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HomeMy WebLinkAboutCOM 0653.000 2004-2006 Hawaii State Association of Counties Counties of Kauai, Maui and Hawaii, City 8. County of Honolulu _ p Q r w~` P~ r;z J January 24, 2006 f0: Council Mcmbcrs County of 1 Iawai`i PROM: Stacy K. Higa, Vice Chair [fawai`i State Association of Counties SUI3.IF,C~C School Impact Fce Working Group Attached for yoty review is material on the School Impact Fee Working Oroup. which was distributed by 1 [SAC President Dain P. Kane at the IiSAC Executive Committee meeting held on January 18, 2006. '['he Working Group teas established by the Legislature through Act 246 in order to study the school impact fee issue. HSAC President Kane is one of 10 members on the Working Group. The only other county representative on the Working Group is a designee of Honolulu Mayor Mufi Hannemann. HSAC President Kane has requested feedback from county council members on the Working Group's efforts. If you have any comments, please submit them to him at the Maui County Council or to me. "thank you for your attention. SKH/daw Attachment cc: Dain P. Kane, [ISAC President w/o attachment Corrrm. No. ~S3 Ref. To: I _ " 1 Ref. Uate ~ 4 ~~PC I U U December 21, 2005 MEMORANDUM TO: School Impact Fees Working Group Members FROM: Jan K. Yaman~Administrative Deputy Auditor/In-house Counsel SUBJECT: Second Working Group Meeting The agenda and distribution for the School Impact Fees Working Group Meeting on Wednesday, December 28, 2005 aze enclosed. Please brine the distribution with You to the meetine, includine the red binders provided at the first meetine. Duplicate materials will not be provided. We expect the meeting to run about two hours: • If you aze driving to town for the meeting, mileage reimbursement forms will be provided at the meeting. Also, pazking passes have been provided in this packet for those members whose off ces aze located outside of the Civic Center azea. If you need a pazking pass and have not received one, please contact our office no later than Friday, December 23, 2005. • If you aze traveling from the Neighbor Islands, please plan your flight schedule accordingly. You will be reimbursed for airfare, cab faze to and from the airport in Honolulu, as well as pazking fees and mileage on your home island. In lieu of per diem, a meal allowance will be provided. Finally, please brine your calendar to the meetine as we intend to plan future meetings. If you have any questions or cannot attend the meeting, please call Mrs. Pat Mukai, Secretary, or Ms. Jan Yamane, Administrative Deputy Auditor/In-house Counsel, Office of the Auditor, at 587-0800. Mahalo for your participation and commitment to this important project. We look forward to seeing you at the meeting. School Impact Fee Working Group Agenda Date: Wednesday, December 28, 2005 Time: 10:00 a.m. Place: Conference Room 225 State Capitol 415 South Beretania Street Honolulu, Hawaii I. Call to Order, Public Notice, Quorum II. Chair's Report a. Announcements, Introductions, Correspondence, and Additional Distribution b. Minutes of Previous Meeting III. 2006 Legislature a. School Impact Fee Working Group Report to the 2006 Legislature b. School Impact Fee Working Group Legislative Requests IV. Consultant Contract V. Planning a. Next Meeting VI. Adjournment Individuals who require special needs accommodations are invited to call Jan K. Yamane, Administrative Deputy Auditor, at 587-0800 at least 4 working days in advance of the meeting. c , School Impact Fee Working Group (Established pursuant to Act 246, SLH 2005) 1. President of the Senate (Designee) Senator Norman Sakamoto Hawaii State Capitol 415 S. Beretania Street, Room 230 Honolulu, HI 98813 Phone: (808) 586-8585 Fax: (808) 586-8588 Email: sensakamotoCD.caoitol.hawaii.aov 2. Speaker of the House of Representatives (Designee) Representative Roy Takumi Hawaii State Capitol 415 S. Beretania Street, Room 444 Honolulu, HI 96813 Phone: (808) 586-6170 Fax: (808) 586171 Email: reotakumiCrt?caoitol.hawaii.aov 3. Mayor of the CIty and County of Honolulu (Designee) Austin Y. Imamure, CEO Pacific Rim Bank (mailing address) (street address) P. O. Bax 240853 500 Ala Moana Boulevard, Suite 2A Honolulu, HI 96824-0853 Honolulu, HI 96813 Phone: (806) 585-9600 Fax: (808) 585-9600 (same as phone line) Email: austinCdioacificrimbank.com or ayiphiQaol.com 4. Superintendent of Education (Designee) Rae Loui, Assistant Superintendent Office of Business Services Queen Liliuokalani Building, Room 406 1390 Miller Street Honolulu, HI 96813 Phone: (808) 586-3444 Fax: (808) 586-3445 Email: rae loui~notes.kl2.hi.us Or Randy Moore Project Manager Department of Education Queen Liliuokalani Building, Room 321 Honolulu, HI 96813 Phone: (808) 586-3430 Fax: (808) 586-3429 Email: randy moorefRnotes.kl2.hi.us iz-ts-0s a 5. Executive Director of the Land Use Commission Anthony Ching, Executive Officer State Land Use Commission (mailing address) (street address) P.O. Box 2359 235 S. Beretania Street, Room 406 Honolulu, HI 96804-2359 Honolulu, HI 96813 Phone: (808) 587-3826 Fax: (808)587-3827 Email: achingCo)dbedt.hawaii.gov 6. President of the Hawaii State Association of Counties Dain P. Kane, President Hawaii Association of Counties Go 200 South High Street, 7"' Floor Wailuku, HI 96793 Phone: (808) 270-7760 Fax: (808) 270-7686 Email: dain kane co.maui.hi.us 7. Department of Education employee or consultant whose primary area of responsibility is repair and maintenance, capital Improvement projects, land use planning, or any other relevant field, to be appointed by the Superintendent of Education Duane Kashiwai, Public Works Manager Kalanimoku Building, Room 501 1151 Punchbowl Street Honolulu, HI 96813 Phone: (808) 586-0430 Fax: (808)586-8223 Email: duane kashiwait7Dnotes.kl2.hi.us 8. Principal or Complex Area Superintendent to be appointed by the Superintendent of Education Patricia Park, Complex Area Superintendent Central Oahu District Office Mililani Technology Park Leilehua Building 300 Meheula Parkway, Suite 50 Mililani, HI 96789 Phone: (808) 627-7480 Fax: (808) 627-7479 Email: patannparkCWaol com 9. Executive Director of the Land Use Research Foundation Dean Uchida, Executive Director Land Use Research Foundation of Hawaii 700 Bishop Street, Suite 1928 Honolulu, HI 96813 Phone: (808) 521-4717 Fax: (808)536-0132 Email: duchida(a1lurf.org z 12-19-05 s 10. One member of the development community to be designated by the Executive Director of the Land Use Research Foundation Bob Bruhl, Director of Acquisitions and Forward Planning D.R. Horton, Schuler Division, Hawaii 828 Fort Street Mall, 4"' Floor Honolulu, HI 96813 Phone: (808) 521-5661 Fax: (808)521-1476 Email: rbruhlCo drhorton.com Office of the Auditor 1. Marion M. Higa, State Auditor Office of the Auditor 465 S. King Street, Room 