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CHAPTER 3: POLICY ISSUES The first phase of this project was a policy analysis that culmi Ordinance Issues Memorandum (October 2005) and a Policy Analysis Memorandum (January 2006). The first phase also included an extensive public participation and education process November 2005 focus groups in Hilo and Kona (see summary in Appe " January 2006 video conference with participan ts in Kona, Hilo and Honolulu (see summary in " Appendix H), and March 2006 workshops in Hilo and Kona (see summary in Append " A list of participants in these public meetings can be found in Based on the analysis conducted fo r Phase I, the County should consider replacing its fair share assessments with a true impact fee system that follo ws the requirements of the State impact fee enabling act. An impact fee collected from all new developmen t would be more legally de fensible, more equitable and generate significantly more revenue than the curre nt Ñfair shareÒ system. This additional revenue would translate into capital improvements that would benefit all More specific recommendations are provided for detailed policy i Treatment of Existing Lots A major issue in the development of an impact fee system for HawaiÓi County is how to treat existing lots of record. In most jurisdictions that have adopted impact fees throughout the United States, how to treat existing lots is a minor issue. Generally , the supply of such lots is limited, and if they are grandfathered or otherwise exempted from impact fees the overall effect on impact fee revenues is short-lived and relatively minor. However, this is not the case indicates that there are about 64,000 undeveloped resi dential lots in the county. This exceeds the total number of housing units on the island at the time of the 2000 census (62,674). Many of these lots are accessed via private substandard roads, have priva te water catchment systems, and are serviced with cesspools or septic tanks. Of the roughly 2,000 pe rmits of single-family deta ched units issued by the County annually, it has been estimated that about one-third of these new homes are being built on lots that were created in the 1950s and 1960s. The perception exists that many of these lots are owned by local residents who intend to build a h for themselves in these older subdivisions. While this is undoubtedly true to some extent, it is far from the typical case. An analysis of property tax reco rds indicates that only about 14 percent of existing vacant residential lots are owned solely by Big Island residents, and two-thirds are under the exc ownership of non-Big Island residents (see Table 9). The remaining 17 percent are owned by multiple owners with some Big Island resident participation, but it is likely that most of these lots are bei as an investment, rather than as a future home si te. The investment motive probably holds for a good number of the Big Island owners as well. So the number owned by build a home on them is probably considerably less than 9,000 lots. To put that number in perspective, it represents less than five years of single-family building permit activity in HawaiÓi County at current development rates. H Ó C \I N A ÐI F S September 19, 2006, Page 15 AWAI I OUNTY NFRASTRUCTURE EEDS SSESSMENT MPACT EE TUDY