Bill Text: HI SB2498 | 2024 | Regular Session | Amended
Bill Title: Relating To Financing.
Spectrum: Strong Partisan Bill (Democrat 10-1)
Status: (Introduced) 2024-02-13 - The committee on WAM deferred the measure. [SB2498 Detail]
Download: Hawaii-2024-SB2498-Amended.html
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THE SENATE |
S.B. NO. |
2498 |
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THIRTY-SECOND LEGISLATURE, 2024 |
S.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO FINANCING.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
It is estimated that there are almost eighty-three thousand cesspools in the State; with nearly fifty thousand, or eighteen per cent, on Hawaii island; approximately fourteen thousand, or eighteen per cent, on Kauai; over eleven thousand, or fourteen per cent on Maui; approximately seven thousand five hundred, or nine per cent, on Oahu; and approximately one thousand four hundred, or two per cent, on Molokai. Collectively, the State's cesspools release more than fifty-three million gallons of untreated sewage into the ground each day and Hawaii relies on groundwater for ninety per cent of its drinking water.
In response to the State's cesspool pollution problem, in 2017, the legislature enacted a measure that required all cesspools not excluded by the director of health to be upgraded or converted to wastewater systems approved by the director of health, or connected to sewage systems by January 1, 2050; however, cesspool conversions, which are estimated to cost $1,300,000,000, have been lagging.
The legislature finds the upfront costs of cesspool conversions to be a barrier that prevents many cesspool owners from addressing systems that daily contribute to the release of untreated sewage into the ground. The legislature further finds that it is in the public interest to reduce risks presented by cesspools and safeguard public sanitation and the environment. It is in the interest of the State to encourage the acceleration of cesspool conversions as doing so would also produce external benefits to public education about cesspools and wastewater, while creating a market to sustain the clean water workforce being developed in training programs, like Work-4-Water, through the university of Hawaii community colleges system.
The legislature also finds that while state and federal funding for cesspool conversion loans are limited, the recently approved Inflation Reduction Act of 2022 and Bipartisan Infrastructure Law generously increase funding to supplement the Hawaii public utilities commission's energy efficiency programs. Under the Inflation Reduction Act Home Energy Rebate program, the State will receive $68,300,000 in funding for energy efficient water heaters, space heaters and coolers, dryers, cooking appliances, wiring, insulation, and other ENERGY STAR qualified technologies from fiscal year 2024 to fiscal year 2031. Under the Bipartisan Infrastructure Law, the state will receive $7,000,000 in funds for grid resilience and weatherization, and $18,000,000 for electric vehicle charging infrastructure from fiscal year 2024 to fiscal year 2028.
The public utilities commission-approved public benefits fee surcharge is currently used by its contractor, Hawaii Energy, to administer commercial and residential energy efficiency programs. For the program year spanning July 1, 2023, to June 30, 2024, it is expected that Hawaii Energy will receive $44,000,000 from ratepayers to administer its programs, with $26,000,000 allocated for commercial programs and $18,000,000 allocated for residential programs.
On October 26, 2017, the public utilities commission issued Order No. 34930 requiring the Hawaii green infrastructure authority to transfer all green energy market securitization (GEMS) bond-funded principal and interest loan repayments collected to supplement the public benefits fund. The amounts transferred to the public utilities commission are approximately $3,500,000 to $4,000,000 annually, and, to date, the authority has transferred over $17,700,000 to the public utilities commission.
It is expected that the Maui wildfires will significantly injure the State's economic health, and initial signs already indicate that the actual general fund tax revenue is roughly 1.8 per cent less than projected by the council on revenues for the first fiscal month of 2024.
The legislature further finds that according to the public utilities commission's Indenture of Trust, the GEMS bond was designated a "green bond," and that the State pledged to commit proceeds to the "financing of environmentally beneficial projects".
In lieu of transferring GEMS loan repayments to the public utilities commission, the legislature finds that allowing the Hawaii green infrastructure authority to retain earned interest to cover its operating expenses while repurposing the repaid principal of GEMS funded solar loans to fund a cesspool conversion revolving loan fund would create a long-term source of capital that, when combined with federal funds, serves a necessary public purpose.