500 Honolulu, HI 96813 Phone: (808) 587-0800 Fax: (808)587-0830 Email: mmhiaaCdtaloha.net 2. Jan K. Yamane, Administrative Deputy Auditor Office of the Auditor 465 S. King Street, Room 500 Honolulu, HI 96813 Phone: (808) 587-0800 Fax: (808)587-0830 Email: ivamaneCci)auditor.state.hi.us 3. Pat Mukai, Secretary Office of the Auditor 465 S. King Street, Room 500 Honolulu, HI 96813 Phone: (808) 587-0800 Fax: (808)587-0830 Email: pmukaiCtl7auditor.state.hi.us 3 12-19-05 School Impact Fee Working Group (Established by Act 246, Session Laws of Hawaii 2005) State of Hawaii www.state.hi. us/auditor Minutes of Meeting The agenda for this meeting was filed with the Office of the Lieutenant Governor, as required by Section 92-7(b), Hawai'i Revised Statutes. Date: Friday, December 9, 2005 Time: 10:00 a.m. Place: State Capitol 415 South Beretania Street Conference Room 225 Honolulu, Hawai i Present: Senator Sakamoto, President of the Senate Designee Austin Imamura, Designee for the Mayor of the City 8 County of Honolulu Randy Moore, DOE, Superintendent of Education Designee (in place of Rae Loui) (late arrival) Anthony Ching, Executive Director, Land Use Commission Dain Kane, President of the Hawai i Association of Counties Duane Kashiwai, DOE Employee whose primary area of responsibility is repair and maintenance, capital improvement projects, and land use planning Patricia Park, DOE, Central Oahu Complex Area Superintendent Dean Uchida, Executive Director, Land Use Research Foundation (late arrival) Bob Bruhl, Development Community Member Marion M. Higa, State Auditor Jan Yamane, Administrative Deputy Auditor/ln-House Counsel, Office of the Auditor Pat Mukai, Secretary, Office of the Auditor Ralph Portmore, Group 70 International Anna Liza Gavieres, SMA Jake Ng, Senator Sakamoto's office Absent: Representative Roy Takumi, Speaker of the House of Representatives Designee Call to Order: Member Sen. Sakamoto called the meeting to order at 10:07 a.m., at which time quorum was established. Introductions: School Impact Fee Working Group members and Office of the Auditor staff introduced themselves: Norman Sakamoto, Chair of Education b Military Affairs Committee Anthony Ching, Executive Director of Land Use Commission Pat Mukai, Secretary, Office of the Auditor Jan Yamane, Administrative Deputy Auditodln-House Counsel, Office of the Auditor Marion M. Higa, State Auditor Duane Kashiwai, DOE Pat Park, DOE Complex Area Superintendent Bob Bruhl, Executive Management Team, D.R. Horton-Schuler Homes Austin Imamura, Pacific Rim representing Honolulu City Council Dain Kane, HSAC, Maui Councilmember 1 Member Sen. Sakamoto asked whether Dean Uchida (LURE) would attend. Ms. Yamane stated yes. Rae Loui (DOE) was also supposed to attend. Member Sen. Sakamoto decided to proceed with the meeting. He asked whether members had reviewed the legislation. He summarized concerns raised during the last legislative session. In general, the developer community is looking for consistency in how funds and land get allocated to the schools. Currently there's the Land Use Commission, county processes, various state agencies, and county agencies that have other priorities besides schools. From the department's perspective or the public's perspective, how can we get to a better place where schools can be constructed. From the developer's perspective, they're looking for certainty in the process. Both sides are looking for fairness. The intention of this legislation was to having the respective parties appoint people so this working group would consist of counties, state, developers, and DOE. Member Sen. Sakamoto asked for comments or questions. Member 8ruhl asked about the Act itself. One of the overall objectives is to make recommendations that would be presented 20 days prior to the commencement of the Legislature, which starts in January. Member Sen. Sakamoto clamed that the Regular Session of 2006 begins on January 18, 2006. (Mr. Randy Moore arrived at 10:07 a.m.) Member Bruhl asked whether the Working Group needs to amend the charter or do we recognize that we are not going meet that deadline and set a new goal for ourselves? Member Sen. Sakamoto referred Member Bruhl to further down the agenda, item VIII, regarding the Working Group's report to the Legislature. He deferred to the Auditor's Office for an explanation on report procedure. Member Sen. Sakamoto asked Mr. Moore whether he was going to be the permanent member in lieu of Ms. Lout. Mr. Moore replied that he would be taking her place for this meeting. Member Moore was asked to introduce himseH: Randy Moore, Project manager for Act 51 (works in the Superintendent's office). Member Sen. Sakamoto asked the Auditor's Offx;e to give some background on where we are and how to proceed. State Auditor Higa stated that from Act 246, the Office of the Auditor has been assigned responsibility and administration of the Working Group. There are also appropriations that the Working Group may use in the event a contractor is engaged. State Auditor Higa then went over some housekeeping matters, including updating contact information and adjustments in our staffing. Ms. Yamane stated that Member Park provided a new a-mail address, which is her preferred address. State Auditor Higa continued with additional housekeeping matters, including member reimbursement for expenses and Capitol parking. She also explained that the Working Group meetings will be conducted under the Sunshine Law, Chapter 92 of the statutes. She asked Ms. Yamane to go over some of the overall principles and how it impacts the Working Group. Ms. Yamane explained that the Sunshine Law is Chapter 92 of Hawai i Revised Statutes. The principle involved is open government. This public policy protects the people's right to know. She explained the Sunshine Law's legal requirements, including posting and filing agendas, taking minutes, and prohibitions on member interactions on agenda items outside of the public meeting. Ms. Yamane indicated that she would assist with guiding the Working Group so as not to violate Sunshine. State Auditor Higa added that the Sunshine Law requires a quorum to do business (6 of 10 members) and a majority of members to make decisions (6 of 10 members). Under a strict interpretation of Chapter 92, if the Working Group loses quorum, the meeting should be stopped until quorum is resumed. Members were asked to notify the Office of the Auditor if they cannot attend the meeting. With only 10 members, every member counts. To add an item to the agenda, the Working Group needs a two-thirds vote (7 of 10 members). 