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that no impact fees would be collected in this area, and no impact fees would be spent there. Exclusion would not have to be permanent. For example, Ka nsas City, Missouri, first developed arterial street impact fees for the area north of the Missouri River, before preparin g impact fees for the southern part of the city. In each area, the older part of th e city that was annexed prior to 1950 was excluded from the impact fee system. Exclusion fr om the impact fee system would not be meant to penalize an area, but to lessen the burden of paying an impact fee. Other methods of funding new infrastructure could be explored for those areas. Option 5: Everyone Pays. A final option is not to provide any special treatment for existing lots. Most of the focus groups in both the Hilo and Kona workshops came up with this alternative as the preferred option. The consensus seemed to be that if housing affordability is the concern, there should be a separate program to address that. This is the recommended Affordable Housing The key characteristic of an impact fee is that th e amount of the fee is proportional to the impact on facilities. To waive fees for affo rdable housing or other policy goal s may weaken the defensibility of the impact fee system, since opponents could argue that it is not actually an impa ct fee, but an illegal tax disguised as a fee. Consequently, any waiver of f ees for affordable housing or other purposes should be paid by other funding sources. Paying fees on behalf of existi ng lot owners as a means of encouraging affordable housing would provide a windfall for many property owners who do not actually need assistance. The recommended approach would provide assistance to first-time home buyers who earn less than 140 percent of the median family income and who are purchasing or bu ilding a single-family unit that costs less than the median home value, provided that the property is used as the buyerÔs primary residence. The assistance could be either in the form of an outright grant, or in the form of an interest-free loan that would be repaid when the qualifying homebuyer sells the house or ceases to live there. The loan approach would have the advantage that it would reduce the incentive to gain public assistance that is not really needed, and would also make the program mo re self-sufficient if the loan repayments are earmarked for futu impact fee assistance. If the qualif ying party already owns the lot, the assistance would be used to pay the impact fees at time of building permit. In the event of a speculative project, the builder would pay the fees at time of building permit, and the assistan ce in the amount of the fees paid would be provided to the qualifying homebuyer at closing to reduce the total funds closing. Progressive Residential Fees One thing that can be done to mitigate the effect on a ffordable housing is to reduce fees for the smaller and more affordable units to the extent that it can be demonstra impact on the need for facilities. That option has been provide would need to assess a flat rate for single-family homes if fees are collected at time of subdivision approval since the size of the house would not be known until a building permit is issued for the structure (see discussion below). Time of Collection The current fair share assessments are imposed duri ng the rezoning process, and are collected prior to final subdivision approval for single-family lots and prior to final plan approval for multi-family and H Ó C \I N A ÐI F S September 19, 2006, Page 17 AWAI I OUNTY NFRASTRUCTURE EEDS SSESSMENT MPACT EE TUDY