Schools board again rejects homebuilder fee

The state school board for a second time has rejected a homebuilder fee the Department of Education contends it needs to accommodate the estimated 10,000 students expected to enroll in urban Honolulu schools as developments pop up along the city’s rail line.

Some Board of Education members raised concerns about the legal standing of the fees, while others questioned why the department isn’t taking advantage of a law to generate revenue off of public school lands rather than solely relying on the proposed fees. Last time around, stymieing affordable housing was cited as a major concern, but several bills this legislative session would exempt affordable projects from the fees.

The Board of Education’s Finance Committee tabled a proposal Tuesday that would have established a so-called school impact fee zone along a 4-mile stretch of the rail line, from Kalihi to Ala Moana — even after the Department of Education lowered the per-unit fee by $3,500.

Board members in November cited concerns about hindering affordable-housing developments when voting down a plan that at the time called for charging builders of new homes $9,374 per unit to help pay for new schools in the area. Dann Carlson, assistant superintendent for school facilities, presented a revised fee of $5,858 at Tuesday’s Finance Committee meeting.

A 2007 state law authorizes the department to collect fees from developers in high-growth areas of the state to offset the cost of building new schools. The 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 supposed to be based on each new development’s proportionate share of the additional demand on public-school facilities.

Residential development in the Kalihi-to-Ala Moana area is expected to add some 39,000 new housing units, according to a DOE analysis, with about one-fifth for affordable or low-income housing.

The 13 existing schools serving the area can handle only about 1,500 to 1,750 more students. The DOE anticipates it will need to build 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.

Under the original impact fee proposed, the department estimated it could collect $365 million over the next 20 to 30 years to help pay for new schools. Under the reduced fee — which lowers the land requirement of the impact fee — that would drop to $228 million.

Board members, however, voted to defer taking any action for up to 90 days.

BOE member Bruce Voss, an attorney, raised legal concerns, citing two U.S. Supreme Court cases that restrict governments’ ability to impair property interests with land use regulations. A third Supreme Court case held that monetary fees are subject to the same limitations.

“The U.S. Supreme Court says … that the impact fee has to be proportionate to the demand, the need created by the units being developed in this specific district,” Voss said at the committee meeting. “It’s our responsibility to ensure that we don’t enact policy that violates the Constitution. … What I’m looking for is the basis, the justification so that we have the assurance that this impact fee is constitutional. I just don’t see it.”

Voss asked the department to consult with the state Attorney General Department to ensure its next proposal is defensible under the Constitution.

BOE member Kenneth Uemura, meanwhile, questioned why the department is not using a 2013 law known as Act 155 to generate revenue from unused portions of school lands.

The law was intended to “optimize” the use of public school lands by establishing a pilot program to generate revenue from public uses such as workforce housing on underused public school lands.

“I think because we’re looking at additional students and additional schools, I think we should be looking at Act 155,” Uemura said, adding that he’s seen a study that looks to co-locate schools on the McKinley and Farrington high school sites using the law.

Carlson, the assistant superintendent for facilities, said the DOE is looking at three pilot projects under the law. But he said he’s identified parcels the department owns that do not have schools on them.

“We’ve intentionally not looked at our school sites,” Carlson said. “We think urban land is precious right now, and I’m very reluctant to work out an arrangement where I’m leasing that land for an extended period of time. I anticipate I may need to use that land.”

Uemura made the motion to defer action, saying, “As much as I support the impact fee, I’m not really convinced that we have the right impact fee.” An initial motion to defer action for three months was reduced to 90 days.

“Every month that we delay this, more people are getting building permits and we’re missing out on the opportunity to be able to collect these fees,” Carlson said.

This isn’t the first time the board would be approving an impact fee district. 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 DOE has so far collected roughly $800,000 in fees in Leeward Oahu and about $2 million on Maui.