2 State Auditor Higa also mentioned that the Act 246 appropriation will be used to engage a consultant. Further, the law albws the Working Group to procure the consultant outside the procurement code. Contracting with a consultant will be up for discussion today. Ms. Yamane responded to Member Bruhl's question of the form of the report to be submitted to the Legislature 20 days prior to session. One way to handle it would be to send a letter explaining where the Working Group committee is in terms of its process -the Working Group would forward the letter to the Legislature and explain its intention to continue to work through session. State Auditor Higa added that Member Rep. Takumi was appointed by the Speaker of the House to be the House's representative on the Working Group. He is currently out of town and could not attend today. Member Moore asked whether Chapter 92 prohibits the three DOE members from discussing what is the appropriate DOE approach or response. Ms. Yamane clarified that the three DOE members cannot discuss agenda items, especially votes about those items. Member Moore asked how the DOE can come up with a coherent perspective. Ms. Yamane restated that discussions among DOE employees cannot violate Sunshine. Member Kashiwai stated that collecting data and compiling information on issues by DOE members would not be a violation. State Auditor Higa reiterated that if a consultant comes back with its report, makes recommendations on what the Legislature or the department ought to do, and if at some point it does become an agenda item requiring a vote, then this is where the three DOE members could not discuss the department's vote, or what the respective votes would be as members of the working group. The issue could be clarified by the Office of Information Practices (OIPj. Member Moore continued to raise concerns about disparate positions coming from the department. Further Sunshine Law discussion among members continued. Member Park asked whether the DOE members are representing themselves as employees of DOE or representing the DOE. Ms. Yamane stated that, according to the Act, DOE employees are designated to represent DOE interests in various areas. Member Bruhl asked who are the voting members. State Auditor Higa said that each member of the working group has a vote. Member Sen. Sakamoto asked other members for input. Member Ching suggested that DOE could designate two members as non-voting. Member Councilmember Kane reiterated that DOE members are brought in for their expertise in a specific area for the overall department. Therefore, their vote is based on expertise and what each member thinks is the best conclusion based on facts and analysis. DOE members do not discuss their votes. There is a lot of flexibility for members to provide information. if the intent is to get three votes and make sure you all stick together and vote the same way, this is where the Sunshine Law protects the public's right to know. Member Sen. Sakamoto told members to vote when the time comes. If further advice is needed, the Working Group may turn to a deputy attorney general or the OIP. Election of Upon a motion by Member Councilmember Kane, seconded by Member Park, it was voted on Chair: and unanimously carried to open nominations for Working Group Chair. Member Sen. Sakamoto asked for nominations for the Working Group Chair. Member Councilmember Kane nominated Member Sen. Sakamoto. Upon a motion by Member Councilmember Kane, seconded by Member Park, it was voted on and unanimously carried to close nominations for Chair. 3 Upon a motion by Member Councilmember Kane, seconded by Member Kashiwai, it was voted on and unanimously carried to elect Member Sen. Sakamoto as Chair of the Working Group. Orientation: Chair Sakamoto then called upon Ralph Portmore, Group 70 International, to provide an orientation on the 2001 School Fair Share Contribution Study. (Member Uchida arrived at 1034 a.m.) Mr. Portmore said that the 2001 study was co-authored by Group 70 International and Duncan Associates, a firm that specializes in school impact fee studies. He handed out the statements of the purpose of the study and of the findings. The first study on impact fees in Hawai i was conducted by the Land Use Research Foundation in 1992. The 2001 study got into the specifics of education impact fees and was recommended at the behest of the Land Use Commission (LUC) and developers. The study came up with specific recommendations for 2 separate bills: 1) to establish a land dedication requirement; and 2) to establish an impact fee related to school construction. After the study was completed, both the development community and the LUC wanted to keep things status quo. So, there was a concern to change the process and that's what initiated that bill that led to the study in 2001. But at the end of the process, the concern went away and that's why there was no follow-up. In 2001, when the initial study was started, business was bad and the LUC was heavily involved with ail kinds of negotiations. By the end of the study, the community had fewer problems paying the fees and the LUC had come up with a solution, a mechanism that said they will negotiate any fee in lieu after its decision. There is a concern about the consistency and fairness. So, this led to a second study. Act 262, the original enabling legislation, and the study summarize the possibilities. Mr. Portmore indicated that there is no need to start at the beginning of the process. Rather, the Working Group could re-visit the options, which are fairly constrained because there is extensive legislative history on what these fees can and cannot do. Act 246 calls for a test case study for Central Oahu and asks what it would actually look like. Roundtable Member Councilmember Kane asked whether. 1) the concern was driven by economic issues Interaction: and 2) the process might strive for more stability. Mr. Portmore stated the process could be setup in a very precise way. Everybody would know and agree that it's fair. In Mr. Portmore's opinion, the original legislation happened when developers were feeling the pinch. By the time the bill passed and the 2001 study was completed, developers were doing well and they were okay with paying the fees and dedicating the land. The process is complex and we don't know whether it would incur higher costs. Fees can be very extensive. Member Ching stated that he is anon-voting member of the commission and that he does not speak for the commission. He asked about the concern by the LUC. Mr. Portmore said that the law was passed around 1998, so the movement began a few years prior to 2001. Member Ching asked for clarification on the LUC's position at that time, to the best of Mr. Portmore's recollection. Mr. Portmore indicated that he didn't have specifics. The initial bill was driven by concerns by both the LUC and the development community. The effort and resources-the time that was required to negotiate agreements on a case by case-were all raised as concerns. Member