Report Title:

Impact Fees

Description:

Authorizes the counties to assess impact fees, and transfers revenues to a new state special fund, to help pay for state highway improvements that serve new or more intensive development. (HB2703 HD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

2703

TWENTY-SECOND LEGISLATURE, 2004

H.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO IMPACT FEES.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The purpose of this Act is to clarify county authority to assess impact fees for state highway improvements. This Act also establishes a new special fund for the department of transportation to administer county impact fees assessed for state highway projects.

SECTION 2. Chapter 264, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . IMPACT FEES

§264-A Definitions. As used in this part, unless the context requires otherwise:

"Capital costs" means part or all of the costs for capital improvements. Capital costs may include costs to acquire right-of-way, plan, design, engineer, finance, and construct improvements, including costs of management and consultant fees. Capital costs shall not include periodic maintenance and other operating costs.

"Department" means the department of transportation.

"Development" means any artificial change to real property that requires a county grading or building permit including construction, expansion, enlargement, alteration, or erection of buildings or structures.

"Director" means the director of transportation.

"Impact fee" means an assessment on development used to incrementally fund a fair share of the capital costs of state highway improvements reasonably needed to serve that development.

"State highway improvements" means capital improvements to the physical infrastructure of state highways.

§264-B Highway development special fund. (a) There is established in the state treasury the highway development special fund to be administered by the department, into which shall be deposited:

(1) Transfers of county impact fees assessed under part VIII of chapter 46 to pay for state highway improvements;

(2) Interest from investment of deposits; and

(3) Legislative and county appropriations.

(b) Moneys in the highway development special fund shall be used for the following purposes:

(1) Capital costs of qualifying proposed state highway improvements;

(2) Reevaluation of the need, geographic limitations, amount, and use of impact fees;

(3) Transfers to reimburse other special funds for expenditures that otherwise might have been funded with moneys in the highway development special fund;

(4) Transfers under sections 36-27 and 36-30;

(5) Refunds under section 264-D; and

(6) The department’s costs to implement this part, including costs to administer the highway development special fund.

(c) The department may establish accounts in the highway development special fund as necessary to implement this part and rules adopted by the department pursuant to section 264-E.

§264-C Authority to assess impact fees. Any county with a population in excess of five hundred thousand may assess, impose, levy, and collect impact fees for any development pursuant to ordinances adopted under section 46-142 and this part and the department is authorized to receive those funds for expenditure in the county and for the state highway improvements for which the fees were collected.

§264-D Refund of impact fees to county. Upon the request of a county, the department shall refund impact fees transferred to the highway development special fund which have not been expended or encumbered for purposes established under this part within six years after collection under part VIII of chapter 46.

§264-E Adoption of rules. The department may adopt rules pursuant to chapter 91 to implement this part.

§264-F County ordinances and rules. Notwithstanding section 264-C, no county shall assess impact fees for state highway improvements without the director’s consent.

§264-G Limitations on actions. A civil lawsuit contesting an action by the department or a county under this part or under part VIII of chapter 46 shall be filed within sixty calendar days after the date of the action."

SECTION 3. Section 46-141, Hawaii Revised Statutes, is amended to read as follows:

1. By adding the definition of "department" to be appropriately inserted and to read:

""Department" means the department of transportation."

2. By amending the definition of "impact fees" to read:

""Impact fees" means the charges imposed upon a developer by a county [or], board, or by the department to fund all or a portion of the public facility capital improvement costs required by the development from which it is collected, or to recoup the cost of existing public facility capital improvements made in anticipation of the needs of a development."

3. By amending the definition of "needs assessment study" to read:

""Needs assessment study" means a study required under an impact fee ordinance or rule of the department that determines the need for a public facility, the cost of development, and the level of service standards, and that projects future public facility capital improvement needs; provided that the study shall take into consideration and incorporate any relevant county general plan, development plan, or community plan."

4. By amending the definition of "offset" to read:

""Offset" means a reduction in impact fees designed to fairly reflect the value of non-site related public facility capital improvements provided by a developer pursuant to county land use provisions[.] or rule of the department."