The purpose of this Act is to:
(1) Establish the cesspool conversion revolving loan fund within the Hawaii green infrastructure special fund to provide financing to low- and moderate-income households for cesspool conversions approved by the department of health;
(2) Authorize the Hawaii green infrastructure authority to administer the fund; and
(3) Require annual reports to the legislature.
SECTION 2. Chapter 196, Hawaii Revised Statutes, is amended by adding a new section to part IV to be appropriately designated and to read as follows:
"§196- Cesspool conversion revolving loan fund. (a) There is established in the Hawaii green infrastructure special fund established under section 196-65, the cesspool conversion revolving loan fund that shall be administered by the authority. Funds deposited into the cesspool conversion revolving loan fund shall not be under the jurisdiction of nor subject to approval by the commission and shall include:
(1) Principal
and interest repayments from green infrastructure loans made under section
196-65;
(2) Interest
repayments from loans made to state government agencies under section 196-62.5;
(3) Funds
from federal, state, county, private or other funding sources;
(4) Moneys
received as repayment of loans and interest payments; provided that the
repayment of loans and interest payments under this paragraph shall not include
repayment of loans and interest collected as a result of funds advanced from
proceeds of the clean energy and energy efficiency revolving loan fund established
pursuant to section 196-65.5 or any solar or energy storage loan program; and
(5) Any
fees collected by the authority under this section; provided that moneys
collected as a result of the funds advanced from proceeds of the green energy
market securitization bonds, clean energy and energy efficiency revolving loan
fund, and any solar or energy storage loan program shall be kept separate from
fees collected as a result of funds advanced from proceeds of the cesspool
conversion revolving loan fund.
(b)
Moneys in the cesspool conversion revolving loan fund shall be used to
provide low-cost loans or other authorized financial assistance to eligible
low- and moderate-income households to update or convert existing cesspools in any
county to septic systems, aerobic treatment unit systems, connect to existing
sewer systems or any other system approved by the department of health for
wastewater treatment on terms approved by the authority. Moneys from the fund may be used to cover all
administrative and legal costs of fund management and management associated
with all loan programs administered by the authority, including personnel,
services, technical assistance, data collection and reporting, materials,
equipment, and travel for the purposes of this section.
(c)
Funds appropriated or authorized from the cesspool conversion revolving
loan fund shall be expended by the authority.
The authority may contract with other public or private entities for the
provision of all or a portion of the services necessary for the administration
and implementation of the loan fund program pursuant to section 196-96(e). The authority may set fees for fund
management and technical site assistance provided under this section.
(d)
All interest earned on the loans, deposits, or investments of the moneys
in the fund shall become part of the fund.
(e)
The authority may establish subaccounts within the fund as necessary.
(f)
The authority may adopt rules pursuant to chapter 91 to carry out the
purposes of this section."
SECTION 3. Section 196-64, Hawaii Revised Statutes, is amended to read as follows:
"§196-64 Functions, powers,
and duties of the authority. (a) In the
performance of, and with respect to the functions, powers, and duties vested in
the authority by this part, the authority, as directed by the director and in
accordance with a green infrastructure loan program order or orders under
section 269-171 or an annual plan submitted by the authority pursuant to this
section, as approved by the commission for the green infrastructure loan
program, may:
(1) Make loans and expend
funds to
finance the purchase or installation of green infrastructure equipment for
clean energy technology, demand response technology, and energy use reduction
and demand side management infrastructure, programs, and services;
(2) Hold and invest moneys
in the green infrastructure special fund in investments as permitted by law and
in accordance with approved investment guidelines established in one or more orders
issued by the commission pursuant to section 269-171;
(3) Hire
employees necessary to perform its duties, including an executive
director. The executive director shall
be appointed by the authority, and the employees' positions, including the
executive director's position, shall be exempt from chapter 76;
(4) Enter into contracts for
the service of consultants for rendering professional and technical assistance
and advice, and any other contracts that are necessary and proper for the
implementation of the loan program;
(5) Enter
into contracts in compliance with chapter 103D for the administration of
the loan program[, without the necessity of complying with chapter 103D];
(6) Establish loan program
guidelines to be approved in one or more orders issued by the commission
pursuant to section 269-171 to carry out the purposes of this part;
(7) Be audited at least annually by a firm of
independent certified public accountants selected by the authority, and provide
the results of this audit to the department and the commission; and
(8) Perform all functions necessary to effectuate
the purposes of this part.