Uchida asked Mr. Portmore whether the study was done at the request of the developers. Mr. Portmore referred to the report, which stated that the bill was passed in response to concerns raised by developers. Member Uchida asked whether the DOE was the one that worked with Duncan Associates, to which Mr. Portmore responded in the affirmative. The recommendation at the end of the report was to not move forward. Part III of the effort-which involved presenting recommendations to the community and the Legislature-was cancelled. Chair Sakamoto summarized that the manner in which assessments are made can lie improved. The challenge for the Working Group is how to move forward in light of the study. Chair 4 Sakamoto asked whether the group should hire another consultant. Member Councilmember Kane referred back to Act 246, stating that the group would have to submit something to the Legislature 20 days prior to session. An extended period of time to work should Ue considered. It would be unrealistic to think that the Working Group could come up with recommendations by then. Member Bruhl commented on the number of assumptions made that lead to important numbers. For example, did all enrollment statistics have a weighing impact on credits or on the costs per student ratio? If in Kapolei, Ewa, or Mililani, if you have 100°~ or 125°k capacity, how are the numbers calculated? Other mature areas might need different calculations. This is a larger CIP issue. Mr. Portmore responded that the study only deals with funding. The formula tries to reflect the conditions in each area in terms of growth and in terms of costs. But, to construct schools for new student enrollment, it's clear in the law you cannot raise funds, that is, collect funds from developers with new developments to build and fix up deficiencies for new students. Member Park asked how Central Oahu is defined. Mr. Portmore replied that it combines part of Leeward, Wahiawa, and Waialua. Member Moore asked whether there any reasons not to go forward with Group 70's 5-year old study and simply update numbers. Member Uchida expressed that the whole issue needs to be evaluated. In Hawaii, there is growth in certain areas around the state, but the overall enrollment has been about the same for the last 20-30 years. So, the question is, given that the overall enrollment is about the same, are impact fees the right tool to use to accommodate this growth which is a redistribution of population. Other models on the mainland are based on growth. Florida and Colorado have student projections of 20,000-30,000 for the next 10 years. Hawaii isn't like that. We have pockets of high growth and others where it's declining. The group should consider the whole package and not only where growth occurs. Member Uchida asked whether there is any place on the mainland with similar patterns, and if so, can Hawaii borrow from them. Chair Sakamoto summarized that one optbn is to update, not redo. Member Ching suggested that the Working Group identify the issue areas that need greater clarity. He further suggested that a study should be about implementing and understanding the roadblocks and why implementation hasn't occurced. Member Ching offered some principles. First, the role of the LUC needs ctarfication. Member Imamura favors simplicity. Member Ching wondered where to cut off the swpe of contribution. Member Councilmember Kane referenced many of the discussion topics and comments back to Act 246, pages 5-B. He offered that the Act states the functions of the Working Group and directs it to consider specific issues. Member Uchida stated that Duncan Associates was just hired by the County of Hawai i to look at their island-wide impact fee. Chair Sakamoto asked the Working Group how it desires to move forward. Member Councilmember Kane stated that there is a need to update the prior report. It's important for the Working Group to have somebody, whether internally or externally, to go through the report, and do the actual update. It needs to address where we are today versus where we were when this report was initiaNy completed. Member Uchida stated that the prior study didn't look at closing existing schools. 5 Member Councilmember Kane asked for a clarification from the Auditor on the level of resources. Are there internal resources or will everything be contracted out with the 5150,000 appropriation? State Auditor Higa replied that her office does not have that kind of expertise. Member Councilmember Kane asked about DOE's current practices. Wiil someone from DOE inform this body of practices today that are different from other practices done 4-5 years ago? Is there a goal we need to be aware of7 Member Kashiwai indicated that that the DOE members can consolidate their information. Current DOE practices are based upon the 2001 study. Chair Sakamoto requested that DOE provide what it has done and what It has asked for. The group doesn't need a consultant for that portion of the work. Do counties use DOE projections? Member Councilmember Kane responded that, historically, there have been problems. There needs to be better correlation and a collaborative effort to get things moved through to development and education. Chair Sakamoto asked whether various counties compare their previous general plans or projections with reality and how good are the planning projections? Member Councilmember Kane responded that hls charter will require revision of general plans every 10 years. Member Bruhl added that there are a combination of factors. General plans provide for general growth. In the case of the Ewa deveopment plan, there are population projections. So, for the population projections, there are certain areas that are being developed under certain land uses, whether R be single family, higher density, commercial, or residential. They can make general calculation based on that. Chair Sakamoto asked to what extent is the developer/community actually able to calculate a student impact? Member Bruhl stated that developers would contact facilities. They would go in and present the plan for the area, with projected density, and the DOE would tell the developer what the impact would be in terms of number of schools. Member Bruhl was recently provided with ratios of .273 students/per single family home, but doesn't know where those numbers come from. Chair Sakamoto asked whether the process is working. Member Bruhl responded that data is needed for aneeds-based assessment. A comprehensive needs-based assessment involves more than just growth projections. Member Uchida offered that developers of Waiawa and Koa Ridge can be asked to come in and lay out their plans for the area. Member Ching urged caution. For example, Waiawa is entitled, but not built. Although there were expectations that ft would be built at a