Hawaii’s old schools need more than a fresh coat of paint to make them new again, state officials say. The facilities need to be overhauled to ensure students are learning in a 21st century environment, which involves flexible floor plan designs and advanced technology.

Two bills have emerged this legislative session to help the district make money off underutilized school lands by leasing the properties for other public purposes, such as workforce housing. The legislation has so far been able to overcome the backlash that has dogged the Public Land Development Corporation, which proposed doing something similar at a broader level but is now headed toward repeal.

Both school land bills, which face a big test Tuesday, propose public-private partnerships to help the district upgrade existing facilities and build new schools. They differ primarily in terms of which agency would have oversight and how many projects could be undertaken in the formative years.

Educators and lawmakers say they want to modernize agriculture-age classrooms for information-age kids. But Hawaii is hundreds of millions of dollars behind in maintaining its current inventory, forcing officials to find an innovative approach to finance the initiative.

“We’re proceeding cautiously,” said Rep. Takashi Ohno, House Education Committee vice chair. “There’s a crucial need to provide safe, modern, functioning schools.”

House Bill 865 would let the Department of Education, with Board of Education approval, develop up to five sites.

The bill, which was part of Gov. Neil Abercrombie’s legislative package, originally made the Hawaii Community Development Authority the lead agency but was changed in a joint-committee meeting Feb. 15.

Senate Bill 237 gives top oversight to the lieutenant governor’s office. The legislation lets the board choose up to two sites to be part of a two-year pilot program.

The board supports the intent of the Senate bill, but wants to take the lead. Board Chair Don Horner has said he would be happy if the district can just have a chance to do one project to prove the concept works.

The state’s 256 school campuses occupy almost 4,000 acres of land and 19 million square feet of building space, according to a recent report by Steven Bingler, William Kaneko and Alan Oshima for the Hawaii Institute for Public Affairs.

“Many school campuses are situated in valuable areas like the financial district of downtown Honolulu, near Waikiki Beach and downtown Lahaina — collectively worth billions of dollars if developed appropriately,” the article says.

Based on tax assessments, Horner said the DOE is the state’s largest property owner with well over $4 billion of land. He said the legislation provides a creative way to address a dire capital need.

Hypothetical Projects: Build Vertical, Combine Schools

The DOE hasn’t identified any schools or done any land assessments to determine potential project sites should the legislation become law this session, DOE spokeswoman Donalyn Dela Cruz said.

“Right now there isn’t any area in mind,” she said. “But I’m sure lawmakers are eager to make suggestions.”

House Education Chair Roy Takumi said he estimates only 20 percent of the total DOE inventory would be suitable for the type of projects envisioned by the bills.

He said the most likely sites would be areas where there are two or more schools in close proximity that have low enrollment. He said in this case, two schools could be combined into one and the other school could be leased for another public purpose.

Horner said as a hypothetical project, the state has 14 acres at Jefferson Elementary in Waikiki. With two other elementary schools within walking distance, he said there is an opportunity for consolidation.

“The first priority though is student achievement,” Horner said.

Another example would be a site that is land rich, whether in overall acreage or due to location. Takumi said the state could take a high school campus spread out horizontally across 50 acres, for instance, and replace it with a new school building several stories tall and lease the excess land.

“I don’t see us selling off school lands and opening up a pawn shop,” Takumi said. “There’s so many things you could build on these lands that are compatible with the needs of the community. Just be creative and think about it.”

A preliminary review by a real estate expert indicates that 10 parcels that have unused public school lands are valued at $120 million under existing surrounding uses, according to the Senate bill. But the legislation doesn’t identify what parcels were assessed.

In board meetings over the past several months, Horner, Assistant Superintendent Ray L’Heureux and other school officials have discussed hypothetical project sites in southern Maui and around Waikiki.

Horner has said the 77-acre property the state recently bought on the Valley Isle for a new high school could be subdivided, rezoned and leased to make money for other educational needs.

The Kihei high school is one of 11 new schools the DOE included in its proposed budget for the next two years. Altogether, the department is asking for $621 million in capital improvement projects in 2014 and 2015.

L’Heureux has said at the current spending level it would take 1,000 years before the state addressed the building needs of every campus. Hawaii ranks last in the nation in terms of how much money per student it spends each year on capital improvement projects.

The state doesn’t break down its overall net assets – $1.3 billion, as of June 30 — by department so it’s not possible to know how much of that total is the DOE, said Luis Salaveria, deputy finance director.

Lawmakers Factor PLDC Concerns Into School Lands Legislation

This isn’t the Legislature’s first effort to establish a legal mechanism for the state to make money off underutilized school lands through public-private partnerships.

Lawmakers tried to pass this type of legislation for the past several years but weren’t successful until 2011 when they created the PLDC.

Although the PLDC’s main purpose was to help fund the Department of Land and Natural Resources, it was also a tool to develop school lands. However, a groundswell of community concern over the new agency has the PLDC headed for repeal this session.

Takumi said he understands the PLDC-prompted concerns over the school land bills, but stressed that the current legislation is different. He said there’s no fast-tracking or exemptions, and it would be limited to leasing lands not selling them.

“This is one idea, not the silver bullet,” he said. “We’re trying to deal with a growing need for new school buildings but have a shrinking resource base to provide that.”

Cognizant of the public disdain for the PLDC, lawmakers are working to make HB 865 and SB 237 a more palatable, measured approach.

Aside from limiting the number of projects, both bills also have provisions requiring school officials to engage the community in the selection and development of potential sites. The legislation also requires revenue to be used exclusively for education needs.

Hawaii schools are 65 years old on average, necessitating more than $200 million annually in repair and maintenance costs alone, Ohno said.

Still, critics question whether the DOE or lieutenant governor’s office have the expertise to execute the development projects, which is why earlier versions of the bills handed that power over to the PLDC or Hawaii Community Development Authority.

“With all due respect, it appears that the DOE, BOE and Lieutenant Governor’s office do not have the development expertise or experience to efficiently maximize the benefits of this legislation,” the Land Use Research Foundation of Hawaii said in its testimony, which advocated for the HCDA to play a significant role.

L’Heureux told board members last month that developing school lands should not be the DOE’s kuleana.

Horner, however, said he supports the district building the internal capacity to be able to do it.

While supportive of public input, Horner said there are some decisions with regards to building 21st century schools that the community doesn’t need to be involved with.

“It’s just like me building branches at First Hawaiian Bank,” said Horner, the bank’s former CEO. “I don’t go to the community and ask them what they want. I know what is needed in the four walls of that educational facility.”

He said it’s important to engage the community, but the department needs to lead the way on some bigger decisions, such as does every school need a pool or how many acres does an elementary require.

“We need a master strategy of 21st century schools, rather than just one-off,” Horner said at the board’s most recent meeting. “We need community involvement, but at the same time we don’t need 256 flavors.”

L’Heureux said he agrees the department and board have the responsibility to do that, but it can’t be done without concurrent input from the community.

The full House and Senate will vote Tuesday on HB 865 and SB 237, respectively. The bills, if passed, would then cross over to the other chamber for its consideration.

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