The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the House Committee on Finance on Feb. 27, 2026.
_____________
Feb. 27, 2026, 2 p.m.
Hawaii State Capitol
Conference Room 308 and Videoconference
To: House Committee on Finance
Rep. Chris Todd, Chair
Rep. Jenna Takenouchi, Vice Chair
From: Grassroot Institute of Hawaii
Ted Kefalas, Director of Strategic Campaigns
RE: TESTIMONY IN SUPPORT OF HB1713 HD1 — RELATING TO SCHOOL IMPACT FEES
Aloha Chair, Vice Chair and other Committee members,
The Grassroot Institute of Hawaii supports HB1713 HD1, which would repeal school impact fees and lapse monies collected from school impact fees into the school facilities special fund.
This bill serves as an important follow-up to Act 268 (2025), which repealed the construction cost component of school impact fees and exempted Department of Hawaiian Home Lands projects, certain affordable housing projects and single-room dwellings from school impact fees.
Grassroot’s 2025 brief “Getting schooled: The case against school impact fees in Hawaii” outlined why school impact fees no longer make sense for Hawaii.
For starters, school impact fees increase housing costs because homebuilders are naturally going to incorporate the cost of various fees into their sales prices.
Therefore, it is no surprise that Gov. Josh Green suspended them via emergency order for the rebuilding of Lahaina and for certain housing projects covered under his affordable housing proclamations. It is also no coincidence that the first action taken by the Beyond Barriers Working Group established by the governor’s housing proclamations was to waive the school impact fee for a 52-unit rental project in downtown Honolulu.
The school impact fee for projects in the downtown area is $3,864 per unit, which would have added $200,928 to the project’s overall construction costs.[1]
A couple of years before that, in 2022, Howard Hughes Holdings had to pay the DOE $3,864 per unit in school impact fees to build its 565-unit Ward Village condo on Oahu — for a total of $2.18 million. To recoup its costs, the company passed the fees along to its buyers in the form of closing costs.[2]
In addition to driving up the cost of housing, Hawaii’s school impact fee system is likely unconstitutional, the money generated by the fees has never been spent, and student enrollment in areas subject to such impact fees has been declining.
Regarding constitutional concerns, the Hawaii Office of the Auditor warned in a 2019 report that the DOE’s school impact fees might violate the constitutional requirement that there be a “nexus” between proposed new units and the need for more classroom capacity.[3]
Meanwhile, the negative effect of school impact fees on housing growth has not been offset by a commensurate benefit to local schools. The state auditor’s 2019 report noted that the state Department of Education collected $5.34 million in impact fees[4] between 2007 — when the fees were established — and 2018, yet it had not spent any of it.
Eliminating school impact fees, especially for small-scale projects, is a common-sense way to help reduce housing costs in Hawaii.
Thank you for the opportunity to testify.
Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
_____________
[1] Andrew Gomes,”Housing panel makes first development decision,” Honolulu Star-Advertiser, Jan. 3, 2024.
[2] Andrew Gomes, “Ward Village Builder Charges Buyers Separate Fee to Cover School Impact Assessment,” Honolulu Star-Advertiser, Oct. 2, 2022.
[3] “Audit of the Department of Education’s Administration of School Impact Fees: A Report to the Governor and the Legislature of the State of Hawai‘i,” Office of the Auditor, State of Hawaii, September 2019, p. 11.
[4] “Audit of the Department of Education’s Administration of School Impact Fees,” p. 6.