particular point in time, that hasn't happened. Chair Sakamoto indicated that the state is trying to get moneys out of the development community to the greatest extent possible The state wants to build schools. Chair Sakamoto concluded that for the case study, the Working Group should engage a consultant. Member Councilmember Kane offered that it would be appropriate to have a neutral consultant come in and provide an outside approach. Member Imamura wants to find a simple process. For example, California has a bedroom tax. The tax is tied to the number of bedrooms. So, if you have 4 bedrooms, the presumption is that the owner have kids. Fora 4-bedroom, they pay 51,000. There's no distinction between different types of 4-bedroom dwellings. If you have development in new area, it's going to be problematic. The extent of the development and the numbers will determine what is being paid for in that area. Member Moore stated that the department has a constitution and a moral and statutory responsibility to provide public education. It's not the department's responsibility to raise moneys for public education. It's the department's responsibility to spend moneys effectively. 6 Chair Sakamoto stated that one purpose of the Working Group is to lessen the department's burden to haggle with the developer. Member Moore agreed. Planning: Chair Sakamoto asked State Auditor Higa for suggestions on how to proceed. State Auditor Higa proposed two items for decision. First, the group needs to decide on some response to the Legislature to meet the 20-day requirement. It can be accomplished simply by letter, informing President/Speaker that the group has met and is still discussing the issues. Second, if the group decides to engage a consultant, it would be helpful to have the parameters for that contract Member Councilmember Kane reminded the group of the specificity of Act 246, which directs the Working Group to conduct a case study. It nicely provides these parameters for that. State Auditor Higa added that the Working Group is not subject to the procurement code. The way the Office of the Auditor approaches any kind of contractual obligation is to set out specifications for proposers. She offered to prepare a draft of what specifications might look like, taking into consideration today's discussion, and the legislation. The group could then work off of that draft. State Auditor Higa offered the Working Group to draft a letter for the Working Group's approval and vote and a description of what you would like !o have the consultant cover. She suggested that the Working Group have adecision-making meeting and consider a draft. Member Bruhl stated his concern that the study will be limited to new development. The needs assessment should consider what is truly needed by the state, DOE, not by Central Oahu. Member Bruhl agrees with a comprehensive planning effort. The most important factors are the variables DOE uses today, which are based on the number of students per home. Statewide or island wide numbers need to be considered. Future Member Chair Sakamoto began planning for the neat meeting. State Auditor Higa suggested Meetings: that the meeting be on December 28, 2005. The next meeting was scheduled for: Date: December 28, 2005 Time: 10:00 a.m. Place: State Capitol, Conf. Rm. 225. Adjournment: Wtth no further business to discuss, the Chair adjourned the meeting at 72:06 p.m. Reviewed and approved by: Jan Yamane Administrative Deputy Auditorlln-House Counsel December 2005 [ ] Approved as circulated. [ ] Approved with corrections; see minutes of meeting. SIFWGI120905 7 DRAFT CONTRACT THIS AGREEMENT, made this _day of , 2006, by and between the STATE OF HAWAII, by its Auditor, Marion M. Higa, hereinafter referred to as the "STATE" and the "STATE AUDITOR," respectively, and CConsultant name], whose business address is [Consultant address], hereinafter referred to as the "CONSULTANT," WITNESSETH THAT: WHEREAS, Section 10, Article VII, Constitution of the State, and Chapter 23, Hawaii Revised Statutes ("HRS"), require the STATE AUDITOR to conduct post-audits. and to conduct such other investigations as may be directed by the State Legislature of the State of Hawaii; and WHEREAS, under Act 246, Session Laws of Hawaii ("SLH") 2005, the Hawaii State Legislature established a School Impact Fee Working Group (Working Group), to be administratively attached to the STATE AUDITOR, to prepare the scope of work for an updated overview of alternative financing methods for construction of new and expanding existing educational facilities, a needs assessment study using central Oahu as the case study, and development of specific recommendations to implement methods for financing that may include legislation, county ordinances, and agency and commission rules and regulations; and WHEREAS, Act 246, SLH 2005, provides that the Working Group may advise the STATE AUDITOR in the negotiation and execution of a contract or contracts with one or more consultants, for-profit and non-profit organizations, private entities, corporations or any combination [hereof; and WHEREAS, Act 246, SLH 2005, directed the STATE AUDITOR to facilitate operation and administration of the Working Group, including gathering, synthesizing, and disseminating information among key stakeholders, researching, and drafting meeting minutes, the report to be submitted to the Legislature, and any proposed legislation, county ordinances, and agency and commission rules and regulations to enable the Legislature to carry out its responsibilities under the Act; and WHEREAS, the Legislature authorized the STATE AUDITOR to engage a consultant or consultants, oversee the work of the consultant(s), and administer the contract of the consultant(s); and [Include language if consultant is Group 70; omit if other consultant] [WHEREAS, in 2001, the CONSULTANT, with Duncan Associates, prepared the report entitled "School Fair Share Contribution Study" for the STATE Department of Education; and] WHEREAS, the CONSULTANT has had considerable experience in conducting such case studies and is capable of performing the services required under this contract; and 1 WHEREAS, the Legislature authorized the STATE AUDITOR to procure the services of the CONSULTANT without regard to Chapter 103D, HRS, as authorized by Section 2, Act 246, SLH 2005; and WHEREAS, Section 4, Act 246, SLH 2005, appropriates funds to the office of the STATE AUDITOR for the purposes of this Act, and the cost of consultant services under this contract is to be paid from funds thus appropriated; NOW, THEREFORE, the CONSULTANT agrees to perform such services as are hereinafter set forth, and the STATE, in consideration thereof, agrees to pay the CONSULTANT such amounts as aze hereinafter specified, all upon the following teens and conditions: 