(b) The authority shall submit to the commission an annual plan for the green infrastructure loan program for review and approval no later than ninety days prior to the start of each fiscal year. The annual plan submitted by the authority shall include the authority's projected operational budget for the succeeding fiscal year.
(c) In the performance of the functions, powers, and duties vested in the authority by this part, the authority shall administer the clean energy and energy efficiency revolving loan fund established pursuant to section 196-65.5 and may:
(1) Make loans and expend funds to finance the purchase or installation of clean energy technology and services;
(2) Implement and administer loan fund programs on behalf of other state departments or agencies through a memorandum of agreement and expend funds appropriated to the department or agency for purposes authorized by the legislature;
(3) Utilize all repayment mechanisms, including the green energy money saver on-bill program, financing tools, servicing and other arrangements, and sources of capital available to the authority;
(4) Exercise powers to organize and establish special purpose entities as limited liability companies under the laws of the State;
(5) Acquire, hold, and sell qualified securities;
(6) Pledge unencumbered net assets, loans receivable, assigned agreements, and security interests over equipment financed, as collateral for the authority's borrowings from federal, county, or private lenders or agencies;
(7) Utilize the employees of the authority, including the executive director;
(8) Enter into contracts for the service of
consultants for rendering professional and technical assistance and advice and
any other contracts that are necessary and proper for the implementation of [the]
a loan fund program;
(9) Enter into contracts in compliance
with chapter 103D for the administration of [the] a loan fund
program [exempt from
chapter 103D];
(10) Establish loan fund program guidelines;
(11) Be audited at least annually by a firm of independent certified public accountants selected by the authority and provide the results of the audit to the department and legislature; and
(12) Perform all functions necessary to effectuate the purposes of this part.
(d) The authority shall submit an annual report for the clean energy and energy efficiency revolving loan fund to the legislature no later than twenty days prior to the convening of each regular session describing the projects funded and the projected energy impacts.
(e) In the performance of the functions, powers, and duties vested in the authority by this part, the authority shall administer the cesspool conversion revolving loan fund established pursuant to section 196- and may:
(1) Make loans and expend funds to finance the update or conversion of existing cesspools in any county to septic systems, aerobic treatment unit systems, and connect to existing sewer systems or any other system approved by the department of health for wastewater treatment;
(2) Reference
as an example the loan program under section 342D-83, provided by the
department of health;
(3) Utilize
all repayment mechanisms, financing tools, servicing and other arrangements,
and sources of capital available to the authority;
(4) Utilize
the employees of the authority, including the executive director;
(5) Enter
into contracts for the service of consultants for rendering professional and
technical assistance and advice and any other contracts that are necessary and
proper for the implementation of a loan fund program;
(6) Enter
into contracts in compliance with chapter 103D for the administration of a loan
fund program;
(7) Establish
loan fund program guidelines;
(8) Be
audited at least annually by a firm of independent certified public accountants
selected by the authority and provide the results of the audit to the
department of health and legislature; and
(9) Perform
all functions necessary to effectuate the purposes of this subsection.
(f)
The authority shall submit an annual report for the cesspool conversion
revolving loan fund to the legislature no later than twenty days prior to the
convening of each regular session describing the projects funded."
SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 5. This Act shall take effect on July 1, 2024.
Report Title:
Cesspool Conversion Revolving Loan Fund Program; Hawaii Green Energy Infrastructure Authority; Green Energy Market Securitization Bond Funded Loan Proceeds; Report
Description:
Establishes the Cesspool Conversion Revolving Loan Fund. Directs green energy market securitization loan repayments and interest to be deposited into the Cesspool Conversion Revolving Loan Fund. Requires the Hawaii Green Infrastructure Authority to administer the Cesspool Conversion Revolving Loan Fund. Requires annual reports to the Legislature. (SD1)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
