IPFNA_Policy Analysis Memo_Jan_06

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APPROACH The County should consider replacing its fair shar e assessments with a true impact fee system that follows the requirements of HawaiÔiÔs impact fee enabling act. development would be more legally defensible, more equitable and generate significantly more revenue than the current Ñfair shareÒ system. This additional revenue w that would benefit all fee payers. Impact fees would essentially replace the fair shar e assessments. Lots that had paid fair share assessments would get credit agains t the impact fees or be exempt fr om having to pay impact fees for the same type of facilities. Fair share assessments made at zoning but not yet collected at the time of the effective date of the impact fee ordinance (beca use the property had not yet been subdivided) would become void; instead of paying fair share assessments, the prope A major difference is that impact fees would be assessed on all nonresidential development and residential de velopment in areas with existing zoning. Lots in Older Subdivisions One of the reasons for the failure of the previous impact fee initiative in 1990 was the lack of su for assessing owners of individual residential lots. The Island of HawaiÔi has many buildable lots in older subdivisions that have not been fully develope d. Many of these subdivi sions were created in the 1950's and 1960's prior to the comprehensive sub division code that was adopted in 1967. The perception is that many of these lots are owned by local residents who have owned them for years with the expectation that one day they would build a home on them. The fear is that imposition of impact fees at the building permit level may hurt this opportunity. De could be a major source of the islandÔs affordable ho using. The current fair share system addresses this concern by only charging developers who require rez oning, but at the cost of generating very little revenue for needed capital improvements. There are two reasonab issue in the context of an impact fee system. One approach is to allow one dwelling unit to be built on an exi impact fee. The impact fees would be collected prior to securing final subdivision approval for si family lots, while collection of fees for multi-family and nonresidential developments would be deferred, with interest, and collected at the time of building pe rmit. The fees for existing lots of record on the effective date of the impact fee ordinance would be collected at time of building permit, except for the first dwelling unit to be built on the lot, which woul d be exempt from the fee. Developments that were assessed and had paid fair share assessments would receive credi An alternative would be to give owne rs of existing lots of record a grace period during which they could build without having to pay the fees . Such a transitional provision wo uld ensure that owners of lots in older subdivisions with imminent plans to devel op would not have their opportunity to build a home impaired by a new fee. The amount of time given to owners of existing lots to build would be a policy issue for the County. When to coll ect the fee (e.g., at subdivision or building permit) could be t as in the first alternative. H Ô C \I N A ÐP A M January 5, 2006 , Page 12 AWAI I OUNTY NFRASTRUCTURE EEDS SSESSMENT OLICY NALYSIS EMORANDUM