1. Scope of Work. (a) The CONSULTANT shall perform an analysis of the salient issues, which shall include but not necessarily be limited to an investigation and evaluation of: i. Examination of the background of the salient issues, including but not necessarily limited to an investigation and evaluation of: (i) The 2001 Group 70 International and Duncan Associates report entitled "School Fair Shaze Contribution Study" and its relevancy today; (ii) The 1992 study entitled "Impact Fees in Hawaii: Implementing the State Law" and its relevancy today; (iii) The differing school facility infrastructure needs posed by: a. Infill and new development; b. Condominium, duplex, detached single-family homes, and other types of construction; and c. The varied market prices tazgeted by differing types of developments; (iv) Various funding mechanisms and other best practices utilized by other jurisdictions nationwide; (v) Current practices engaged in by the STATE Department of Education to assess and collect fair-share contributions and any other relevant means of resource acquisitions; (vi) Potential means of funding, including: a. Impact fees assessed through calculations of proportionate shares of overall development costs; and b. Any other means as may be deemed appropriate by the Working Group; and (vii) How to improve the STATE Department of Education projections for future facilities to be better aligned with various county plans and priorities; and ii. Conduct a case study, using central Oahu, on how these issues and proposals may affect a specific, contiguous geographic azea that is slated for ongoing, complex, and varied development that will probably result in the need for increased STATE Department of Education facility capacity. The case study shall include a "needs assessment" which shall at a minimum include: 2 (i) Developing service and facility standards; (ii) Identifying and projecting needs for capital facility capacity; (iii) Defining current deficiencies or excess capacity in existing capital facilities; (iv) Separating the capital costs of new growth and development from existing capital needs; (v) Estimating capital costs on aper-unit-of-demand; (vi) Apportioning the capital costs of new development to various types of land use; (vii) Calculating credits for past and future tax payments towazd capital facility capacity; and (viii) Developing legislation, ordinances, and rules or regulations containing policies and procedures for impact fee assessment, collection, administration and appeals; and iii. Provide the Legislature, counties, and other interested public and private entities with measurable, specific deliverables which may include but not necessarily be limited to: (i) New or revised statutes; (ii) New or revised ordinances; and (iii) New or revised STATE Depaztment of Education procedures for consideration and possible approval by the STATE Board of Education. (b) The CONSULTANT'S analysis will be conducted for Fiscal Yeaz 2005-06. 2. Deliverable. The CONSULTANT'S major final product will be a report examining the STATE Department of Education's practice of assessing fair share contributions and detailing items i, ii, and iii in paragraph 1. The report will contain three major sections: i. An updated overview of alternative financing methods for construction of new and expanding existing educational facilities, including analysis of how school districts accommodate growth in student population and redistribution of student population; ii. A needs assessment study using central Oahu as the case study; and iii. Specific recommendations, based on the research and needs assessment, to implement methods for financing new or expanding existing STATE Depaztment of Education educational facilities, which may include but not be limited to proposed legislation, county ordinances, and agency and commission rules and regulations. 3. Commencement and Completion Dates, The CONSULTANT will be given notice to proceed immediately upon execution and certification of this contract. The following deadlines governing the performance of the contract shall apply: Commencement of analysis January 20, 2006 Completion of school impact fee analysis April 7, 2006 Final report Apri121, 2006 3 4. Conduct. From time to time during the course of the CONSULTANT'S work, upon the request of the STATE AUDITOR, the CONSULTANT shall inform the STATE AUDITOR of the progress made in the performance of its work. 5. Pavment. The STATE shall pay to the CONSULTANT for the services rendered under this contract a fee, including all out-of-pocket expenses and the Hawaii general excise tax, not to exceed [FILL.IN DOLLAR AMOUNT] DOLLARS for Fiscal Yeaz 2005-06. The fee does not include any work beyond the scope of work specified in this contract. Additional services required, such as testifying or speaking on the results, shall be compensated for as provided in paragraph 6. The CONSULTANT shall be paid NINETY-FIVE PERCENT (95%) of the amount billed, and the remaining FIVE PERCENT (5%) shall be withheld by the STATE; provided that, after the cumulated billings have totaled [FILL IIV DQI:LAR AMOUNT] DOLLARS ($L,,_]), the CONSULTANT shall be paid ONE HUNDRED PERCENT (100%) of the amount subsequently billed, if in the judgment of the STATE AUDITOR, the CONSULTANT'S performance under this contract is satisfactory. If, however, the CONSULTANT'S performance is not satisfactory, the STATE may continue to withhold the remaining FIVE PERCENT (5%), in the amount of [FILL IN DOLLAR AMOUNT] DOLLARS ($L,_]), until in the judgment of the STATE AUDITOR the CONSULTANT'S performance under this contract is satisfactory. All withheld amounts shall be paid the CONSULTANT only after the CONSULTANT has satisfactorily completed the work required under this contact and has submitted, as provided in Section 103-53, HRS, a tax cleazance from the STATE Director of Taxation, showing that all delinquent taxes levied or accrued against the CONSULTANT under state statutes have been paid. 6. Additional Services. The STATE AUDITOR may request the CONSULTANT to extend the scope of the work. No such additional services, however, shall be performed by the CONSULTANT until a written authorization is received from the STATE AUDITOR. Such authorization shall contain the additional scope of work to be performed and the additional compensation to be paid. 7. Contract Not Bindin¢ Unless Executed and Annropriation Available. This contract shall not be binding or of any force unless all parties hereto have fully and properly executed it and unless the STATE Comptroller has endorsed thereon his certificate that there is available an unexpended appropriation or balance of an appropriation, over and above all outstanding contracts to cover the amount required under this contract. 