to help pay for new schools in urban Honolulu.

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.

Residential development in the area is expected to bring with it as many as 10,200 students over the next two decades. The 13 existing schools serving the area can handle only about 1,500 more students, according to the Department of Education.

Under the department’s proposal, builders or buyers of new homes and condos within the proposed district would be assessed a $9,374 fee per unit to help offset the cost of building new public schools or expanding current ones. The fee would apply to all new residential developments within the district, including accessory dwellings or ohana units and government housing projects.

Developers, landowners and the city’s Department of Planning and Permitting objected to the plan, while education advocates and the teachers union supported the idea.

“We understand that the DOE must fund its schools, but the current proposal runs contrary to the objectives of (transit-oriented development), and it will serve to inhibit affordable developments in the urban core,” Arthur Challacombe, acting director of Honolulu’s Department of Planning and Permitting, said in written testimony.

He contends that development around the rail system will “realistically occur incrementally over decades.”

“Larger developments that add significant numbers of residential units will require approval by the City Council or the (Department of Planning and Permitting) director and, therefore, provide the opportunity to impose special conditions of approval that can address school facilities at that time,” Challacombe said.

Affordable-housing advocates, including Hawaii Habitat for Humanity and Faith Action for Community Equity, also testified in opposition.

The BOE’s Finance Committee deferred action on the proposal for three months. BOE member Ken Uemura, the committee’s vice chairman, said the committee is asking the department to work with stakeholders to “see if they can collaborate on the district (boundaries) and the fees.”

Dann Carlson, assistant superintendent for school facilities and support services, said the department was disappointed with the decision. He referred to the school impact fee as the only taxing power the department has at its disposal, but added that it’s a one-time fee versus a recurring tax.

A 2007 state law authorizes the department to establish school impact fee districts in high-growth areas of the state. The DOE can charge new developers for 10 percent of construction costs and 100 percent of future land needs to accommodate additional students.

The law, which officials have called prescriptive and complex, requires both a construction fee and either contribution of land or a fee in lieu of land for every new unit to be paid before a project receives a building permit. A developer can opt to build a school instead of paying the fees.

David Arakawa, executive director of the Land Use Research Foundation of Hawaii, a nonprofit research and trade association that represents landowners and developers, said his organization supports the concept of impact fees but opposes the analysis and calculations the DOE used to come up with its fees.

Arakawa, whose organization helped draft the underlying law, asked the Board of Education to hold off on a decision in order to give stakeholders an opportunity to work with the DOE.

“Due to the significant negative consequences and economic implications which may potentially arise from the proposed designation, any resulting districting and impact fees must be reasonably based on accurate and credible facts and analysis and must involve participation of, and collaboration with, all stakeholders affected,” Arakawa said.

He suggested the proposed fee district — which encompasses the areas served by the 13 existing schools from Kalihi to Ala Moana — be broadened to include school districts with underused campuses such as the Roosevelt, Kaimuki and Moanalua complexes.

DOE officials noted that the school impact law is designed to place the burden where the impact is going to occur. And, unlike mainland public schools that are locally funded with property taxes, Hawaii’s school system is funded at the state level.

“This tool places the burden on the parties who are placing the added demand on our schools instead of placing that burden on the entire state,” Carlson, the assistant superintendent, said.

Four school impact fee districts are currently in place. The BOE 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.

The fee in the Leeward Oahu district is $4,334 per unit, and $2,371 and $2,055 per unit in Central Maui and West Maui, respectively. The urban Honolulu fee reflects the higher cost per acre of potential future school sites within the proposed district.

BOE members hinted that legislative action may be needed to amend the school impact fee law to carve out an exemption for affordable-housing projects.

“To me this is just bad policy — policy that hurts people because it takes away affordable housing and has negligible, if any, impact on the real problem of our school facilities, which is all of our responsibilities because we have a statewide school system,” said BOE member Bruce Voss.