5. By amending the definition of "proportionate share" to read:

""Proportionate share" means the portion of total public facility capital improvement costs that is reasonably attributable to a development, less:

(1) Any credits for past or future payments, adjusted to present value, for public facility capital improvement costs made or reasonably anticipated to be contributed by a developer in the form of user fees, debt service payments, taxes, or other payments; or

(2) Offsets for non-site related public facility capital improvements provided by a developer pursuant to county land use provisions[.] or rule of the department."

SECTION 4. Section 46-142, Hawaii Revised Statutes, is amended to read as follows:

"§46-142 Authority to impose impact fees; enactment of ordinances required. (a) Impact fees may be assessed, imposed, levied, and collected by:

(1) Any county for any development, or portion thereof, not involving water supply or service; [or]

(2) Any board for any development, or portion thereof, involving water supply or service; or

(3) The department for any development, or portion thereof, involving state highway improvements if the department has prepared and submitted a needs assessment study and an intergovernmental agreement approved by a county council for collection of impact fees as authorized by law and in accordance with this part and part of chapter 263;

provided that the county enacts appropriate impact fee ordinances or the board or the department adopts rules to effectuate the imposition and collection of the fees within their respective jurisdictions.

(b) Except for any ordinance governing impact fees enacted before July 1, 1993, impact fees may be imposed only for those types of public facility capital improvements specifically identified in a county comprehensive plan or a facility needs assessment study[.] prepared for a county or the department. The plan or study shall specify the service standards for each type of facility subject to an impact fee; provided that the standards shall apply equally to existing and new public facilities."

SECTION 5. Section 46-143, Hawaii Revised Statutes, is amended to read as follows:

1. By amending subsection (a) to read:

"(a) A county council [or], board, or the department, when considering the enactment or adoption of impact fees shall first approve a needs assessment study that shall identify the kinds of public facilities for which the fees shall be imposed. The study shall be prepared by an engineer, architect, or other qualified professional and shall identify service standard levels, project public facility capital improvement needs, and differentiate between existing and future needs."

2. By amending subsections (c) and (d) to read:

"(c) The pro rata amount of each impact fee shall be based upon the development and actual capital cost of public facility expansion, or a reasonable estimate thereof, to be incurred by the county [or], board, or by the department.

(d) An impact fee shall be substantially related to the needs arising from the development and shall not exceed a proportionate share of the costs incurred or to be incurred by the county [or], the board, or by the department in accommodating the development. The following seven factors shall be considered in determining a proportionate share of public facility capital improvement costs:

(1) The level of public facility capital improvements required to appropriately serve a development, based on a needs assessment study that identifies:

(A) Deficiencies in existing public facilities;

(B) The means, other than impact fees, by which existing deficiencies will be eliminated within a reasonable period of time; and

(C) Additional demands anticipated to be placed on specified public facilities by a development;

(2) The availability of other funding for public facility capital improvements, including but not limited to user charges, taxes, bonds, intergovernmental transfers, and special taxation or assessments;

(3) The cost of existing public facility capital improvements;

(4) The methods by which existing public facility capital improvements were financed;

(5) The extent to which a developer required to pay impact fees has contributed in the previous five years to the cost of existing public facility capital improvements and received no reasonable benefit therefrom, and any credits that may be due to a development because of such contributions;

(6) The extent to which a developer required to pay impact fees over the next twenty years may reasonably be anticipated to contribute to the cost of existing public facility capital improvements through user fees, debt service payments, or other payments, and any credits that may accrue to a development because of future payments; and

(7) The extent to which a developer is required to pay impact fees as a condition precedent to the development of non-site related public facility capital improvements, and any offsets payable to a developer because of this provision."