8. The foregoing constitutes the entire contract between the parties. No amendment to this contact shall be valid unless it is reduced to writing and signed by the parties. 9. This contract may be executed in any number of counterparts and by each of the parties to this contact in separate counterparts, all such counterparts together constituting but one (1) and the same instrument. 4 IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed as of the day and year first above written. OFFICE OF THE AUDITOR STATE OF HAWAII By Marion M. Higa State Auditor [CONSULTANT FIRM] sy [CONSULTANT NAME] s STATE OF HAWAII ) ss CITY AND COUNTY OF HONOLULU ) On this day of , 2006, before me personally appeared [Consultant], a [parh~er] in the [Consultant Firm], a Hawaii [Form of Consultant Firm], to me known to be the person described in and who executed the foregoing instrument and acknowledged that he executed the same as the free act and deed of the [Form of Consultant Firm]. Notazy Public, First Judicial Circuit State of Hawaii My commission expires: 6 DRAFT <Date> Letter to: President Robert Bunda Speaker Calvin Say Subject: School Impact Fee Working Group Report to the 2006 Legislature Deaz President Sunda and Speaker Say: Act 246 (Session Laws of Hawaii 2005) created the School Impact Fee Working Group ("Working Group") to assist the State Auditor with prepazation of the scope of work for: • An updated overview of alternative financing methods for construction of new and expanding existing educational facilities, including analysis of how school districts accommodate growth in student population and redistribution of student population; • A needs assessment study using central Oahu as the case study; and • Development of specific recommendations, based on the research and needs assessment, to implement methods for financing new or expanding existing Department of Education educational facilities, which may include but not be limited to proposed legislation, county ordinances, and agency and commission rules and regulations. As required by Section 3 of Act 246, the Working Group is reporting its progress to the 2006 Legislature prior to the convening of the Regular Session of 2006. The Working Group does not have findings and recommendations at this time but is in the process of engaging a consultant to carry out the research, case study, and development of specific recommendations. The Working Group hopes to engage a consultant by January 2006, with projected completion of the report by April 2006. The Working Group is composed of representatives of various stakeholder groups. $elow is a list of the ten members of the Working Group and their respective affiliations: Senator Norman Sakamoto (President of the Senate's Designee) Representative Roy Takumi (Speaker of the House of Representatives' Designee) Austin Y. Imamura (Mayor of the City and County of Honolulu's Designee) Rae Loui (Superintendent of Education's Designee) Anthony Ching (Executive Director, State Land Use Commission) Councilmember Dain Kane (President, Hawaii State Association of Counties) Duane Kashiwai (Department of Education employee whose primary azea of responsibility is repair and maintenance, capital improvement projects, ]and use planning, or any other relevant field, to be appointed by the Superintendent of Education) Patricia Park (Complex Area Superintendent to be appointed by the Superintendent of Education) Dean Uchida (Executive Director, Land Use Research Foundation of Hawaii) Bob Bruhl (One member of the development community to be designated by the Executive Director of the Land Use Research Foundation of Hawaii) The Working Group will keep the Legislature apprised of its progress. Should you have any questions or concerns about the school impact fee project, please do not hesitate to contact me at 586-8585, State Auditor Marion H. Higa, or her Administrative Deputy Auditor, Jan K. Yamane, at 587-0800. VTY, Senator Norman Sakamoto Chav School Impact Fee Working Group Cc: School Impact Fee Working Group Members Representative Roy Takumi Austin Y. Imamura Rae Loui Anthony Ching Councilmember Dain Kane Duane Kashiwai Patricia Pazk Dean Uchida Bob Bruhl Marion M. Higa, State Auditor 2 SB1814CD1 Page 1 of6 Report Title: DOE; Impact Fees Description: Establishes a school impact fee working group to perform an overview of alternative financing methods for school construction. (CDl) THE SENATE ~ B N O 1814 TWENTY-THIRD LEGISLATURE, 2005 S.D. 2 STATE OF HAWAII H.D. 2 C.D. 1 A BILL FOR AN ACT RELATING TO IMPACT FEES. BE IT ENACTED KY THE LEGISLATURE OF THE STATE OF HAWAII: SECTION 1. As residential development continues to proceed in the State of Hawaii at a s~eady pace to accommodate the growth of kamaaina families and ':he influx of newcomers, it becomes increasingly important that adequate infrastructure be developed to service this new censt~uction. While this includes such obvious elements as roads, wat~:r, sewage, telephone, cable television and Internet, and electric._ty, it also includes what is arguably the most important element, espec.i.ally as regards the future - school facilities. To da*.e, Eair share contributions have beer, collected by the department of education from individual development firms to defray a portion of the costs their new developments will have on the department of education. These resources, often in the form of cash and donated real estatF~, hsve traditionally been used to either improve and expand existing school facilities or to build altogether ?ew facilities. Both parties, the aepa tment of education (DOE) and the development community, would like o achieve a greater level of predictability t~~ fi Ie~UC ~\1)ocuments%20and%20Settines\D WATANABE\Local°io20Settines\Temoorarv%... 1 / 19/2006 SB ] 814 CD I Page 2 of b these arrangements. To this end, several impact fee measures were introduced during the 2004 and 2005 legislative sessions. It is the consensus of the stakeholders at this time, however, that more information needs to be gathered and more planning done to arrive at an. equitable solution satisfactory to all concerned parties. In 2001, the local planning organization Group 70, Inc. and Duncan Associates prepared a report entitled "Schocl Fair Share Contribution Study" which examined the existing department of education practice of assessing fair share contributions. Another report completed in 1992 entitled "Impact Fees in Hawaii: Implementing the State Law", provided some insight into the use of impact. fees for public facilities. These reports can serve as a basis upon which to build; however, they both neec; to be updated and a_n certain instances expanded. The purpose of this Act is to establish a school impact fee working group to prepare the scope of work for: (1) Ar, updated overview of alternative financing methods for construction of new and expanding existing educational facilities, including analysis of hoo, school districts accommodate growth in student population and redistribution of student population; (2) A needs assessment study using Central Oahu as the case study; and (3) Development of specific recommendations, based cn the r~;search and needs assessment, to implement methods fir financing new or expanding existing department of education educational facilities, which may include but not; be limited to proposed: (A) Legislation; (B) County ordinances; and (C) Agency and commission rules and regulations. SECTION 2. (a) 'Phere is established a school impact fee working group (working group), which shall be administratively attached to the office of the auditor. The working group may advise the office of tYe auditor in the negotiation ar.d execution of a contract or contracts with one or more consultants, for-profit and non-profit organizations, private entities, corporations, or any combination thereof to: F,o. rir.