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Repeal school impact fees via HB2091 to cut housing costs

The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the House Committee on Housing on Feb. 9, 2024.
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Feb. 9,  2024, 10:00 a.m.
Hawaii State Capitol
Conference Room 312 and Videoconference

To: House Committee on Housing
      Rep. Luke A. Evslin, Chair
      Rep. Micah P.K. Aiu, Vice-Chair

  From: Grassroot Institute of Hawaii
             Ted Kefalas, Director of Strategic Campaigns

RE: TESTIMONY IN SUPPORT OF HB2091 — RELATING TO SCHOOL IMPACT FEES

Aloha Chair Evslin, Vice-Chair Aiu and Committee Members,

The Grassroot Institute of Hawaii would like to offer its support for HB2091, which would repeal school impact fees.

This is a sensible measure that would help reduce the costs associated with the development of residential housing.

Those costs are generally passed on to the buyers or renters, thereby contributing to the high cost of housing in Hawaii. They may even discourage housing construction or make development of low-cost housing infeasible for homebuilders.

It is no coincidence that school impact fee waivers were included in Gov. Josh Green’s emergency order streamlining housing construction. In fact, the first action taken by the Beyond Barriers Working Group established by the order was to approve a school impact fee waiver for a 52-unit rental project in downtown Honolulu.

The school impact fee for that area is $3,864 per unit, which would have added $200,928 to the project’s construction costs.[1]

Adding such fees to the cost of building affordable housing simply makes such projects less attractive to developers.

Meanwhile, the negative effect of school impact fees on housing growth is not offset by a commensurate benefit to local schools.

The collection and administration of the state Department of Education’s impact fee program received sharp criticism from the Hawaii State Auditor, who noted that between 2007 and 2018, the DOE collected only $5,342,886 in impact fees[2] — an insignificant amount compared to the $80 million or more required to build a new school.

The auditor’s report also warned that Hawaii’s school impact fees may violate the constitutional requirement that there be a “nexus” between proposed new units and the need for more classroom capacity.[3]

By repealing school impact fees, HB2091 would help reduce the cost of residential construction and eliminate one of the factors contributing to Hawaii’s high housing prices.

Thank you for the opportunity to testify.

Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
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[1] Andrew Gomes, “Housing panel makes first development decision,” Honolulu Star-Advertiser, Jan. 3, 2024.
[2] “ Audit of the Department of Education’s Administration of School Impact Fees: A Report to the Governor and the Legislature of the State of Hawai‘i,” Office of the Auditor, State of Hawaii, Sept. 2019, p. 6.
[3] Ibid, p. 14.

 

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