Concurrency, Community Facility Districts & Impact Fees

published 7.6.2010 in West Hawaii Today, with some subsequent edits.

Kona is at a quality of life crossroads.  Even in this economic downturn, developers are submitting subdivision plans.  Best guesstimates are 30,000 to 35,000 more homes could be built tomorrow that are currently allowed by zoning and approved subdivisions. Development will happen, so we need to preserve the quality of life for all of us who love our island life style.  Hawaii County’s Mitigation Toolkit must include more than just concurrency; we need approve an impact fee ordinance and to use Chapter 32-Community Facilities Districts.  The Hawaii County Code should have ordinances that provide a complete funding package of concurrency, community facilities districts (CFD) and impact fees.   An ordinance on concurrency would require that infrastructure is in place before new residents occupy homes.

The Code has  an ordinance (Chapter 32)  for community facilities districts (CFD)  to provide the funding to build the infrastructure. A CFD is created for the area that will be served by the infrastructure.  The county provides the bridge financing by floating a bond to help the developer pay for the roads, sewers etc.  The bond is paid by assessments on the new owner’s lots and paid by the properties that benefit from these services in payments over time. For example- a subdivision of 5,000 homes needs a sewer treatment plant, if the plant costs $50 million, the assessment is $10,000. per lot and usually paid along with property taxes. The developer should be required to provide adequate performance bonds to assure that the infrastructure is provided on time. The goal would be that existing residents are not impacted by higher taxes to pay for infrastructure for new residents.

The Code needs an ordinance for Impact Fees to be paid by new residents at the time they  purchase a house. Impact fees do not go into the general fund. They are a “per-roof” fee that pays for the infrastructure in the district where the fees are generated.  But if charges are due after the subdivision is complete, the money would help offset costs for the next subdivision and we end up with “infrastructure in arrears”, creating hardships for existing residents.  Average impact fees nationwide for single-family detached dwellings are $11,417 per year. This includes police, library, fire, general government, drainage, parks roads, sewers, water, schools ($4,704 per year) and non-utility uses.   In most states all categories of land use are charged that benefit from the infrastructure:  single family, multi-family, retail, office and industrial.  This information is available at http://www.impactfees.com/.

Developers are against concurrency because it adds to their up-front fees.   Developers borrow money to buy land, pay engineers to do the plans, have to borrow money to provide infrastructure and pay interest on the money they borrow.   They don’t see cash flow to pay expenses until the houses or lots are sold. Responsible development can only happen if laws are in place that outlines the developer’s responsibilities so they know what they are required to do before they buy the land. Here’s several examples of our unclear laws: 1) If the Planning Department does not comment on a plan within 90 days, the plan is deemed approved. The Planning Department should approve or disapprove plans and record any  conditions to “run with the land”. 2) Once subdivisions are approved, there is no expiration date or date to review. Subdivision plans should be reviewed periodically. 3) Developers do not know about their Fair share assessment costs until far into the subdivision process. Fair Share is a policy, not part of the Hawaii County Code. There is no surety for developers as to their costs or requirements, because the Planning Director decides.  There is no surety for existing residents because there are no public hearings and there are no recorded fair share assessment agreements to view to provide accountability. Since the Mayor is elected every 4 years, and the Mayor appoints the Planning Director, the parameters for Fair Share could change every 4 years. This lack of clearly written legislation does not facilitate responsible development. The Hawaii County code needs to be transparent and updated in all of these areas.

I believe it’s time to form an island-wide task force of Community Development Steering Committee Members to look at our development and subdivision codes and recommend updates and changes. This group could also learn about funding mechanisms and laws that are used elsewhere, make recommendations and introduce legislation in a complete package of funding mechanisms.  New residents who choose to move here should pay for the necessary increase in infrastructure by paying assessments and impact fees.  The quality of life of existing residents should not be impacted by traffic jams, packed schools, inadequate sewer plants or water systems or by higher taxes.  It’s time to update the Hawaii County Code  to facilitate responsible development for the 25,000 to 35,000 new homes that will be built in Kona.