~r~„~,,,,,o„r~o/ ona„Ao/ ~nCPtt;nadrl W ATA NA RR\T.nnai%70~ettino¢lTemnnrarv%. 1 /19/^0(lfi SB 1814 CDl Page 3 of ti (1) Facilitate the operation and administration of the working group; (2) Facilitate information gathering, synthesis, and dissemination among key stakeholders; (3) Draft meeting minutes; (4) Conduct research; i (5) Graft the report to be submitted to the legislature; (6) Draft any proposed legislation, county ordinances, and agency and commission rules and regula3tions; and (7) Perform any other such functions as may be deemed necessary by the working group. The auditor shall have the primary responsibility for overseeing the work of and administering the contract or contracts of any consultant or consultants hired by the working group. Chapter 103D shall not apply to any contract. or contracts negotiated or executed under thi., Act. (b) The working group shall be composed of: (1) "he president of the senate or the president's designee; (2) 'Che speaker of the house of representatives or the speaker's designee; (3) ~gayor of the city and county of Honolulu or the mayor's designee; (4) The superintendent of education or the superintendent's designee; (5) The executive director of the land use commission or the executive director's designee; (6) The president of the Hawaii state association of coai~ties or the president's designee; (7~ A department of education employee or consultant whose primary area of responsibility is repair and maintenance, capital improvement projects, land use "^-`r`...,.,,~„+~°/7(land%20SettinQ~~AP WA"fANARF1T.Heal°rn20SetYinos\Temn~rarv°/n 1/lU~~l1(1F. SB 1814 CD 1 Page 4 of 6 planning, or any other relevant field, to be appoint=d by the superintendent of education; (8) A principal or complex area superintendent to be appointed by the superintendent of education; (9) The executive director of the Land Use Research Foundat_on or the executive director's designee; and (10) One member of the development community to be designated by the executive director of the Land Use Research Foundation. (c) The working group sh=311: (1) Examine the background of the salient issues, which shall include but not necessarily be limited to an investigation and evaluation of: (A) The 2001 Group 70, Inc. and Duncan Associates report entitled "School Fair Share Contribution S~udy" and its relevancy today; (e) 'the 1992 study entitled "Impact Fees in Hawaii: Implementing the State Law," and its relevancy today; (C) The differing school facility infrastructure needs posed by: (i) Infill and new development; (ii) Condominium, duplex, detached single-family homes, and other types of construction; and (iii) The varied market prices targeted by differing types of developments; (D) Various funding mechanisms and other Nest practices utilized by other jurisdictions nation-wide; (E) Current practice: engaged in by the 3epartment of education to assess and collect fair-share contributions and any ether relevant means of resource ~1~.)1!'•ATl,,..,....,,«...o/_'1M..AOL `1110 ~„~r~~V mm~win~rn~ __-tni -~n,. SB 1814 CD 1 Page 5 of 6 acquisition; (F) Potential means of funding, including: (i) Impact fees assessed through calculations of proportionate share:; of overall development costs; and (ii) Any o=her means as may be deemed appropriate by the working group; and (G) How to improve the department of education projections for future facilities to be better aligned with various county plans and priorities; (2) Conduct a case study, using central Oahu, on how these issues and proposals may affect a specific, contiguous geographic area ghat is slated for ongoing, complex, and varied development which will probably result in the need for increased department of education facility capacity. The case study shall include a "needs assessment.'" which shall at a minimum include the following: (A) Developing service and facila.ty standards; (B) Identifying and projecting needs for capital facility capacity; (C) Defining current deficiencies or excess capacity in existinc capital facilities; (D) Separating the capital costs of new growth and development from existing capital needs; (E) Estimating capital costs on a per-unit- of-demand; (F) Apportioning the capital costs of new development to various types of land use; (G) Calculating credits for past and future tax payments toward capital facility capacity; and file'//C''\I~nenmPnte°/~(lane/7l1Co»~„~~Anlx7nTnrrnnrnr ___io.~i~~. - ~ - SB1814 CDl Page 6 of 6 (H) Developing legislation, ordinances, and rules or regulations containing policies anti procedures for impact fee assessment, collection, administration and appeals; and (3) Provide the legislature, counties, and other interested public and private entities with measurable, specific deliverables which may include but not necessarily be limited to: (A) Ned or revised statutes; (B) New or revised ordinances; (C) New or revised department of education procedures for consideration and possible approval by the board of education. SECTION 3. The working group shall submit .its findings and recommendations, including any proposed legislation, to the legislature no later than twenty days prior .o the convening of the regular session of 2006. SECTION 4. There is appropriated eut of the general revenues of the State of Hawaii the sum of 5150,000, or so much thereof as may be necessary for fiscal year 2005-2006, for the operation of the working group. The sum appropriated shall be expended by the state auditor which shall oversee and administer any consultant contracts as may be executed or, behalf of the working group for the purposes of this Act. SECTION 5. This Act shall. take effect on upon approval, provided ghat section 4 shall take effect July 1, 2005; and provided further that this Act shall be repealed on July 30, 2006_