SECTION 6. Section 46-144, Hawaii Revised Statutes, is amended to read as follows:

"§46-144 Collection and expenditure of impact fees. Collection and expenditure of impact fees assessed, imposed, levied, and collected for development shall be reasonably related to the benefits accruing to the development. To determine whether the fees are reasonably related, the impact fee ordinance or [board] rule of the board or department shall provide that:

(1) Upon collection, the fees shall be deposited in a special trust fund or interest-bearing account, or transferred to the department as provided in this section. The portion that constitutes recoupment may be transferred to any appropriate fund;

(2) Collection and expenditure shall be localized to provide a reasonable benefit to the development. A county [or], board, or the department shall establish geographically limited benefit zones for this purpose; provided that zones shall not be required if a reasonable benefit can be otherwise derived. Benefit zones shall be appropriate to the particular public facility and the county [or], board, or the department. A county [or], board, or the department shall explain in writing and disclose at a public hearing reasons for establishing or not establishing benefit zones;

(3) Except for recoupment, impact fees shall not be collected from a developer until approval of a needs assessment study that sets out planned expenditures bearing a substantial relationship to the needs or anticipated needs created by the development;

(4) Impact fees shall be expended for public facilities of the type for which they are collected and of reasonable benefit to the development; [and]

(5) Within six years of the date of collection, the impact fees shall be expended or encumbered for the construction of public facility capital improvements that are consistent with the needs assessment study and of reasonable benefit to the development[.]; and

(6) A county shall transfer impact fees for expenditure by the department pursuant to a needs assessment study and intergovernmental agreement approved by the county upon request of the department pursuant to this part."

SECTION 7. Section 46-145, Hawaii Revised Statutes, is amended to read as follows:

"§46-145 Refund of impact fees. (a) If impact fees are not expended or encumbered within the period established in section 46-144, the county [or], the board, or the department, as the case may be, shall refund to the developer or the developer's successor in title the amount of fees paid and any accrued interest. Application for a refund shall be submitted to the county [or], the board, or the department, as the case may be, within one year of the date on which the right to claim arises. Any unclaimed refund shall be retained in the special trust fund or interest bearing account and be expended as provided in section 46-144.

(b) If a county [or], board, or the department seeks to terminate impact fee requirements, all unexpended or unencumbered funds shall be refunded as provided in subsection (a) and the county [or], board, or the department, as the case may be, shall give public notice and direct notice to all contributing developers of termination and availability of refunds at least two times. All funds available for refund shall be retained for a period of one year at the end of which any remaining funds may be transferred to:

(1) The county's general fund and expended for any public purpose not involving water supply or service as determined by the county council; or

(2) The board's general fund and expended for any public purpose involving water supply or service as determined by the board[.]; or

(3) The highway development special fund and expended for any public purpose involving state highway improvements pursuant to section 264-B."

(c) Recoupment shall be exempt from subsections (a) and (b)."

SECTION 8. Section 46-148, Hawaii Revised Statutes, is amended to read as follows:

"[[]§46-148[]] Transitions. Any county, or the land use commission pursuant to section 205-4(g), requiring impact fees or imposing development exactions[,] in order to fund public facilities, shall incorporate fee requirements into [their] its broader system of development and land use regulations in such a manner that developments, either collectively or individually, are not required to pay or otherwise contribute more than a proportionate share of public facility capital improvements. Development contributions or payments made under a development agreement, pursuant to section 46-123, are exempted from this requirement."

SECTION 9. Section 205-4, Hawaii Revised Statutes, is amended by amending subsection (g) to read as follows:

"(g) Within a period of not more than three hundred sixty- five days after the proper filing of a petition, unless otherwise ordered by a court, or unless a time extension, which shall not exceed ninety days, is established by a two-thirds vote of the members of the commission, the commission, by filing findings of fact and conclusions of law, shall act to approve the petition, deny the petition, or to modify the petition by imposing conditions pursuant to section 46-148 necessary to uphold the intent and spirit of this chapter or the policies and criteria established pursuant to section 205-17 or to assure substantial compliance with representations made by the petitioner in seeking a boundary change. The commission may provide by condition that absent substantial commencement of use of the land in accordance with such representations, the commission shall issue and serve upon the party bound by the condition an order to show cause why the property should not revert to its former land use classification or be changed to a more appropriate classification. Such conditions, if any, shall run with the land and be recorded in the bureau of conveyances."

SECTION 10. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 12. This Act shall take effect upon its approval, provided that sections 3 through 7 shall take effect retroactive to October 1, 2002.