HB946

SECTION 1. The legislature finds that state tax revenues have increased significantly over the last several fiscal years. However, looking forward, the legislature is cognizant that the amount of tax revenues collectible are at times erratic and unpredictable, depending largely on the health of the State and national economies.

The legislature finds that counties need to carry out significant capital improvement projects that have been neglected over time due to a lack of funding. A recent example is the rupture of a Waikiki sewer line on March 24, 2006, after flooding rains. The rupture forced the city and county of Honolulu to divert untreated sewage into the Ala Wai Canal while repairing the rupture. The resulting national media coverage of the closure of Waikiki beach and other famous beaches along the south shore of Oahu due to the diversion of sewage into the Ala Wai Canal no doubt hurt tourism, the State's major industry. Another example is the two-year Kapiolani Boulevard underground utility improvement for new water and sewer lines which began on September 5, 2006. Both the Waikiki sewer line and the Kapiolani Boulevard projects would fix aging underground utilities that have been neglected for many years for lack of county funds. In the case of the Waikiki sewage line break, nothing was done until a dire emergency situation arose, and in the case of the Kapiolani Boulevard project, the intent is to avert a future disaster due to aging infrastructure. Both construction projects are intended to make improvements to last for the next fifty years or more.

The legislature finds orderly and planned infrastructure capacity construction is the foundation for planned population growth and desirable communities. Infrastructure construction should precede development. Adequate infrastructure to accommodate future growth would provide livable communities with a desirable quality of life; make possible strategically situated affordable housing (for example, near areas of job growth); and allow for transfer of development rights to protect and preserve important agricultural lands by targeting growth to specific areas that have necessary infrastructure capacity to support development. Counties would first determine where development is desirable and then proceed to construct the infrastructure to support a development, rather than vice versa, as is the present practice.

The State's population will increase and growth is necessary and both should be planned for properly. Experience indicates that the lack of adequate infrastructure imposes a tremendous restriction on accommodating future growth. For example, as the city and county of Honolulu plans for its new fixed-guideway system, the discussion will focus on quality of life issues as the community begins to balance higher densities in and around the transit corridor with the need to protect open space and agricultural areas. Higher densities will require increasing the infrastructure capacity. The neighbor islands also suffer from the lack of adequate infrastructure capacity to accommodate future growth. The State must assist the counties with an orderly and predictable plan for increasing infrastructure capacity to better use existing areas for planned growth and to mitigate impacts to areas that are appropriate for immediate growth.

The State can assist the counties by providing an incentive consisting of supplemental financing for infrastructure capacity construction wherever and whenever feasible, although the primary responsibility continues to rest with the counties for basic municipal infrastructure needs. Infrastructure projects included eligible for assistance under this Act include sewer, water, drainage, and road projects that would increase the county's capacity to accommodate future growth. Increasing infrastructure capacity is not the same as maintenance of infrastructure. While maintenance would lengthen the life of a facility or infrastructure, only projects that would result in increased infrastructure capacity will be eligible for supplemental funding under this Act.

The State cannot afford to abandon the counties and must financially assist the counties when it comes to providing infrastructure. It is in the counties that planning for development is needed and it is the counties that have the ultimate responsibility for this task. However, the State and the counties share several responsibilities under the Constitution of the State of Hawaii regarding development, including the following: article IX, section 6, relating to management of state population growth to protect the public health and welfare; article XVI, section 5 relating to intergovernmental relations to provide cooperation in matters affecting the public health, safety, and general welfare; and article XI, section 3, relating to the policies to promote agriculture and the conservation of productive agricultural lands in the State.

The purpose of this Act is to create a county infrastructure capacity construction loan revolving fund to provide loans to the counties for infrastructure improvements.

SECTION 2. Chapter 46, Hawaii Revised Statutes, is amended to read as follows:

"§46- County infrastructure capacity construction loan revolving fund. (a) There is established within the state treasury a county infrastructure capacity construction loan revolving fund. The revolving fund shall be administered by and moneys expended by the department of budget and finance in accordance with this section. The legislature finds that this section satisfies the requirements of section 37-52.4.

(b) The county infrastructure capacity construction loan revolving fund shall consist of moneys:

(1) Received by the department from counties for the repayment of loan principal and payment of simple interest; provided that simple interest charged to a county for a loan shall be per cent below the prevailing market rate at the time the loan is made but in no event shall exceed per cent;

(2) Appropriated by the legislature into the fund from surplus revenues derived from prior fiscal years;

(3) Appropriated federal grants and subsidies to the State or counties, if any; and

(4) Voluntary contributions.

(c) The department shall expend money in the fund to make loans to counties for the costs, in whole or in part, of infrastructure improvements that would increase the capacity of the infrastructure facilities, including sewer, water, drainage, and roads. Eligible costs shall include but not be limited to planning, design, feasibility studies, construction and materials. No loan shall be made for maintenance or repair costs unless the construction would simultaneously increase the carrying capacity of the infrastructure facility. No loan shall be made only for mass transit or electrical utilities. Loans shall be made only for capital improvement projects approved by the respective county council with a view towards planned growth rather than upkeep and maintenance.

(d) The department shall comply with section 37-47. The department shall adopt rules in accordance with chapter 91 for the purposes of this section."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ , for fiscal year 2007-2008, and the same sum for fiscal year 2008-2009, for deposit into the county infrastructure capacity construction loan revolving fund.

SECTION 4. There is appropriated out of the county infrastructure capacity construction loan revolving fund the sum of $ , or so much thereof as may be necessary for fiscal year 2007-2008, and the same sum, or so much thereof as may be necessary for fiscal year 2008-2009, for the purposes of this Act.

The sums appropriated shall be expended by the department of budget and finance for the purposes of this Act.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval; provided that section 3 shall take effect on July 1, 2007.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	946
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII